Kenyan Agri-tech firm Twiga has downplayed speculation it could be on the verge of closing down its operations following the latest round of layoffs.
While admitting that it is going through financial difficulties, the firm said the layoffs are part of efforts to boost its operational efficiency.
“This restructuring plan has the full backing of the current shareholders. We are eliminating the last-mile delivery and finding a model that works,” said Chief Executive Peter Njonjo at a press briefing in Nairobi yesterday.
Barely a year after laying off 21 per cent of its workforce, the business-to-business platform, which facilitates linkages between farmers and food vendors, recently said it plans to let go of 283 of its employees amid declining purchasing power among its customers and a slowdown in venture capital funding.
Twiga aggregates demand and streamlines logistics in the distribution of farm produce such as fruits and vegetables to small-scale vendors in city estates.
This helps make products more affordable and increases sales for vendors.
The firm serves about 33,000 vendors monthly with an average of seven orders per week per vendor.
Besides Nairobi, it also operates in Uasin Gishu, Embu, Meru, Kirinyaga, Machakos, Nakuru, and Kiambu counties.
The e-commerce platform, which has raised a total of $157.1 million (Sh22.6 billion) in funding over 18 rounds, has now denied the possibility of closing shop, saying the sustained layoffs are part of plans to optimise its operations and bolster operational efficiency.
“The current cost structure was built with the expectation that the company would be expanding across Africa in the next few months. The availability of funding to do that in the short term is not available due to increases in interest rates. In the short term, we can sustain the business with a 40 per cent reduction in operating costs instead of increasing prices,” said Mr Njonjo.
Twiga has benefitted from Sh300 million Hustler Fund loans at lower interest rates to grow its businesses.
Mr Njonjo, however, clarified that the money was channelled to its customers through Sokoloan. He said non-performing loans through the platform have reduced to less than two per cent from an industry average of +10 per cent on unsecured mobile lending.