In this week’s entry to the Spotlight series, we speak to the founders of Kippa, a Nigerian fintech startup on how it is helping aid financial inclusion in African SMEs.
Kippa is a disruptive fintech startup based in Nigeria, unlocking socio-economic prosperity in sub-Saharan Africa by helping SMEs grow their business and embrace financial inclusion. As providers of digital business and financial management solutions for African SMEs, its first product is a simple-to-use mobile bookkeeping app, which ultimately helps merchants to recover debts three times faster – simplifying daily and time-consuming financial recording tasks for SMEs.
The company was founded in June 2021 by Kennedy Ekezie-Joseph, Duke Ekezie-Joseph and Jephthah Uche, who have experienced directly how a lack of available financial solutions presented significant challenges for small business owners across the continent.
“As sons of micro merchant families, we experienced first-hand how financial exclusion directly impacts the livelihoods of African SMEs,” Kennedy Ekezie-Joseph, CEO & co-founder said.
“To help even validate this, even more, all three co-founders embarked on a journey around Nigeria to interact with merchants and understand how a solution like this could positively transform how business is carried out.”
Lagging behind
Currently, out of the 3.5 trillion transaction records in Africa, 99 per cent of bookkeeping is done on pen and paper. This costs SMEs on average $50+ per month and takes 10+ hours per week. Record-keeping is integral to growing a successful business, but SMEs lag behind when it comes to the adoption of cheaper, and more efficient digital technologies. Across Africa, bad or forgotten debts cost SMEs $1-2billion in losses annually.
Duke Ekezie-Joseph, co-founder and chief growth officer, said: “Africa’s economy is powered by SMEs, which represent 50 per cent of Africa’s GDP, 84 per cent of employment and 96 per cent of all businesses. Yet the lack of access to financial services is an acute problem across Africa: the IFC estimates that two-thirds of adults in Sub-Saharan Africa do not have access to formal financial services.
“In Nigeria alone, $100million of debts are lost by SMEs annually; 36 per cent of adults don’t have access to financial services; over half of adults are unbanked or underbanked; there is no organised financial system in Nigeria; and, there is a lack of available digital business and financial management solutions for Nigerian SMEs.”
Kennedy Ekezie-Joseph added: “Due to the low literacy levels among some small business owners, building software products for them has been difficult, and previous attempts have been poor copies of imported solutions. Market-specific nuances need to be designed around the local market. Kippa is addressing usability and literacy levels through its mobile-first philosophy, offering an app that can run offline and is so simple that it does not require any training. It mimics the WhatsApp platform used by the entire continent every day.”
The opportunities
Though Africa is home to some of the fastest-growing economies, it is lacking in organised financial systems for SMEs. This provides a number of opportunities for fintechs in the SME sector currently, with innovators in the industry stepping in to answer SME demands for digital financial solutions.
“The Covid-19 pandemic has provided further opportunities for the fintech industry to push more SMEs online,” explained Duke Ekezie-Joseph. “Across Africa, there will be an estimated 615 million smartphone users by 2025, and internet costs are becoming two times cheaper every year.
“Increased political stability, as well as improved trust and transparency within the fintech sector over the years, have also improved investor confidence. Africa’s population is also expected to double by 2050 and six of the world’s ten fastest-growing economies are all in Africa.”
When it comes to financial inclusion, Africans are more generally disadvantaged than developed economies, with access to credit nearly impossible due to the scarcity of financial records. The International Finance Corporation (IFC) estimates that only five per cent of SMEs who have ever applied for institutional credit have received it, and the formal SME credit gap is $150billion+ in Africa – which is also a huge opportunity for those with a solution to these challenges.
Kennedy Ekezie-Joseph added: “Since we launched, we realised how quickly Kippa has become an integral part of our user’s businesses, almost instantly – for more than 80 per cent of them it’s the first B2B SaaS they’re using. This is the most important win so far. Additionally, the opportunity to work with a brilliant team of 30+ members from across three countries, learning every day and growing together has been remarkable.”
Looking ahead
On the future, Duke Ekezie-Joseph said: “Our vision is to be the leading provider of all-in-one digital business and financial management solutions for Africa’s SMEs. What sets us apart from other fintech companies is that, above all, one of our key aims is to contribute to the development of Africa and raise the quality of life for African SME merchants, by providing them with the financial tools they need in order to thrive. We want to help SMEs grow, run more sustainably and profitably, see communities flourish, and the African continent prevails as a global economic force.”
Kennedy Ekezie-Joseph added: “The firm has ambitious growth plans for channel expansion: by leveraging the trust we have built with our merchants, we will launch and develop further financial tools and services for customers, and can also partner with others to operate in our system.
“The rich data we have about how small businesses operate will also enable us to build and sell superior business and financial tools and services to customers as their needs grow. As we move forward, we plan to continue working closely with our users, build for them and remain their trusted partner to start and run their businesses.”