Agribusiness traders urged to use transaction records to access credit

Agribusiness traders in Kenya are being encouraged to utilize documented sales, invoices, and payment histories to secure financing, as lenders seek alternatives to traditional collateral like land and buildings. This shift aims to ease access to working capital for businesses along Kenya's agricultural value chain, where limited access to formal credit has constrained their ability to purchase produce, meet supplier obligations, and expand distribution.

Agriculture accounts for an estimated 3.2 to 3.6 percent of total bank lending, highlighting a financing gap for businesses involved in moving agricultural produce from farms to consumers. Lenders can assess creditworthiness through verified transactions, accepted invoices, and bank or mobile money statements, rather than relying solely on asset ownership.

Invoice financing allows eligible suppliers to access up to 85 percent of an approved invoice's value before the buyer settles the payment, providing funds to sustain operations between delivery and collection. However, the financing model depends on the reliability of the buyer, confirmation that goods have been delivered, and the supplier's ability to meet repayment obligations when payments fall due.

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