How vending machines are making life better for Kenyans

Shopkeeper, Jackson Opati, has stopped selling packaged milk from his store and instead switched to using a vending machine dispensing fresh milk. "This ATM is a more lucrative business," he explains.

Mr Opati runs a small grocery store in the crowded settlement of Kibera in Kenya's capital, Nairobi.

For the last year, or so, his shop - built from wooden poles and corrugated sheets - has hosted a milk vending machine from US-Kenyan company Zaidi Technologies. It is one of nine such machines that Zaidi has operating in Kenya.

Using a small panel on the front of the machine, he keys in the amount of money that a customer wants to spend and seconds later the corresponding quantity of milk pours into a recycled plastic bottle or bag that the customer brings from home.

"Since I got the vending machine, the number of customers has sharply increased," he says.

Monday to Thursday, Mr Opati sells 150 litres of milk a day. On Fridays and weekends that jumps to 300 litres, giving him 6,000 Kenyan shillings ($53; £40) in profit a week. "For me, it's a good business," he says.

"These vending machines have become very important for us in Kibera," says one of his customers, Caroline Atieno, while queuing in front of the tall machine, which is decorated with pictures of black and white Friesian cows.

She has five children and says she gets through a lot of milk: "With this ATM, I can spend whatever I want on milk, even as little as 10 Kenyan shillings (9 cents; 7p), based on the money that I have in my pocket."

This is a key attraction of the selling in this way, Kenyans who live in such settlements, often earn less than a dollar a day, so being able to buy fresh produce in small quantities is a huge bonus.

"The milk is also much cheaper than the packed long life milk which is sold at most places in Kibera, and [it] tastes better," Ms Atieno adds.

The pasteurised milk from Zaidi's ATM goes for 65 Kenyan shillings a litre, while packed ultra-heated (UHT) long life-milk normally costs around 110 Kenyan shillings a litre and is only sold in packages of 200ml, 300ml or larger.

In recent years, vending machines have been popping up across Nairobi's numerous informal settlements - selling milk, cooking oil, clean renewable cooking fuel and sanitary pads.

"We decided to start selling milk through ATMs as it removes the cost of packaging, improves the costs of logistics and allows us to sell milk without attracting VAT," says Graham Benton, co-founder and chief executive of Zaidi Technologies.

"The ATMs also help us to unlock the 80% of the market that has remained untapped by larger, regulated businesses."

The machines have also provided new business opportunities, explains Vivian Kenyatta. The 28-year-old single mum formed a youth group of 20 members. "With our savings, we wanted to start a business to uplift ourselves and these ATMs appeared to be rather affordable."

While they did not have enough pooled cash to open a whole shop, they were able to buy a cooking oil vending machine for 100,000 Kenyan shillings ($890; £670) this year and rent a small space, from where they sell the oil.

"We make a profit of around 400 Kenyan shillings a day, which we put on a bank account and we might use for emergencies, like when one of our group members needs to go to a hospital," the single mother explains this while she dispenses cooking oil from the machine into a recycled plastic cooking oil bottle for her next customer.

Although operating vending machines in deprived areas of Africa comes with challenges.

Often, shop owners can only afford the very cheapest machines, which might not be suitable for food. They also may not be able to pay for proper maintenance. To save money they might turn machines off when they are empty - meaning any residue goes bad or congeals in the system.

Power cuts, which are very common in Kenya and neighbouring countries, are an added disruption.

Zaidi Technologies has developed a different business model to counter some of these issues: it owns and installs the vending machines, the shopkeeper then pays for the electricity and provides water for cleaning. In return they receive a commission of 4 shillings for every litre of milk they sell.

Unscrupulous shopkeepers have also been known to dilute milk, but Zaidi Technologies are working on a tamper-proof system - after pasteurisation, the milk containers will be delivered to shops and slotted into the machines by the delivery drivers, who will then lock the vending machines.

"The systems will be automated, so that we can see if the door is tampered with, or, if the milk violates our temperature thresholds, allowing us to take the system offline until a technician can come and service it," explains Mr Benton.

Technology company, KOKO Networks, has developed its own vending machine system specifically for the African market, to supply its bioethanol cooking fuel.

Like the milk machines, the KOKO machines can dispense very small amounts of fuel, to cater for cash-strapped customers.

"To protect fuel quality and ensure safe handling... our ATM's have lots of safety features and sensors. Our fuel can only be dispensed into a registered KOKO fuel canister and with the ATM we avoid creating mountains of plastic bottling waste", says Sagun Saxena, executive director at KOKO Kenya.

When customers refill their fuel canister, they buy the fuel directly from KOKO, using mobile money payments, while KOKO pays a commission to the shopkeeper.

The company was launched in Nairobi in partnership with Shell in 2019 and now runs more than 750 bioethanol vending machines in Kenya and will enter other East African countries in the coming year.

Mr Saxena sees lots of opportunities for vending machines in the food sector as well. "Currently packaging, handling and trading via small shops adds a lot of costs," he says.

"That's why retail prices for food are higher in small, local shops versus even the larger supermarkets in Nairobi. Bringing these costs down through the use of vending machines, will benefit many households."