How Kenyan Farmers Created One Of The Most Effective Financial Powerhouse

Family Bank has been in business for the last 40 years, serving millions of customers especially small and micro-businesses (SMEs). Today Family Bank is one of the largest banks by customer numbers, many of whom are agribusinesses from where the lender got a firm rooting for its success.

Let us go back to the 80s. Banking was an elite service; personal unsecured loans were unheard and it was sacrilegious to walk into a banking hall in gumboots and an overcoat.

Titus Muya, the bank’s founder, saw the untapped potential within the informal sector, particularly agriculture, which mainstream lenders ignored.

This is one of the reasons that Family Bank, initially known as the Family Finance Building Society Limited expanded to Githunguri and Gatundu areas of Kiambu County. This was by design and not accident. The two sub-counties were dairy, tea, and coffee growing belts.

The then-building society worked on lending to farmers via their co-operatives, and over time, this relationship would prove useful.

Here is a short video by Family Bank on the 40-year journey.

Family Bank introduced a school fees-based loan in the 1980s that targeted farmers. The product was simple and easily accessible, all you needed was to be a small-scale tea, coffee, or dairy farmer and guarantee the payment of your loan from the proceeds of your tea milk, or coffee. The entry barrier was from as low as KES 200.

Due to the popularity of this product, the Kenya Tea Development Agency (KTDA) started paying farmers their tea bonuses through the building society. KTDA represents the interests of 650,000 smallholder tea farmers. Deposits from KTDA tea bonuses boosted the building society’s balance sheet at a time when most indigenous lenders were struggling because of liquidity.

Over time, the then-building society gained further in-depth knowledge of the agriculture sector and formed relationships that it would leverage in years to come.

The first opportunity to make good on these relationships came around 2007 when Family Finance Building Society Limited converted into a fully-fledged bank after getting a license from the Central Bank of Kenya. This conversion opened new opportunities, including ushering in new strategic shareholders in the newly-licensed bank.

KTDA secured a 15% stake, making it the largest shareholder.

Since then, Family Bank continued to leverage on this symbiotic relationship and this influenced industry-specific products such as the Majani Plus Loan. The loan is advanced to tea farmers based on their tea delivery volume to KTDA and private factories. It funds farm inputs, school fees, and other needs.

Family Bank has equally made inroads in the dairy sector and is a key financier for stakeholders along the milk value chain.

On dairy farming, Family Bank has set aside a KES 1 billion fund to facilitate the industrial production of fodder by financing the fodder production activities namely; land preparation, planting, fertilization, weed control, harvesting, ensiling, baling and transportation, up to the point where the dairy farmer receives the fodder at the farm. This is aimed at supporting dairy farmers to have all-year-round access to good quality fodder that will enable them to double their milk production and income.

There are other sub-sectors within the agriculture space where Family Bank is playing a critical role but let us look at why these two sectors are important.

Tea is one of the biggest export earners for Kenya and in 2024 the country earned KES 215 Billion from tea exports. Dairy is also a significant contributor to the economy with some 1.8 million farmers, directly or indirectly, earning from it.

By funding tea, dairy, and fodder production, the Family Bank is sustaining livelihoods and boosting Kenya’s economy.

Read Also: Family Bank’s Profit After Tax Close The Year At Ksh 3.4 Billion