DigiKua

For the millions of East African women and youth who turn to entrepreneurship for livelihood, the lack of the right resources, tools, and network access means entrepreneurship remains risky and unsustainable.  

Entrepreneurs from marginalized communities who do manage to start businesses lack the right support structure to make their businesses sustainable. Lack of education and resources prevents entrepreneurs from procuring documentation required by institutions, excluding them from economic systems. Without data-backed records of business performance, their businesses are seen as risky investments and are often denied financing. Without access to sustainability and scale, 70% of businesses in marginalized communities shut down without translating into long-term economic benefits for their founders and their employees.

There is also a dearth of tools, financing, and networks to overcome systemic inequalities. Micro-financing organizations and bank-managed initiatives targeting start-up entrepreneurs rarely accommodate the realities that entrepreneurs in low-income communities face. Business support initiatives may offer training, but not financing support - crucial when only 20% of small enterprises and 33% of medium enterprises in Sub-Saharan Africa have a bank loan or line of credit (International Finance Corporation). Without a contextualized support model that addresses these systematic barriers, what marginal gains entrepreneurs may experience are insufficient to ensure sustainability of their livelihoods. They remain vulnerable to the uncertainties of the informal sector, where 93.5% of young (15-14) Kenyans and 90.2% of Kenyan women, and 98.4% of Tanzanian youth and 95.9% of Tanzanian women (ILO) turn to for employment. Further, entrepreneurs are denied the agency to build their own paths out of poverty, perpetuating an expanding cycle that has 37% (20 million) of Kenyans and 49% (28 million) of Tanzanians living under the poverty line of $1.90/day, 4x the global poverty rate of 8.44% (World Bank).

DigiKua is a USSD- and WhatsApp-based digital business recordkeeping tool, built by and for marginalized communities. It makes financial reporting quick and accessible even in the absence of formal education, regular internet connectivity, or a smartphone. DigiKua helps entrepreneurs stay on top of their businesses, empowering them to make data-backed decisions and build paths toward sustainable scale.

Making Business Documentation and Credit Scoring Equitable

DigiKua data can be used as an alternative way for entrepreneurs to prove their creditworthiness and access financing that is critical to growing their businesses. Validated financial reports generated by DigiKua serve as documentation for external financing – a requirement that many marginalized business owners struggle to meet. DigiKua’s alternative credit scoring system uses more holistic metrics to create a more equitable playing field for marginalized entrepreneurs trying to secure external financing. The system considers business financials, social and environmental impact data, participation in business acceleration programs, and loan repayment timeliness – all gathered quickly and easily through DigiKua. Somo’s growing network of partner investors, organizations, and financial institutions use DigiKua and our alternative credit score to gain a more comprehensive assessment of an entrepreneur’s creditworthiness.

Empowering Entrepreneurs to Connect and Grow

Select entrepreneurs on the DigiKua platform can opt to participate in Somo Invest, our online financing linkages platform that enables business owners to harness their DigiKua data in pitching to investors. They build a visual profile where they highlight their entrepreneurial vision and USP, and the impact that they are creating in their communities. Entrepreneurs’ profiles are automatically populated with DigiKua-sourced data, making it easy for them to present their business performance and financials. Through the Somo Invest platform, entrepreneurs connect with third-party investors and, backed by the documentation that DigiKua provides, secure catalytic capital to scale.

How exactly does an entrepreneur use DigiKua?

Enrolled entrepreneurs can access DigiKua 24/7 by dialing a USSD code or WhatsApp number. They navigate numbered-option menus to record sales, inventory, expenses, and other information. Their input is validated by referencing mobile money payments, bank transaction records, and push notifications. The data is automatically fed to an online spreadsheet that contains entrepreneurs’ business records sorted by month, and is also used to generate regular business performance summaries that are sent to the entrepreneurs via SMS. Users can generate their detailed documentation through a link emailed to them – the only time that they will need an internet connection during the core DigiKua user journey. See a video walkthrough of DigiKua here.

DigiKua is built for marginalized East African entrepreneurs from low-income communities who have been excluded from the economic systems they need. Our target entrepreneurs make an average $55.35 a month or $1.93 a day in informal jobs, far below Kenya’s minimum wage of $124.56 and Tanzania’s $179.65. They live in overpopulated urban informal settlements that sorely lack basic services and livelihood opportunities. 

