Investment | DOB Equity invests in Kenyan tech-enabled food wholesaler

NAIROBI, Capital Markets in Africa: DOB Equity, a leading Dutch family office, announced that it had taken a minority stake in Twiga Foods, the Kenyan wholesaler, to expand its reach in the fast growing African micro-vendor food market.

DOB Equity says Twiga Foods’ integrated and tech-enabled business model reduces costs and increases convenience for vendors in Nairobi by allowing them to buy fruit and vegetables through their mobile phone and delivering supplies directly to retailers’ stalls. In addition Twiga has become a reliable off-taker of produce for farmers thereby giving them the confidence to invest more in their farming.

Twiga Foods simplifies and shortens the often complex supply chains of key food items, thereby reducing costs, enabling just in time delivery, and minimizing waste. After proving the business model with bananas, the company has recently branched out to tomatoes and onions and is looking to broaden its product base shortly.

DOB Equity explains that current supply chains for African urban markets are inefficient and costly for both the customer and the vendors. For instance, over 30% of banana stock purchased at the farm gate is lost due to poor handling by middle men and a lack of cold chain. This loss gets priced into end-consumer cost and contributes to the rapidly rising food inflation in Kenya today.

DOB’s investment will enable Twiga Foods to expand their supply capacity, allowing them to reach 7,350 vendors in Nairobi selling to 1.5 million Kenyans living in low and middle-income neighborhoods. The market value of consumable goods sold through small informal vendors in Nairobi alone is over US$700mn annually.

“The best thing about the Twiga model,” says Twiga’s CEO and co-Founder Grant Brooke, “is that it is a big win for Africa’s shop keepers, for Africa’s farmers, for local FMCG manufacturers, and governments dealing with skyrocketing food prices amidst rapid urbanization. To be able to launch this innovative model with the backing of like-minded investors like DOB Equity is a huge advantage.”

Brigit van Dijk-van de Reijt, CEO of DOB Equity, comments: “By simplifying the food supply chain, Twiga Foods will improve food security and help reduce costs for Kenyan consumers.”

“Improving delivery networks and reducing the cost of food are extremely important in Kenya, where families spend up to half their income on food.”

“Current supply chain problems mean fruit can be significantly cheaper for consumers outside Africa like Europe or the United States, than those in Kenya, where the fruits are actually grown, despite the huge disparity in distance travelled.”

“Ultimately, by improving the food delivery chains, Twiga Foods will raise food security on the continent and will help unlock the urban African consumables market which is approaching US$1tn in annual value.”