This article was produced by the IFC.
By Gloria Mwaniga Odary
It all started with bananas.
Peter Njonjo and Grant Brooke decided to sell bananas to informal vendors scattered throughout Nairobi after a deal to export fruit to the Middle East fell through. Offering African fruit to African buyers would be straightforward, they figured. It wasn’t.
As they immersed themselves in Kenya’s informal economy, the duo spotted problems in the system that moves farmers’ goods to families’ plates. Inefficiencies in the retail supply chain, such as an overdependence on middlemen who required a cut of every deal, drove up the price of food – not just bananas, but a vast number of grocery staples.
“We found out that the cost of what consumers were spending as a percentage of their disposable income in Kenya was equivalent to what consumers were spending in the US 150 years ago,” recalls Njonjo. According to the World Economic Forum, Kenyans spent 46% of their household income on food in 2015 – among the highest percentage in the world. By comparison, the US spends 6.4% and the UK 8.2%.
Njonjo and Brooke searched for a technology solution that would make food affordable – and when they couldn’t find one, they built a digital platform to help farmers and vendors create a more efficient marketplace. With Twiga, the Kenya-based digital business-to-business company they founded in 2014, they have aggregated demand from small-scale fruit and vegetable vendors in Nairobi, offering farmers a reliable market that also reduces post-harvest losses. And with built-in buyers, there’s no need for middlemen.
Fruit and vegetable vendors benefit, too: no more 4:00 a.m. trips to wholesale markets to buy stock of questionable quality. Twiga’s app allows the vendors to order potatoes, rice, cooking oil, pineapples, sugar – and, of course, bananas – online. The company then delivers the groceries directly to their stall or store.
Twiga now serves around 7,000 outlets a day through a network of 17,000 farmers and 45,000 vendors. Parties can coordinate payment via the mobile app using M-Pesa, a mobile money service. The company has also reduced typical post-harvest losses from 30% to 4% for produce brought to market on the Twiga network, according to Njonjo.
Just as the market has responded, so have investors. Twiga, one of the most funded startups on the continent, has raised $56.1 million from investors, including IFC.
For Njonjo, finding a solution to the high cost of food in Africa was a personal quest. Growing up in Kenya, he had been inspired by stories of entrepreneurs: “I remember reading about people who’ve actually gone ahead and started businesses that impacted people’s lives.”
Those early years sowed the entrepreneurship seed in Njonjo, and he hoped to one day start a business that created such impact. “Later, even as I worked for a corporation in different roles, I always viewed myself as an entrepreneur. I strived to create ideas and new businesses, even within the company. That is what emboldened me to make this leap to start my own company,” he says.
Even so, Njonjo’s experience of co-founding a tech-based business in Africa was more of a challenge than he could have imagined. After spending two decades working for The Coca-Cola Company in Africa, he admits that he was out of practice when it came to the iterative, trial-and-error approach necessary in tech enterprises. As an entrepreneur, “you’re creating something that really doesn’t exist,” he says.
The prospect of inventing technology solutions for the continent continues to entice Njonjo. “Especially in the African context, a lot of industries are still very, very low-tech, which means that there is a lot of opportunity [because of the] inefficiency that exists. This cuts across nearly everything.”
Now, Njonjo is eyeing an even bigger goal: supplying Africa’s growing urban population – projected to double over the next 25 years to nearly 1 billion – with high-quality, affordable fresh and processed food.
“There’s huge opening in this part of the world. It’s a sizable economy, so it presents a sizeable opportunity,” he says. “There are so many problems to be solved in Africa on account of leveraging technology and I’m really, really excited to be on the continent at this particular point in our history.”