Who is Virtual City?

We are a technology firm that develops and delivers mobile solutions across the Agri and Supply value chain. We provide digital tools that accelerate financial inclusion for farmers and de-risk investment decisions for financial service providers.

We are passionate about Africa and our drive is centered around smallholder farmers, so we are constantly developing and deploying solutions that increases and unlocks their value. Virtual City is active in Kenya, Uganda, Rwanda and Tanzania and our vision is entry into twenty more countries in Africa over the next five years.

Virtual City began its operations in 2000 and has grown to be the current leader in supply chain automation solutions in East Africa. We are a technology company that focuses on end to end transformation of supply chains for meaningful impact to beneficiaries through enablers.

The value we bring to our customers is in providing efficiency, visibility and transparency along the supply value chain. Having a positive impact on business growth by enabling our clients to drive decision making and build on sales volumes and market share enabling to serve the end-consumer better. Virtual City has brought forth a paradigm shift in the way supply chain is managed through invention and we are honored to have been recognized for this over the years through various awards and partnerships both local and international.

How we bring value across the Supply Value Chain

Our Vision?

To be the preferred “Supply Chain Solutions Provider in Africa”. We have a passion for invention and seeking new ideas & opportunities to enhance the value we deliver to our customers.

Our Mission?

To consistently invent Supply Chain Solutions that simplify lives. We make the lives of all stakeholders we work with easy.

Our Value Proposition?

Virtual City began its operations in 2000 and has grown to be the current leader in supply chain automation solutions in East Africa. We are a technology company that focuses on end-to-end transformation of supply chains to deliver meaningful improvements to the participants in the supply chain.

The value that we bring to customers lies in providing efficiency, visibility and transparency in the procurement value chain. This has a positive impact on business growth as Our clients can make better decisions to improve sales volumes, resulting in improved customer service and increased market share.

Virtual City has introduced a paradigm shift in the way supply chains are managed through invention and have been recognized for this over the years through various local and international awards and partnerships.

The Virtual City value proposition is that we are the only major regional player with the technology and capability to deliver visibility and coordination across the entire food value chain from farm to consumer. Our platform is designed to digitize all the stages in the field operations of the supply value chains to provide on-demand datasets to generate predictive analytical outputs. This enables businesses to make quick data-driven decisions to serve Our clients more efficiently, leading to business growth.

Our solutions make use of user-friendly mobile tools to create efficiencies and eliminate fraud within the supply value chain by increasing transparency and visibility of all produce transactions. The role-players involved include smallholder farmers, suppliers, cooperatives, warehouses, processors, buyers, traders, manufacturers, distributors and retailers.

Virtual City has developed a suite of inter-related mobile and tablet applications designed for each key player in the supply value chain. Handy interfaces on simple field devices are integrated into three core solutions with value added services derived from the utilization of the solutions. Our core solutions are named AgroForce, SalesForce and RetailForce.

Virtual City Intro

Virtual City is a mobile technology provider that specializes in supply chain automation. The business is owned by local Kenyan shareholders and run by the founder and governed by a Board of Directors that comprises of shareholders and the Acumen Fund. The company specializes in automating supply chains in the Agriculture and FMCG Distribution segments of the East African market. Our solutions provide supply chain visibility, thereby reducing fraud, increasing efficiency, and creating data-driven insights. Our solutions also serve as a powerful platform for mobile money, enabling faster, lower-risk transactions between SME enterprises and their trading partners.

What is Your Project and How is it Inventive

Virtual City intends to create a cashless ecosystem in the Agro Value Chain that will comprise smallholder farmers, cooperatives, traders, processors, distributors and input retailers. This unique ecosystem will be driven by a Mobile Voucher system that interlinks the players and transactions while enabling sellers of produce to get either immediate value that can be used to purchase inputs or securitized for loan applications or to store as a receipt that allows the end product value to be realized. Nothing like this exists in the markets of Kenya and Rwanda today, and the implementation of such inventiveness would enhance farmer’s livelihoods, increasing their access to inputs and income. This project directly aligns with FreeTrade’s missions of enhancing Market Information and providing Market Services. In addition, while we propose starting in Kenya and Rwanda, this is the type of infrastructure exists across East Africa, and could be replicated and scaled.