Somo focuses on women and youth (ages 18-35) entrepreneurs who face compounding barriers to economic agency. They are disproportionately excluded from formal education and have the lowest levels of formal financial access. Only 16-20% of women in the region have access to long-term financing from formal financial institutions, leaving a $42 billion financing gap for women entrepreneurs across business value chains. Women also have less time to run a business as they have to deal with patriarchal standards that expect them to devote more time to household responsibilities.

With DigiKua, all entrepreneurs regardless of gender, educational background, and time flexibility have an easy, quick, and accessible way to manage their businesses. It is their gateway to the larger economic system, providing them with tools and data to confidently pitch their businesses. By developing an alternative credit scoring system based on DigiKua, Somo is also working to create a more equitable economic landscape from the side of investors and institutions. Underserved entrepreneurs for so long have been practically disqualified from any kind of financing, but with DigiKua, they can get their foot in the door. With better opportunities to grow their businesses and achieve sustainability, entrepreneurs will attain economic prosperity translating into true well-being for themselves and their communities.  

Somo is a grassroots movement. Most team members grew up in informal settlements and understand the resource barriers and lack of networks that people from low-income communities face in pursuing economic empowerment through entrepreneurship. 

This core competency, built on years of trust and collaboration, enables Somo to co-create solutions with the people who are meant to use the solutions. Lead developer Charles Jumaa grew up in a low-income neighborhood and taught himself how to code after seeing his mother’s small grocery fail due a lack of record-keeping. He now trains a team of young East Africans from similar backgrounds. They and the rest of the Somo team combine innovation, contextual understanding, and local leadership to help entrepreneurs take ownership of their path to economic empowerment. 

A robust monitoring and evaluation (M&E) framework allows Somo to holistically assess impact through improved economic outcomes, community well-being, and access to basic social services. We use our baseline data from over 10,000 people across 30 communities to track how metrics like income, bank access, and external capital increase from before Somo’s interventions. Quantitative analysis is coupled with qualitative input from entrepreneurs on how our tools are fitting into their realities. Through continuous feedback and dialogue with business owners, Somo’s field staff shape the refinement of our digital tools and help the community adapt to the technology. 

Somo is a grassroots movement. Most team members grew up in informal settlements and understand the resource barriers and lack of networks that people from low-income communities face in pursuing economic empowerment through entrepreneurship. 

This core competency, built on years of trust and collaboration, enables Somo to co-create solutions with the people who are meant to use the solutions. Lead developer Charles Jumaa grew up in a low-income neighborhood and taught himself how to code after seeing his mother’s small grocery fail due a lack of record-keeping. He now trains a team of young East Africans from similar backgrounds. They and the rest of the Somo team combine innovation, contextual understanding, and local leadership to help entrepreneurs take ownership of their path to economic empowerment. 

A robust monitoring and evaluation (M&E) framework allows Somo to holistically assess impact through improved economic outcomes, community well-being, and access to basic social services. We use our baseline data from over 10,000 people across 30 communities to track how metrics like income, bank access, and external capital increase from before Somo’s interventions. Quantitative analysis is coupled with qualitative input from entrepreneurs on how our tools are fitting into their realities. Through continuous feedback and dialogue with business owners, Somo’s field staff shape the refinement of our digital tools and help the community adapt to the technology. 

Somo’s needs-based approach, locally rooted model, and data-backed impact have enabled us to build a network of peers who expand our reach and deepen our work. We leverage this network to bolster the sustainability of our programs while remaining committed to the community-centered nature that drives our vision. Our partnerships with investors and other organizations give Somo the capacity, knowledge, and community-based understanding to equip African entrepreneurs with the agency and networks they need to catalyze change.

DigiKua currently reaches 3,117 entrepreneurs in Kenya and 621 in Tanzania. 50% of current users are female, and 100% are social entrepreneurs from low-income, marginalized backgrounds who are working to address community issues through their businesses.

Somo is seeking valuable partnerships and networks that will help us scale the impact DigiKua is creating among marginalized entrepreneurs. We are interested in gaining insights from peers and experts that will help us improve our M&E framework, and adapt it to a growing user base. We are looking to assess the difference in outcomes between DigiKua as a standalone intervention and DigiKua as a part of a more comprehensive business support package. Through MIT Solve, we hope to connect with M&E experts who can help us design our impact assessment and link us with the resources we need to implement our plans. 

