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Twiga Foods, IBM Introduce Blockchain-Based Lending for Kiosk Owners in Kenya


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Twiga Foods, IBM Introduce Blockchain-Based Lending for Kiosk Owners in Kenya

Twiga Foods, a Kenyan business-to-business food supply platform has partnered with IBM Africa to develop blockchain-enabled finance lending platform for its customers. According to a blog post by IBM Research, Twiga was looking into expanding its logistic services into a total market ecosystem by adding financial services for its clients towards the end of last year.

“Previously, we were focused on helping farmers distribute bananas, tomatoes, onions, and potatoes to 2,600 kiosks across Kenya, but we soon realized that we could help them sell even more produce with access to working capital. It’s simple, if the food vendors can sell more, we can distribute more, growing both of our businesses.” Says Grant Brooke, CEO, and co-founder.

In collaboration with IBM scientists in Nairobi, they first had to develop a manner in which they could determine the credit scores for the vendors before issuing the loans.

“We analyzed purchase records from a mobile device and then apply machine learning algorithms to predict creditworthiness, in turn giving lenders the confidence they need to provide microloans to small businesses. Once the credit score is determined, we used a blockchain, based on the Hyperledger Fabric, to manage the entire lending process from application to receiving offers to accepting the terms to repayment,” said Isaac Markus, a researcher on the inclusive financial services group at IBM Research in Kenya.


With blockchain, the lending process becomes transparent to all permitted parties involved, from the lending bank to the borrower’s bank and the loan applicant themselves. In addition, blockchains are immutable, helping to reduce fraud, since no one single party can append the blockchain without consensus from the entire network.

Twiga Foods and IBM have so far processed more than 220 loans for small food kiosks, known locally as “mama mbogas” in Swahili, with the average loan size of around $30 (Kshs 3,020) over an eight-week pilot which increased the order size by 30 percent and profits for each retailer, on average, by 6%. The loans were for four and eight days with an interest rate of one and two percent, respectively.

All of the loans were executed via mobile phone and went directly toward working capital for the businesses. When a retailer had an order delivered, they would get an SMS with loan options for financing that order. They would then respond to the SMS confirming the loan option they preferred.

Read: Are You in a Debt Cycle? This Tool will Help You Take Control of Your Finances

Blockchains employ a series of “smart contracts” which can be executed in real time, having the potential to significantly reduce the time it takes to manually process and issue a loan.

“We had several iterations of the platform based on feedback from the retailers. The SMS-based solution provided an effective channel for a diverse set of users, some with limited IT literacy, to access financing for their orders,” said Andrew Kinai, the lead software engineer on the project at IBM Research.

Based on the success of the pilot, the plan is for the platform to be rolled out to more SMEs across Africa by the end of the year and expanded into new sectors.

Founded in 2014, Twiga has developed a unique solution to address the inherent inefficiencies in the delivery of fresh produce in East Africa and has over 2600 vendors it supplies with over 4000 weekly orders of bananas, onions, tomatoes, and potatoes.

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