Briefly Outline the broad history of your business

Virtual City is a leading company in the Kenyan technology sector. The company is governed by a Board of Directors that comprises of the company’s shareholders and representatives of Acumen Fund. Over the years the company has consistently proven itself in its ability to invent relevant applicable solutions for the Agriculture and Distribution sectors through smart application of mobile technology, business process mapping and integration to Mobile Money. We are currently creating inventions with respect to engaging SMEs in the mobile money transaction process. Virtual City has recently been the recipient a number of major awards or investments:

1. Legatum Pioneers of Prosperity:
   $50,000 grants (2007). Recognized the top 6 inventive SMEs out of 450 applicants from 10 African countries.
2. Africa Enterprise Challenge Fund (AECF):
   $750,000; 50% grant, 50% loan (2009). Recognizes companies that deliver a positive impact to Africa’s rural poor, particularly by linking rural farmers with local and international markets.
3. Nokia Growth Economy Venture Challenge:
   $1 million convertible debt at 0% interest (2010). Awarded for inventiveness in the use of mobile technology to improve the lives of people who reside in areas where average income is less than $5 per day.
4. Acumen Fund:
   US$ 1.5m in Virtual City investment through a convertible note instrument.

The mission of Virtual City is to be the preferred mobility solution provider in Africa. Virtual City has been able to carve a position for itself as the market leader in the development, customization and implementation of inventive solutions, particularly those focused on supply chain automation.

We have done this by being able to constantly recognize and adapt to the changing needs and growing demands of our clients, and responding with new technological inventions. With this philosophy, we have provided some of the largest organizations, both local and global, with tailor-made mobility solutions that have led to an increase in their productivity and as a result, their bottom-line. Our solutions provide supply chain visibility, thereby reducing fraud, increasing efficiency, and creating data-driven insights. Our solutions also serve as a powerful platform for mobile money, enabling faster, lower-risk transactions.

D2. Operations

The Virtual City organization structure supports the entire breadth of the company and is built to ensure easy flow of information and robust quick decision making. Decisions are decentralized and the line managers are empowered to impact the day to day operations of the company as long as they feed into the global picture of the company.

We currently have 45 employees and we have recently re-aligned 80% of the staff towards customer facing functions in client service, business development and account management and outsourced most of the non-core, non-customer facing functions. Employees are empowered to do their tasks at various levels:

• Annual leadership training for line and senior managers
• Functional training on an annual basis based on the employee’s line of expertise.
• Weekly knowledge base sessions that are built for employees to share their work and non-work related experiences.
• Cross-company functional training happens continuously and ensures that training accrued by an individual or department trickles down to other departments over time.

The company has invested in state of the art equipment enabling employees to work faster and more efficiency and to work anywhere regardless of where in the world they may be. All employees also have remote working capability.

Virtual City has invested heavily in internal systems to empower employees to work with minimum supervision and deliver real output. We are currently using a customized balanced scorecard system that manages performance. Employees also have a shared knowledge and shared working platform where they can collaborate on multiple projects. These are supported by the companies substantial investment in management systems including its Navision Financial Management ERP for real time financial reporting and its CRM system for client issues tracking and customer satisfaction management.

Lastly, to ensure the products are of the highest quality and are delivered on time, we have invested in a product testing and sequencing system that manages a product throughout its development life. In the entire product design and development process, we employ internationally recognized and accepted practices, notably Agile and standardized UI/UX design. The design and development team is supported by a dedicated team of quality testing and control experts with additional sources available from our quality outsourcing partner at critical stages in project execution.

To ensure that we focus our efforts to what makes us truly great and truly inventive; we are outsourcing all non-core functions. We wish to product development and customer interaction functions:

• Project management across the company just to ensure we get products out faster and “get it right” the first time.
• Testing and product integrations of products to product testing companies.
• Marketing communications to a marketing agency based in Nairobi.

