Incentro, the Google Cloud services reseller that sued Twiga Foods to collect more than $261,000 in unpaid invoices, has resolved its dispute with the e-commerce startup, TechCabal has learned. The bill ballooned to $450,000. In December 2023, a Kenyan court gave both companies until March 13, 2024, to resolve the debt dispute after an earlier November deadline was missed.
A person close to the matter said both parties have now agreed to ask Google to cancel the original contract after Twiga’s new management team and Incentro Africa completed negotiations following the departure of Peter Njonjo, Twiga co-founder and CEO.
Incentro has agreed to withdraw the lawsuit and renegotiate the original contract terms with Google “in light of the current global economic climate,” said Zuber Momoniat, Twiga’s CFO.
Dennis de Weerd, Incentro’s CEO, confirmed that Momoniat was “instrumental in resolving the dispute and rekindling our partnership.”
Inside Twiga and Incentro’s debt dispute
While Incentro has not yet withdrawn the lawsuit, it has sent a letter committing to doing so once the negotiation with Google is settled.
Twiga’s contract with Incentro was a complex 4-party transaction that involved Google Cloud, Digicloud, a Google distributor, Incentro, the local Kenyan cloud service reseller and Twiga Foods.
Incentro agreed to provide cloud services worth $3 million to Twiga Food for three years beginning in mid-2022. In return for a long-term commitment, Google would offer Twiga Foods incentives and perks worth $200,000 through Incentro. To deliver this, Incentro signed a similar agreement with Digicloud, Google’s distributor, for $3 million worth of Google Cloud services over three years.
African companies that use Google Cloud sometimes opt for long-term contracts involving a reseller who manages their cloud account with Google to avoid direct billing on a credit or debit card. The reseller is responsible for delivering extra perks and incentives on behalf of Google Cloud.
According to Incentro’s September 2023 court filing, Twiga fell behind on monthly payments as the e-commerce firm adjusted its priorities from growth to profitability.
Twiga and Incentro are now asking Google through Digicloud to redo the contract terms. De Weerd said this was what his company had been trying to get Twiga to agree to before the lawsuit.
African companies are still “small” customers
Africa only has a handful of big spenders, and cloud providers prioritise these few big spenders with $100 million in annual revenue, an Amazon Web Services employee told TechCabal. Startups are a distant second.
However, African startup executives whose companies rely on global providers are struggling with the increasing amounts they have to shell out for cloud services. In many cases, weakening local currencies are responsible for the increases even when cloud providers keep their prices unchanged.
“I will take having to pay local cloud cost with the same level of security with +92% uptime over 99.9% uptime and rising dollar cost that could ultimately wreck my business,” Edmund Olotu, CEO and founder of Bloc, a business banking fintech, said on X.
Twiga’s case underscores a familiar problem facing African companies who try to save costs by entering long-term contracts with global cloud or SaaS providers. Global service providers are often inflexible if these companies run into difficulty and need custom support, a Kenyan cloud expert told TechCabal.
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Copyright for syndicated content belongs to the linked Source : TechCabal – https://techcabal.com/2024/01/23/twiga-incentro-debt/
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