The Next Wave: The high cost of cutting out the middleman

At 4 AM, Marikiti, Nairobi’s largest wholesale contemporary produce market, is already buying and selling. Lorries arrive in a single day carrying potatoes, tomatoes, onions, and cabbages from farms throughout Kenya and neighbouring nations. Brokers match sellers with patrons, negotiate costs, and transfer perishable inventory earlier than it loses worth.

This equipment feeds Nairobi, working in a single of the metropolis centre’s busiest buying and selling hubs with out the warehouses, payrolls, and company overheads of a venture-backed distributor. Twiga Foods raised greater than $185 million attempting to formalise contemporary produce distribution in East Africa. What did enterprise capital misunderstand about the promote it wished to switch?
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Twiga’s failure is now enjoying out in insolvency proceedings. GT Flow Limited, previously Twiga Foods One Limited, entered statutory administration in August 2026. In September, its guardian, Twiga Foods Limited, renamed Templar Field Limited, adopted. Mohamed A. Mohamed of Maawiy Financial Advisory Services was appointed administrator of each firms, taking management of their property and affairs as collectors submitted claims.

The company unwind previous statutory administration reveals the stark distinction between enterprise capital expectations and operational realities:

• In December 2023, Twiga secured a $35 million convertible bond from Creadev and Juven, alongside $1 million in private capital from co-founder Peter Njonjo, primarily to settle mounting money owed with commerce suppliers.
• Njonjo resigned from the board in 2024, handing administration to former Jumia govt Charles Ballard, who minimize over 600 roles between 2023 and 2025.
• In mid-2025, Twiga deserted its custom-built distribution hub at Tatu City and bought controlling stakes in three conventional fast-moving client items (FMCG) distributors—Jumra, Sojpar, and Raisons—to pivot away from unstable contemporary produce.
• Internal paperwork leaked in April 2025 outlined an alleged plan to switch the Twiga model and core property right into a clear company shell (“NewCo”) whereas leaving legacy liabilities behind in renamed entities.

Twiga’s monetary unwind exposes the cost of constructing a distribution enterprise round heavy mounted commitments and skinny margins. Its logistics infrastructure, expertise prices, and long-term leases created obligations that have been tough to maintain as the enterprise struggled to fund day-to-day operations.

The group’s 2025 acquisitions of FMCG distributors Jumra, Sojpar, and Raisons added extra companies to a company construction already struggling to show distribution volumes into sufficient money to service its money owed.

At Marikiti, time prices cash. Tomatoes soften, cabbages wilt, and yesterday’s asking value can change into at present’s loss. Brokers handle this by adjusting costs all through the day and matching produce with patrons earlier than it loses extra worth.

A centralised distributor has much less room to manoeuvre. It buys produce, strikes it via warehouses, types it, and delivers it to retailers. Every step provides prices, from gas and labour to storage and stock administration. Those prices stay even when costs fall, or a cargo arrives broken.

The margins go away little room for errors: at a gross margin of 5% to eight%, a badly broken cargo can wipe out revenue from a number of profitable deliveries. The distributor should take up the loss, low cost the inventory, or danger shedding the buyer.

Marikiti’s brokers can reply sooner: if tomatoes begin softening, they minimize costs and redirect the inventory to meals distributors who can use it that day. As the market thins, costs fall additional. The aim is to show produce into money earlier than it turns into waste. Brokers earn commissions with out proudly owning each crate they transfer.

Their benefit is the skill to reprice, reroute, and discover one other purchaser earlier than the clock runs out. A centralised platform has to get well the cost of its complete operation from every transaction. At Marikiti (or every other massive market), costs can change in minutes, however overheads can not.

The secondary flaw in the B2B tech mannequin entails the mechanics of casual commerce credit score. Informality in retail is a rational risk-management framework designed round extreme money movement volatility.

A kiosk working a roadside stall buys stock on morning credit score from a provider, sells produce all through the day, and settles the invoice in the night. When tech platforms attempt to digitise this credit score relationship via formal monetary expertise rails, they run right into a elementary enforcement downside.

If the platform extends commerce credit score through a cell app and the vendor experiences a poor gross sales day, the vendor merely defaults on the digital pockets (Copia tried this mannequin, and it failed too). The platform can not repossess two luggage of greens, nor can it economically pursue a micro-vendor via formal authorized channels.

The casual dealer manages credit score via relational capital and rapid market exclusion. The dealer is aware of the place the vendor lives, the place her stall is situated, and which relations function adjoining retailers. If a vendor defaults on a dealer, she/he’s immediately blacklisted throughout the complete bodily wholesale market cluster. Because entry to every day stock is her sole livelihood, the vendor prioritises paying her casual dealer above all different obligations.
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Furthermore, the casual dealer executes an uneven danger switch that company startups can not replicate. When wholesale costs collapse, the dealer pushes the loss backwards onto the producer. If a dealer commits to accumulating tomatoes from a farmer however wholesale costs fall in a single day, the dealer merely delays arrival or calls for a direct 40% value discount on the spot. Facing whole crop rot inside 48 hours, the farmer has no leverage and accepts the lowered payout.

A venture-backed startup, certain by provide agreements, public relations, and company governance, can not simply renege on promised farmgate costs with out destroying its model repute or dealing with litigation.

This failure mode is systemic throughout Kenyan market tech:

• MarketForce raised $42 million to digitise casual retail ordering earlier than shutting down its B2B e-commerce platform RejaReja because of unsustainable commerce credit score defaults.
• iProcure raised tens of hundreds of thousands to digitise agricultural enter provide chains earlier than getting into insolvency proceedings after burning capital on stock distribution hubs.
• Wasoko and MaxAB executed a defensive merger throughout North and East Africa to trim operational burn charges after recognising that scaling B2B retail distribution multiplied losses.

Attempts to chop out middlemen in casual produce markets have repeatedly underestimated what brokers do. At Marikiti, they set costs, prolong credit score, join patrons and sellers, and clear inventory earlier than it spoils. These relationships are half of the market’s infrastructure.

Technology corporations want to know how they work earlier than constructing merchandise for the merchants who rely on them. Payments, messaging, and route-planning instruments can assist brokers run their companies with out shopping for produce, holding stock, or working an costly distribution community. Twiga’s lesson is to know the market’s economics earlier than attempting to rebuild it.

Kenn Abuya

Senior Reporter, TechCabal

Thank you for studying this far. Feel free to electronic mail kenn[at]bigcabal.com, along with your ideas about this version of NextWave. Or simply click on reply to share your ideas and suggestions.