It is important to note is that we do not plan to reduce the number of employees as a product of our outsourcing strategy. Outsourcing is serving two key functions: Focusing our efforts towards what we do best and cross-training the internal teams with external expertise. Through our partnership with Acumen Fund, Virtual City has technical assistance support from global resources in Project Management, Route to Market Management, Financial Modeling and Strategy Execution. Through our partnership with IBM Research, Virtual City has access to a team of PHD experts in business modeling and access to the global technical expertise of IBM. Our strategic partnership with Safaricom provides us access to their nationwide sales footprint plus a revenue share model on their M-Pesa platform for all the enterprise supply chain solutions we deploy together. Similar relationships exist with the Microsoft 4Afrika Project and the Google Africa projects all of which provide additional capacity for Virtual City to execute on our initiatives as a result of the strategic partnership it has formed over the years with the best-of-its-kind global organisations that have recognized our unique ability to execute.

D3. Management and Personnel

The inventive project team is comprised of the senior management team behind the initial success of AgriManagr in the tea sector, as well as the expansion efforts into coffee and diary. The team members are as follow:

• John Waibochi, Chief Executive Officer

  John is the Founder and CEO of the Virtual Group of Companies, to which Virtual City is a key pillar. He is also a shareholder and sits on the Board. John studied electrical engineering at Michigan State University. John has worked in the mobile communication sector in Kenya since 1994 and worked for two different firms in the space before launching Virtual City in 1999.

• Herbert Thuo, Chief Marketing Officer

  Herbert earned a Bachelor of Commerce in Marketing from Jomo Kenyatta University of Agriculture and Technology and is currently pursuing his MBA from United States International University in Nairobi. Before joining Virtual City, Herbert worked with MFI Enterprise Solutions as a Marketing communications Manager where he drove B2B communications across its Africa operations. He is an Acumen Fund East Africa Fellow.

• Catherine Irungu, Chief Operations Officer

  Catherine earned a Bachelor of Arts degree from United States International University in Nairobi and was working within Virtual City as the head of customer service before joining as the Chief Commercial officer. She has a breadth experience in managing large and small clients and meeting tight sales numbers.

Past experience has taught us that sector expertise is vital to gaining traction with a new, unfamiliar product. The senior management team will be supported by a team comprised of the following positions:

• Corporate Sales Manager

  This position will be dedicated to managing enterprise sales to exporters and domestic aggregators. Marketing Supply Chain Solutions means marketing a solution – not a simple product – that has implications for a potential customer’s operations, processes, and staff training. Furthermore, this project will demand expertise and experience that is different than Virtual City’s other sectors, so having a credible sales manager will be critical.

• Channel Partner Manager

  Virtual City’s success in other sectors has been the result of close partnership with key organizations that provide the credibility and relationships required to introduce an unfamiliar solution. To be fruitful, each of these partnerships requires significant time and the hands-on efforts of a dedicated resource to develop the right relationships. For Horticulture, this will be filled by a partner manager working specifically focused on horticulture.

• Account Manager

  Implementation requires a dedicated account manager to coordinate installation and training across multiple customers with many sites and many staff members. Effective technical support, including troubleshooting when needed, also requires a dedicated account manager.

• Implementation Staff

  The technical and client service team will be assigned to support implementations, which usually require onsite installation and training. This team can be scaled as Virtual City gains traction in the horticulture sector.

The senior team has significant experience in agriculture and rural supply chain challenges, but horticulture presents new needs and issues. In order to accelerate Virtual City’s learning and penetration, we will be working with a “route to market” consultant and a financial consultant to support customized financing packages and provide project/customer-specific accounting and reporting.

E1. Solution Offerings

Virtual City’s solutions provide an elaborate but simple way to use a cashless ecosystem for all of the players in an agricultural supply chain. The project will establish a cashless ecosystem that interlinks all these transactions and players while increasing trade, reducing the inventory to cash cycle, minimizing fraud and enhancing farmer value. It capitalises on the transactions between farmers, collection centres, co-ops, agro dealers, input suppliers and processors providing critical linkages based on the produce delivered by the farmer. It also enables any player in the supply chain to hold, leverage or cash in on the stored value of their Voucher receipt using their mobile phones. An exhibit of the players involved in this type of ecosystem transaction is shown below.

• AgriManagr

  is a produce purchase automation solution that captures smallholder farmer deliveries at the buying centre and tracks the inventory in batches through to the Coop and processor.

