With a debt already close to 70% of its GDP, the IMF projects that Kenya plans to borrow $12.4bn from foreign sources by June 2022. This, at ... a time when the country is at a high risk of debt distress and subject to zero limits on non-concessional borrowing. But the distress is also having a cause and effect on its population.
The company will “definitely” need to raise money to expand its footprint, says Njonjo, without giving an amount. The aim, he adds, will be to “synchronise” the fundraising with the opening up of African markets once the worst of the COVID-19 pandemic is over.
Twiga Foods uses its platform to aggregate food demand from informal retailers and source produce directly from farmers and manufacturers.
This, the company says, quickens delivery and reduces post-harvest losses on fresh produce. The company, launched in 2014, has raised a total of $55 million in debt and equity, backed by investors including Goldman Sachs and the International Finance Corporation.
During its fundraising in 2019, the company said it planned to expand into West Africa.
- Those plans are “impractical for the moment” due to travel restrictions and quarantine requirements, says Njonjo.
- For now, any foreign expansion will focus on countries bordering Kenya, he adds.
- The priority is to scale up in Kenya, with expansion into the country’s third-largest city Kisumu planned in September. That will be followed by entry into “two or three” more Kenyan cities by the end of year.
- The shift in plans, he says, “is a short-term change of emphasis. We’re not walking away from out plans to expand across the continent.”
West African prize
The early stages of the COVID-19 pandemic were a tough time for the company. Informal food retailers were not sure whether to stay in the cities or go home. The hotels and restaurants which are among Twiga’s clients were operating only minimally, if at all.
Twiga, classed as an essential service by the Kenyan government, was able to keep operating. The company has retained all its employees and will be able to for “the foreseeable future,” says Njonjo. Twiga has been able to “overcome the initial impact” of the pandemic. “We’re growing again.”
Njonjo spent 21 years with Coca-Cola, including a stint as the company’s president for west and central Africa. He’s keen to revive the company’s plans to expand there.
- West Africa remains a “sizeable opportunity” due to its higher rates of urbanisation compared with the east, says Njonjo. “Expansion is still a priority.”
- Africa still has a “$300bn problem to be solved” in terms of food access, he says. “That remains a constant. The ability to travel is the variable. We want to focus on what is under our control.”
- Wider phone access in Africa, improved networks and greater 4G penetration will help Twiga to contribute to solving it, he says. The apps that 4G permits will open up more opportunities for digital food transactions.
- The companies that succeed, he adds, will be those that can adapt to the impact on incomes from the pandemic. Businesses will need to help their clients to “stretch their money further.”
- The African Continental Free Trade Agreement will help by providing a “unified framework” for businesses. Yet even now, there are “clusters” in east and west Africa which are “fairly well integrated,” he says.
Keeping the Goldman Sachs signature should be enough to ensure fresh funds for Twiga’s expansion.
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