Paying Farmers Faster: Why SWAFI Starts With Kenya’s Dairy Belt

If you want to change a food system, fix the cash flow. That’s the short thesis for why SWAFI exists—and why we’re starting with Kenya’s smallholder dairy farmers. Our mission is simple and outrageously ambitious: enable East Africa to be fed by local farmers by 2030. We’ll get there by building the most responsive, tech-first financing for the people who produce the region’s food—beginning with invoice finance that turns monthly milk payments into money this week, not next month.

The cash-flow choke point no one talks about

Most Kenyan dairy farmers are paid monthly for milk supplied daily. That gap strangles working capital precisely when farms need to buy feed, call the vet, or pay for artificial insemination. Miss those windows and yields fall—fewer litres per cow, lower quality, and less income. It’s a classic cash conversion cycle problem, and it shows up everywhere you look in smallholder operations. SWAFI (1)

At the same time, the sector is huge and concentrated. Roughly 1.5–1.8 million Kenyan households keep dairy; about 770 co-operatives represent them; five processors handle 80%+ of formal milk, and one processor (Brookside) alone accounts for ~45% of that formal volume with an estimated 200,000 linked farms. Most milk—around 80%—still moves through informal channels.

The financing gap is real—and fixable

Across Sub-Saharan Africa, agri-SMEs and smallholders face a yawning financing gap. Recent benchmarks put the annual agri-SME gap at ~$106B (SSA & SE Asia), with a combined smallholder + agri-SME gap around $117B—driven by collateral demands, perceived risk, and high transaction costs for small, seasonal loans. That’s the headwind farmers feel when a calf is due or a pasture dries out.

In Kenya specifically, the dairy economy is pivotal—~4% of national GDP and 700k+ jobs—yet households still struggle to access affordable, timely credit aligned to their production cycles.

SWAFI’s first product: invoice finance built for dairies

Our opening move is deliberately boring—in the best way. We finance self-billed milk invoices that dairies issue to farmers (or their co-ops), settle 75–80% of the value within 24–48 hours, and pay the balance at processor settlement. SWAFI relies on the processor’s stronger credit to de-risk the advance and takes a ~5% fee on full settlement. It’s standard receivables finance, tuned for smallholder reality.

• Advance today: 75–80% via bank transfer or M-PESA

• Balance later: 15–20% on dairy payment; SWAFI retains ~5%

• Risk lens: elevate processor credit over farmer collateral; add data from dairies, co-ops, CRBs and M-PESA to automate ~80% of decisions over time

  
  

Why this works now: Kenya’s digital rails are exceptional. M-PESA is used by at least one person in about 96% of Kenyan households, which makes disbursement and repayment fast, cheap, and auditable—even off the tarmac.

Start narrow, scale fast

We’ll begin where dairy is dense—peri-urban belts around Nairobi—working through co-ops and the largest processors to reach farmers quickly and keep unit economics tight. The thesis is straightforward: pay earlier → buy inputs on time → stabilise yields → improve quality → lift income. With average smallholder invoices around $300/month, our base case targets ~65,000 invoices/month by Year 3, positive unit economics by month 17, and cash-flow positive by month 27.

The bigger picture (and why we’re optimistic)

• Informal dominance: ~80% of Kenyan milk is traded outside formal processors—friction and opacity that invoice finance can help professionalise from the ground up.

• Data tailwinds: Processor e-invoicing plus co-op records create high-frequency, verifiable cash-flow data. Combine that with bureau and M-PESA histories and you can underwrite tiny tickets, instantly.

• System importance: The dairy sector anchors rural incomes—~1.8m households—and remains a national growth lever. Helping farmers buy the right input at the right time is both good finance and good food policy.

  
  

What comes next

Once we’ve proven the model in dairy, we’ll extend into term finance for productivity upgrades (e.g., simple hydroponic barley seed-mat units) and adjacent value chains. The aim isn’t to invent exotic products; it’s to sequence practical, cash-flow-safe finance that lifts yield and resilience.