Twiga Foods: Case of wrong business model or just misplaced confidence?

Twiga Chief Executive Peter Njonjo (centre) at a press briefing in Nairobi on August 25, 2023. [David Gichuru, Standard]

The app sells more than just fresh produce and has lately expanded into items like diapers and cooking oil. Such items are also sold to retailers by other platforms possibly who have perfected sourcing or have the muscle for last-mile delivery. Then the firm went into farming and even ventured into the government-sponsored Galana Kulalu irrigation project in Tana River County.

Mr Njonjo says Twiga invested in the project, producing onions and tomatoes on a 2,000-acre farm for the local market.

So successful was this commercial project that they were invited to share a Privately Initiated Investment Proposal under the Public Private Partnership Act by the government on the Galana Kulalu Food Security Project.

"Galana Kulalu is geared towards maize production, which is a primary commodity that falls outside Twiga's strategy. This led to Twiga giving up its rights in the Galana Kulalu Food Security Project to Selu Ltd, who have invested and developed the concession to the State," said Mr Njonjo.

He said Twiga's focus is now on onions and tomatoes and the firm still supplies fresh fruits and vegetables sourced from small-scale farmers.

"Our bananas come from Meru, Murang'a and Tharaka Nithi counties," said Mr Njonjo, adding that their potatoes come from Nyandarua County.

"The company cannot meet the banana demand and runs out of stock in minutes."

They also source carrots and watermelons as well as seasonal fruits like oranges and avocadoes.

A hard fact to comprehend, however, is how Twiga got into the current financial mess despite raising close to Sh23 billion in the last decade.

Mr Njonjo breaks it down, explaining that the firm invested heavily in a (banana) ripening facility, which is the largest in Africa, providing market access to 6,000 farmers in the last financial year.

Twiga, he said, also invested in a distribution centre at the Tatu City Industrial Park with the capacity to handle six million kilos of goods a day.

"It can feed a significant part of Nairobi delivering to the doorstep of every kiosk," said Mr Njonjo. "We have served 75,000 customers in the last financial year, saving them a fortune in trips to the market and last-mile logistics costs."

Single harvest

The money also went to a farm in Taita Taveta County, which he said is optimised to produce 300,000kgs of onions and tomatoes in a single harvest.

There is also Some Yetu, a platform where retailers can place their orders and Soko Loan, which has lent Sh3.2 billion to over 33,000 customers since its launch.

"Our non-performing loans are among the lowest in the market on unsecured mobile lending at two per cent vs 10 per cent as a market average," said Mr Njonjo.

Mr Njonjo said when operating optimally, the firm has the potential to transform Kenya's food industry situation. During the Covid period, he said, the company's revenue grew six-fold.

Mr Njonjo noted that 50 per cent of fresh produce is wasted before it gets to the consumers' tables.

"Twiga is solving that problem through commercial farming and eliminating waste in production to as low as two per cent with sustainable margins of +30 per cent," he said.

He insisted that the company is not closing down but transforming its operations in Nairobi, Thika and Machakos for last-mile distribution.