DigiKua
DigiKua connects marginalised populations to the digital economy, and gives small business owners access to financial services. Through this tool businesses track data from any device via either WhatsApp or USSD code. The data is used to automatically generate reports in Google Sheets, including cash-flows, invoices/receipts, inventory trackers, and customer/product databases. Business owners can see their data on a customizable dashboard, gaining a better understanding of their businesses and capturing the records they need to access financing. DigKua connects small business owners to the digital economy by giving them a tool to record business transactions and generate validated financial reports necessary to secure credit/ loans. Entrepreneurs in low income communities do not have access to loans or credit from formal institutions because they don’t have the necessary documents, collateral or banking history to support their applications.
77% of MSMEs in Kenya report not having access to the capital they need to grow (Viffa 2018). With only 20% of businesses in Kenya being licensed (KNBS 2016), most small businesses do not have a formalized way of accessing capital. Kenya Revenue Authority states that 400,000 small businesses failed in 2016 alone. Poor financial management, as well as an inability to access loans, are the leading reasons these companies failed. Small business owners rarely keep records of their transactions, and they are unable to qualify for loans or financial aid to scale their businesses. With COVID, small businesses across Kenya faced closure, and the lockdown and economic slowdown pushed even more people into poverty. Entrepreneurs are unable to access banking services without formalized reporting, and financial institutions are reluctant to lend to small business owners in marginalized communities, so these businesses are unable to grow and expand their services. Although micro-financing organizations and banks run initiatives targeting social entrepreneurs, their models rarely acknowledge these entrepreneurs' realities. For example, most entrepreneurs in low income areas do not have a formal education, and do not have access to tools that allow them to effectively manage investments or create financial reports.
DigiKua connects entrepreneurs in low income communities to the digital economy by connecting their daily business transactions to a financial tool designed to secure external funding for their ventures. Using both USSD and WhatsApp, DigiKua is accessible on all phones. 80% of Kenyans have a mobile phone (Geopoll 2021). Mobile money payments are increasing across the region, and small business owners are now more willing to use digital tools to update their records and track their business growth. To access the platform, one simply dials a code or messages a number on WhatsApp, enters a passcode and follows the instructions to record the update. The data populates a Google spreadsheet connected to individual investment dashboards, showing entrepreneurs’ business growth over time. Data collected by DigiKua includes businesses inventory, revenue, clients served and products sold, with the option to adjust a company's offering over time. There are currently 1,054 active users of DigiKua in Kenya.
DigiKua is designed to be accessible to small business owners from marginalized communities. We use the technologies already available to this population, including USSD (which is used for mobile money transactions on basic phones) and WhatsApp, so our tool is simple and accessible. The poverty cycle makes it difficult for individuals to generate enough income to transact in the formal economy. DigiKua is a solution designed for this generation of entrepreneurs, by entrepreneurs who have grown up in the communities we serve. All of our entrepreneurs come from marginalized communities, and they are focused on creating businesses addressing needs in their communities through job creation and sustainable solutions to health, education and environmental challenges. DigiKua will be able to validate data (both for informal and formal businesses), giving them access to potential financing. Longer term, business data and growth trends from DigiKua will be valuable for institutions that want to provide financial services to MSMEs.
- Scale safe and private digital identity and financial tools to allow people and small businesses to thrive in the digital economy.
DigiKua is providing businesses built out of marginalized communities access to the tools required to secure financing. We are bridging the gap between small businesses and financing institutions. DigiKua has the potential to increase cash-flow in marginalised communities, by giving people direct access to global financial institutions. We are also empowering existing businesses and aspiring entrepreneurs with financial literacy through our digital training, DigiSomo. Short term, businesses can access external funding and become formalised. Longer term, there will be a reduction in poverty through an increased inflow of capital into small businesses that expands their capacity to create jobs.
- Growth: An organization with an established product, service, or business model rolled out in one or, ideally, several communities, which is poised for further growth.
Somo has been in operation for 5 years, and DigiKua has been in use since 2020. Our team has rapidly deployed and scaled our programs in different geographies, adjusting for local context where needed. DigiKua is available in three locations – Nairobi, Kisumu and Mombasa – and we are expanding this service to more communities in East Africa.. Our team regularly checks in with entrepreneurs to ensure that we are meeting their needs, and regularly updates the platform to create a better user experience. We use HCD to capture key needs for personas of entrepreneurs and their different business sectors. We have enlisted multiple business partners to use DigiKua using separate login credentials, allowing them to see their individual portfolios of businesses.
