‘The back office for kiosks’: The start-up fixing Kenya's retail
“We see ourselves as the back office for the kiosk.” This is how Twiga Foods Co-founder and Chief Executive Peter Njonjo sums up the firm’s business model.
The agri-tech startup was recently named one of the 100 Most Influential Companies globally by Time magazine. It made the enviable list for its use of technology to raise demand and ease logistics in the distribution of fresh farm produce.
Through mobile technology, Twiga Foods, founded in 2014, set out to create a low-cost but efficient supply chain beneficial to farmers and vendors.
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“We want to ensure that kiosks are efficient. If you look at the big supermarkets they have their own warehouses, logistics and supply chain. The kiosks don’t,” Mr Njonjo tells Enterprise.
“That’s why the kiosk is sometimes expensive. We want to invest in a warehouse that helps this kiosk, we want to build a supply chain and build digitisation that helps the kiosk.”
He says at the end of the day, the kiosk should be as competitive as the big supermarkets.
Twiga Foods has over 130,000 retailers served by a fleet that covers about 12,000 kilometres and handles over 1.2 million kilogrammes of assorted products daily.
Last year, the firm raised Sh5.56 billion from international investors and is currently targeting a pan-African expansion starting regionally with Uganda.
It all began with bananas. The light bulb moment for Mr Njonjo was at a Nakumatt outlet.
He was puzzled to discover that bananas at the now collapsed giant retailer cost the same as at a supermarket in London, UK.
“Something was wrong,” he says.
Mr Njonjo says bananas travel thousands of kilometres from farms in Latin America and South East Asia to get to London.
“Something that has travelled on a vessel for close to a month lands, ripens, is merchandised and put on the shelf and then priced the same as bananas in Nakumatt that come from, for example, Meru?”
This put his curious mind to work on what was really going on.
He found a deeply broken food supply chain; there was also a big struggle to access a market that is very fragmented.
“I always knew there’s a problem in retail because I worked for Coca Cola. What I didn’t know is how deep we were going to go into it,” he says on the early roots of Twiga.
So, in 2014, he and Grant Brook, an American from the Texas ranches, founded Twiga Foods, aiming to provide high-quality food items at affordable prices across Africa.
In the early days, Mr Njonjo mostly financed the business while Grant was running it until April 1, 2019, when he took over and now oversees the daily operations as CEO.
Interestingly, Mr Njonjo, one of the senior most Kenyans in Coca Cola during his time — rising to head the beverage giant’s West and Central Africa regions — had also joined the firm on April 1.
The love for business and solving problems has always been there for him, he says. While in school, he used to buy bread from the canteen and sell ii in the dorms for a small profit.
Mr Njonjo has tried and failed in business many times and one can shudder at the money he has lost, but he kept at it.
“Twiga has been a blessing after making so many mistakes, it made me really refine how I thought and proceed about business.”
Lowering food costs, he admits, is a tough job that requires concerted efforts globally and cannot be done by just one firm.
It involves a lot of complexities such as navigating importation, with the Kenyan food supply chain far from self-sufficient.
“What we’re doing is building a formal supply chain that will make it easier to get any form of goods and services,” he says.
A broken supply chain means that retailers accessing products is an issue and on the other hand farmers or manufacturers accessing outlets is also a headache.
The Twiga app has become a one-stop shop selling a diverse range of products and services including airtime, electricity tokens and electronic appliances.
It recently started providing a loan service where vendors get goods delivered in less than 48 hours interest-free, one of the things that earned the firm a spot on Time magizine’s list.
Mr Njonjo, as a corporate chief and entrepreneur for many years, is generous to share the business lessons he has picked along the way.
He says one should have a clear vision for their business before they embark on anything else.
This will help an entrepreneur find their true north.
“The vision informs the strategy that you pursue,” says Mr Njonjo.
This comes after establishing the vision and strategy.
“When you have the clarity and strategy, build a team of the right people,” he says, adding that long gone are the days of a “superman” or hero entrepreneur who wants to do it all.
When Twiga Foods started, Mr Njonjo could not afford to pay his core team high salaries.
Instead, he proposed to allocate them shares in the business as they worked towards its success, which has turned out well.
“You need to be seen as a company that operates above board, that we will not engage in practices that don’t resonate with the expectations of investors out there,” he advises.
Policy and procedures are crucial to any business and lay out the modus operandi.
A common mistake is to, for example, say that since everyone is bribing, your company should also do the same.
At the onset, Twiga outlined strict anti-bribery and anti-money laundering policies.
Such structures made it smooth for global investors such as Goldman Sachs, who when investing in the business thoroughly audited the firm in line with international best practices.
“Do not take shortcuts as it reduce the scope of impact you can have as a company,” says Mr Njonjo.
Create shared value
He underscores that sharing the company’s value with stakeholders helps scale it up. He notes that each time Twiga raises capital, they bring new shareholders on board and then work as a collective for the progress of the company.
And even when the investors cash out, they leave on good terms and with a significant return on their investment.
“Even though I founded this business, it can exist for many years after I’m gone because now there are other people who are vested in it and want to see it continue,” he says on creating a sustainable enterprise.
On burning money
In business, he’s failed many times and even returned to employment at some point. But one has to try many things before one works.
“When you look at creating new businesses, sometimes we have ideas about what it is we want to do but those ideas are not what the customers want,” Mr Njonjo says.
“Sometimes when you burn money it’s a lesson that life teaches you in terms of what the customer really wants.”
On raising capital
On raising funding, which Twiga Foods has successfully being doing, he says it is important for an entrepreneur to understand there is an ecosystem and it is not just about them as the business owner.
“You need to ask yourself what you need to do to attract this pool of capital. What kind of return am I offering? Do I have the credibility to deliver this return?”
He says many entrepreneurs complain about the inability to attract funding but have not addressed certain issues.
They want capital yet have, for example, no team to execute their strategy.
“When you are thinking about raising money, put yourself in the shoes of the investor and ask yourself if you are giving somebody enough reasons to invest in you and where you feel you have shortfalls, be open and truthful.”
“Talk to people who’ve walked that journey before. There’s an increasing number of companies in Kenya that are getting funding who can advise you on how to approach investors,” says Mr Njonjo.
Innovators can also seek help and guidance from incubation hubs.
Mr Njonjo maintains that a business should not be the same as it was six months or a year ago. This helps it avoid a plateau that affects most startups.
The single focus of a business is the customer and one has to keep improving the business for that customer.
To boost innovation, he says his role as CEO is to empower the organisation to do so.
“If I’m the only one innovating, I become a bottleneck and this means that I’m actually limiting the organisation to my capability.”
“My role is to create an enabling environment where I can have 300 people innovate and then figure out how then can we have a process to filter what is scalable and what is not,” he says.
He explains that there are amazing ideas that come from the team and creating that culture is what helps the organisation.
“If I look at where I sit, I’m so many levels from where the work gets done so I’ll not have the idea in terms of what needs to get done,” Mr Njonjo says.
“I can have the vision of where the organisation wants to go but the innovation that gets us there essentially has to come from the team.”
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