Kenya National Trading Corporation(KNTC) has launched edible oil dispensing machines, a move that is expected to trigger intense competition by local and foreign firms for a share of Kenya’s cooking oil segment.
According to a statement from KNTC, this venture targets low-income earners and groups who will sell the cooking oil using the vending machines.
The initiative dovetails with the Kenya Kwanza administration’s plan to address the needs of hustlers or those disadvantaged Kenyans at the bottom of the income pyramid.
This cooking oil vending machines will be strategically placed within residential areas across the country with KNTC supplying the oil in affordable quantities.
KNTC joins a crowded field of firms already in the sachet economy space
KNTC joins a long list of manufacturers who have entered the sachet economy, most firms now repackaging their products into smaller quantities to capture the household budget of low-income households. Some of the household items now sold in sachets include magazine, washing powder, tea leaves, glucose, airtime and spices among others. Also sold are small cooking gas cylinders which can be refilled from automated machines.
KNTC plans to offer vendors a litre of cooking oil at KSh 185 enabling them to sell to consumers at KSh 210.00, a 13.5% profit margin. Consumers will be able to pay as little as KSh 20 to buy the cooking oil
Prospective vendors are required to put in an investment of KSh 185,000 which includes working capital.
According to Moses Kuria, Cabinet Secretary for Trade and Industrialization, the end game is to replace imported cooking oil with local substitutes through investment in palm oil plantations in a venture that involves the state partnering with private sector and County Governments.
KNTC Managing Director Ms Pamela Mutua seeks to empower Micro, Small and Medium Enterprises particularly those run by the youth and women.
State-run Hustler Fund has already positioned itself to provide loans of between KSh 20,000 and KSh 2 million in loans to prospective investors seeking to invest in the vending machines.
This ‘Mama Pima’ project involves collaboration between KNTC and innovation by Pt Industrial Nabati Lestari(INP) from Indonesia, one of the world’s largest edible oil producers.