Twiga Foods, a Kenyan food logistics startup, has raised $23.7 million in a Series B round led by Goldman Sachs. The round also saw participation from existing investors TLcom Capital, International Finance Corporation and Creadev. An additional $6 million in debt was raised from OPIC and Alpha Mundi. The latest funding follows a $10 million round last November.
The high rate of waste and the lack of effective distribution are two major problems plaguing the agribusiness value chain across African countries.
Since its launch in Nairobi in 2014, Twiga has been building Kenya’s only end-to-end distribution for fresh and processed food, sourcing from more than 17,000 producers and delivering 3 times a week on average to over 8,000 retailers.
Twiga operates a two-fold business-to-business model which sees it connect demand to supply—by allowing retailers to order fresh produce from local farmers through its mobile-based marketplace—and then manage supply through its logistics arm, thus reducing waste and improving efficiency. The company currently distributes food to over 8,000 retailers across Kenya.
Peter Njonjo, CEO and Co-founder at Twiga Foods, said, “This funding enables us to invest in our technology and organization to tackle the inefficiencies in Africa’s domestic food production and distribution ecosystems; a $300 billion informal and fragmented market that is estimated to grow to $1 trillion by 2030. With the support of our investors, we are developing technology-driven commercial solutions and cooperating with existing industry players to solve the challenge of food security in Africa.”
The big-picture goal for Twiga though, Njonjo stated is to expand into Nigeria, Africa’s most populous country and largest economy, where inefficient farming practices remain a problem. Twiga’s launch in Nigeria will see it join local agribusiness startups offering tech-based solutions by providing farmers increased technical support and capital.
Hamadi Boga, principal secretary of the Kenya State Department for Crop Development and Agricultural Research said, “Food security is a key priority for the Kenyan government and Twiga Foods is playing a major role in achieving this. As our population grows and urbanisation continues, it is essential that we can provide access to affordable food for as many Kenyans as possible, as well as support and promote sustainable agriculture. We commend them on their impact so far, as well as their ability to attract investment to Kenya.”
Twiga operates a mobile-based, cashless platform to aggregate urban retail demand, offering thousands of small and medium-sized vendors convenient one-stop-shop ordering. Retailers have access to lower-cost, higher-quality fresh produce and processed food, conveniently and reliably delivered to their doorstep within 18 hours of ordering. As a result, farmers and food manufacturers have guaranteed access to a fairly priced, transparent marketplace. Twiga pays farmers within 48 hours of the collection with mobile money, providing them with increased income visibility and permitting better financial planning.
Twiga covers a range of fresh produce and a growing share of the overall shopping cart. Its fresh offering includes bananas, potatoes, onions, tomatoes, and watermelons – popular staples in Kenya. More recently, leading Kenyan manufacturers have tapped into Twiga’s technology-led distribution network, with the company now distributing a fast-growing range of processed food including rice, maize flour, cooking oil, milk, juice, sugar, and snacks.
Twiga is also tackling inefficiencies in the supply chain, helping to reduce food prices for consumers.
Poor post harvest process currently accounts for between 30 and 50 percent loss of fresh produce. Through investment in its supply chain and material handling, Twiga has reduced the level of food waste by up to 70 percent compared to the market averages.
It’s not the first time the company has attempted to facilitate micro-lending however, last year, it partnered with IBM on a blockchain-based eight-week pilot scheme to help administer loans to retailers in Kenya.