iProcure, a Kenyan-based agtech firm, has received a grant of US$ 1.2 million in addition to funding of US$ 9 million, Series B, that it intends to use to support its expansion in Kenya, Uganda and Tanzania. This brings the total of funds that it has secured to date to US$ 17.2 Million.
“This USA grant will enable iProcure to grow from its current rate of 100 installations per month, a pace that has been slow due to financial constraints. The grant will assist us double and accelerate our rate of growth in Kenya and transform the way the agricultural industry works digitally”, said Niraj Varia, iProcure CEO in an interview with Kenyan Wallstreet.
Available figures indicate that 60% of Kenyan farmers buy farm inputs from agro-dealers while the rest or 40% of farmers live far away from these outlets and therefore have no access.
iProcure intends to build a farm force of field agents made up of previously unemployed agricultural experts and personnel, who will use the firm’s device and take orders, finalize them and send them to iProcure for delivery.
He said one of the biggest challenges facing Kenya’s agriculture is politics as well as the sector’s sensitivity to climate change and erratic rainfall patterns.
iProcure plans to expand in East Africa
In October 2022, the firm took a massive hit after rainfall failed. To minimize this exposure, iProcure has since accelerated its expansion into Uganda and Tanzania so as to generate diversification of its equity.
“We still have a small share of Kenya’s total market and so plan to deepen by expanding the sales team and infrastructure, bringing in new products to drive down prices for farmers. The goal is to grow in Kenya while diversifying into other countries in the African region, including Uganda and Tanzania,” said Varia.
Not many farmers in Kenya, East Africa and the rest of the continent have access to the right farm inputs at the right time and at competitive prices. Other challenges facing farmers in Africa include poor agricultural practices, post-harvest issues as well financing challenges.
Figures indicate that Kenyan farmers use about 10-14% of the global average agricultural inputs used, way ahead of its neighbours including Tanzania and Ethiopia.
iProcure’s mission is to unlock the other 90% so as to increase the level of agricultural productivity in the country, the risks associated with farming notwithstanding.
He said the biggest challenge facing the agricultural supply chain is that no one knows anything about it-it is a complete black box.
For instance, most farms are basically micro businesses that do not keep proper records and accounts and are mostly on paper and pen. This means that most farmers so do not have a history of their production or even any new products that are out there.
It is also estimated that some 60% of rural farmers buy their inputs from agro dealers-who are mostly small stores that are inadequately stocked. The dealers do not do stock taking with the business having a lot of leakages and pilferage.
Most agro dealers do not also possess the necessary tools to analyze what products are bringing in cash in terms of revenue and gross profit, do not monitor what products are low in terms of stock levels or those coming up to expiry and therefore turning into losses for them.
“Most are pen and paper businesses and therefore unable to raise adequate capital. There is a business with 5 trucks, is run semi-formally, a distributor who is also not formal and a manufacturer –all with challenges of data through the entire supply chain. There is no information between the data silos and opaque all the way to the manufacturer. The end result is supply shocks,” said Niraj.
iProcure enables full digitization of the entire system of an agro retailer with IT solutions that manage sales, inventories, deliveries, point of sales and orders, CRM and Quality Management as well as business analytics-what is selling and not selling and what is valuable to the business in terms of revenue and gross profit, inventory assessment, stock takes and inventory reports.
An agro dealer is thus able to fully manage all these aspects of the business using one iProcure device just as any other retailer does anywhere around the world.
“We have a hardware that is installed in the store and can be used by the clerk. The other is a App that the store owner can use to monitor what is happening in real time, eliminating leakages and wastage etc. We also have a supply chain ERP system that allows digital management of a product all the way from the manufacturer to the retailer, eliminating wastage and leakage,” said Niraj.
A combination of these two products allows iProcure to send information back up through the entire supply chain to enable planning by the store owner.
iProcure also uses its platform to ensure farmers get fertilizer at the right price by cutting off middlemen along the supply chain between the manufacturer and the farmer.
iProcure has enabled many agro-dealers to grow their businesses from one store to 5 or more outlets in different small towns. It has also facilitated the sale of huge volumes of fertilizer at below market price before the Govt fertilizer subsidy programme kicked in. Dealers are able to plan better and therefore lower their levels of stock ups pile-ups.
Using iProcure data, the firm can now give inputs to agro-dealers, on a credit basis. Last year, it gave inputs on credit to 1,500 agro-dealers across the country or 15% of all agro-dealers who borrowed an average of US$ 400 at a time and began repaying within two weeks and fully repaid within six weeks. This immediately drove up sales to agro-dealers by 10%, pushing more products to the farmer.
On its future plans, Niraj said iProcure intends to expand in Kenya and Uganda, to 8,000 in Kenya by the end of 2024. The firm plans to use its devices to power other distributors in the region through partnerships, using its data and insights and the model to meet the needs of farmers in Africa.
iProcure also intends to open up its platform to other dealers such as a large lender, who wants to deal with farmers in Kenya by giving products from an aggregator and not cash, using vouchers that are redeemed within its ecosystem. The lender can then control how the cash they lend out is used.
“We have warehouses and trucks in Kenya and using distributors in Uganda so as to monetize and power what we are offering to rural farmers, through use of technology. Today, we have digitized 3.500 agro dealers in Kenya or 30% of all agro dealers in the country, using our technology, and 1,000 in Uganda. We plan to reach 5000 agro dealers in Kenya at the end of this year as we also expand into Tanzania and get to 1,000 by the end of the year,” said Niraj.
Niraj, who is born and raised in Kenya, has a background and working experience in a wide range of fields that include actuarial science, strategy consultancy, fund management, managing partner at Novastar Venture Capital and agro-business.
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