Category Archives: SME solutions

Node Africa launches

Phares introduces Node Africa

This week saw the unveiling of Node Africa, a new company led by Phares and Brian, the duo who spearheaded Angani before they left the company following a boardroom fallout that rocked the Kenya ICT startup community, late in 2015.

They have moved on from Angani, are now back with Node Africa, an information management company (that uses cloud infrastructure) and who’s tag line is we run your cloud infrastructure so you can run your enterprises.

It’s been an impressive turnaround in a few months; and in just six weeks after formal incorporation (in December 2015), they have launched Node Africa company and it’s up and running with a team of six, partnerships with Cisco, VMware, and Microsoft and with customers including Pesapal, Tarpo, Strathmore University, and WhatsApp Africa.

They still believe that Africa will be a cloud-first continent, and that, gmail and popular apps have shown, companies value well-delivered services, regardless of the location, or infrastructure that’s behind them, or the devices that their customers are using – and that cloud services, backed by a dedicated team like theirs are the way of the future for local and regional companies to scale their growth, customers and services.

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#WhatsNextAgTech

Nest Nairobi held its monthly entrepreneurship speaker series in partnership with the Kenya Climate Innovation Centre (KCIC) on January 27, at the Strathmore Business School.

#WhatsNextAgTech panel

Hosted by Zeynab Wandati (business reporter at NTV Kenya), the panel featured Stefano Carcoforo (CEO/Co-Founder of iProcure Africa), Grant Brooke (CEO at Twiga Foods), Marion Moon (Managing Director Wanda Organic), Charles Odida (a farmer), Linda Kwamboka (Co-Founder at MFarm Ltd), Chris Kolenberg (Director Marketing & Sales at Kenya Biologics), and Munyutu Waigi (Co-Founder of Umati Capital)

Excerpts from the event sorted by subject

Agri-Economy Agriculture is 26% of Kenya’s GDP and employs 80% of the rural population. It comprises 40% of exports and 45% of govt. revenue and 7% of industrial raw materials – KCIC rep

Government

A law is coming in farming which will require all farmers to be members of an organization, and through that, they will be taxed – Marion
I’ve no faith in the government to solve small farmer problems e.g. they allow contaminated maize imports, our borders are porous and farmers get zero protection, just exploitation from the government – Munyutu
The support that governments give to farmers has very little to do with farmers interest e.g. in the choice of fertilizers sold – Charles
Ultimately you have to work with the government. It’s not as bad as it was in the 90’s – Stefano

Cooperatives

We work with cooperatives, providing tech to them; while others devalue them by saying they want a cut, and there are many shady ones, cooperatives aggregate demand on behalf of farmers and play an integral role in rural societies – Stefano
We don’t work with cooperative, as we want to pay farmers directly. I’ve never seen a successful corporative, they are more like pyramid schemes. They may work when they are 10-15 people, but go bad when they are 200-300 members and become unions – Grant
Cooperatives are very critical but don’t have farmers’ interest at heart. There is an Eldoret dairy cooperative with $10 million revenue, but it’s farmer members remain poor – Munyutu

Maize

Maize is a terrible crop – when you have a bumper season, the price goes down. When you have a bad year, the government imports a lot of maize – Stefano
Maize is a good crop. Farmers with good storage and good planning don’t have to sell maize at throwaway prices. Ugali (made from maize meal) is one of the top foods bought in every household. Also there are institutions that buy hundreds of bags of maize every year e.g. schools to fees students – they need quality and villages don’t trust imported maize – talk to them, negotiate sales in advance and they come to check out the farmers’ fields and pay more than the government – Charles

Farmers

The average of age of a Kenyan farmer is 62 years; they are used to a certain way of doing things right, and it is hard for them to change – Charles
Growing a crop does not happen overnight like the Eurobond; Farming does not produce quick money, and farmers, by nature, are patient – Charles
Farmers trust each other, they trust farmers who have tried things e.g. they will try a pest control fertilizer that they are referred to by others – Linda
Farmers will adapt when they see something work. So you often have to give them free samples – Chris

