October 28, 2019

By Lynda Kiernan

Twiga, a Kenyan agtech startup that uses mobile technology to align supply and demand in Africa’s large, but fragmented fruit and vegetable market announced it has raised a $23.7 million Series B led by Goldman Sachs, and including the International Finance Corporation, TI.com, and Creadev. 

At the same time the company announced the raising of another $6 million in debt from OPIC and Alpha Mundi, for a total of $30 million for this fundraising, and $50 million in funding raised this year.

Co-founded in Nairobi in 2014 by Grant Brooke – who ventured to Kenya in 2008 to conduct graduate work for his master’s degree – Twiga Foods was born from Brooke recognizing that the disorganized nature of the agriculture and food value chain was benefiting the brokers and not the farmers, and was blocking any attempts at solving issues in the market.

Today, Twiga is the only end-to-end distribution channel for fresh and processed foods sourced from Kenya’s 17,000 producers.  The company’s cashless platform employs mobile technology to align supply and demand, acting as a B2B facilitator, aggregating buyers and growers in Africa’s highly disordered fruit and vegetable market. Through Twiga, vendors can use the company’s m-commerce platform to order produce as and when needed, which is then delivered to the doorstep of more than 8,000 retailers within 18 hours of ordering. In return, farmers are paid within 48 hours of collection with mobile money, giving them increased income and allowing for better financial planning.

“The main reason markets do not work here is because there lacks a proper market infrastructure to support the 5 million population in Nairobi,” said Brooke in 2017. “As a result, produce goes bad and there are massive delays at the markets. This means that the cost of the same gets passed to the customer.”

In essence, Twiga consolidates the supply chain, gathering the purchasing power of urban food retailers which enables higher quality, lower priced foods to be delivered directly to them, and eliminating the need for them to travel to the market.  It’s a win for all sides – farmers have guaranteed access to a fairly-priced, transparent marketplace, and vendors can consistently source high-quality produce which is delivered by Twiga.

“Twiga’s innovative model combines technology and modern logistics tailored to the local market to re-engineer the food supply chain,” said Jules Frebault with Goldman Sachs. “We are delighted to be backing Peter and the highly capable team as they scale operations and drive sustainable access to lower cost quality food on the continent.”

With this capital, which brings the company’s funding just this year to $50 million following a $10 million round in June, and a $10 million round announced in January, Twiga plans to establish a distribution center in Nairobi with cold rooms, conveyors, and sorting equipment; offer greater supply chain services; and to drive its expansion into new markets with an eye toward a pan-African presence by late 2020. 

“We’re working on French West Africa…we see significant opportunity in those markets,” Peter Njonjo, CEO of Twiga, told TechCrunch.

The population of sub-Saharan Africa is on pace to double over the coming 30 years, and tapping into the potential that lies in this growth in regard to food and agriculture is becoming a theme among investors.

Within the next 25 years Africa will need to feed an additional 750 million people, according to the report, “The Future of Food Demand: China, Africa and India” issued by CME Group. And together with the continent’s young average age, low per-capita calorie consumption rate, increasing urbanization, and rising standards of living, the continent poses a huge opportunity for investors engaged along the food chain.

Meanwhile, in “Ending Poverty and Hunger by 2030: An Agenda for the Global Food System” – another report issued in 2015 – the World Bank said that food demand in sub-Saharan Africa is projected to climb by 60 percent over the next decade.

“Food security is a key priority for the Kenyan government and Twiga Foods is playing a major role in achieving this,” said Professor Hamadi Boga, principal secretary of the Kenya State Department for Crop Development and Agricultural Research.

“As our population grows and urbanization 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.”

– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.