Duke Ekezie-Joseph is the Co-Founder and President of Kippa, a Nigerian fintech platform that’s digitizing Africa’s MSME sector. Kippa, which initially focused on digital bookkeeping services, now provides a variety of business, financial management, and payment solutions for African MSMEs.
The company recently closed an oversubscribed $8.4 million seed round with backing from leading global investors like Goodwater Capital. And Kippa also recently received a ‘super-agent’ banking license from the Central Bank of Nigeria that allows Kippa merchants to offer a full suite of agent financial services to end customers and enables Kippa to integrate with national switches and provide B2B services to other fintechs.
In this lightly edited interview with Afridigest, Duke, who leads Kippa’s operations, marketing, product, finance, HR, and admin teams as President, shared his thoughts about the key opportunities & risks facing Kippa, the company’s business model, and the impact of the market downturn on African startups.
What does Kippa do, who are your customers, and what problem do you solve for them?
Kippa is a fast-growing SaaS platform powering merchants across Africa. Today, we provide over 500,000 businesses on the continent with financial tools to manage and operate their businesses profitably.
We focus on the micro- and medium- segments because these businesses are the reason why economies in Africa have a chance at survival. MSMEs in Africa contribute 50% of the GDP of African economies and provide 84% of the employment opportunities while constituting over 90% of all businesses. Simply put, they are the engine that will propel African economies to prosperity; their prosperity naturally leads to the prosperity of their respective economies.
At Kippa, we’re focused on creating real impact for this critical segment and we’re building the rails that will power businesses and economic activity for Africa’s MSMEs.
What’s Kippa’s business model? How does Kippa make money?
We began our journey with a digital bookkeeping app that was and remains free for merchants. But upon seeing its rapid pace of adoption and based on customer insights we gathered during our first few months of operations, we layered on new paid products to provide optimum value for merchants.
Today, we have two revenue-generating products at Kippa: KippaPay and KippaStart.
KippaPay is our CBN Super Agent licensed platform that allows agents and businesses to offer services through a POS terminal, displacing the need for cash and addressing the dearth of ATM machines in certain areas. And KippaStart is company incorporation software that helps business owners to register their business with government agencies simply and in the shortest possible time.
What are the key opportunities and key risks for Kippa going forward?
The opportunities that lay ahead of Kippa are massive. Today, small businesses in Africa transact over $3.5 trillion annually, more than 90% of which is in cash, and virtually all of that transaction data is recorded manually with pen and paper.
There is also an SME credit financing gap of over $360 billion on the continent, and one of the key roadblocks in lending to SMEs is the lack of adequate financial records and credit histories.
Kippa provides robust solutions for both of these outsized opportunities and more. Honestly, we haven’t even begun to scratch the surface of what’s possible — there’s still a lot of work to be done in digitizing merchants and their operations all across the continent.
In terms of risks, just as every Africa-focused entrepreneur might tell you, building in this market is extremely difficult and requires an insane amount of resilience and doggedness. For example, the absence of adequate infrastructure slows down innovation and makes it exponentially more difficult to build products that serve the real everyday consumer.
Given your recent fundraise, what are your thoughts on the current global market downturn and the impact on Africa’s startup ecosystem?
A significant amount of investor financing entered the continent in the last 18 months. The $4-$5 billion in funds raised in 2021 was a huge jump from what was raised in 2020 and 2019, but just as in the global market, we on the continent are also now experiencing somewhat of a slowdown in VC funding.
To a large extent, this has impacted startups negatively, but on the other hand, it has forced a lot of companies to think critically about the long-term sustainability and health of their businesses, which to be fair, a lot of founders may not have paid as much attention to in years past. This new focus provides founders the ability to execute better and build towards sustainable growth and profitability while keeping burn as low as possible. I honestly believe that this situation is for the net good of the ecosystem.
What’s next for Kippa? What are you most excited about?
Our team will continue to improve our core products for existing customers while acquiring & serving new merchants across Nigeria and sub-Saharan Africa. At the same time, we’ll keep innovating and launching new products & services based on customer insights in order to solve additional pain points for businesses on the continent.