• Distributr

  is a distribution supply chain automation solution that tracks the order, sales, delivery and mobile money payments of finished products and input supplies from the processor through to the distributor and eventually retailer.

• Researchr

  is a market analysis solution that is used to capture field information on farmers, farms, traders, retailers, consumers, etc. and provide automated analytical reports on the players and entities in the supply chain.

• Hewani

  is an SME trade platform that enables Agro Dealers, Regulators, Retailers, Revenue Collection Agencies, etc. to generate orders and sales remotely, plus be able to collect payments via mobile money either at the retail outlet or remotely while providing customized reconciliation reports of all transactions.

The Supply Chain Solutions project will use these value chain platforms to establish a cashless ecosystem that interlinks all these transactions and players while increasing trade, reducing the inventory to cash cycle, minimizing fraud and enhancing farmer value. An exhibit of how the different players will connect in shown below, with different processes for each player.

Virtual City intends to achieve the following:

• Deploy a Voucher and Loyalty Platform

  that aggregates data captured from Virtual City’s Agro Purchasing and Agro Distribution Solutions with integration to key mobile money platforms such as M-Pesa for mobile payments and M-Shwari for mobile deposits.

• Increase the affordability and accessibility of process automation

  for the staple crops sector that substantially reduces the cost of acquisition of the hardware and software tools enabling market players to enhance the efficiency of buy/sell transactions and inventory tracking.

• Create Key Linkages

  between market players within existing supply chains and across to other supply chains in other markets through the online and mobile platform.

• Duplicate the 9-13% increase

  in smallholder farmer volumes achieved in Tea sector to staple crops supply chains through automation of the buying process and integration to mobile money.

• Increase the value of raw produce

  for smallholder farmers of staple crops by providing them a receipt that can be held on to, traded, sold or used as collateral without forcing them to resort to quick sales at the farm gate due to short term cash requirements.

• Develop a business model

  based upon a transactional revenue share model as opposed to hardware/software license sales for Virtual City’s automation products.

• Invest jointly with our Route to Market partners

  to create the awareness and provide the sales support necessary to gain momentum in the market. A new, unfamiliar technology requires significant education and handholding to build support and confidence necessary for successful adoption.

Our Inventiveness

The inventiveness of Virtual City’s solutions is in the smart application of affordable, easily-deployed technology to address systemic supply chain problems that hurt smallholder farmers operating in a rural African setting – farmers without another answer. We firstly bring the accuracy, efficiency and reliability of

supply chain management systems

to the field operations of smallholder agriculture and secondly unlock the value of the delivered produce not only to the smallholder farmers but to other actors in the ecosystem. The previous supply chain projects of Virtual City have in effect been inventive and transformational for specific commodities such as the tea, dairy, beverages, inputs and other vertical market sectors. This Supply Chain Solutions Project provides the missing linkages between the market players that enable ease in trade, access to finance, mobilisation of assets and affordable channel for introduction of new services that would previously have been too expensive to administer to this market.

Transparency and automation

Our project is designed to reduce the chronic problem of fraud whereby the farmer is cheated by fraudulent buying clerks and middlemen that manipulate the manual weigh scale or divert crops to “ghost farmers” in the manual records. Secondly, it provides streamlined, real-time management capabilities for co-ops and processors who can easily track raw produce and farm input inventory, farmer transaction records, purchase history, and net dues. Third, it goes beyond providing value at one level, but seamlessly manages processes at the buying centre, factory receiving centre, transporter, and processor thereby enabling reconciliation and facilitating a faster process from delivery to payment for the smallholder – the end beneficiary.

Differential pricing

is facilitated by tracking individual deliveries from individual farmers and also in providing scaled pricing depending on when the farmer decides to cash in on their delivered produce. This is particularly powerful in encouraging farmers to not only improve the quality of their output, but delay the inevitable conversion of the produce to cash until the most opportune time. Historically, the value of most produce delivery in East Africa is measured only on quantity recorded at the farm gate due to the limits of manual recordkeeping plus the unfortunate immediacy of requirement for cash to support the livelihood of the smallholder farmer’s family. Supply Chain Solutions allows the buyer / processor to offer differential pricing to the individual farmer based upon quantity, quality, location buying price (farm gate, Coop, processor plant reception), market sale price and even for loyalty for consistency of delivery. This enables staple crop smallholder farmers to enjoy the same privileges as tea farmers whereby the monthly payment for deliveries to the buying centre is treated simply as a pre-payment deposit and the eventual value of the payment determined by the export market price.