Somo also aims to gain technical support from MIT Solve in further optimizing DigiKua. We are currently streamlining DigiKua’s input validation system as well as the automated credit scoring system, and we imagine that the resources and expertise of MIT Solve’s network could help us improve DigiKua’s backend. Somo’s homegrown team of developers is interested in connecting with and learning from peers from around the world, while also sharing their own experiences and insights in developing for marginalized communities. 

Further, Somo hopes to leverage MIT Solve’s network to find other organizations working with MSMEs in East Africa and collaborate with them to scale the reach of DigiKua. We work with partners to deploy our tools in new communities, and we plan to build our network through MIT Solve and forge new mutually beneficial partnerships. Peer organizations could also help us in translating content to local languages or dialects when applicable, as well as adapting our systems to differences in local business, regulatory, and financial standards. 

Somo believes that we have a lot to share with the MIT Solve community, and we want our tool to be able to help marginalized entrepreneurs across Africa and even in different parts of the world. Becoming an MIT Solver would position us to share our expertise on developing ultra-accessible digital tools that break down barriers for communities in the periphery. We aim to share findings from program evaluations and impact assessment that would give valuable insight into how entrepreneurs’ needs are best addressed. In doing so, we share not just data but the voices of our partners. Through MIT Solve, Somo will work toward a social development landscape that is, first and foremost, driven by people it is meant to serve.

Somo is the only one of the almost 80 entrepreneur support organizations (ESOs) operating in Kenya to empower marginalized entrepreneurs through the entire business lifecycle. Our holistic support package combines basic skills training, customized mentorship, business ideation and launch support, low-cost production facilities, digital recordkeeping tools, acceleration, market channels, and investment linkages. DigiKua is a core part of our program’s innovation, being the only USSD- and WhatsApp-based digital business recordkeeping tool of its kind. DigiKua is built around Somo’s experience of working with marginalized youth and women entrepreneurs, addressing their limited time, experience, and connectivity with a quick and accessible tool. Somo’s developers designed DigiKua to be available through USSD, which entrepreneurs already use for mobile money transactions, and deliver weekly reports via SMS, enabling usage on basic feature phones without internet access. DigiKua is also the only tool of its kind that integrates directly into a multi-channel investment support system – combining high-touch, direct investment facilitation, capacity-building for entrepreneurs to independently find financing, and systems-level initiatives to create a more inclusive, bottom-up financing ecosystem. Somo Invest innovates on the MSME-Investor network platform model by integrating real-time business data from DigiKua into an enterprise’s profile, strengthening credibility and streamlining information flow, ultimately increasing their chance to secure additional financing to grow their business. DigiKua’s ability to generate financial reports that entrepreneurs can use to fulfill loan requirements and secure capital even without an intermediary like Somo creates a greater sense of agency for people who were previously excluded from formal systems. Further, Somo’s alternative credit scoring system – only possible with a tool like DigiKua – is a way for financial institutions and investors to become a part of the solution by adapting a system that minimizes disenfranchisement in credit assessment. 

Somo is happy to share DigiKua with peer organizations, entrepreneur networks, and other potential partners. We believe our tool has the potential to transform the way East African entrepreneurs are able to propel their businesses and create impact, and we envision a future where the entire region can benefit from our innovation.

Somo envisions a business ecosystem where thriving social enterprises create sustainable livelihoods and drive inclusive economic growth and development in their communities.

Within the next 12 months, we intend to bring financial inclusion to 11,600 marginalized entrepreneurs through DigiKua, resulting in more stable businesses, sustainable enterprise expansion, increased economic wellbeing, and more quality livelihoods. We plan to bring DigiKua to Uganda by the end of 2023 by partnering with 3 organizations already working with entrepreneurs in the country’s low-income communities. We will leverage the networks of our existing partners such as the Argidius Foundation (Argidius) to connect with Ugandan organizations working in similar spaces. DigiKua’s infrastructure was designed to be easily deployable in new geographies, requiring minimal on-ground technical adaption upon launch followed by remote maintenance conducted from our Nairobi headquarters. DigiKua is ready to operate at a scale of three or more countries once Somo secures the necessary resources and partnerships. At the same time, Somo plans to extend our reach and deepen our roots in Kenya and Tanzania through Somo Digital Ambassadors – Somo entrepreneurs who are well-acquainted with our tools and can encourage more entrepreneurs in their communities to enroll in DigiKua. Ambassadors will work hand-in-hand with partner ESOs in introducing the benefits of DigiKua to new areas and cultivating a more empowered system of entrepreneurship across the region.

