Why We Invested in Tappi | Digitizing Small Businesses to Build Long-term Financial Wellbeing in Nigeria & Kenya
Photo courtesy of Mercy Corps.
Micro, small, and medium-sized enterprises (MSMEs) form the backbone of many African economies, contributing to job creation, income generation, and poverty reduction. The continent’s ~44 million MSMEs drive 60% of employment and 38% of GDP.
Yet, these businesses (~60%+ women-led), ranging from small shops selling staple goods to local communities to MSMEs working in the agriculture supply chain, remain the most underserved and exposed to shocks. This is especially true for MSMEs in Kenya and Nigeria, facing increased impacts of climate change (droughts and flooding) which cause a plethora of challenges from supply chain disruptions and damages to produce and stores through to depleted customer spending power.
With only 16% of MSMEs in Kenya and 13% in Nigeria having an online presence (mostly mobile wallets, payment platforms, and online tools), very few have a holistic package that offers them the ability to establish a verified digital presence, create a record of performance, and track income. They also lack access to opportunities for growth that could be met through online profiles such as websites, e-commerce platforms, or social media accounts, which would boost income and resilience.
As we move towards a future that is increasingly digital, the lack of online presence and ID means that MSMEs:
Struggle to access a wider customer base beyond their immediate geographic location, reducing opportunities for expansion and growth
Face manual processes, increased paperwork, and higher transaction costs
Are prevented from tapping into the growing e-commerce market, missing out on potential sales and partnerships
Face barriers to accessing loans and investment opportunities as financial institutions increasingly rely on digital data for assessing creditworthiness.
Adopting digital tools and platforms can streamline business operations, improve efficiency, and reduce costs.
THE TAPPI SOLUTION
Tappi is digitizing MSMEs across Africa with their online identity by providing them with the tools to increase sales, income, retain customers, and build long-term financial wellbeing. Starting with Kenya and Nigeria, Tappi’s SaaS platform includes a user-facing app to help MSMEs create an online profile with verified reviews, set up or connect mobile money wallets, access advertising channels (via Google Ads, Facebook Ads, and Instagram Ads) accept online and offline payments, and generate a CRM to track customers and partnerships.
MSMEs get their online identity, verified reviews, Tappi Phonebook, and their online and offline marketing tools. They can either access Tappi services through direct sales or through their business mobile data plan from select providers.
Tappi’s solution is not just an app, but a backend SaaS solution that is highly accessible, as it can be accessed via smartphone, USSD, and WhatsApp.
Tappi’s solution is designed to:
Create a digital presence
Utilize the presence to engage existing and new customers (increase income)
Connect to available payments channels (track income and increase financial inclusion)
Utilize data to support business growth (increased resilience)
Tappi synchronizes offline consumer data with online activities through their mobile ID, allowing businesses to gain valuable insights for effective customer targeting.
For instance, if a consumer interacts with an SME through a specific online channel and later makes a payment for goods or services through an offline channel (like M-Pesa or other mobile operators), Tappi is able to synchronize and consolidate this data. This integration enables SMEs to have a more comprehensive view of their customers’ behavior and preferences, facilitating more effective customer targeting and personalized marketing campaigns.
“Africa’s rapidly growing population, increasing internet penetration, and rising digital adoption create a fertile ground for innovative solutions that bridge the digital divide and support business growth. Tappi is unique versus similar business models because it offers an immediate solution for income generation (online presence, ads, payments) and builds a data layer for systemic change (becoming a platform for value-add services).”
Hetal Patel, Director — Investments, Mercy Corps Ventures
The key difference between Tappi and many digitization and backend solutions is the company’s platform approach. Tappi is not simply selling digitization solutions business-to-customer with the potential for access to financial services. Tappi is a frictionless way of creating a digital ID via an AI chatbot which is then leveraged to create a profile that can access Tappi services (online presence, ads, payments, lead generation).
The above data forms the foundation to build the digital identity for the MSMEs. As they utilize the Tappi app to market to customers and transact, Tappi collects data that it can leverage to help the shops increase sales, and in the mid-term gain access to financial services. As payments will already be integrated into the platform, Tappi will be able to de-risk repayment and collection challenges. The combination makes a one-stop platform for MSMEs to create a digital presence, grow income immediately, establish a trail to access financial services, and for partners to plug in with other value-add services.
The ability to layer on services, supported by a verified ID and validated income, is key to excelling in an uncertain future. MCV sees climate change impacting all sectors and geographies, urban and rural. Understanding the behaviors and needs of millions of shops (and their customers) is vital to offering them access to goods and services that increase their ability to adapt to unpredictable shocks.
“SMEs as the bedrock of our economies have the fundamental grit and purpose to push our economies forward if given the right access and tools for success. Our goal is to give these businesses a digital identity to win on the Internet to build trust and participate in the digital economy to grow their businesses.”
Kenfield Griffith — CEO & Co-Founder, Tappi
THESIS ALIGNMENT — INCLUSIVE FINTECH
Aligned with our Inclusive Fintech Thesis and research on MSME resilience to climate change, Tappi’s SaaS offers a full-suite of entrepreneurship-as-a-service to SMEs, which increases and stabilizes business income, captures data to unlock other financial products, and in turn increases their financial resilience. The United Nations Conference on Trade and Development estimates that Africa’s e-commerce market is valued at over $25 billion, representing significant untapped potential, that we believe Tappi is set up to capture.
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