Kippa’s CEO On The KippaPay Tough Call That Cut 70% Of Staff
Nigerian fintech startup, Kippa, recently announced the withdrawal of its offline payments product, KippaPay, from the market. The move, which surprised many industry insiders, was explained by the company’s leadership as a strategic response to a rapidly changing economic landscape in Nigeria.
Kippa’s co-founder and CEO, Kennedy Ekezie, told WT that the decision to retire KippaPay was driven by a confluence of economic factors. Over the past 18 months, Nigeria experienced a significant uptick in the cost of doing business as currency depreciation and inflation battered local enterprises.
“We decided to pull this product back from the market for profitability reasons. Our projections changed significantly in the past 6 months due to the changes in the macroeconomic conditions in Nigeria,” Ekezie told WT.
“These past two quarters, the cost of doing business in Nigeria went up significantly and 9 percent of our customers shut their business down in the past 3 months,” he shared.
Kippa, which since 2020 has provided banking services and finance management software to small businesses, launched KippaPay having obtained a Super Agent License in Nigeria last September.
The product, which supported merchants with offline payments and agency banking through its POS terminals, had made inroads into the Nigerian market over the past 18 months, notably in a segment that has become as competitive as it has been lucrative. Some NGN 1.15 T (~USD 1.4 B) went through merchant POS transactions in Nigeria in March 2023, according to data cited by BusinessDay.
With KippaPay, Kippa joined prominent banks and established fintech challengers such as Moniepoint and OPay—with a distribution of agents and POS devices amounting to millions between them—as notable players jostling for places in the space.
Speculation that the cutthroat nature of the competition influenced the decision to pull the plug on KippaPay was however put to bed, though the numbers touting KippaPay’s performance have not been publicised.
A major blow came in the form of the devaluation of the Nigerian Naira, impacting Kippa’s cost structures, Ekezie shared. The Nigerian currency is among Africa’s worst-performing currencies, plummeting nearly 40 percent against the dollar at the official window since a mid-June devaluation, per the World Bank.
As the Naira’s value plummeted, Kippa’s costs soared, derailing the company’s financial targets. The CEO described the situation as a critical juncture, where the company had to make a difficult choice: to face the challenge head-on now or risk catastrophic consequences in the future.
“The floating of the Naira affected our cost structures: we import offline payment hardware in USD, and in the past 6 months, the naira has fallen significantly, extending our breakeven period by 2.5 percent – the price sensitivity of our customer segment combined with the profitability crunch they’re experiencing made it obvious that this decision needs to be made. You can either stare into the abyss and make the decision now, or kick the can down the road and deal with the explosive consequences later,” Ekezie emphasised.
One of the immediate consequences of this decision is the impact on Kippa’s workforce, with 70 percent of employees (around 40 people) being let go, according to the CEO. The company, however, is ensuring a soft landing for its team members by assisting them in finding new roles and providing severance packages. “We’re supporting people with landing their next roles and offering severances to team members affected,” the Kippa CEO said, marking a break from a period during which Kippa went big on hiring, notably landing executives from some of Nigeria’s top fintech companies.
Despite the setback, Kippa is not bowing out of the industry. The company maintains a robust financial position, the CEO reiterates, giving it the flexibility to reassess its strategies. Last year, Kippa raised USD 8.4 M in seed from Goodwater Capital, TEN13 VC, and Rocketship VC among others, bringing its capital base to more than USD 11 M within a full year of operation. The focus, WT has learned, now shifts to a more sustainable business model that prioritizes profitability and long-term growth.
“This was the best decision to be made to preserve the ambitions we had when we decided to start building this company. We still have a significant cash runway and we’re back to the drawing board, with a smaller team to chart the next steps for the business,” Ekezie told WT.
“It’s critical that we go down a path with the right fundamentals for profitable growth and that’s a priority for us in the next phase of the business,” he added while also hinting at the likelihood that “other players will eventually make the same decisions” in a separate post on X (formerly Twitter).
Starting November 15th, KippaPay will no longer be available to merchants. To ease the transition for its clients and partners, Kippa has pledged extensive support, demonstrating its commitment to maintaining strong relationships despite the product retirement.
While the sunsetting of KippaPay marks the end of an era for the company, Kippa would look to summon resilience. With a smaller, more focused team, the fintech startup is gearing up for a new chapter, leveraging its resources to navigate the evolving fintech landscape in Nigeria.
Kippa would be keen to build on from the previous year during which it served 482,000 businesses, powered over 5 million transactions, and processed ~USD 75 K in payments on the Kippa app. As it steps back to reevaluate its approach, Kippa remains a player to watch, with its eyes set on a sustainable and potentially prosperous future.