Sowing Smarter: Unlocking Agricultural Trade Credit for Kenyan Farmers with PentaPay

A woman skillfully picks tea leaves in a lush, expansive tea plantation, carrying a woven basket on her back amid the vibrant greenery.

Executive Summary

Agriculture remains the backbone of Kenya's economy, employing over 70% of the rural population and contributing approximately 21% of the national GDP. Despite its scale and importance, agricultural supply chains are severely constrained by limited access to structured credit, high default rates, and inefficient, cash-heavy transactions. Agro-dealers, cooperatives, and input suppliers face persistent challenges in managing credit and collections from smallholder farmers and farm-based enterprises. PentaPay offers a digital solution tailored to this ecosystem by enabling Know Your Business (KYB) onboarding, AI-powered collections, and smart, data-backed credit offerings that are aligned with seasonal cash flow cycles.

Industry Context

According to the Ministry of Agriculture and the World Bank, there are over 4.5 million smallholder farmers in Kenya, many of whom rely on agro-dealers for seeds, fertilizers, animal feeds, and other inputs. Most transactions between agro-dealers and farmers are conducted on informal credit, particularly during the planting season, with repayment expected after harvest.

These informal arrangements often lead to delayed payments, defaults, and disputes, with an estimated KES 10–12 billion in outstanding agricultural receivables in any given season. Furthermore, the lack of structured financial records and customer verification prevents agro-dealers from accessing trade financing to scale their businesses.

Business Challenge

For Agro-Input Suppliers and Agro-Dealers:

• High exposure to repayment risk during long harvest cycles

• Inability to verify new or walk-in customers

• Manual collection processes involving field visits and community pressure

• Cashflow shortages that limit restocking and supplier relationships

  
  

For Investors and Agricultural Lenders:

• Lack of real-time visibility into repayment behavior and the creditworthiness of smallholder farmers

• Difficulty in underwriting inventory and trade credit to agro-dealers

• No digital trail of receivables or structured customer data

  
  

The PentaPay Solution

PentaPay streamlines agricultural trade credit management through:

1. KYB for Agro-Clients: Agro-dealers can onboard farmers and cooperatives using ID, mobile history, group affiliations, and location-based records.

2. Flexible Credit Plans: Payment terms can be aligned to planting and harvesting cycles, with auto-adjustments based on weather or market risk.

3. AI Collections Engine: Timely, multilingual SMS reminders and structured escalation workflows reduce default risk and improve repayment.

4. Receivables Monitoring Dashboard: Input suppliers can track outstanding payments across customers and generate performance-based credit tiers.

5. Mobile Money Integration: Accepts and reconciles payments from M-Pesa and other platforms for ease and accountability.

   
   

   

   A farmer diligently tends to his tea plantation, skillfully harvesting leaves on a bright day amidst lush greenery.

Use Case Scenario: Agro-Dealer in Eldoret

Profile: A mid-sized agro-dealer in Uasin Gishu County supplies 1,200 farmers per season with inputs worth KES 6,000 each.

Before PentaPay:

• 85% of sales were on informal credit

• Repayment rate after 90 days: 55%

• Required 3 staff to manually chase payments via boda boda transport

  
  

After PentaPay:

• 95% of customers onboarded with KYB and digital contracts

• Repayment rate improved to 83% in two seasons

• Default cases dropped by 60%

• Collection costs reduced by 40%

• Enabled the dealer to access KES 3M in trade finance from a local MFI using receivables history

  
  

Investor Relevance

For agricultural investors and lenders, PentaPay creates the infrastructure needed to:

• Digitize customer risk profiles and repayment performance

• De-risk inventory and supply chain finance for agro-dealers

• Scale structured lending to thousands of MSMEs and farmers with traceability

  
  

Kenya’s agricultural finance market is projected to reach KES 160 billion by 2027, driven by digital tools and weather-indexed lending models. PentaPay is uniquely positioned to serve this emerging segment by linking data, payments, and credit behavior in one seamless ecosystem.

Strategic Impact

For Agro-Dealers:

• Improve repayment predictability and reduce manual collection overhead

• Build long-term loyalty with verified customers

• Qualify for supply-side credit using receivables data

  
  

For the Ecosystem:

• Reduces default risk across the agricultural supply chain

• Enhances financial inclusion for smallholder farmers

• Aligns with SDG 2 (Zero Hunger), SDG 8 (Decent Work), and SDG 9 (Innovation & Infrastructure)

Agricultural trade in Kenya is overdue for a digital transformation. By equipping agro-dealers and suppliers with data tools to manage risk, offer credit, and streamline payments, PentaPay is unlocking growth across the rural economy. From Eldoret to Embu, small businesses in agriculture can now trade smarter, get paid faster, and grow sustainably.

References

1. World Bank – Agricultural Sector Transformation and Growth Strategy (ASTGS), Kenya 2021: https://documents.worldbank.org/en/publication/documents-reports/documentdetail/535541595171247847/kenya-agricultural-sector-transformation-and-growth-strategy

2. Ministry of Agriculture, Livestock and Fisheries, Kenya: https://www.kilimo.go.ke/

3. FSD Kenya – Digitising value chains for financial inclusion: https://fsdkenya.org/publication/digitising-value-chains/

4. Kenya Agricultural Finance Market Landscape Report 2022 – AGRA and Dalberg: https://agra.org/reports