Janeffer Wacheke, co-owner of a fresh-vegetable stall, checks her mobile phone for a purchase order of vegetables and fruits made to Twiga Foods Ltd., while on her stall in Nairobi, Kenya, on June 11, 2018. Wacheke's fresh-vegetable stall in Nairobi uses technology that's helping crack a problem Kenyan banks have so far failed to solve -- measuring the creditworthiness of traders in the country's $20 billion informal economy. Photographer: Luis Tato/Bloomberg
Nairobi-based vegetable seller Janeffer Wacheke checks an order © Bloomberg

These days, Kenyan tech is not just about moving money and data over mobile networks. The goods being shifted are just as likely to be paracetamol and potatoes.

Nairobi is famous as a pioneer of Mpesa mobile money, which is credited with drawing millions of unbanked people into the formal financial sector. That has not only helped poorer Kenyans move small amounts of money to each other and between themselves and vendors. It has also enabled many to access services from micro-credit to electricity via small solar panels, with instalments settled by mobile phone.

Now, say those involved in the sector, Kenya is moving into a new phase in which non-tech companies — from farming to pharmaceuticals — can use the country’s IT infrastructure to invent new ways of doing business. 

“There was a lot of hype about Silicon Savannah, but a lot of those early start-ups flamed out,” says Grant Brooke, chief executive of online farm produce marketplace Twiga Foods, referring to the nickname for Kenya’s fast growing technology sector. “Now the people who were part of that are ready to build serious companies.”

Companies can draw on a pool of well-qualified IT developers. They also operate in an environment in which those on modest incomes are used to paying for things electronically. Smartphone penetration is high, and nine in 10 adults own a mobile.

Uber Eats, the food delivery app business that is part of the US ride-hailing company, chose to launch its second sub-Saharan operation in Kenya last month precisely because of consumers’ strong appetite for online services. “It is testament to the technological savvyness of Kenyans,” says Amal Devani, east Africa general manager for Uber Eats, of the company’s decision to launch in Nairobi. It already operates in South Africa.

Joe Mucheru, minister for information and communications, jokes that more elderly people are getting their eyes tested as a direct result of mobile and e-services. Few, he says, are willing to entrust their Personal Identification Number to relatives, since PINs are used for all sorts of online government services and payments: they would prefer to do it themselves, even if it means a trip to the opticians. Moving to e-services also helps tackle corruption, he adds.

Twiga is using an online marketplace to solve a simple but serious problem. According to the World Economic Forum, Kenyans spend on average 47 per cent of their income on food. This makes them extremely vulnerable to food inflation. Mr Brooke argues that partly reflects low farming yields, which he compares with those of late-19th century America, as well as poor logistics for getting food to market. 

Twiga promises to improve the price that farmers get for crops such as potatoes, bananas and onions, while simultaneously providing urban vendors with a reliable supply of fresh vegetables at a discount. “We’re creating certainty for farmers. That does the most good,” says Mr Brooke, adding that only if farmers know they can sell their produce regularly and transparently will they invest in the new seed, fertiliser and irrigation needed to increase yields.

The market is fragmented with approximately 130,000 merchants buying vegetables for Nairobi alone. Twiga’s platform aggregates orders — currently it supplies about 1,500 vendors — and creates a marketplace that cuts out layers of intermediaries. Twiga combines online with offline, with collection points around the country. That has cut post-harvest losses for signed-up farmers from 30 per cent to 4 per cent, Mr Brooke estimates. “That’s where we get most of our margins.”

MyDawa, a health tech company launched this year with start-up capital from Ion Equity, a Dublin-based private equity firm, wants to do for pharmaceuticals what Twiga is doing for vegetables. It also seeks to use technology to cut out layers of middlemen, this time those that exist between pharmaceutical manufacturers and patients.

Inefficiency raises the price of drugs, often beyond the ability of ordinary Kenyans to afford them. It also increases the risk that sub-standard or fake medicines enter the supply chain. MyDawa has a digital platform — built with local expertise — and its own warehouses from which medicines are dispatched. The company’s head of IT, 32-year-old Nicky Nyamasyo, studied at Egerton University in Nakuru.

MyDawa’s system authenticates medicines through a QR code tracking system that sends patients a text message confirming the product is genuine. Tony Wood, managing director, says it “can squeeze fakes out of the supply chain”. The company chose to start in Kenya, he says, “because of the easy adoption of technology” by consumers.

Big Tech has spotted the potential. When Mark Zuckerberg, Facebook’s chief executive, made a visit to the city in 2016, he declared Kenya a “world leader” in mobile money. Mr Zuckerberg is among the backers of Bridge, a Nairobi-headquartered company that seeks to use technology to improve low-cost private education.

Other companies have used Kenya as a staging post. In May, Cellulant, a digital payments provider that started out in Kenya and Nigeria, raised $47.5m from the Rise Fund, run by private equity group TPG Growth, to help its Africa expansion plans.

Kenya is two to three years ahead of other African markets, says Ken Njoroge, Cellulant’s chief executive. “And most of that is driven by the fact that mobile money and the mobile payments ecosystem is more mature, customers are educated and regulators are comfortable with it.”

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