There are millions of small-scale farmers locked out of Kenya’s formal economy.
Alex Muriu had a vision. The Kenayn native wanted to find a way to help farmers who were struggling financially. In 2014, Muriu, 29, created Farm Capital Africa with the goal of generating wealth through investing in profitable business ventures in the underfunded agricultural sector.
Farm Capital Africa uses the internet to raise funds and mobile money to disburse to agripreneurs — mostly youth and women. The aim is to connect these agripreneurs with investment groups that can help them access funds they need to scale up their agricultural ventures.
Farm Capital Africa helps small-scale farmers between ages 25 and 35. Through its investor networks, Farm Capital Africa participates in a profit- and loss-sharing arrangement between the agripreneur and the investor.
Alex Muriu talked to AFKInsider about how Farm Capital Africa works.
AFKInsider: What made you want to launch Farm Capital Africa?
Alex Muriu: From a conversation with a farmer back in 2011 that got me curious about financing (or lack thereof) in the small-scale agriculture industry. I started thinking of a solution and in 2013 decided to put these ideas to practice. The rest is history.
AFKInsider: Is it true that at university, you ran a successful computer hardware shop?
Alex Muriu: I used to sell flash disks back when people didn’t know what they were. This then morphed into a web design and web hosting company which I ran for five years until I graduated from university.
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AFKInsider: Please explain what Farm Capital Africa does?
Alex Muriu: We provide input financing to small-scale farmers. This we do by partnering with local agrovets (places where farmers can buy agricultural and veterinary products). Once a farmer joins our program they can then pick inputs from the agrovet on credit and pay upon harvest.
AFKInsider: What were some startup challenges?
Alex Muriu: In the process of devising a working financing model we lost substantial amounts of money through bad debts. We also had human resource issues. Getting the right talent in the agri-space can be quite a challenge.
AFKInsider: What have been some obstacles in growing your business?
Alex Muriu: Not obstacles per se; more like stumbling blocks. I do not have an agricultural background so the learning curve was quite steep. We have also had some challenges with raising capital as social-impact investors are not as rampant as profit-making investors.
AFKInsider: Does Kenya have many resources for small business?
Alex Muriu: The government has funding initiatives for small business like the Uwezo Fund and Youth Fund. I believe there is some work to be done in incentivizing small businesses whether it’s tax incentives or business regulation laws. There have been strides in this space. In Kenya, you can now register a business in a day.
AFKInsider: What are the pluses of doing business in your country?
Alex Muriu: We have a relatively stable political climate which allows business to run without political interference for the most part. Kenya has high literacy and education levels so getting talent — affordable talent at that — is not an uphill task.
AFKInsider: What are some disadvantages of doing business in your country?
Alex Muriu: I think we have a few too many unscrupulous entities in Kenya. (It)’s very easy to get conned or played while trying to get business partnerships. Anyone setting up a business here should double and triple check who you choose to do business with. But otherwise, (it’s) a great place to do business.
AFKInsider: What are your long-term goals for your company?
Alex Muriu: We will become the largest financial player in the small-scale farming space. There are millions of farmers locked out of the formal (economy).
AFKInsider: What do you like best about what you do?
Alex Muriu: I see lives changing through the work we do. People take their kids to school, have money for medicine when they fall sick and even more important the dignity of being financially self-reliant. I love that.