When VunaPay, an agritech startup that provides produce management solutions, was founded last year, its co-founder and CEO – Judy Njogu Mokaya – did not anticipate that the platform would gather momentum as fast as it did. Months later, the startup has brought on board three cooperatives, actively serving more than 9,000 farmers with tens of thousands more on a wait list.
“Small-holder farming accounts for 30% of the nation’s GDP. But there is little value generated from this enterprise. A sign that something is broken in the sector. We cannot see the benefit of the earnings derived from small-holder farming,” Njogu said in an interview with The Valentine Njoroge Show.
Njogu, who has a range of experience with stints at Safaricom and Oracle, partnered with Koya Matsuno, a seasoned Japanese entrepreneur, and Ian Wambai – a tech guru – to create VunaPay to enable farmers earn instant payment from their produce. The three co-founders collaborated on a sprint project in the startup accelerator program Antler, where they were challenged to come up with disruptive innovations that would spur social change. Matsuno now serves as the company’s COO while Wambai is the Chief Technology Officer (CTO).
“60% of Kenyans owe their bread and butter to agriculture and yet our small-holder farmers are really struggling. If I was going to do anything that would make the most impact, it had to do with these small-holder farmers,” says Judy Njogu.
Broker Exploitation and the Age Gap
VunaPay’s founders carried out an extensive research on the agriculture industry in Kenya. One of the salient problems they identified was broker exploitation exacerbated by the delay in payment disbursement. Farmers who delivered their products to co-operatives are expected to await payment for months. VunaPay realized that such a model was not sustainable because it pushed individuals further and further away from the sector.
“Two-hundred grams of Kenyan coffee is going for about US$80 and yet the small-holder farmer does not make even a dollar from his produce. Those paid well get about Ksh 80. But another problem arises when brokers get farmers’ produce for as little as 20% of the cooperative price because of desperation,” said Judy Njogu.
Small-holder farmers, who make up 80% of the agricultural block in Kenya, cannot afford to wait for monthly or quarterly disbursement. They need instant payment to facilitate their daily incomes and purchase essential farm inputs such as fertilizers. When agriculture proves a disastrous and loss-making enterprise, young people shy away opting for other rewarding engagements.
According to Njogu, the average age of the Kenyan farmer is sixty due to generational apathy. She decried that if the enterprise did not embrace technology and immediate returns, young people would continue selling their inherited lands or tapping into the overcrowded real-estate sector.
“We work a lot within the agricultural cooperative spaces and we find a lot of eighty-year-olds. Our young people are not getting into coffee farming. That is what we are looking to change as VunaPay,” said Judy Njogu.
VunaPay’s Dream
VunaPay sought to revolutionize the agricultural sector by digitizing the remuneration system in cooperative societies. The platform determines how much produce a farmer has delivered to the processing factory, then allocating a fraction of the payment. The incorporation of technology between VunaPay’s systems and those of the factories enables a real time and accurate inventory. The program is mainly operating within the coffee zones in Kiambu, but the company is gauging possibilities for expansion.
“Farmers keep calling us notifying us about areas facing similar problems. This is an angle that I had never really thought about. As we were going into this program with the goal of bringing in the youth into agriculture, we realized it would also serve women exceptionally,” Judy Njogu added.
The CEO provided a case study of women hawking milk in Kiambu to facilitate their daily ‘chama’ contributions. As these women cannot rely on cooperatives, their produce is vulnerable to shrewd brokers who would short-change them. VunaPay, on the other hand, would provide them with instant payment at better rates.
Njogu, however, maintains that more work needs to be done especially from the government side, especially on expensive farm inputs and lack of advisory services. VunaPay admits that it is doing well in its inaugural journey with the farmers but with more than 12,000 co-operatives in Kenya, more partnerships and innovative solutions need to be fostered.
“Our entry into the market will assure farmers get instant payment, but other stakeholders need to work on ensuring they get better rates for their products upon exportation or local sale,” Njogu says.
