Washingtone Koech
Padma Nayak
Diana Woche
jodie Beattie
EGADE Business School Tecnologico de Monterrey
Ezequiel Reficco
Francisco Layrisse
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Shopping in Kenya is definitely changing, especially with the presence of the internet and increased use of online platforms for business. It is now easier for companies to link their customers with their products, and to link businesses with other businesses. It may have been quite difficult to consider the idea of farming done online – or grocery shopping. However, online presence in Kenya is changing this scenario as several online companies are cropping for the same purpose. Such is the idea that led to the growth of Twiga Foods. It may be a surprise that the company that handles more than 130 tons of market produce started with bananas, before growing to the stature it enjoys at the moment. Twiga Foods is a platform that links businesses to businesses. It acts as a marketplace that links farmers to urban retailers. The company does this by sourcing for produce from the farmers and delivering it to the urban retailers. Twiga is mobile-based and links African retail outlets, market stalls, and kiosks. It uses a mobile-based cashless and business-to-business supply approach to distribute produce among the millions of small and medium-sized vendors across all African urban markets.
Twiga Foods handles at least 130 tons of market produce on a daily basis and provides the suppliers and vendors in its platform with a guaranteed market. It is notable that the network of small-business proprietors on the Twiga Food platform includes at least 17,000 farmers and 8,000 vendors. The farmers and vendors are able to access the market directly, thus offering the lowest prices of food for the consumers. According to the co-Founder of Twiga Foods who is also the current CEO, Mr. Peter Njonjo, offering the lowest prices of foods for consumers has ripple effects on the entire economy. As such, the marketing strategy of the company is in the low prices it offers the vendors for the produce. This has been done by eliminating brokers and using a single platform that joins the network of food producers, pack houses, and transportation systems that supply and deliver the wide variety of produces from vendors (both formal and informal) across cities. Consequently, post-harvest losses have also been reduced by about 50%. With a team of more than 400 professionals who work on sourcing, finance, logistics, technology, administration, and human resources, Twiga Foods attracts at least 14,000 unique customers on a weekly basis.
Perhaps the most outstanding aspect of the company is the strive by the administration to align its strategy with the frameworks of the sustainable development goals. Particularly, the company aligns its functions with the second SDG that seeks to end hunger and achieve food security, while improving nutrition, and promoting sustainable agriculture. Mr. Njonjo states that the company does this by having an organized platform founded on transparency, efficiency, fairness, and formality of the marketplace. Besides, the company also seeks to achieve this by creating sustainable farming methods that lead to a sustainable value chain in entire Africa. As such, Twiga Foods has partnered with Sun Culture that has helped to introduce the concept of solar irrigation. The project has been utilized in Taita Taveta in Kenya and the mode of use elaborated through the Farmer Engagement Program run by both Twiga Foods and Sun Culture. Samson Makau, a farmer from the area says that the concept has introduced a new concept of farming that has increased the efficiency of watering their farms and increasing production. Through this type of irrigation, farmers are able to get water throughout their farms with less hustle and more cheaply, thus increased production. Besides, the partnership between the International Financial Corporation and Twiga Foods helps to coach farmers on the best agricultural practices. The partnership is in line with meeting the goals of the second SDG while ensuring transparent sourcing of produce from smallholder farmers.
It is quite prudent to note that the goals of the company are aligned both to the global needs of farmers and the sustainable development goals. Particularly, Twiga Foods is working toward certifying all farmers on the Global GAP by March 2021. The company also intends to establish global standards for all the farmers’ produce.
Twiga foods operate on a mobile application and a web platform (marketplace) that connects farmers to vendors.
The first step for a farmer to join Twiga Foods is by signing up through their mobile phones. The company then assesses the farm before adding the farmer into the system. Once the farmer is entered into the system, Twiga would provide them with a purchase order to indicate the produce and the date of harvest. The company then harvests and weighs the produce issuing the farmer with a receipt. The farmer receives their payment within 24 hours of the transaction. All produce from farmers is then gathered at a Collection Centered before going to the Packhouse for processing, grading, and dispatching to more than 60 sales routes.
For a vendor to join the platform, they are also required to sign up. A sales representative from Twiga then visits the vendor and registers them to the system. The vendor then places an order with the representative. Twiga then delivers the produces directly to the vendor’s shop.
Collection Centers for the farmers’ produce are fund in 13 counties that are strategically situated to ease the process. The collection centers are found in: -
1. North Rift: Baringo (Equator, Mogotio)
2. South Rift: Bomet (Silibwet)
3. Eastern: Makueni (Nziu), Kitui, Machakos
4. Embu: Embu (Kivwe, Kathageri, Kiritiri), Tharaka Nithi (Itugururu)
5. Taveta: Kajiado (Ilasit, Kimana), Taveta (Timbila, Mkuyuni, El-Doro)
6. Meru: Meru (Githongo, Mitunguu, Mujwa, Egoji, Maua, Mikinduri), Isiolo (Maili Nane)
7. Kirinyaga: Kirinyaga (Kagio, Kutus), Muranga (Maragwa), Nyeri (Kiawara)
On the other hand, vendors are found in four counties:-
1. Machakos: Syokimau, Machakos Town
2. Nairobi: Embakasi, Donholm, Thika Road, Nairobi West, Dagoretti, Waiyaki Way, Kaloleni
3. Kajiado: Rongai
4. Kiambu: Thika Road, Thika Town
However, to ease the transportation, distribution, and collection, the company has partnered with other delivery companies and services including Jumia, Gobeba, Safeboda, Jambopay, Uber Eats, and Glovo. These partnerships help to take care of the business to the consumer aspect of sales. Besides, Twiga Foods also has a door-to-door delivery service within Nairobi. The service has particularly been beneficial to both consumers and the entire company structure during the COVID 19 pandemic.
