The race is on to unlock Africa’s growth potential. The World Bank thinks the continent’s economy will expand by 3.7% during 2022 and by a further 3.8% in 2023, despite global headwinds. And it is small and medium-sized enterprises that will lead the charge: consultant McKinsey estimates that SMEs account for 80% of jobs across Africa as a whole.
Enabling those businesses to grow more quickly – and to show greater resilience during more difficult periods – is therefore essential. Nigerian start-up Kippa thinks it can provide an important piece of the jigsaw. Since its launch in June 2021, it has signed up 500,000 SMEs in its home country – and now, it has raised funding and begun expanding into other African markets.
Kippa offers a financial management and payments platform, provided through a mobile app, to give small businesses access to vital digital tools. “Small businesses in Africa are still doing everything by hand,” explains Kippa CEO Kennedy Ekezie-Joseph. “For the most part, every element of their business is manual and deals only with cash.”
The problem with that is twofold. First, manual systems make the management of small businesses – from managing money to keeping track of inventory, business records, staff, and suppliers – very challenging. And the headache only grows as the business expands. Second, the lack of any kind of financial management system means businesses do not have electronic records; that prevents them accessing financial services such as credit that could support and accelerate their expansion.
Kippa’s platform is therefore a one-stop-shop for three different types of digital capability. First, it offers a bookkeeping app that enables businesses to manage all their transactions digitally, including both payments and receipts, so that they can finally move away from manual systems. The functionality extends from basic bookkeeping to underpinning online payments and the launch of digital stores.
In addition, Kippa has secured a license from the Central Bank of Nigeria that allows it to operate as a financial services provider, offering essential services such as cash withdrawals and deposits, bills and utility payments, and insurance; merchants with its app can offer access to these services through their shops, earning additional income and boosting footfall.
The third leg of the stool is a business incorporation tool. It enables users to formalise their businesses in as little as three days, giving them the legal status they need to secure access to banking services and other vital support.
“Small businesses in Africa are woefully underserved by traditional providers and while we’re seeing some new entrants from other emerging markets, they invariably offer copies of solutions that work in other regions but that don’t take any account of local and cultural differences here,” Ekezie-Joseph adds. “Our mission is to make it easy for anyone to start and run profitable small businesses in Africa.”
The rapid traction of the platform suggests there is significant demand for such solutions. But Ekezie-Joseph points out that the 500,000 businesses that Kippa has onboarded in Nigeria during its first 16 months is only a small part of the 47 million-strong population of small merchants in the country. “We’re still a drop in the ocean,” he reflects.
There is also the potential for Kippa to expand across the continent. It launched into neighbouring Ghana last month and is planning further entries into new markets across Africa before the end of the year.
To support those plans, Kippa has now built a significant war chest of funding. The business announced last November that it had raised pre-seed funding worth $3.2 million and followed that up last month with the successful completion of an $8.4 million round. September’s financing attracted investors including Goodwater Capital, TEN13 VC, Rocketship VC, Saison Capital, Crestone, VentureSouq, Horizon Partners and Vibe Capital.
The company has also made a number of high-profile hires, with a particular emphasis on building its regulatory experience. Recruits include Niyi Ajao, a former deputy managing director of the Nigeria Inter Bank Settlement System, who has joined Kippa as chairman.
Further expansion will be helped by Kippa’s business model. The company offer its app for free, which encourages take-up, and then takes a commission on the transactions it enables. Further revenues come from businesses who use Kippa to pursue incorporation.