Kippa aims to unlock the potential of African small businesses
The race is on to unlock Africa’s growth potential. The World Bank believes the continent’s economy will grow by 3.7% in 2022 and another 3.8% in 2023, despite global headwinds. And it is small and medium enterprises that will lead the charge: consultant McKinsey estimates that SMEs account for 80% of jobs across Africa.
It is therefore essential to allow these companies to grow faster – and to show greater resilience in more difficult times. Nigerian start-up Kippa thinks he can provide an important piece of the puzzle. Since its launch in June 2021, it has recruited 500,000 SMEs in its home country – and now it has raised funds and started to expand into other African markets.
Kippa offers a financial management and payment platform, delivered through a mobile app, to give small businesses access to vital digital tools. “Small businesses in Africa are still doing everything by hand,” says Kippa CEO Kennedy Ekezie-Joseph. “For the most part, every element of their business is manual and only deals with cash.”
The problem with this is twofold. First, manual systems make managing small businesses – from managing money to tracking inventory, business records, personnel and suppliers – very difficult. And the headache only increases as the business grows. Second, the absence of any type of financial management system means that companies do not have electronic records; which prevents them from 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 capabilities. First, it offers an accounting app that allows businesses to digitally manage all of their transactions, including payments and receipts, so they can finally move away from manual systems. The functionality extends from basic accounting to underlying online payments and the launch of digital stores.
Additionally, Kippa has obtained a license from the Central Bank of Nigeria which allows it to operate as a financial services provider, offering essential services such as cash withdrawals and deposits, bill and utility payments. and insurance; merchants with its app can offer access to these services through their stores, earn extra income and increase footfall.
The third leg of the stool is a business constitution tool. It allows users to formalize their business in just 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 vendors and even though we see new entrants from other emerging markets, they invariably offer copies of solutions that work in other regions but ignore the differences local and cultural here.” adds Ekezie-Joseph. “Our mission is to make it easy for anyone to start and run profitable small businesses in Africa.”
The platform’s rapid traction suggests that there is significant demand for such solutions. But Ekezie-Joseph points out that the 500,000 businesses Kippa has integrated in Nigeria in its first 16 months represent only a small part of the country’s population of 47 million small traders. “We are just a drop in the ocean,” he said to himself.
There is also potential for Kippah to expand across the continent. It was launched in neighboring Ghana last month and expects further entry into new markets across Africa before the end of the year.
To support these plans, Kippah has now built up a large treasury of war funding. The company announced last November that it had raised pre-seed funding worth $3.2 million and followed up last month with the successful completion of an $8.4 million round. . The September funding 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-level hires, with a particular focus on building its regulatory experience. Among the recruits is Niyi Ajao, former deputy managing director of the Nigeria Inter Bank Settlement System, who joined Kippa as chairman.
Further expansion will be aided by Kippah’s business model. The company offers its app for free, which encourages adoption, and then takes a commission on the transactions it enables. Other income comes from businesses that use Kippah to further their incorporation.