Case: Twiga connects merchants and food production

A heartily smiling Naomi Wambui, 74, sits on the steps of an apartment building, with a plastic box full of bananas next to her, on a street in Nairobi’s Kahawa West area, which is full of traders with mobile stalls.

“I found Twiga in December 2022. My life and my business have improved significantly since then. Now Twiga delivers me a box of bananas every day. I get the products cheaper than buying elsewhere,” says Wambui.

“My sales business gives me independence and freedom”

Wambui used to run a small store on the same street. The corona pandemic took her customers and livelihood. She tried to sell vegetables and fruits, but the result of a working day was often almost zero. Wambui is a widow and all her six children have died young. She has no grandchildren.

“I earn 300–400 shillings a day, which is enough to cover my costs. I could also offer home cleaning services, but the work is too heavy for me. My sales business gives me independence and freedom.”

Wambui heard about Twiga through agent Kelvin Mwangi, who seeks new customers and assists existing ones. “I do not own a smartphone. Kelvin helps me if I need assistance with the service, but I can also place my orders by calling Twiga. I always pay in cash,” says Wambui.

Less food waste, lower prices

Founded in 2014, Twiga is a company whose mobile-based webshop platform brings food production and retailers together. Twiga purchases produce from small farmers and runs its own farms, which grow onions and tomatoes, among other vegetables. At the same time, the company strives to utilise and develop smart cultivation methods to prepare for the effects of climate change, for example.

“By making the distribution chain more efficient, food can be delivered from producers to sellers and consumers faster. Shortening the logistics chain helps keep food prices at a lower level, while food waste is reduced significantly, by up to 40 per cent,” says Peter Njonjo, Founder and CEO of Twiga.

Distribution centre increases the number and quality of products

Currently, Twiga’s network consists of 140,000 retailers and over 1,000 farmers. Every day, 2 million kilograms of produce are handled, of which 1 million kilograms is transported to retailers in 12,000 deliveries. Twiga employs over 1,800 people. The company operates in 12 cities in Kenya and in Kampala, Uganda.

In November 2022, Twiga opened a 20,000-m² distribution centre in Tatu City, outside Nairobi. The high-capacity distribution centre processes up to 8 million kilograms of produce daily. The company’s objective is to boost the distribution of produce especially in the Nairobi region. “The distribution centre enables Twiga to increase the number and quality of products supplied. One of the aims of our investment was to support and reinforce the development of Twiga’s business operations, and the new distribution centre is an important milestone in this process,” says Johanna Raehalme, who manages Finnfund’s office in Nairobi and who has been involved in the project from the very beginning.

Quick and easy mobile application

Today, nearly 80% of Twiga’s customers use the service’s mobile app. In 2019, only 5% placed their orders through the app.

One of the app users is Marie Ndikumane, whose profit has increased thanks to her cooperation with Twiga. Ndikumane orders bananas, tomatoes and onions from Twiga and sells them in her street stand under a parasol.

“If I need any assistance, Twiga’s agent will help me place the order,” says Ndikumane.

Twiga engages new retailers actively through agents.

“We move around the city and interact with vendors. We tell them about Twiga and show how to use the app. The interest in our service has been great, and we have succeeded in establishing a brand image among local vendors,” agent Kelvin Mwangi explains.

Sheila Agoi, 30, who has procured vegetables and fruit through Twiga for three years, heard about Twiga on social media. “I read about the positive experiences of many vendors and decided to try the service myself. That was one of the best decisions of my life. Ordering is easy, the products are affordable and they are delivered to my stand regularly and reliably,” Agoi praises the service.

Food security, jobs and reduced poverty

OP Finnfund Global Impact Fund I, an impact fund founded by Finnfund and OP Financial Group, has invested USD 12 million in Twiga since 2021.

The aim of the investment is to develop the value chain of food production, improve the living standards of local people, create jobs, and support food security.

“Twiga has succeeded in cutting unnecessary costs by resolving logistical issues, which has directly influenced the consumer prices of foodstuff. This has had a massive impact on the lives of Kenyans who struggle with the high price level of food,” says Finnfund’s Senior Development Impact Adviser Anne Valto.

“However, it is important to remember that the main responsibility for ensuring food security and developing irrigation systems, among other solutions, lies with the local government,” says Valto. Finnfund strives to invest in companies like Twiga, who aim to cooperate with farmers and develop cooperation models that also focus on education and, for example, the development of cultivation methods.

Worsening drought undermines food security

Food security in East Africa has been jeopardised significantly by the abnormal drought caused by climate change. Rain has been irregular and insufficient in the rainy seasons, and extreme weather phenomena are expected to increase in the future. Another issue in many African countries is low agricultural productivity.

“Farmers who do not use irrigation systems have been hit the hardest by the effects of intense drought. The majority of farms in Kenya are small. Small farmers do not have enough resources to prepare for abnormal conditions,” says Valto.

In East Africa, the situation is the worst in Somalia and Ethiopia, where there is even a threat of famine. The increase in the prices of foodstuff and living is already influencing the consumer habits of the middle class. In proportion to the spendable income, consumers in sub-Saharan Africa are estimated to spend up to ten times more money on food on average compared to consumers living in industrialised countries, such as Finland.

The global inflation and increase in the prices of food and fuel triggered by the war in Ukraine have also impacted the situation. “The situation is serious. At the same time, the growing population must be fed. Thus, it is crucial to boost the productivity per hectare and utilise the principles of climate-smart agriculture more broadly. Impact investors can help with that,” says Valto.

"Twiga has succeeded in cutting unnecessary costs by resolving logistical issues, which has directly influenced the consumer prices of foodstuff. This has had a massive impact on the lives of Kenyans who struggle with the high price level of food."

Senior Development Impact Adviser Anne Valto

Julkaistu 23.1.2024