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Exclusive: Kopo Kopo’s Great Pivot

Kopo Kopo has launched Grow With Us, the fastest way to get cash to local SMEs to help them grow fast and avoid the processes and collateral required by traditional lenders. Grow With Us’ launch was revolutionary, and makes more sense with yesterday’s launch of Square Capital by Jack Dorsey’s Square.

Grow is an unsecured merchant cash advance service for Kopo Kopo customers that have actively used Kopo Kopo for 3+ months. The firm says the more a merchant actively uses its account, the more its eligible to receive the loan of up to Ksh 5,000,000.

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The service is an unsecured and requires no  colateral and unlike a traditional loan, Grow is based on a fixed fee as opposed to an interest rate. For example, if a firm receives an advance of Ksh 200,000 for a fee of Ksh 20,000 it will repay,  Ksh 220,000.

Speaking to TechMoran Ben Lyon Director at Kopo Kopo said the firm wasn’t triggered by anyone, rather it had been thinking of cash advances for merchants for sometime. The service is not a counter to Safaricom’s M-Shwari which allows M-PESA users to save and borrow at the same time.

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“Grow isn’t really a counter to anything. Instead, it’s a new product designed to fill a significant gap in the market. Organizations like FSD Kenya, The World Bank and The World Economic Forum have referred to this SME financing gap as ‘the missing middle,” Ben told TechMoran.

The service launched in partneship with afb, a consumer bank, was to fill the gap in the market as their customers weren’t being served by any existing product in the market.

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“I think we’ve all been thinking about merchant cash advances for some time. Globally, the payments industry is arcing toward ancillary services (loans, targeted advertising, business intelligence, etc). Transaction fees are being commoditized everywhere, so players in the payments industry have no choice but to build new revenue lines that don’t depend on transaction fees,” Lyon said.

Kopo Kopo Country Manager kenya Francis Mugane at the Grow launch a few weeks ago
Kopo Kopo Country Manager kenya Francis Mugane at the Grow launch a few weeks ago

Kopo Kopo, as a software company, remains a software company and its partner, afb, a regulated finance company will assign advance ranges and underwrite advances.

“We’re constantly calibrating our models to accommodate new insights. That’s one of the reasons we’ve enjoyed working with afb: We’re both nimble, data-driven and risk tolerant. Will there be bad debt? Sure. Will we learn from it and adapt? Absolutely.
Also, it’s important to note that payment processors are entering the merchant cash advance industry because we can ‘secure’ advances insofar as we process our customers’ payments.  So long as our customers continue to receive electronic payments from their customers, we’ll continue to automatically collect repayments,” Ben concludes.

Launched in Kenya early 2012, Kopo Kopo went ahead to partner with Kenya’s biggest telco, Safaricom to bring the M-PESA Buy Goods service to small and medium businesses throughout the country, dubbed as Lipa na M-PESA.  Today, the firm serves hundreds of businesses from salons to restaurants to office supply stores.

Ben says Kopo Kopo’s mission is to help SMEs grow and prosper.

“We’re always associated with Lipa na M-PESA because we’ve been acquiring merchants since 2012 (back when the service was still called Nunua na M-PESA). But enabling merchants to accept electronic payments was never our end game. Ultimately, we aspire to be the business management software that SME owners trust to run their business,” says Ben. “We see electronic payment acceptance as the onramp to digital commerce. Grow was the first of many layers we plan to add in the coming months and years.”

Though at the moment Grow is available in Kenya,  Kopo Kopo’s eyes are set on a global opportunity and the firm says it is in the middle of various conversations to see it used in every corner of the world.

Sam Wakoba
Sam Wakoba
Taking you on tour through Africa's tech and business ecosystem, one story at a time since 2010! Based out of Nairobi, Kenya, Sam is the founder and managing director of Moran Media, which runs, various other digital platforms and a startup incubation hub for Kenya's youthful entrepreneurs. Drop me a mail at [email protected]

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