Uncertainty Lingers Despite Signals Of A Turnaround At Twiga
Twiga Foods, a prominent Kenyan startup using technology to address food supply needs, might be on the verge of some positive news after a period of unease during which it grappled with financial woes and delayed payments to suppliers, which put the business under pressure,
Peter Njonjo, Twiga’s Co-Founder/CEO has announced a resolution to clear the outstanding dues owed to over 100 suppliers associated with the startup. Njonjo communicated this development through a now-deleted blog post, where he revealed that the company has successfully concluded its restructuring and re-financing efforts.
“This past week, I personally signed off on communication to more than 100 Twiga suppliers, informing them that our restructuring and re-financing processes are now complete. Consequently, their long-overdue payments will soon be settled,” writes Njonjo, in an article that was published over the weekend but has now been withdrawn, sparking further questions.
This announcement comes as a welcome relief for Twiga’s suppliers, some of whom had been reportedly considering severing ties with the company due to the mounting overdue debts, reaching into the millions. Despite the positive news, Njonjo did not specify a timeline for the disbursement of payments, nor did he confirm whether all outstanding dues to suppliers would be cleared.
Twiga, a business-to-business marketplace platform that sources produce directly from farmers and delivers it to urban retailers, has served 140,000 small retailers in Kenya, per the company’s website. With over USD 150 M raised from notable investors that include Creadev and TLcom Capital among others, Twiga is one of Kenya’s most-funded startups. In recent years, the company has also invested massively in infrastructure to boost capacity. Headwinds in the financial markets however plunged the business into a capital crunch that put it at loggerheads with partners.
Most recently, Twiga found itself embroiled in a debt dispute that escalated to a lawsuit, prompting a liquidation suit filed by Incentro Africa, a Google Cloud service provider, seeking payment for services rendered. The High Court intervened, urging the parties to pursue an out-of-court resolution within 60 days. The court-mandated deadline is set for November 30, failing which a direction on the liquidation application will be issued.
Attributing the financial challenges faced by Twiga Foods to the prevailing “funding winter,” Njonjo acknowledged the abrupt downturn in funding for the Agri-tech firm in 2023. Citing the recent hike in interest rates by the US Federal Reserve as a contributing factor, Njonjo lamented the sudden withdrawal of investment funds during the Series D capital raise.
In response to the funding constraints, Twiga Foods has implemented measures such as staff layoffs and operational restructuring, operating with significantly reduced resources compared to its previous capacity. Despite these challenges, Njonjo remains optimistic about the company’s resilience, highlighting that 94 percent of informal retailers express a willingness to collaborate with Twiga. Njonjo also emphasized that the startup was among the top 10 revenue earners in the country at its peak and expressed confidence in navigating the current storm by gradually reducing reliance on investor funding.
Featured Image Credits: ARK Africa