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Digitizing FMCG Trade Credit in Kenya with PentaPay

  • Writer: The AI Review
    The AI Review
  • Jul 13
  • 3 min read

A worker in protective gear conducts inventory in a towering storage warehouse filled with neatly stacked, wrapped pallets. Source: Unsplash
A worker in protective gear conducts inventory in a towering storage warehouse filled with neatly stacked, wrapped pallets. Source: Unsplash

Executive Summary

The Fast-Moving Consumer Goods (FMCG) sector in Kenya plays a vital role in the national economy, with over 1.5 million micro, small, and medium-sized enterprises (MSMEs) involved in the distribution and retail of essential products. However, this ecosystem is constrained by informal and risky trade credit arrangements, delayed payments, and inefficient collections. PentaPay, a smart B2B credit and payments automation platform, addresses this challenge by enabling merchants and distributors to verify customers (KYB), offer credit safely, and automate collections using AI and mobile integrations.


Industry Context

Kenya's FMCG market is characterized by high transaction volumes, thin margins, and fragmented distribution networks. According to the Kenya National Bureau of Statistics (KNBS), retail and wholesale trade contributes over 8.1% to GDP. More than 70% of B2B transactions in the FMCG value chain are either cash-based or informally extended on credit terms without data-backed credit assessment mechanisms.

The informal nature of trade credit—often based on verbal trust—leads to an estimated KES 15 billion in overdue payments annually across urban and peri-urban supply chains. Suppliers often suffer working capital constraints due to slow or non-payments by retail clients (dukas, kiosks, and small supermarkets), affecting restocking capacity and long-term business scalability.


Business Challenge

For Merchants and Distributors:

  • Lack of visibility into the payment behavior of retail customers

  • High default risk due to informal credit arrangements

  • Manual and time-consuming collections

  • No structured way to reward reliable customers or scale credit extension


For Investors and Financial Institutions:

  • Limited data to underwrite trade finance or supply chain lending

  • Poor documentation of B2B receivables

  • Low penetration of formal credit among MSMEs


The PentaPay Solution

PentaPay is purpose-built to modernize B2B transactions and trade credit by offering:

  1. Instant KYB Verification: Merchants can digitally onboard and verify small retailers using mobile data, business documents, and payment history.

  2. Smart Credit Scoring: Retail customers receive real-time credit limits based on past payment behavior and trading volumes.

  3. AI-Powered Collections: Automated reminders via SMS, WhatsApp, and mobile dashboards help merchants collect payments on time.

  4. Flexible Payment Terms: Merchants can offer installment plans or staggered payment options to their best-performing customers.

  5. Digital Receivables Dashboard: Tracks all outstanding payments, sends alerts, and integrates with mobile money (M-Pesa) and bank transfers.


A shop owner in a bustling store checks his phone, surrounded by colorful packets and merchandise. Source: Unsplash
A shop owner in a bustling store checks his phone, surrounded by colorful packets and merchandise. Source: Unsplash

Use Case Scenario: FMCG Distributor in Nairobi


Profile: A Nairobi-based FMCG distributor serves 300 retail shops monthly with goods worth KES 45 million per year.


Before PentaPay:

  • Extended credit to 60% of retailers based on verbal trust

  • Monthly losses from defaults: KES 750,000

  • Manual collections required 2 full-time staff


After PentaPay:

  • Onboarded all retailers with KYB within 1 week

  • Reduced defaults by 68% within 3 months

  • Improved collection timelines by 45%

  • Enabled additional credit to 90 new clients

  • Reduced working capital cycle from 45 to 21 days


Investor Relevance

For investors, PentaPay unlocks:

  • Digitized receivables data for underwriting trade finance

  • Visibility into retail repayment behavior and business viability

  • Scalable credit infrastructure for underserved MSMEs

  • Contribution to financial inclusion and credit formalization


According to the Central Bank of Kenya, digital credit to MSMEs is expected to grow at 18% CAGR through 2027. Platforms like PentaPay will be instrumental in reducing information asymmetry and increasing credit penetration in sectors that traditionally operate outside formal finance.


Strategic Impact

For Merchants:

  • Grow sales volume by offering flexible, risk-managed credit

  • Build a trusted retail network with verified business customers

  • Reduce bad debt and improve operational efficiency


For the Ecosystem:

  • Supports SDG 8 (Decent Work & Economic Growth) and SDG 9 (Industry, Innovation & Infrastructure)

  • Strengthens B2B trust and formality in East Africa's retail supply chains

  • Helps digitize the last mile of wholesale trade


Conclusion

The digitization of trade credit in Kenya's FMCG sector is no longer optional—it is essential for scale, inclusion, and sustainability. PentaPay provides the tools to manage credit risk, streamline payments, and grow responsibly. As merchants seek to expand and investors look for data-driven channels to reach MSMEs, PentaPay offers a proven, scalable, and regionally relevant solution.


References

  1. Kenya National Bureau of Statistics (KNBS) Economic Survey 2023: https://www.knbs.or.ke/download/economic-survey-2023/

  2. Central Bank of Kenya MSME Access to Credit Report 2022: https://www.centralbank.go.ke/uploads/press_releases/1887327782_MSME%20Credit%20Survey%20Report%202022.pdf

  3. World Bank Doing Business in Kenya 2020 Report: https://www.doingbusiness.org/content/dam/doingBusiness/country/k/kenya/KEN.pdf

  4. Financial Sector Deepening (FSD) Kenya: FinAccess Household Survey 2021: https://fsdkenya.org/publication/finaccess2021/



 
 
 

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