Mobile money and financial inclusion

Supply Chain Solutions’s inventiveness in the use of mobile money changes the nature of payments across the agricultural supply chain and provides the basis for financial inclusion. Supply Chain Solutions will be a key player in powering cashless payments to farmers for produce and payments to service providers of inputs.

Extensibility

The platform design is built on extensible cloud architecture and to work with other systems in use by our clients today. More processors and co-ops can adopt the solution, which works across commodities and countries and does not require restructuring of the software architecture, which is designed for the cloud and hosted remotely. Extensibility is key to achieving Supply Chain Solutions’s full potential impact. We have experienced success in the Kenyan market in tea and wish to go into other commodities comprising such as nuts, beans, peas, potatoes and other staple foods. In addition, we can enter new geographical markets such as Uganda, Rwanda, and Tanzania without modifying the product or business model.

Affordability

The business model is also an invention for business/enterprise solutions in the East African market, particularly in agriculture. The service based and pay-as-you-go model is typically associated with consumer intangible items such as mobile airtime or premium TV. Virtual City will introduce it to co-ops and processors, providing them access to the same level of automation tools that large corporates can afford without having to pay substantial upfront fees, while the farmer will have no direct fees associated with this service.

Sector visibility for regulators over the entire supply chain

The regulators and government agencies intend to use data from the Supply Chain Solutions solution to improve their visibility into the market, identify the actual players, confirm value of inventory across the entire supply chain, and determine the optimal interventions and regulations that will boost the sector and aid smallholders. Rather than making decisions blindly or face a long lead-time for gathering data, a regulator can rely on a “super” view that aggregates activity and productivity across multiple co-ops and processors – this real-time data enables the insights to drive the right actions. The combined outcome of all of these factors is inventive not just for farmers or for the agro sector, but for Kenya and the East African market as a whole. Virtual City has built its business upon being an inventive solution for automating supply chains in these markets – this type of Supply Chain Solutions solution will extend our consistent and sustained focus directly to the first level of the chain, the smallholder growers themselves.

I1. List the Primary Buyers to whom you will sell your products and services

The primary buyers to whom we will sell our services are value chain aggregators. These comprise of cooperatives, Agro Buyers, Agro Dealers, Farm input Suppliers and processors in nuts, soya beans, french beans, sugar snap peas and potatoes value chains. The smallholder farmer and consumer are beneficiaries and users of our services but are not direct customers of Virtual City.

The target customer is a staple food aggregator with an existing or target outgrower base of at least 5,000 farmers. Our target in this pilot is to penetrate 40 Cooperative accounts, which we project would include over 200,000 smallholder farmers collectively in their supply chains. To this target customer we will provide them the AgriManagr produce purchase solution and the Distributr extension services solution to improve supply chain management, provide transparency and real-time data for decision-making, and cost-effectively manage an outgrower network of smallholders and commercial farms. Furthermore, the prevention of fraud, the convenience and safety of mobile money, and the reduced costs to provide extension services make it an economically compelling choice. The Supply Chain Solutions is a service tool that we shall overlay on top of the AgriManagr and Distributr products so that we may generate revenue from the transactions as opposed to selling the products.

Virtual City currently has existing customers in the Tea, dairy, coffee and horticulture produce purchase value chains for its AgriManagr product. In addition, it has customers in the farm input value chains with East Africa wide footprints for its Distributr product. We intend to leverage our learnings from this in developing our route to market plans to access the customer base for the chosen staple foods we have identified.

I2 List the major competitors; sources of competition

Virtual City is the leader in a competitive field with both direct and indirect competitors. Direct competitors offer similar services to processors while indirect competitors offer alternatives to supply chain automation. Agritrace is a Kenyan software company focused on agribusiness IT and data management.

