Corner shops line many Nigerian streets. It is a big part of the shopping culture. People who cannot afford to own big retail stores often open corner shops, making products easily accessible and in smaller quantities to their neighbourhood. And for many, it is their only source of income. Corner shops and micro businesses are an important aspect of Africa’s economy. According to Euromonitor, informal retailing makes up 67 percent of total retail across Kenya, Nigeria, and South Africa. This informal retail market is valued at over $900 billion. However, most of these businesses operate without solid business knowledge. The result is that they almost always end up in debt. With inadequate resources and a lack of access to financial services for growth, they eventually fizzle away.
For tech startup Luca, it is all about helping these micro businesses grow. The startup’s objective is to help them structure and ease their business operations. Luca provides financial management tools for small businesses in Nigeria. It carries out real-time calculations, tracks expenditure and profit, and offers inventory management, invoice, and reports. Initially, it started out by offering bookkeeping services to various small businesses. “From offering bookkeeping services, we were able to understand how these businesses operate,” says Kunle Odebunmi, Luca’s founder. “One of the things we noticed is that 72 per cent of people use cash deposits on the network,” he adds.
With Luca, business owners can track the products in high demand from the general public and customers and the products that are not doing well in the market. For example, if a specific soap brand is in high demand, the network is designed to advise the business owner to stock said brand. According to Odebunmi, this information is one that has proven helpful for last mile and FMCG.
After noticing that some of the business owners registered on the network ran their businesses part-time and employed sales personnel to run the business, Luca launched the multi-user platform. With this feature, the business owner is made a super admin and can monitor transactions in the shop from wherever they are. They can track sales, and cash flow, and monitor inventory. Luca also provides a debt management feature for the business owner. For example, when people purchase goods on credit, the owner inputs it under debt management. Subsequently, the platform sends a “debt” reminder to the debtor via WhatsApp or text message.
Generally, the platform is programmed to notify users of pending activities as well as keep track of their consumers’ purchasing behaviour. For example, if a customer buys diapers from a merchant on the platform, the platform recognizes that the consumer has a baby. Then, it can ascertain what products will be useful to the consumer within a certain period. The merchants can then send new product suggestions to the consumer.
However, more than 40 million Nigerians either do not have access to the internet or cannot afford the internet. Some of them include small business owners. “We have created an offline-first approach with Luca,” Odebunmi says. “Although an internet connection allows access to more features, users can also use it without an internet connection. And the app works on low-data android devices,” he adds.
Odebunmi was inspired to start Luca after a stint in the solar hardware industry. The company wanted to deploy solar solutions to small business owners but first had to do financial background search. “Most of the business owners could not provide a bank statement for their business. As for the people that provided bank statements, one could hardly differentiate the money made from sales, and the money made from purchases,” says Odebunnmi. Working with small business owners was not a new concept to Odebunmi. “My mum had a corner shop. While growing up, my siblings and I would help her with necessary data and calculations. At the end of each day, we would gather to do calculations and record inventory in a notebook,” says Odebunmi. As a certified accountant, Odebunmi’s experience deploying accounting software made him want to help these businesses ease their processes.
Luca is keen on incorporating indigenous languages onto the platform to ease communication for merchants who may converse only in their local dialect. The platform is currently available in Hausa language. “We understand that almost 18 percent of micro business owners speak Hausa. Which is why we started with the Hausa language,” says Odebunmi. This knowledge further resonates with the startups’ operations outside the platform. For example, the brand has teams that communicate with merchants in indigenous languages. “When you go to Alaba market or Oshodi, and you have to communicate with these business owners, sometimes all they can communicate in is Yoruba. You have to speak their language to get to them,” Odebunmi notes.
With a $360 billion credit gap in Africa, micro-businesses experience low chances of getting credit facilities. Even when they do, they are charged exorbitant interest rates. With the depth of data acquired by the network, these businesses can access more credit facilities. “Because we have their information on sales, supplies, and even sales trends of the business, we can leverage that to match a business owner with the right solutions. That way, we know if the business deserves to get a loan and can equally tell the timeframe with which they would be able to pay back.”
The heart of running Luca is gaining the trust of its users. “It is important for us to get feedback from these users,” Odebunmi says. “We’ve also made sure the platform is able to mimic the way these merchants operate offline,” he adds. Luca isn’t just paying attention to businesses that want to grow and expand. The platform also helps business owners that may not be ready to scale and render services to consumers outside their vicinity. “We help these businesses achieve what they want to do today while positioning them for digital commerce in the future,” says Odebunmi. In three months, Luca currently has more than 5,000 active users on the network. The team aims to build more credit and commerce products for users. “It is all about helping these merchants grow in whatever way necessary,” says Odebunmi.