- A new application of an existing technology
By connecting these businesses to the formal economy, we’re exposing entrepreneurs to larger market opportunities, and introducing them to potential investors and external funding opportunities. We are using the tools already being used by our target demographic and giving them access to the knowledge they need to grow their businesses. Small business owners receive both weekly reports through SMS on their business performance and have full financial documents generated on google sheets that they can use at financial institutions. Through Somo Invest (www.somoafrica.org/invest), we invest directly in select entrepreneurs’ businesses and connect businesses with the capital they need to scale. We also link funders interested in early-stage businesses to entrepreneurs in our portfolio. Funders and entrepreneurs can see real-time data visually, and get a summary of the portfolio they have invested in. Somo graduates receive low interest loans through our partners. Our automatic validation system through banks and M-Pesa (Kenya’s most popular mobile money platform) APIs guarantees that financial reports are correct. We are developing additional partnerships with financing institutions to establish direct connections between the tool and financing sources. Additionally, the data from DigiKua will allow us to study how growth of small businesses transactions impacts the digital economy.
- Crowd Sourced Service / Social Networks
- Software and Mobile Applications
- Women & Girls
- Pregnant Women
- Rural
- Peri-Urban
- Poor
- Low-Income
- Minorities & Previously Excluded Populations
- Persons with Disabilities
- 9. Industry, Innovation and Infrastructure
- Kenya
- Kenya
- Uganda
1,054 businesses are using DigiKua, and we plan to have over 2,000 business owners using it by the end of 2021. In 2022, our goal is to have an additional 5,000 active businesses using DigiKua. In 5 years, we want to have 360,000 active users across East Africa on the platform. Assuming each business using this platform employs 3 people, DigiKua has impacted 3,162 lives so far. We have secured financing for 139 businesses. Our portfolio businesses have created at least 2,477 jobs and served 146,763 unique clients.
We will use SDG target 9.3.2, to increase the “proportion of small-scale industries with a loan or line of credit”. At present, our team measures how many times an average user uploads their business data to DigiKua, to understand how the use of this tool impacts their overall business development over time. In the long run, we will use this data to test our theory that small businesses using DigiKua to record their financial data are more likely to access financing for their businesses. As well, by tracking the number of unique customers entrepreneurs reach, we’re able to estimate the potential market for each business's product, and this created additional support for entrepreneurs requests for financial support . We will track the average increase in revenue, increase in income, financing secured and people employed. This will help us understand if the tool is leading to business growth.
- Nonprofit
6 full time staff and 1 intern.
DigiKua is built by Somo graduates who’ve experienced the first-hand difficulties of monitoring business finance without a formal education. One of the developers’ mum used to run a small grocery store which failed as a result of the poor financial management and lack of record-keeping. This experience gave him the passion to create DigiKua. Our technical lead, Charles Jumaa, is self-taught and has trained the rest of the team, all of whom are youth from low-income backgrounds. This team develops tools in collaboration with our entrepreneurs based on the needs we see on the ground. The development team consists of 6 team members; most are self-taught developers with passion for computer software. The team also works with entrepreneurs as coaches, helping them understand the daily challenges that entrepreneurs go through and how they interact with the tools being created, and using their feedback to improve DigiKua’s processes and features.
We invest in developing leadership at Somo, hiring a young team and growing people into management positions. We work with industry experts to conduct coaching sessions for our team, and provide access to certified leadership courses with organisations like the Amani Institute. 54% of the Somo team is female, and 71% of our leadership team are women. 81% of the team is from the communities we work in.
As we grow our operation, our team needs mentorship from software engineers with more experience building scalable tools, as well as marketing experts to maximise potential from our sales channels. As our organisation grows, we will continue to be committed to having most of our team represent the communities we work in and actively work towards creating opportunities for women and building an equitable workplace. As a rule, non-Kenyans are not allowed to be part of the Somo team for more than 6 months.
- Individual consumers or stakeholders (B2C)
![Caroline Mwarania](https://d3t35pgnsskh52.cloudfront.net/uploads%2F43038_Screen+Shot+2021-06-11+at+11.48.17+am_11zon.png)
Grants and M&E Associate