Kenyan agri-tech firm Twiga Foods is banking on an aggressive cost-cutting strategy to remain operational amid a protracted funding drought.
The ongoing restructuring comes after the company raised a cumulative $160 million (Sh23.2 billion at current exchange rates) since inception which has been inadequate to sustain its business.
Twiga Foods Managing Director Peter Njonjo told Business Daily on Wednesday that the revamped strategy seeks to cut the firm’s overall operational costs by up to 40 percent, including laying off a third of its permanent staff by next month.
Mr Njonjo confirmed that all 267 of the total 810 staff have already received their redundancy notices, adding that the process had been handled in accordance with all laid down ethical requirements.
“We need about 40 percent less cost than where we are today. I’m not talking about people, I’m talking about general costs. We have established that it is actually feasible to run the same operations we do at 40 percent less cost,” he said.
The MD said modern technology has played a substantial role in rendering some human-dependent roles obsolete, noting, for instance, that the firm has deployed an optic sensor on its Taveta farm where it’s growing tomatoes, to enable installed machines to sort the fruits based on their colour such that it is easy to arrange ripe and unripe ones separately.
By moving to rent its Tatu City-based warehouse, Mr Njonjo adds, Twiga had to shut down a total of 11 depots and with that effect, a mass layoff wave which the MD maintains was essential for operational efficiency.
“By moving to Tatu City, the number of trucks that we can load simultaneously is suddenly so high. So now we are able to serve all of Nairobi, Thika and Machakos from the warehouse and therefore we don’t need the depot infrastructure anymore,” he explains.
The corporate executive sought to dispel rumours that the firm is facing headwinds and that it is on its way to collapsing, saying that they are eyeing to gain sound footing in one year’s time after the implementation of the spelt-out strategy.
Among the new supply chain segments that the firm is exploring include warehousing services for other manufacturers and suppliers, as well as packaging, with Njonjo disclosing that Twiga has unveiled its own maize and wheat flour brands.
