DOB Equity, a Dutch family office, has taken a minority shareholding in Twiga Foods, the Kenyan wholesaler, expanding its reach in the African micro-vendor food market.
DOB Equity says Twiga Foods’ integrated and tech-enabled business model reduces costs and increases convenience for vendors in Nairobi by allowing them to buy fruit and vegetables through their mobile phone and delivering supplies directly to retailers’ stalls.
In addition Twiga has become a reliable off-taker of produce for farmers, giving them the confidence to invest more in their farming.
Twiga Foods simplifies and shortens the often complex supply chains of key food items, thereby reducing costs, enabling just in time delivery and minimising waste. After proving the business model with bananas, the company has recently branched out to tomatoes and onions and is looking to broaden its product base shortly.
Current supply chains for African urban markets are inefficient and costly for both the customer and the vendors. For instance, over 30 per cent of banana stock purchased at the farm gate is lost due to poor handling by middle men and a lack of cold chain. This loss gets priced into end-consumer cost and contributes to the rapidly rising food inflation in Kenya today.
DOB’s investment will enable Twiga Foods to expand its supply capacity, allowing it to reach 7,350 vendors in Nairobi selling to 1.5 million Kenyans living in low and middle-income neighbourhoods. The market value of consumable goods sold through small informal vendors in Nairobi alone is over USD700 million annually.
Twiga’s CEO and co-founder Grant Brooke says: “The best thing about the Twiga model is that it is a big win for Africa’s shop keepers, for Africa’s farmers, for local FMCG manufacturers, and governments dealing with skyrocketing food prices amidst rapid urbanization. To be able to launch this innovative model with the backing of like-minded investors like DOB Equity is a huge advantage.”
Brigit van Dijk-van de Reijt, CEO of DOB Equity, says: “By simplifying the food supply chain, Twiga Foods will improve food security and help reduce costs for Kenyan consumers.
“Improving delivery networks and reducing the cost of food are extremely important in Kenya, where families spend up to half their income on food.
“Current supply chain problems mean fruit can be significantly cheaper for consumers outside Africa like Europe or the US, than those in Kenya, where the fruits are actually grown, despite the huge disparity in distance travelled.
“Ultimately, by improving the food delivery chains, Twiga Foods will raise food security on the continent and will help unlock the urban African consumables market which is approaching USD1 trillion in annual value.”