Finance

98% of produce is sold to the informal markets and there is little formal financing for that. Debt is about 20-30% of the market cost of foods sold as middle-men and “mama mboga” pass on the cost of default risk – Grant
Cash flow is key in agriculture. When a crop needs weeding, you have no choice, you have to do it, or you’ll have no harvest. You have to schedule money for from activities. – Charles
SACCO’s are good for farmers, but there are also many Kenyans in the US and Dubai (where investments only earn 1-2%), and who are willing, and do lend their idle cash, to farmers they trust to earn much more (some of them are even on @twitter) – Charles
The government has many avenues of financing farmers e.g. AFC lends to sugar farmers at 5% – Charles
Bank ads for farmer loans look sexy in TV but in reality, they are too slow for farmers – they don’t disburse money quickly enough – Munyutu

Local Markets

Food is 51% of household spending – Grant
Food safety is the driving concern for a mama mboga as she will want to know and tell her customers which farm her produce comes from –Grant
Urban young farmers who want to get rich doing passion fruit and strawberry should instead grow things that you can see a market for every day – Grant
It’s crazy that 100% of our local produce would be rejected at the EU – Chris
Processors are getting tired of dealing with brokers and aggregators and want to go deal with the farmers directly – e.g. for dairy, fruits (A company called Fresh & Juicy is working with farmers to supply Nakumatt) – Munyutu

Inputs

It took 2 years to get bio-organic fertilizer approved in Kenya – Marion
Ultimately, what farmer can produce is declining, and those who are increasing productivity are doing so using chemicals, but that is only a short-term (5 years) measure – Marion

Export Markets

Italian companies that produce canned beans and used to source them from South America, are now looking to get them in Kenya, but are struggling to find enough farmers – Marion
Kenya can compete with Brazil in passion fruit; that market is big – Marion.
Kakuzi has 300 small-scale farmers that they used to grow their produce. They know what they spray on their own 6,000 acres, and work with 300 other farmers who they advise, but ultimately, they can’t establish exactly what inputs these farmers are adding to fruits – Chris
Small scale farmers won’t be able to compete in future – 1st world farmers are 40X more efficient – Chris

Logistics / Middle Men

Kenya is not food insecure, it is logistics insecure. A banana is Kshs 10 (sometimes 20), which is the same price as a banana in London; that’s because we stopped investing in markets, and there are many bottlenecks, broken links and 5-7 people between the farm and the market – Grant
Supply chains are longer in Kenya that they need to be – there are too many brokers, and the farmer is not visible in the farm to fork story – Charles
Middlemen exist because farmers don’t understand what the markets want – Linda
Middlemen add zero value, and that’s why the price of food is high – as they hedge against their defaults – Munyutu.

Tech

Farming is putting a seed in the soil, nurturing it and harvesting – it’s not phone or apps or tabs – (which only bring in efficiency) – Marion
Kenya has been slow to get/adopt farm smart phone apps & software compared to Brazil and South Africa – Charles
Kenyans don’t use Kenyan products, but use our apps so we can make them better – Linda

What’s the Next Big Thing in AgTech?

Traceability fake products look more real than the original product – so the next big thing in agri-tech will be clever apps to provide assurance through traceability of inputs. There’s now a lack of traceability, farmers will tell you what you want to hear, and counterfeit products are prevalent – Stefano
Distributed Commodity Exchanges, which used to be in Chicago and Ethiopia (ECX) are now in the cloud with firms like Twiga that act as warehouses – Grant
Mid-size farm management as a career. There are people in this room who inherit 30-40 acres in rural areas but want other people to profitably manage farms for them – Grant
Partnerships – Marion
Farmers specializing in certain crops and increasing their yields drastically – Chris
Financial capacity building – financial products in simple math, loan calculations in easy language – Munyutu

The outreach manager of KCIC said they provide entrepreneurs with an enabling environment (policy) for innovation, business advisory services and financing opportunities [for (1) proof of concept financing and (2) a seed facility of climate change venture funding of $100,000-500,000 of growth capital for entrepreneurs from June 2016]

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Funding Youth & Women Enterprises In Kenya

Today, it became news that the government would no longer extends funds to youth and women programs. So far, the government has distributed more than Kshs 10 billion (~$10 million) to youths and Kshs 7 billion (~$70 million) to women.

Chase Bank Youth & Women Funds The ending was not really new as a previous report released by the Central Bank of Kenya in 2015 noted that “the intention was not for the Government to lend, but to create an incentive for banks to engage with SMEs”.

