A startup food-distribution company based in Kenya is getting help from the U.S. International Development Finance Corporation (DFC) as the company makes more food available for Kenyans while reducing waste.
The DFC brings private-sector investment to developing countries. It recently announced a $5 million loan to Twiga Foods Ltd. The company, which just received its first disbursement of the loan, buys fresh produce from 17,000 farmers and processed food from manufacturers and then delivers it to 8,000 vendors, most of whom are women.
The delivery system saves time, improves food quality and reduces waste. The result? Food that earns more for farmers and costs less to vendors and consumers.
Poor infrastructure and inefficient links between rural farmers and urban vendors had led to roughly 30% of food being wasted, according to DFC. But Twiga has been streamlining Kenya’s fragmented food distribution system since the company started in 2014.
How it works
Twiga buys produce from remote farms across the country, then packages, stores and distributes the food to urban vendors. Vendors place orders on Twiga’s digital-sales platform.
The DFC loan will help Twiga secure additional trucks and delivery vans as well as cold-storage equipment to move more food to market.
Twiga recognized the missing connection between smallholder farmers and sellers in the city, according to Worku Gachou, DFC’s managing director for Africa. “Being able to be that middle ground, to be that bridge, [provides] a commercial solution with inherent benefits to development,” he said.
Farming is a critical part of Kenya’s economy. Three out of 4 Kenyans earn a living directly or indirectly through agriculture. By eliminating inefficiencies in the agricultural supply chain, Twiga helps smallholder farmers move crops to market and make consistent, reliable sales.
How it fits into DFC’s mission
Rather than issuing loans directly to governments, DFC invests in private-sector solutions to pressing challenges. “We recognize that government has an important role, but if you want to see the growth objectives that these countries have, the private sector will be the leading driver of that,” Gachou says.
DFC’s priority areas of investment include energy, health care, critical infrastructure, technology and financing for small businesses and women entrepreneurs. With an active portfolio of roughly $29 billion, DFC offers financing from $1 million to $1 billion. It focuses on investment in Africa, Eastern Europe, Eurasia, the Indo-Pacific, Latin America, the Middle East and North Africa.
The investment in Twiga supports DFC’s 2X Women’s Initiative by helping mostly female produce vendors increase their sales and profits. Future disbursements to Twiga will be issued and repaid over the next five years, according to DFC.