Court drama over Twiga Foods’ lingering cloud service debt

Four months—that’s how long Kenya’s most funded e-commerce platform has to settle a liquidation claim over unpaid invoices in a $3 million cloud services contract dispute.

A Kenyan court sitting in Nairobi has given Twiga Foods, Kenya’s most funded e-commerce platform, and Incentro, a Google Cloud reseller, five months to resolve their dispute over how much Twiga owes Incentro. Incentro claims Twiga owes it $450,000 in unpaid bills and a delayed bonus from Google. But Twiga claims it only owes $94,000.

According to Incentro, Twiga fell behind on monthly payments on a three-year contract for cloud services as the e-commerce firm shifted from high growth to try to become profitable.

After both parties missed an earlier court deadline to reconcile their invoices last week, the court will now hear the case on March 13, 2024. The $3 million contract at the heart of the dispute committed Twiga to using Google Cloud Services over three years through Incentro, a Google Cloud reseller.

In October, TechCabal reported that Incentro was demanding up to $261,878.75 from Twiga in owed bills. Incentro says its claim has now gone up to more than $450,000. The amount includes $92,000 which Incentro says it was supposed to receive from Google for additional services that are part of perks Google offers to large customers. Google did not pay this bonus because Twiga failed to sign off on the work on time. In a 158-page affidavit filed at the Milimani courts last week, Incetro alleged, among other things, that Twiga paid more than 559,000 Kenyan shillings (roughly $3,900 at the time) in value-added-tax based on unpaid invoices which totalled more than $239,000.

But Twiga denies owing Incentro this much. The tech startup, which still uses Google (but not through Incentro), says it is in talks with Google Ireland Limited, the primary provider of Google Cloud Services.

“There is an amount Twiga believe we owe and there is an amount Incentro believe Twiga owe,” Twiga CEO Peter Njongo told TechCabal via text. “As a sign of good faith, Twiga has paid a deposit of 50% of the amount we believe we owe.” Incentro said it did not receive the transfer but got a letter the evening before the court case saying Twiga had paid $47,000. According to Incentro, the payment notice showed the transfer was made to an NCBA account which it had closed.” Incentro claims it has not yet received the payment.

Companies in countries where Google’s invoice billing is not available use Google Cloud through resellers in order to better control spending on cloud services instead of being billed directly. They still pay the same as if they enabled direct billing via a debit card, but also get additional services and more support. Incentro says the contract it entered into with Twiga means it has to pay Google Cloud’s Africa distributor DigiCloud the balance of the $3 million if the contract is not cancelled by Twiga and Google Cloud.

“We are mindful that should we not hear from Google Digicloud that [sic] will have no option…but to demand full repayment of the outstanding total commit value,” part of a letter dated October 12, 2023, from Digicloud CEO Gregory MacLennan, read.

The letter which was filed as an attachment to an affidavit pointed out that Digicloud will only release Incentro from the payment obligation if Google cancels the agreement; otherwise, Digicloud would pass on any default penalties to Incentro “in order for Incentro to pass on the same quantum release (and/or associated penalties) to Twiga”.

Recall that last week, Twiga Foods announced that it had raised “significant capital” from existing investors, including Creadev and Juven. This new capital was supposed to be used to pay 100 vendors Twiga is indebted to. Twiga has previously raised more than $150 million from 25 investors since it was founded in 2013 making it one of the most VC-backed tech companies in Kenya.

Editor’s note: A previous version of this piece had wrongly said the amount Incentro is claiming includes $209,000 in bonuses from Google. The correct amount is $92,000. This article was also updated to clarify that Incentro says it still has not received any payment despite Twiga claiming to have made payments.