Looking at financial results of two banks that had bond issues in 2015, and for which they released detailed information memorandums (IM’s), these show the flat or declining status of the youth and women fund programs. Both Chase, and Family, banks were intermediaries in the incentives by the Youth Enterprise Fund and the Women Enterprise Fund to advance funds to the respective target groups.

Family Bank Youth & Women Funds

That does not mean that the Kenya government has stopped supporting entrepreneurs in the sectors, as there’s now the Access to Government Procurement Opportunities (AGPO) initiative under which the government aims to allow 30% procurement contracts to be given to the youth, women and persons with disability without competition from established firms.

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How Interswitch extends Banking Reach – Part II

Interswitch focuses on solutions for African banks and financial institutions, integrating their payment systems for seamless interaction, regardless of ways in which customers choose to connect or transact with their banks. These can be through phones, tablets, ATM’s, card, and even wearables in the future.

Banks customers can make payments from wherever they are, for batch payments, recurring payments, and also receive SMS updates on anything from remittances, send or receive payments between banks and all mobile money services, make international payments etc.

Financial institutions outsource these complex interactions and switching processes to Interswitch and can reduce their costs, leaving them to focusing on marketing, growing and enriching their customer experience. Interswitch also advises licensed financial institutions on hardware, licensing, vendors and other decisions in a way that is much more affordable than using in-bank teams.

For financial outlets, like malls, restaurants, and stores, where you’ll sometimes find rows of needless ATM’s or card reading machines taking up valuable floor space, one ATM or device managed by Interswitch could serve the transaction needs of most diners, customers or shoppers at the mall.

And behind all these, are Interswitch safeguards to manage risk, authentication, and other elements of security processes. They deal with attempts at ebanking fraud & card fraud and are up to date on the latest security features and changes in the financial sector. Introducing and integrating with new standards within banking are also a part of the Interswitch – so moves like the change to chip & PIN are seamless, and Interswitch is the only PCI certified switch in Kenya – a security standard to process leading card brands like Visa, MasterCard, and American Express.

Finally, the banking world is very competitive and there are moves in Kenya to use loyalty programs for retention. This is possible with Interswitch, which already runs loyalty programs for several banks and brands in Nigeria – tracking customers usage and transactions, so that financial institutions know, manage, reward, and retain key customers.

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How Interswitch extends Banking Reach

Interswitch products have been deployed in many African markets and can be used to extend services to bank customers in a variety of ways:

The Payment Switch is used by many banks; In Kenya they enable customers of dozens of banks to use each other’s ATM’s and to do account to M-pesa and M-pesa to their bank account transactions, even at ATM’s where they don’t have to use bank ATM cards to transact. In Nigeria, Interswitch is at all commercial banks meaning a total network of 13,000 ATM’s are available for customers to use, and in Uganda, there are 13 banks with 280 ATMs. Interswitch has just launched in Tanzania, their 6th market in Eastern Africa. Customers of these banks enjoy lower costs of transactions than with mobile providers and seamless transactions as they cross borders to trade within Africa.
Mobile solutions. An example is Centenary Bank Uganda whose customers have mobile wallets known as CenteMobile with which customers can pay their utility bills, take part in fundraisers and transfer funds, among other bank services.
Agency Banking & kiosks: Interswitch powers agency banking which is a customer delivery channel that many banks are now adopting to extending their reach while controlling costs. Interswitch powers all KCB Mtaani – bank agent locations as well as the teller kiosks in Nakumatt where customers go to load points, get M-Pesa and Airtel Money or buy airtime.
Banks Card: Verve is the leading card brand in Nigeria, and the chip & Pin card has been issued to almost 30 million customers of various banks in Nigeria, West Africa and soon Eastern Africa, starting with KCB and UBA. Verve cards are accepted on Paypal, and one new feature enables Verve cards to send one-time pay codes to friends or family members so they can withdraw set amounts at ATM’s.
Loyalty Programs: Interswitch powers loyalty programs for banks such as First Bank Nigeria; Customers earn points for carrying out transactions on their bank accounts or by using their Verve cards; They can get cash back for card usage and can get gift items and discounts at select merchants, some of who are online.

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Bankelele

Nairobi writer on Banking, Finance, Technology, and Investments

Category Archives: SME solutions

Node Africa launches

#WhatsNextAgTech

Funding Youth & Women Enterprises In Kenya

How Interswitch extends Banking Reach – Part II

How Interswitch extends Banking Reach