Agritrace states a focus on the dairy, poultry, fisheries, meat, tea and coffee sectors, but has in fact been focused on dairy to date. They have signed an agreement with the Kenya Dairy Board to assist in traceability solutions in the sector, but have only successfully implemented one supply chain automation project for a Kenyan dairy company. Agritrace also distributes hardware on behalf of external manufacturers. Though Agritrace’s relationship with the Kenya Dairy Board has given them access in the dairy industry, their solution has proven too expensive for wide-scale adoption by other dairies. This supports the thesis that Virtual City’s ‘software as a service’ model, using low-cost PDA’s, will help the company enter into the Kenyan dairy sector.

Octagon is a Kenyan technology company that provides solutions for digital weighing, both portable and flatbed, for agriculture and transport companies. Octagon uses purpose-built scales and printers and is not viable for low-cost PDA devices. Octagon is focused on the tea, dairy and horticulture industries and has provided service to the microfinance sector, government, tea, and dairy sectors. They have had the greatest success in the tea sector where they have served seven clients in Kenya and Tanzania. We believe that Virtual City’s new product line will hold an advantage over Octagon due to the integration of low-cost PDA’s that use Android, Windows and other operating systems, rather than the more expensive purpose-built devices.

Bytronics is a Kenyan firm whose primary business is the sales and installation of digital weighing equipment. They have extensive experience in this field, having served some of Kenyan’s largest companies including Brookside Dairy and Unga Millers. The company has recently rolled-out a mobile-based sales manager that is competitive with Virtual City’s Distributr, our supply chain solution for manufacturers and wholesalers. Though Bytronics has had success in the field, their focus on a variety of digital weighing technologies (truck transport weigh scales, for example) keep the company from focusing on the agriculture sector.

iSmart is an Indian technology company with over 20 years of experience and is a global leader in ‘plantation management’ and IT solutions for agribusinesses. iSmart has a team of over 250 employees that have now executed over 700 installations in 14 countries. iSmart offers both web based and PDA integrated solutions that can run on a number of PDA’s running Windows as their operating system. To date, iSmart has focused its efforts on South Asia, though they have secured several African clients. We believe that Virtual City’s local presence will give the company an edge over iSmart in sub-Saharan Africa.

Open source technology: In East Africa, there have been at least two efforts to roll-out open-source technology by non-profit organizations. These are built with the specific considerations of the coffee sector in mind, but have not been widely adopted. In one case, the hardware was not appropriate, and required use of iPads for use in rural Tanzania.

Traditional systems: The vast majority of processors in East Africa are using traditional paper-based systems for data management. This involves ledgers in the field, paper records for farmers, traditional spring scales, ledgers in the head office, and a large number of clerical staff to manage this information. The operating costs of these systems are high with the large staff required for operation and significant stationary costs, and customers often demonstrate a preference for the status quo. That said, the savings of supply chain automation are significant and give Virtual City’s solution a significant advantage. In-house solutions: Large processors have occasionally built their own data management solutions and may show reluctance to outsource this service to an external service provider. Virtual City has been successful in its work with medium-sized processors, but has not yet worked with one of the few large processors in the region.

I3. What is your sales and marketing strategy

Positioning

The Supply Chain Solutions Project will be positioned as a service to enable smallholder farmers to maximise the value of their staple crops delivered weight. The warehouse receipt generated once the farmer delivers her crop using Virtual City’s AgriManagr product will create stored value that can be redeemed for cash, inputs, loans or services either immediately or at a later date when the related value may be higher.

Price

Virtual City offers two payment options for its traditional products: a one-time upfront capital expenditure or monthly recurring pay-as-you-go (aka “software as a service” or SaaS). Typical monthly expenses for an average co-operative will range from $300 to $800 USD, depending on the number of buying centre routes they manage. With the Supply Chain Solutions project we intend to provide the AgriManagr and Distributr software licenses without an upfront or monthly license fee. The revenue model will be to receive 1.5% – 3% of the transaction value or Supply Chain Solutions value whenever it is traded. We are currently working with IBM Research to establish the exact business model for this and expect to have an output on this in 3 months by September 2013.

Distribution Channels

Virtual City plans to use a two-pronged approach to distributing Agrimanagr: direct sales and route to market partners, as we look to enter new markets and new commodities.