In the next five years, Somo will solidify transformative paradigm shifts in the East African MSME economy by partnering with ESOs, business development services (BDS) providers, and banks to change the way financing works for marginalized entrepreneurs. We are already in talks with banks interested in using DigiKua to improve their evaluation process for micro business loan applicants and de-risk lending to entrepreneurs who need it most. They will be able to use our alternative credit scoring system to fairly determine credit-worthiness among traditionally thin-file enterprises, and the continued use of DigiKua for business performance monitoring will help develop mutually beneficial relationships between entrepreneurs and institutions. DigiKua will also be a key tool for BDS providers across the region. By providing DigiKua through a SaaS or white label model, Somo will enable BDS providers to give any entrepreneur they work with access to the tool even if the entrepreneur does not work directly with Somo. By 2027, we target partnerships with 128 BDS providers and 48 financial institutions, resulting in 160,000 entrepreneurs using DigiKua. With the right support and peer networks, Somo believes that DigiKua can become the primary mode of business recordkeeping among MSMEs in marginalized communities, achieving widespread enough acceptance that the barriers that necessitated DigiKua’s creation no longer exist.

Somo measures our impact progress through the following metrics:

• Number of DigiKua entrepreneurs who are accessing external financing: The bottom-line objective of DigiKua is to foster financial inclusion that translates into businesses getting the capital that they need to grow. We track the number of investment deals made through the Somo Invest platform, and use DigiKua to monitor entrepreneurs who are able to use their generated documentation to access loans from other institutions. To date, 400 entrepreneurs have secured external financing through DigiKua.

• Gender and youth equity: Somo ensures that at least 50% of our partner enterprises are women-led and at least 80% are youth-led. We strive to empower entrepreneurs who have traditionally been at a disadvantage because of the opportunities they have lacked or the responsibilities that they continue to carry. For women entrepreneurs, we facilitate in household meetings a healthy discussion on the importance of women’s agency to address potential resistance from male family members about women becoming entrepreneurs.
  
• Multidimensional inclusion: Somo expects that financial inclusion that DigiKua cultivates through increased investment-seeking capacity also spills over into other forms of economic and social inclusion. We ensure all Somo entrepreneurs have bank accounts, registered businesses, and access to health insurance and social security. 
• Quality livelihoods generated by businesses: Empowered entrepreneurs create opportunities for their entire community to benefit from enterprise development through the creation of jobs, whether directly in their business or indirectly across the value chain. Somo monitors both direct and indirect jobs per business – on average three and seven within the first year for existing Somo partner businesses. We also ensure that the jobs created are decent jobs with dignity, and we track weekly work hours, wages, and working conditions to confirm this. By establishing and growing their businesses, Somo entrepreneurs have directly created 8,800 jobs to date, with their employees earning 2.7x the average income in their communities.
• Increases in business revenue and household income: The most important benefit of a thriving business in a low-income community is greater economic agency for the entrepreneur, the indicators of which we track through DigiKua. With a stable source of income, they are able to provide for their families’ health and sustenance, their children’s education, and their own aspirations. Current Somo entrepreneurs earn 3x the average income in their communities and experience a 258% median annual revenue growth in the first three years of operation.
• Amount and type of financing accessed: We want to ensure that entrepreneurs receive financing and the financing they receive is equitable and enough to catalyze development. Somo uses DigiKua to monitor investment amounts as well as the financing structure and terms of such investments – interest rates, repayment terms, etc. We supplement this with dialogues with entrepreneurs to ensure that they feel empowered and not restricted by these investments. Businesses using DigiKua have secured $938,956 of external financing to date, most of which are low interest loans.
• Gender and youth equity: Somo ensures that at least 50% of our partner enterprises are women-led and at least 80% are youth-led. We strive to empower entrepreneurs who have traditionally been at a disadvantage because of the opportunities they have lacked or the responsibilities that they continue to carry. For women entrepreneurs, we facilitate in household meetings a healthy discussion on the importance of women’s agency to address potential resistance from male family members about women becoming entrepreneurs.
  

Somo’s Theory of Change states that:

If our model addresses the multifaceted needs of entrepreneurship, digital tools are tailored to the local context and entrepreneurs’ learning and business needs; institutions and funders are willing to invest; and, external economic conditions and regulatory frameworks do not hinder businesses; 

Then entrepreneurs will be able to overcome class-, gender-, and age-based systemic barriers, apply their knowledge and skills to launch social impact businesses, make data-informed business decisions to grow their businesses, access start-up and longer-term financing, and participate competitively in growing markets. They will be able to generate decent jobs and revenue, improve livelihoods, and sustainably drive inclusive economic growth and development in their communities.

