Twiga Foods suppliers yet to benefit from the Ksh.300M Hustler Fund promised by the government
Agri-tech startup Twiga Foods has revealed that its suppliers are yet to benefit from the Ksh.300 Hustler Fund promised by the government.
In November last year, the government announced that it would give Twiga the funds for onward lending to suppliers and customers. The funds were part of the Ksh.50 billion Hustler Fund launched by the president in December last year.
The Hustler Fund seeks to provide loans to small businesses in the country that have always struggled to access financing from local banks. It is designed to improve financial access to responsible finance for personal, micro, small, and medium-sized enterprises (MSMEs).
During a recent media round-table, Peter Njonjo, Group CEO and co-founder, of Twiga Foods noted that the delays were due to delays in establishing the framework for the disbursement of the funds.
‘’The Hustler Fund has been working with financial institutions to allow aggregators like Twiga and many others help their customers access loans from the fund. Once this framework is established, Twiga will help its customers access the fund. For now, no funds have been disbursed from the Hustler Fund to Twiga Foods customers.’’ he said.
‘’Twiga was never the intended recipient of the hustler fund, but Twiga was to allow our customers access the loans for their businesses using our platform,‘’ he added.
Njonjo notes that the startup has worked with other financial institutions to lend out Kshs 3.2B to over 33,000 customers since the inception of its Sokoloan platform.
‘’This has more than doubled Twiga’s vendor order sizes and is supported through our inbuilt credit scoring and loan management systems. Our Non-performing loans are amongst the lowest in the market on unsecured mobile lending at 2%, vs. 10% as a market average,’’ he says.
Cutting down on operations costs
The revelation comes at a time when the e-commerce and food distribution company is trying to cut down operation costs that has seen it seen it send home a third of its 850 permanent employees this month. This is despite it having raised Kshs 23Bn in the last 10 years.
Njonjo says the current cost structure was built with the expectation that the company would be expanding across Africa in the next few months. The availability of funding to do that in the short term is he says is however not available due to increases in interest rates in the US, which has impacted the available capital for investment in Africa and other emerging markets.
‘’ So, in the short term, we can sustain the business with a 40% reduction in operating costs instead of increasing prices to ensure customers still get affordable goods and services despite the economic environment. This restructuring plan has the full backing of the current shareholders, ’’ he says.
He added, that contrary to the rumours, the company is not closing down but transforming its operations in Nairobi, Thika and Machakos for the last mile distribution and transitioning to a wholesale model for Western Kenya and Uganda.
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