• Direct Sales Virtual City will use its direct sales method to target its smallest customer segment. These direct sales agents will target Cooperatives and agricultural processors and will be paid on commission for sales made.
• Route to Market Partners Virtual City will leverage partners that have substantial client footprints to target co-ops, SMEs, and corporations. Virtual City has signed up Safaricom, and we are their first enterprise solutions provider. We also have a signed agreement with Commercial Bank of Africa to co-create supply chain systems financial packages for the Agriculture and Product Distribution vertical markets. Part of our strategy here will be building an external partner and account management team comprised of staff from our Route to Market partners who sell our joint products on Virtual City’s behalf.

Promotion

Virtual City recognizes marketing and promotion of Supply Chain Solutions as a crucial aspect for success because it is modernized and is unfamiliar to most of our target customer segment. We have dedicated a significant portion of the funds requested from FoodTrade ESA towards doing joint marketing efforts with our Route to Market partners and building an external sales team to provide a presence in remote rural areas. Virtual City’s promotion strategy will include the following:

• Events Virtual City will sponsor events relevant to each of the products being promoted.
• Targeted advertising We will selectively advertise in appropriate print and online media. Our partnership with both Safaricom and CBA Bank include access to their marketing budget to jointly promote our services.
• Marketing collateral This will include printed sales materials for potential customers and a demo/trial version of the application which can be downloaded.
• Project videography Virtual City will develop video testimonial documentaries of our success stories with previous customers. This is particularly important in communicating effectively with co-ops, who require clear proof of concept and can see the solution at work in a powerful, concrete way.
• Road shows and site visits For interested, and to create market awareness, Virtual City will arrange site visits to co-ops or processors where Agrimanagr and Distributr have been implemented. In addition, through these road shows we will organise live demos of how the Voucher system works.

Impact

Virtual City’s solutions create a systemic change in the way the Agro Supply chain operates in 3 fundamental ways:

1. Product Delivery to Cash Cycle: The project will substantially reduce both the typical transaction cycle from raw produce to cash and also input to cash. Suppliers of raw produce traditionally have to wait between 30 days and 45 days for their physical delivery notes to be processed and payments made by the processors. In addition, local AgroVets often resort to informal loan systems whereby the provide their input on credit and await payment at a later date. The Supply Chain Solutions Project will enable instantaneous conversion to mobile payments or mobile deposits.
2. Access to inputs: Farmers usually require inputs before the planting season which is usually at a time that they have no funds. Through the Supply Chain Solutions project third party providers such as banks, MFIs, government agencies will be able to provide them with credit on their vouchers which they can use to procure inputs based upon their past trading history and accurate records.
3. Increased transactions amongst ecosystem players: The Supply Chain Solutions Project will provide a reliable platform through which market players can identify service providers, place orders, request transport, receive deliveries or access services. These service providers need not necessarily be players within their physical neighbourhood and business partnership decisions based on quality and reliability could be created.

Risk Management

M1 Evidence of a positive environmental Impact

All of Virtual City’s products have an immediate effect of removing the need of paper in the transaction process. Previously all produce deliveries and sales were captured in triplicate on paper at every level of the transaction and then reconciled every month end using more paper that’s then used to send paper statements to the farmers. The reduction in paper usage through supply chain automation projects is significant and the same will apply in this instance.

The access by the farmer through this ecosystem to a reliable, best-of-its-kind agro input providers, both locally and regionally, will improve the quality of inputs applied in the farms at no significant increase in price to the farmer. The ease in access to capital through the Supply Chain Solutions Project will also enable both the farmers and the Cooperative access financial services to better improve their inputs supply and purchase. Forces of supply and demand will ensure the best service providers for inputs are successful in the market irrespective of their physical location.

M2 Potential environmental and social risks and mitigation strategies

The potential risk of an Supply Chain Solutions Platform will be fraud perpetuated by traders. In order to mitigate this, Virtual City is partnering with Commercial Bank of Kenya as the custodian of the Voucher and with IBM Research in building the solid and secure business model. CBA’s experience with M-Shwari which is in itself a deposit taking voucher system will be invaluable in mitigating the risk for this project.

The farmer and consumer is also provided with self care tools and transaction reports that enable one to confirm all transactions, vouchers, payments, etc.

A phased approach towards the implementation of this project will also ensure that learnings from the pilot projects are built into the project roll out design.