Ghanaian startups get boost from Catalyst Fund

Ghanaian startups Boost Ghana and KudiGo have been chosen to join the Catalyst Fund Inclusive Digital Commerce Accelerator.

The program was created in Ghana to support digital commerce companies in developing solutions that can better reach, serve and benefit micro and small enterprises (MSEs).

The accelerator is managed by BFA Global and is a partnership with the Mastercard Foundation COVID-19 Recovery and Resilience Program and the Meltwater Entrepreneurial School of Technology (MEST).

Boost Ghana and KudiGo are enabling small retailers to grow by easing business administration, digitizing operations, improving access to working capital and reducing the cost of doing business, while providing suppliers with efficient access to MSE customers on the ground.

The two startups are the first cohort of innovative digital commerce companies to be scaled by the accelerator, but the plan is to choose a total of six to help over the next two years.

Boost Ghana and KudiGo will receive up to $120,000 in capital funding along with expert-led venture acceleration support, in-market expertise from MEST and networking opportunities with Catalyst Fund's global circles of investors and corporate innovators.

"MSEs are the backbone of Ghana's economy, representing about 80% of the MSME sector and employing over 50% of Ghanaians. Within the MSE sector, informal work is predominant and contributes to 90% of employment," said Jane del Ser, program director for the Catalyst Fund Inclusive Digital Commerce Accelerator.

"Following the COVID-19 crisis, micro and small enterprises in particular lack access to a financial safety net, which significantly impacts their livelihoods and ability to do business. As most transactions and records occur offline, these businesses also lack digital financial records that can grant them access to the working capital they need to survive. Both Boost Ghana and KudiGo present digital solutions that have the potential to significantly impact the livelihoods of thousands of informal MSE owners," del Ser added.

Bridging the digital gap

Since launching the program in November 2020, Catalyst Fund conducted research on MSEs in urban and peri-urban retail shops around Accra and found that 100% of shop owners have smartphones, and more than half already market their businesses via social media.

However, few currently use digital means to purchase inputs, manage their businesses on a day-to-day basis, or fulfill orders; and only 20% buy inputs online. This leads to costly transportation expenses, and it means MSEs cannot guarantee the availability of supplies or price stability enjoyed by larger retailers.

Boost Ghana is tackling this problem by enabling underserved small businesses in Ghana to order stock digitally at wholesale prices and receive same-day deliveries. For suppliers, they provide direct access to last-mile retail customers at scale, providing critical data and reducing the cost of distribution.

KudiGo provides a holistic retail management solution for small business owners, including inventory management, CRM, mobile money payments and a digital storefront, enabling businesses to build a digital footprint and access financial services more easily. They also offer their MSE customers last-mile delivery via partners.

Growing the ecosystem

In addition to working with Boost and KudiGo, the Catalyst Fund team plans to grow the wider digital commerce ecosystem by partnering with corporate innovators and investors who can help these companies scale, in an effort to create a more enabling investment and business environment.

"Digitizing MSEs is critical to growing the informal sector and unlocking their potential to scale up and be at the forefront of Ghana's economic recovery. Leveraging the collective capacity of local digital commerce companies to lead this effort is definitely a step in the right direction," said Nathalie Akon Gabala, Mastercard Foundation's regional director for West, Central and Northern Africa.

Catalyst Fund first launched as a global accelerator for inclusive fintech startups in 2015 and accelerated 25 fintech startups across 14 emerging markets. Over 90% of the initial companies are still operating and have gone on to raise nearly 25 times the amount invested in them, reaching more than 2.5 million low-income customers globally.

In January 2020, the program expanded to accelerate 30 additional early-stage fintech startups operating or about to operate in India, Kenya, Mexico, Nigeria and South Africa.

The portfolio companies have raised over $81 million in follow-on funding, unlocking capital in their markets to return $25 for every $1 invested in the program.

*Top image source: Cards photo created by wayhomestudio - www.freepik.com.

— The Staff, Connecting Africa