The USAID Hub facilitated access to $1,659,400 of working capital for 14 firms in Kenya and Uganda to promote staple food trade across East Africa. The firms, most representing grain traders and allied services, received access to the financing as a result of a Hub grant to Financial Access Commerce & Trade Services (FACTS) Africa. These deals are expected to demonstrate the viability of lending to grain traders, increasing the risk appetite of FACTS and other financial services to lend more to an underserved sector.
The recipients include firms across the grain value chain. Hi-Tech Farm Supplies Limited of Kenya, for example, provides quality agricultural inputs and services to farmers for greater production. Mubende Agro Supply and Processors Limited in Uganda procures grain directly from farmers, offering them a ready market for their products. Uganda’s Namirembe Offspring Limited also purchases grain, which is then sold in domestic and regional markets, while Kenya’s Logistics Link Ltd manages the collection and movement of shipments. With short-term finance to improve their operations, these companies, along with 10 others, will generate greater grain trade, providing benefits along the value chain, from grain farmers to consumers.
Access to finance remains a significant barrier to regional staple food trade. Traders, millers and warehouses struggle with the documentation required to obtain working capital from banks as many do not have high-quality business plans, financial models, accounting records or evidence of corporate governance structures. Without additional capital, traders are limited in their purchasing; they can only buy using the money they have on hand. If traders had working capital, however, they could purchase larger volumes and then pay financial institutions after selling the grain. This would allow larger volumes of staple foods to move from surplus to deficit areas, providing a solution to food insecurity in the region.
In addition to the working capital deals, FACTS has led four “Ignite My SME” seminars in Kenya, Uganda and Tanzania where SMEs learned tools to enhance their access to finance. These seminars reached over 250 participants, expanding knowledge throughout the region and better positioning SMEs to obtain working capital through various sources. These efforts will contribute to increased regional trade for greater economic growth, food security and resiliency.