Somo’s sequenced programs and digital services facilitate skills training, network building, and financial inclusion. A third-party evaluation of our model funded by Argidius shows Somo’s work generates a 310% return on investment materialized through job creation and increased income. On average, Somo businesses employ three people and create eight jobs after one year, and five people and 15 jobs after two. Women hold 57% of these jobs and 79% are held by youth. To date, businesses supported by Somo’s tools have created over 6,000 jobs, accessed over $373,000 in external financing, and experienced a 4.4x income increase from the baseline average income in their communities, moving them out of poverty into middle income status. Entrepreneurs are also creating significant social impact, which includes 33,000 families with clean water access, over 250,000 kilograms of healthy food consumed, and over 1 million kilograms of materials recycled to date. Interviews show entrepreneurs are more confident and capable of crafting and executing clear business value propositions as a result of Somo’s hands-on, contextualized support. Before Somo, entrepreneurs’ businesses were not registered, and had no bank account or savings. Today, Somo entrepreneurs have greater financial inclusion, running fully registered businesses with bank accounts. With access to larger economic and market ecosystems, entrepreneurs boost their productivity and sales.

Somo’s impact is holistic. It empowers not just entrepreneurs but other stakeholders involved in MSME development as well. By providing contextually grounded tools to BDS providers, financial institutions, and investors, we are tackling the barriers to economic inclusion from all fronts and equipping others to do the same. Through DigiKua, banks can de-risk their MSME lending and serve a much wider market, enabling many more marginalized entrepreneurs to access the capital needed to grow. Organizations with missions like ours can maximize our tools’ scalability and ease of deployment to empower communities we have not yet reached ourselves. Ultimately, with stakeholders contributing toward an inclusive environment and social entrepreneurs having the means to engage with them, Somo is creating a replicable model of locally driven development that transcends our own organization.

DigiKua’s WhatsApp version is ready to use in any country where WhatsApp is accessible. No technical adaptation is necessary other than appropriate language translation. The USSD version requires USSD shortcode setup, bulk SMS setup, and API integration with DigiKua. The timeline for this process differs from country to country. In Somo’s expansion to Tanzania, it took us two weeks to connect with local service providers and get DigiKua up and running. We estimate that the process will take up to 2 weeks in Uganda.

DigiKua is highly scalable and has been developed using multiple modern programming languages including PHP, Python, NodeJS, and Google app script. We use MySQL, already widely understood by developers, and we built DigiKua using a modular framework to facilitate easy improvements. This makes DigiKua readily customizable to the needs of different locations or clients without having to revamp the entire system. The application is also hosted on highly scalable cloud infrastructure on Google Cloud and Amazon Web Services, as well as local instances running on on-premise infrastructure.

Somo’s interventions depart from the traditional top-down development paradigm by ensuring that local entrepreneurs are at the center, driving development and growth for communities. Entrepreneurs help design and implement Somo’s programs, giving them ownership of the process and providing the next generation of entrepreneurs the support of those who have been successful in growing businesses in their communities. Further, Somo’s feedback mechanisms with entrepreneurs, backed by validated impact and financial data collected using DigiKua, enable us to collaboratively collect evidence and evaluate impact in real-time.

Somo values community-driven leadership and is governed by policies that ensure we hire locally in each area of operation.  Somo’s East African leadership team reflects the low-income areas we serve, helping us identify and address the evolving needs of our constituents. 87% of Somo staff come from partner communities and have navigated difficult environments, innovatively adapted to shocks, and grown alongside our entrepreneurs. As Somo scales, we are placing a premium on growing our current management pipeline, ensuring that Somo team members with deep roots in partner communities have a pathway of growth to achieve higher level management positions. Our team is built on the idea of growing the next leaders over time, with tenured staff already committed to mentoring younger, newer team members, helping to keep our organizational culture strong and inclusive.

Somo ensures that at least 50% of the entrepreneurs we work with are women. We build our services around women’s realities, ensuring that our tools address the specific barriers women face such as disconnection from institutions and a greater proportion working in the informal sector. Somo also conducts household meetings to facilitate a healthy discussion on the importance of women’s agency to address resistance from male family members about women becoming entrepreneurs.