Twiga Foods eyes additional US$15m investment from IFC to scale up operations

Image Courtesy: Twiga Foods

KENYA – Kenyan tech-enabled food distribution platform, Twiga Foods is set to clinch a funding of Ksh 1.6 billion (US$15 million) from its long partner and financier, the International Finance Corporation (IFC).

The investment will be used to support the development of up to 300 irrigated medium-scale contract farmers to complement Twiga’s seasonal smallholder farmer supply base.

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This is aimed to stabilize year-round fresh fruit and vegetable volumes in line with Twiga Foods mission of supplying readily available safe, affordable, and high-quality food to Kenya’s urban markets.

The proposed investment would further enable IFC and Twiga Foods to reach medium scale farmers, mainly SMEs and VSEs with limited banking, limited operating track records or lower levels of collateral.

Peter Njonjo, Twiga’s CEO and Co-Founder mentioned that this initiative lines up strategically with the Government of Kenya’s Agricultural Sector Transformation and Growth Strategy, which aims at boosting food security in the medium term through modernizing and scaling of commercial farming for the domestic market.

The funding, through unfunded risk sharing facilities (RSFs) with tier 1 commercial banks in Kenya, is part of an aggregate portfolio of loans of up to Ksh. 3.2 billion (US$30 million).

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According to Twiga Foods’ press-release, the RSF will be scaled up in phases and the first phase will be implemented with KCB Bank Kenya Limited.

The program will be supported by IFC’s Global SME Finance Facility (GSMEF) and Women Entrepreneurs Finance Initiative (We-Fi).

GSMEF is a blended finance partnership focused on helping to close the financing gap faced by SMEs in emerging markets.

We-Fi on the other hand is a collaborative partnership among 14 governments, six multilateral development banks, and other public and private sector stakeholders, hosted by the World Bank Group.

It seeks to address financial and non-financial constraints faced by women-owned SMEs in developing countries.

The development comes weeks after the food distributor set base in Kisumu county as part of its plan of expanding in the East Africa region.

In August, the company decided to shelf plans to expand into the West African region as the startup shifts its focus to markets within East Africa.

After setting up in the Kenya’s third-largest city Kisumu, Twiga will enter two or three more Kenyan cities by the end of 2020.

The shift in plans is a short-term change of emphasis as West Africa remains a size-able opportunity for the company due to its higher rates of urbanization compared with the east.

With the expansions slated, the e-grocer is planning to undertake a fundraising within the next months, synchronised with the opening up of African markets once the worst of the COVID-19 pandemic is over.

In August, Twiga Foods decided to shelf plans to expand into the West African region as the startup shifts its focus to markets within East Africa.

Founded in 2014, Twiga Foods serves around 3,000 outlets a day with produce via a network of 17,000 farmers and 8,000 vendors.

From an initial focus on agricultural goods and connecting the produce of farmers to marketplaces, the company has since created additional revenue streams by moving into the B2B supply chain for Fast Moving Consumer Goods and other consumer products.

Being a client of IFC, Twiga Foods raised US$10.3 million financing co-led by the World Bank’s private investment arm and Pan-African venture capital firm, TLcom Capital in 2018.

As part of the deal, Wale Ayeni, who leads IFCs’ venture capital activities in Africa, and Maurizio Caio, managing partner at TLcom will joined the board of the company.

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