Kenyan B2B e-commerce food distribution platform Twiga has laid off 211 of its full-time employees following a restructuring that eliminated the company’s in-house sales team.
Laid-off staff make up 21% of the more than 1,000 employees, mostly in Kenya, where it links farmers or agricultural producers and fast-moving consumer goods manufacturers with retailers.
The agritech’s CEO and co-founder Peter Njonjo told TBEN that the laid-off trade development representatives were given the opportunity to work for the company as independent agents with pay based on the customers they acquire and the sales they make.
The representatives signed up suppliers and were responsible for customer relations, gathering market information and promoting products to customers. In the current proposition, the agents will perform similar tasks.
Reports also indicate that Twiga has reduced staff travel allowances as part of cost-cutting measures.
“Twiga recently launched a new, optimized sales agent program… where current Trade Development Representatives (TDRs) will transition from permanent employees to independent agents on a 100% commission basis,” Twiga said in response to a TBEN investigation, adding that the transition from the TDRs was made in accordance with labor law and affected employees were given the first right to refuse to switch to the new model.
The company says it plans to create 1,000 opportunities through the agent model by the end of the first quarter of next year.
“This transition creates an entrepreneurial opportunity open to former sales agents and the general public. The advantage of this transition is that it allows for increased revenue based on the effort and entrepreneurial spirit of the agent. This model has worked with other companies such as insurance and banks who have completely transitioned to independent agents in Kenya.
Co-founded by Njonjo and Grant Brooke in 2014, Twiga joins the growing list of startups in Africa and around the world that are downsizing amid a slowdown in venture capital funding that has made capital difficult to access for operations and growth.
The changes come just one year after Twiga raised $50 million in Series C round to scale up in Kenya and expand into neighboring countries. The round was led by Paris- and Nairobi-based family office and private equity firm Creadev as TLcom Capital, IFC Ventures, DOB Equity and Goldman Sachs’ spin-off Juven made follow-on investments.
They also recently launched Twiga Fresh, a private label addition that will see it grow and distribute its own farm produce to merchants and deal with traceability issues, inventory and price volatility – which have made it difficult for the company to deliver on its promise of affordability and food security.