Thursday, August 18, 2022
Thursday, August 18, 2022
Home Blockchain Twiga Foods Raises $30M From Goldman Sachs to Digitize Food Distribution

Twiga Foods Raises $30M From Goldman Sachs to Digitize Food Distribution

by Sam Wakoba
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Twiga Foods, the Kenyan B2B food distribution company, has raised $30 million to digitize food distribution in Kenya.

Twiga Foods raised $23.75 million in Series B equity round led by Goldman Sachs, with participation from existing investors including the International Finance Corporation, TLcom Capital and Creadev.

The additional $6 million in debt from OPIC and Alpha Mundi. The firm will use the Series B to fund its proprietary technology and logistics assets to support the roll-out of its distribution system and lay the foundations for expansion into other cities on the continent. 

According to Peter Njonjo, CEO and Co-founder at Twiga Foods, “This funding enables us to invest in our technology and organization to tackle the inefficiencies in Africa’s domestic food production and distribution ecosystems; a $300bn informal and fragmented market that is estimated to grow to $1trn by 2030. With the support of our investors, we are developing technology-driven commercial solutions and cooperating with existing industry players to solve the challenge of food security in Africa.”

Launched in Nairobi in 2014, Twiga has helped over 17,000 fresh food producers delivering 3 times a week on average to over 8,000 retailers. Twiga Foods’s end-to-end digital platform and logistics network links retailers with farmers and food manufacturers, presenting a convenient and reliable alternative to the current inefficient and expensive farm/factory-to-market processes. 

In June, IFC partnered with Twiga Foods to boost the company’s food safety practices to global standards and ensure traceability of produce from the farm to consumers.

The two firms introduced global quality certification to food products destined for the domestic, rather than just for the export market. IFC also agreed to advise Twiga Foods on food safety and quality management systems in its produce handling facilities. Twiga’s staff will also be trained on internationally-accepted practices.

The agreement added to a $10 million investment in Twiga Foods, made in November 2018, led by IFC, the Global Agriculture and Food Security Program (GAFSP) and TLcom- a Pan-African venture capital firm to expand operations and offer new services.

Around the same time, Twiga Foods raised $5m from French investment firm Creadev to help Twiga achieve its ambitious goals. With deal, Twiga Foods has access to Creadev’s international retail network and financing for expansion to reach more small-holder farmers, informal retailers, and end customers.

Before that, Twiga Foods raised a $10 million investment from IFC, a member of the World Bank Group, TLcom, and the Global Agriculture and Food Security Program (GAFSP) to expand operations and offer new services.

In August 2018, the firm also received $5 million in financing from OPIC to enable the company to expand its product distribution business and improve food security in Kenya. A year earlier, Twiga Foods raised $10m Series A funding round led by Wamda Capital with participation from Omidyar Network, DOB Equity, Uqalo, 1776, Blue Haven Initiative, Alpha Mundi, and AHL.

Twiga Foods has also been working with IBM Research to extend access to microloans to 220 food stall retailers across Kenya using a blockchain-based financing system.

Small and medium-sized businesses (SME) in African countries often have difficulty accessing sufficient credit due to the complexities of financing processes, high loan costs, collateral requirements and lack of a credit score. Twiga Foods and IBM Research, therefore, partnered to help more SMEs access credit.

Twiga covers a range of fresh produce and a growing share of the overall shopping cart. Its fresh offering includes bananas, potatoes, onions, tomatoes and watermelons – popular staples in Kenya. More recently, Twiga Food began working with manufacturers to distribute processed food including rice, maize flour, cooking oil, milk, juice, sugar and snacks.

With Sub-Saharan Africa’s population set to double over the next 30 years, access to reliable and affordable food sources for consumers and guaranteed markets for farmers are essential for effective food distribution.

Twiga is also tackling inefficiencies in the supply chain, helping to reduce food prices for consumers. Currently, between 30 and 50 percent of fresh produce is lost through poor post-harvest processes. Through investment in its supply chain and material handling, Twiga has reduced the level of food waste by up to 70% compared to the market averages.

Jules Frebault of Goldman Sachs, “Twiga’s innovative model combines technology and modern logistics tailored to the local market to re-engineer the food supply chain.  We are delighted to be backing Peter and the highly capable team as they scale operations and drive sustainable access to lower-cost quality food on the continent.”

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