The Next Wave: The high cost of cutting out the middleman
Attempts to cut out middlemen in informal produce markets have repeatedly underestimated what brokers do.
In Nairobi’s Marikiti market, one of the city’s busiest trading hubs, fresh produce is traded 24/7. However, a once-successful venture, Twiga Foods, ran into financial trouble, highlighting the high costs of cutting out the middleman in produce distribution.
Twiga raised over $185 million to establish itself as a formal distributor in East Africa, but its ambitious expansion plans ultimately led to its downfall. In August 2026, Twiga Foods One Limited entered statutory administration, followed by its parent company Twiga Foods Limited, which renamed itself Templar Field Limited.
The financial issues exposed stark contrasts between venture capital expectations and the operational realities of running a distribution business with heavy fixed costs. In December 2023, Twiga secured a $35 million convertible bond and $1 million in personal capital, but it failed to manage its mounting debts effectively.
The company's strategy to buy traditional FMCG distributors Jumra, Sojpar, and Raisons in mid-2025 failed to solve its core problems. Although these acquisitions added more businesses to its corporate structure, they could not sustain the distributor amid thin margins and escalating operational expenses.
Twiga’s logistics infrastructure, technology costs, and long-term leases created unsustainable obligations. The group’s financial struggles were amplified by these fixed commitments, as the distribution hub at Tatu City was abandoned in favor of a more traditional approach.
Unlike Twiga’s centralized model, brokers at Marikiti can react quickly to market fluctuations by adjusting prices and redirecting stock before it deteriorates. This flexibility allows brokers to manage perishable goods with minimal overhead, making them more adaptable to daily price changes that can occur in minutes.
The failure of Twiga Foods serves as a cautionary tale about the pitfalls of trying to formalize a distribution model that requires heavy infrastructure and long-term commitments, especially when faced with the fluid and competitive nature of fresh produce markets.
Written by urgent.news from TechCabal's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
