Small businesses make up the most crucial parts of every economy. They effectively mirror the state of their home nation. For example, it’s easier to understand Nigeria’s economic state by walking through the Onitsha market than looking at industrial estates. So it makes sense that developed nations like New Zealand and Singapore have invested in becoming friendly environments for small businesses. Nations thrive when small businesses are healthy.
Africa’s internet economy is growing faster than ever, and we now have more businesses online. Many of them now leverage social media to promote their businesses. But beyond marketing, they still do most of their work offline since they cannot use digital alternatives. For instance, many of them still use pen and paper for financial accounting. Some do not have financial records and only depend on their memory. In part, this is because most accounting apps are either too expensive for them or too sophisticated. Problems like this contribute to the high rate of business failure on the continent.
There is so much exclusion among small businesses. Most B2B services target big businesses for the obvious reason of profit. But according to the e-Conomy 2020 report by IFC and Google, most of the successful businesses in Africa’s internet economy are solving problems in the informal sector. Kippa, a Nigerian startup, is one of these businesses. By giving small business owners an easy-to-use finance management app, Kippa is reducing their chances of bankruptcy.
Kippa was founded in February 2021 by Kennedy Ekezie, Duke Ekezie and Jephthah Uche. Before Kippa, the trio founded Africave, a software talent matching platform in 2019 that shut down last year. The founders then sought to solve a new problem that would play to their strengths. To find the right problem to solve, Kippa’s founders went on a market tour to understand the pain points of small businesses in Nigeria. After that research tour, they found a pressing problem they could solve — bookkeeping. They also saw that credit was a bigger problem for small businesses. After consulting founders of similar businesses in emerging markets such as India’s Khatabook and Indonesia’s BukuWarung, Kippa was born to fit the Nigerian market.
Kippa’s growth has been speedy since its launch in June. The bookkeeping and finance app claims to have grown an average of 126 per cent month-on-month and recorded more than $300 million across over 200,000 businesses. These results have also impressed investors so much that Kippa got $3.2 million pre-seed funding in November.
In an interview with Ventures Africa, Kennedy Ekezie, CEO at Kippa, discusses his journey into entrepreneurship and the future of Kippa in Africa.
Tell us about yourself and your background.
My name is Kennedy Ekezie. I am currently CEO and co-founder at Kippa. I’d say I had an exciting childhood. I was born and raised in Nigeria. I grew up close to my parents, who were quite particular about education. They always emphasized that education was important to create any form of social change.
I lived in Lagos for the first eight years of my life before we moved to Calabar. I studied Philosophy at the University of Calabar. I did a couple of things there that shaped my journey so far. The first one was creating a social enterprise that advocated against female genital mutilation and for the advancement of women’s rights.
The second was participating in debates. The first time I ever travelled outside of Nigeria was to debate competitively with people from other schools. The debate was at Harvard University in the US. That experience reshaped my horizon. I also worked at Accenture from Nigeria and TikTok in Beijing. All these elements helped in building Kippa.
What made you start Kippa?
Our journey to start Kippa was from an exercise into problem discovery that led to customer discovery. At this time last year, I did not know I was going to build Kippa. In November 2020, my co-founders and I decided to work on something bigger than us. We spent time travelling across Nigeria, meeting small business owners. We wanted to get a sense of the challenges they faced trying to make ends meet. We noticed many small business owners spending a lot of time adding entries to their large sales ledgers. I have lived in Beijing, and I know that small business owners there use digital technology for these things. It just seemed off that African businesses were still doing them manually. So we went back to build software that would be easy for them to use.
We also realized while doing our research that many of the attempts to build for this segment have been poor copies of imported solutions. For example, we saw very poor copies and imitations of QuickBooks and Sage, and these are imported solutions that do not take cultural contexts into account.
What are the challenges for Kippa’s model today?
Digital adoption is still the predominant challenge. Historically, digital adoption has always been a challenge in emerging markets. Many of these small business owners only ever use their phones for WhatsApp and Facebook. Some of them are getting smartphones for the first time, while others don’t even have. And even for the ones that have, there is so much internet latency.
Also, we had to build around the cultural nuance of doing business here. For example, people sell on credit to people they are friends with. So debt collection might be challenging for them. That was very challenging for us to solve, but we cracked it. Even at that, adoption and distribution don’t come easy. It requires a lot of grassroots marketing, such as door-to-door campaigns.
Building for small businesses is not easy. That’s why many people who tried earlier and couldn’t scale moved to serve high-end folk like restaurants who can pay them well for their work. So we have to figure out ways to double down on digital distribution for this product without taking on the high acquisition costs that come with on-street marketing. So far, we’ve been successful with that. I mean, we gained over 200,000 users in just five months.
Kippa has grown quickly within a short period. What does that mean for its future?
It simply shows there is a very high demand for what we have. It also shows that there is so much potential for solutions that serve small businesses. Small businesses have been unserved for a long time, and they lag in digital adoption. The end game is not even digital adoption, but to use it as a vehicle to accelerate solutions for them. And the biggest problem that these businesses face is a lack of access to finance and tools. They want money and tools to run their businesses. Our growth shows that we are in a great position to solve this problem.
Most commercial activities are in urban areas. How is Kippa driving adoption in rural areas?
We are building for rural areas too. We already have users from rural areas. Some of our users operate farms or fisheries in remote areas of Akwa Ibom, Osun, etc. We meet and talk with these users. We are aware that 200,000 users are still a drop in the ocean compared to well over 40 million small businesses in Nigeria. We’ve barely scratched the surface. Most problems with rural areas are infrastructural, and there’s only so much you can do. But we are also designing around some of these problems. For instance, we are allowing offline functionality. People can enter their transactions even without the internet, and whenever they connect to the internet, it syncs to the cloud.
Kippa is an African solution but still operates only in Nigeria. When will it scale to other parts of Africa?
We plan to expand the product to a few more countries early next year and increase our user acquisition efforts there. We’ll start from Ghana, which feels like home to me because I’ve spent a lot of time there. Then we’ll move to other parts of the continent. What we have is a Pan-African solution.
Written by Oluwatosin Ogunjuyigbe
