Twiga Foods investing in technology to stay afloat amid layoffs

E-commerce and food distribution company Twiga Foods says it is investing more in technology to cut down operation costs during a tough operating environment that has seen it send home a third of its staff this month.

The business-to-business (B2B) marketplace platform that sources farm produce directly from farmers and delivers it to urban retailers laid off 267 of its 810 workers, saying it was adjusting operations amid the biting economic times which have made people’s purchasing power decline.

The layoffs triggered speculation about the health of the ten-year-old start-up founded in 2013 by Peter Njonjo and Grant Brooke.

But Njonjo, who is also the company’s CEO, told Citizen Digital on Friday the company was still on track and just adjusting to the tough operating environment amid rising inflation, weakening currency, and a decline in funding by global investors.

“Although Kenya has its own market dynamics, we are all linked to the global funding system. The decline in funding has affected tech companies globally and so it is about adjusting accordingly to the current climate,” he said.

“Companies that have enough courage to respond to these changes immediately are the ones that will survive. We don’t want to be a start-up that operated for just a few years and left. We want to be still here in the next 10 years and that is why we are making adjustments.”

Twiga’s latest layoffs affected 33 per cent of its workforce and came after another round at the close of last year, which saw the company send home 21 per cent of its workforce, representing 211 of its over 1,000 employees at the time.

The restructuring is part of the company's plan to slash costs by up to 40 per cent and achieve what they called a lean, agile and cost-effective organization.

Njonjo said Friday that the company, which has so far raised over $157 million – approximately more than Ksh.23 billion at current foreign exchange rates, was investing more in technology to make sure the move wouldn’t affect its strategy.

For instance, it shut down 10 depots in Nairobi and moved all operations to a modern 200,000-square-foot warehouse in Tatu City that has forklifts and a warehouse management system to enable it to dispatch more volume of produce faster.

“Off-loading trucks at go-downs was taking too much time. It was difficult to have 1,000 people just offloading produce at the warehouses and we are confident these investments, together with a ripening facility to bring down wastage of bananas and in turn keep the final costs low will come in handy,” the CEO said.

The company also did away with in-house delivery which was done through leased trucks which Njonjo said were increasingly unsustainable as the price of fuel continues rising in Kenya. Now, they will hire contractors on a pay-per-use basis.

Additionally, the company’s Soko Yetu app from where retailers order farm produce, enables Twiga to use data analytics in partnerships with lenders who can provide credit to its customers.

“Because of the prevailing market conditions, retailers are restocking depending on the money they have at hand, not what they need and by coming in as a kind of aggregator, we can use data to work with lenders who can provide them with credit,” Njonjo said.

He added that Ksh.3.2 billion credit given so far from lenders such as NCBA, KCB and Safaricom, saying they have recorded a default rate of 2 per cent.

The company has also taken up packaging, with its in-house brands of maize and wheat flour, cooking oil and ketchup.

After its $50 million (Ksh.7 billion currently) series C round in November 2021, Twiga said it was seeking to expand to Central and West Africa. But now, Njonjo said they have shelved the plan to instead scale in Kenya, a market he considers more favourable.

“Markets have changed and the disposable income in Kenya is much higher than these parts of the continent, so right now we are focusing on building scale in Kenya. Plans to expand are still there, we have just changed the timelines,” he said.

Asked about whether the start-up is not thinking about an exit, Njonjo said; “Our focus right now is building an attractive company; after that, an IPO, bonds or a buyout will become options.”

($1= Ksh.145)