Partnership with Jumia e-commerce
It all started with bananas, before growing to handle 130 tons of produce daily. The company also finds its inspiration in the need to change how Sub-Saharan Africa spends its disposable income, especially on food. Sub-Saharan Africa spends not less than 50% of its disposable income on food. This is a stark contrast to the 10% spent by the USA. This expenditure is associated with agricultural inefficiency that leads to post-harvest losses of between 30 and 50%. It is also due to inefficiency within the supply chain and the non-commercialization of the food sector. In Kenya, agriculture accounts for 30% of the GDP, but with only 2% exposure on the balance sheet. The government expenditure on the same is meager 3.5-3.8%. It is prudent to note that this pattern is replicable across most of Africa.
Mr. Njonjo suggests that to improve the conditions and reduce the expenditure on food in the African continent, it would be judicious to certify all farmers on the Global GAP. The company intends to achieve this by March 2021 and establish global standards for their produce.
Farmers and vendors have several benefits of using the platform offered by Twiga Foods. Firstly, Twiga Foods continues to encourage precision agriculture to improve efficiency in the sector. Importantly, the use of mobile applications for ordering and selling supplies increases transparency and eases the procedures. They also get to enjoy prompt payments using e-platforms such as MPESA. Twiga Foods also offers instant approval of loan requests. In fact, the CEO asserts that the requests are approved within 0.8 seconds.
Some of the pilot programs currently running include the:
○ Installation of IoT in farms to get real-time data on soil moisture, precipitation, humidity for optimization of yield;
○ Drone surveillance for yield management: Crop sensors, Crop density;
○ Satellite imagery for better analytics in partnership with 2 tech companies;
Perhaps the most outstanding aspect of the company is the endeavor by the administration to align its strategy with the frameworks of sustainable development goals. Particularly, the company aligns its functions with the second SDG that seeks to end hunger and achieve food security, while improving nutrition, and promoting sustainable agriculture. Mr. Njonjo states that the company does this by having an organized platform founded on transparency, efficiency, fairness, and formality of the marketplace. Besides, the company also seeks to achieve this by creating sustainable farming methods that lead to a sustainable value chain throughout Africa. As such, Twiga Foods has partnered with Sun Culture that has helped to introduce the concept of solar irrigation. The project has been utilized in Taita Taveta in Kenya and the mode of use elaborated through the Farmer Engagement Program ran by both Twiga Foods and Sun Culture. Samson Makau, a farmer from the area says that the concept has introduced a new concept of farming that has increased the efficiency of watering their farms and increasing production. Through this type of irrigation, farmers are able to get water throughout their farms with less hustle and more cheaply, thus increased production. Besides, the partnership between the International Financial Corporation and Twiga Foods helps to coach farmers on the best agricultural practices. The partnership is in line with meeting the goals of the second SDG while ensuring transparent sourcing of produce from smallholder farmers.
Analyzing the sources of growth of agricultural production and studying the level of inefficiency, as well as the sources of the same inefficiency is a significant step toward improving the livelihood of subsistent farmers in developing countries and the entire African continent. One of the issues that farmers continue to grapple with in the continent includes the lack of formal structures within the sector. Many farmers, for instance, struggle with inaccessible markets and lack of capital. Besides, there is still an extensive level of poor handling of produce that leads to a lot of wastage of produce. Additionally, the presence of middlemen and the lack of transparency in the markets has led to high food prices. Significantly, many farmers lack requisite information on cheap farming practices that would increase their production and give them the highest profits.
Twiga Foods has been able to align its decisions and actions with the objectives of meeting the needs of the farmers, vendors, retailers, and consumers of farm produce. Some of the strategies assumed by Twiga Foods include having a commission-based revenue model. In this transactional approach, the company charges a commission for transactions carried out on its platform. The company charges a percentage for every product sold. The company startup model in partnership with Goldman Sachs has also helped to address the problem of the lack of effective distribution and the high rates of wastage. The startup has attracted investors such as International Finance Corporation, TLcom Capital, and Creadev. This has also helped the company to raise more than $60m in the capital.
With the business model assumed by Twiga Foods, it is quite apparent that there is a myriad of benefits socially and environmentally both for the farmers and the countries in line with the sustainable development goals. Among the social benefits include the fact that it has empowered rural farmers tremendously. It has increased local employment by hiring transporters, agents, administrative staff, etc. Besides, the company has helped to reduce the disposable income on food by at least 15%. It has also invested significantly in educating farmers on effective farming and harvesting practices. This has been realized by providing farmers with the best farming practices and agricultural technology. Significantly, certifying farmers on Global GAP has also increased their traceability.
Environmental benefits include the guarantee of food security by increasing agricultural production. This has been realized further by the use of solar-powered irrigation and increased awareness of sustainable farming. Importantly, Twiga Foods has helped to reduce post-harvest losses by 70% for the farmers on its platform.
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