How vending machines make life easier for Kenyans

Jackson Opati, a shopkeeper, stopped selling packaged milk at his store and switched to using a vending machine that dispenses fresh milk. He says that the ATM is a more lucrative venture.

How vending machines make life easier for Kenyans

Mr Opati owns a small grocery shop in Kibera, Kenya's capital.

His shop, made from wood poles and corrugated sheet, has been home to a Zaidi Technologies milk vending machine for the past year. Zaidi Technologies has nine of these machines in Kenya.

The customer simply needs to use a small panel at the front of the machine to enter the amount of money they want. Seconds later, the milk is poured into the bag or recycled plastic container that the customer brought from home.

He says, "Since the vending machine was purchased, the number and satisfaction of my customers has increased dramatically."

From Monday through Thursday, Mr Opati sells 150 L of milk per day. On Fridays and weekends, he sells 300 litres of milk per day. This gives him 6,000 Kenyan Shillings ($53; PS40), in profits each week. He says, "It's a good company."

Caroline Atieno, one of his customers, says that vending machines are very important to them in Kibera. She is queuing up in front of the tall machine decorated with images of Friesian cows in black and white.

She has five children, and she says she can get through a lot of milk.

This is the key attraction to selling in this manner, Kenyans living in such settlements often earn less than $1 per day so having access to fresh produce in small quantities is a big bonus.

"The milk is also cheaper than the packed long-life milk, which is sold at most places around Kibera," Ms Atieno said. The packed ultra-heated long-life-milk (UHT) is normally sold in packs of 200ml, 300ml and larger.

Vending machines have appeared in Nairobi's informal settlements over the past few years. They sell milk, cooking oils, and sanitary pads.

Graham Benton, cofounder and chief executive at Zaidi Technologies, says, "We decided that we would start selling milk through ATMs because it removes costs of packaging, improves logistics, and allows us to sell dairy products without paying VAT."

"The ATMs help us unlock the 80% market that is not being tapped by larger, more regulated businesses. Vivian Kenyatta says that the machines also opened up new business opportunities. A youth group was formed by Vivian Kenyatta, a 28-year-old single mother. It has 20 members. "We wanted to build a business with our savings and these ATMs seemed to be quite affordable."

Although they didn't have enough cash to open a shop, they were still able to purchase a vending machine to sell cooking oil for 100,000 Kenyan Shillings ($890; PS670). They also rented a small space from which they can sell the oil.

"We make a profit about 400 Kenyan shillings per day, which we put onto a bank account and might use for emergencies like when one our group members has to go to the hospital," the single mother explained while she dispensing cooking oil from her machine into a plastic container for her next customer.

Shop owners often can't afford the most expensive machines. This could make it difficult to buy food-safe machines. Sometimes they may not have the funds to maintain their machines properly. They might save money by turning off machines when they are empty. This means that any residue or congealed material in the system will go bad.

Additional disruptions can be caused by power cuts in Kenya and other neighboring countries.

Zaidi Technologies has come up with a new business model to address these issues. It owns and installs vending machines. The shopkeeper pays for electricity and water for cleaning. They receive a 4 shilling commission for each litre of milk sold.

Zaidi Technologies is working to develop a tamperproof system. After pasteurization, the milk containers will arrive at shops to be inserted into vending machines by delivery drivers.

"The systems will become automated so that we can see whether the door has been tampered with or if milk exceeds our temperature thresholds. If this happens, we can take the system offline until an technician can service it," says Mr Benton.

KOKO Networks is a technology company that has created its own vending machine system for Africa to sell its bioethanol cooking fuel.

The KOKO machines are similar to the milk machines in that they can dispense small amounts of fuel to help cash-strapped customers.

Our ATMs are equipped with many safety sensors and features to ensure fuel quality and safe handling. Sagun Saxena (executive director of KOKO Kenya) says that fuel cannot be dispensed into a registered KOKO fuel container. The ATM also helps to avoid the creation of mountains of plastic bottling waste.

Customers fill up their fuel canisters by buying fuel from KOKO using mobile money. KOKO then pays a commission.

In partnership with Shell, the company was founded in Nairobi in 2019. It now operates more than 750 bioethanol vending machines across Kenya. The company will also expand into other East African countries over time.

He sees many opportunities for vending machines within the food industry, too. He says that packaging, handling, and trading in small shops can add a lot to the cost of current operations.

"This is why food retail prices are higher in smaller, local shops than in larger supermarkets in Nairobi. Many households will be able to bring these costs down by using vending machines.

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