Business Daily May 20th, 2022
I prefer to buy my food at an open mama mboga market located at Nairobi West near where I live because it is more pleasant to do so than going to an air-conditioned grocery store.
It is from this market and from a conversation with a market vendor there that I first heard of the operations of the fresh food aggregator Twiga Foods — the start-up that has been winning international accolades for implementing a highly successful and fintech-enabled food supply chain that connects rural farmers to street vendors in the urban areas of Kenya.
Twiga Foods has built a platform that has allowed fresh produce vendors and small retail businesses to order and replenish stock from the comfort of their premises on their mobile phones. Fresh produce suppliers are paid within 24 hours.
Agriculture, despite being touted as the mainstay of the economy, hardly attracts serious private investment. Indeed, there is very little happening in the sector in terms of commercial investment.
And despite all the breakthroughs in ICT and in bioscience we keep hearing about, the impact on agricultural productivity in this country has been minimal to say the least.
So, when I received an invitation the other day to meet and interview the founder and chief executive of Twiga Foods, Peter Njonjo, I readily accepted the invitation. We in the press are yet to evolve a culture of celebrating our own innovators and authentic entrepreneurs and business leaders.
I made a mental note that Mr Njonjo deserved a hearing because he represents the new generation of local innovators and entrepreneurs who are blazing the trail in the fintech space — mobilising hundreds of millions shillings of venture capital money and channelling it into developing modern and technology-enabled supply chains to support rural agriculture and small retail businesses.
We started by going through facts, numbers and statistics. I was to learn that in the last eight years, Twiga Foods has touched 130,000 smallholder farmers.
It has trucks and haulers covering 120,000 kilometres a day, transporting 1.2 million kilogrammes of assorted products daily. The company runs a modern massive digital distribution centre that is located in Ruiru.
I think people like Njonjo are investors who are seeing opportunities in the broken retail markets in this country.
Today, the typical customer of Twiga Foods exhibits the following characteristics.
The supply to their business is fragmented which means that on a single product you will find a small retailer dealing with multiple parties — from a manufacturer-appointed distributor to small stockists all with different pricing and trading terms.
Secondly, due to the lack of scale, logistics and transport can end up eating up to 40 percent of trading margins for the small businessman and the mama mboga.
In most cases, the order they place for replenishing stock is not driven by the needs of customers but based on how much capital they have at hand.
It is a broken market. If you are in doubt, just look at prices obtained for produce at the farm gate and compare it with what the same goods are sold for at supermarkets.
When I met Mr Njonjo, and as the conversation progressed I saw in him all the innovation principles we hold dear: the ability to take risks, to embrace failure and unexpected outcomes, to disrupt the status quo, and to invest in the future.
This week, Twiga Foods announced that it has invested in producing its own crop on a 650 hectare farm where it will be growing tomatoes and onions under irrigation.
Today, the wholesale price of tomatoes in Carlifornia is $100 per tonne. In Kenya, the same quantity goes for $420.
Innovation and commercial investment in agricultural production is what will give us food security. We must learn to celebrate our innovators.