Twiga Foods and IBM successfully test blockchain technology in lending to small scale vegetable sellers

Twiga Foods, a start-up that specialises in buying and supplying fresh food to vegetable vendors (Mama Mboga) at their premises, has collaborated with technology firm IBM to pilot a technology to help disburse loans to vegetable vendors. In the piloted model, the system calculates the creditworthiness of vendors by analysing their purchase records with Twiga Foods to predict the vendors’ possibility of paying back loans.

The pilot involved 220 vegetable vendors and ran for eight weeks, with an average loan amount of sh3, 000 issued. At the end of the programme, the size of produce the vendors ordered from Twiga increased by 30 percent while their profit grew by an average of 6 percent. Interest was charged at 2 percent on a four-day loan and two percent on an eight-day loan.

“Previously we were focused on helping farmers distribute bananas, tomatoes, onions and potatoes to 2,600 kiosks across Kenya, but we soon realised 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,” said Grant Brooke, co-founder Twiga Foods.

The technology used

The lending system uses blockchain technology where information from transactions is visible to all computers involved in the system and, is stored in form of blocks of data. For instance, a vegetable vendor has taken a loan, his/her information (amount borrowed, date etc.) is stored as a block of data, and with every action that follows this is stored as another block of data.

Every computer in the system can tell which block of data came before the other. Thus, if one tries to change any of the information in the system they will have to change the whole system-block by block, which is impossible without detection. The nature of the system makes it easier to manage financial transactions from loan issuance to repayment, in an open and secure way, thus building trust among those involved.

In the pilot, whenever Twiga delivered products to the vegetable vendors, the vendors got a message with options for loans to be used to pay for the order. To which they would respond by confirming the loan option they preferred.

According to Andrew Kinai, the projects Lead Software Engineer at IBM Research, the team had to go over the platform severally based on the feedback from the retailers, adding that the use of SMS was effective especially considering that some of the users had limited IT literacy. After the pilot-according to IBM-the plan is to roll out the programme further to include more SME owners in Africa across different sectors.

Blockchain technology has many applications areas that could transform the nature of transactions in Africa, early this year ICT Cabinet Secretary Joe Mucheru established a task force to look at how Kenya could explore the use blockchain and artificial intelligence technologies.


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