May 28, 2022

Kenyan fintech company 4G Capital, which provides unsecured loans to micro-enterprises, has raised $18.5 million in Series C funding from global private equity firm LightRock.

The equity financing comes as the fintech plans to launch a range of new products and services, including new loans that raise the credit limit to $1,000 and allow for a maximum repayment term in the current month. All this is in his plans to expand the client base and increase profits.

The products are currently under development, but the company plans to expand its footprint through micro-sellers, which have been its target market since its launch in 2013, as well as lending to larger companies in the agriculture value chain.

Wayne Hennessy-Barrett, CEO and founder of 4G Capital, told gaming-updates that they will also be launching an app later this year that will allow their customers to sell in digital marketplaces and connect with other digital providers such as delivery services.

“This year we will create new loan products with longer maturities and higher volumes, and we will provide loans to large companies in the agricultural value chain… We are also planning to launch an application that will allow our clients to manage their business. Helps you run better. Our products and services and link them to other suppliers such as distributors of consumer goods (FMCG). The future of 4G is truly a value proposition for our customers driven by data and AI,” said Barrett.

4G Capital is already using its latest retail finance product called Kuza, which will allow customers to access merchandise from FMCG manufacturers and distributors on credit.

Barrett launched 4G Capital in 2013 after a brief stint as a loan officer at a bank in Kenya, which allowed him to travel around Africa and gain insight into the continent’s lending space.

“I have spent a lot of time in the informal markets and across the board to find out what to look for – the energy, potential and activity of informal traders in Kenya; He needed someone to support him,” said the veteran of the British army.

It was this experience that prompted him to enter the lending market to cater to microtraders, who are often repelled by formal lending and banking institutions. With his experience as a consultant and loan manager, he tried a different approach: 4G Capital opened physical branches to get to know its clients better, not just to reach them by phone.

“I have seen many banks and financial institutions close public branches, offshore call centers in emerging markets where labor costs were low. But the banks no longer knew their customers and therefore could not make informed credit decisions,” Barrett said.

“I have always found it important, especially when dealing with people who can be quite vulnerable, to have a personal topic of conversation that is then complemented by technology.”

4G Capital provides short-term loans to micro-enterprises in Kenya and Uganda, which are often closed by formal banking institutions. image credit: 4G Capital

Barrett said the fixed offices allow 4G Capital to make sure they’re dealing with real companies and also help provide business training for their clients.

“It makes us a lot more resilient to things like fraud prevention, money laundering, terrorist financing and the like. Unfortunately, if you’re borrowing money blindly, you don’t necessarily know who’s on the other side.” he said.

“We know our customers better than anyone because we stand next to them in the markets. However, we do not do physical traditional microfinance operations – we have very light teams of three to five people who are incredibly efficient in terms of their productivity. ,

Barrett said 4G Capital has provided $230 million in loans since launch and has provided loans to more than 1.75 million micro-enterprises in the same period, up 90% year-on-year.

The lender has also partnered with a number of debt investors who have provided them with loans for further loans, including Alfamundi, a Swiss powerhouse investor, Citibank, which has provided them with a $3 million loan in 2020, a US convenience guaranteed by International. Development Finance Corporation, Ford Foundation, Co-operative Bank of Kenya and high net worth individuals.

Having been in business for almost a decade, 4G Capital is exploring new growth opportunities in West and North Africa, with a focus on partnerships in Ghana, Nigeria and Egypt that will increase its market share and value proposition for customers. . His origin. Market.

As it plans to grow its business, 4G Capital plans to invest in improving its data processing scoring algorithms and expand its management team as its core banking system develops.

Barrett said, “We want to make sure we’re growing at the right pace, so we have the capital we need to move to the next stage and we’re laying the groundwork to enable that digital scale.”

The latest funding round raised $24.5 million, the total capital raised by 4G Capital since 2016. The deal is also backed by Lightrock partner Shakir Merali, who has now joined the board of 4G Capital.

Commenting on the deal, Merali said:

“Often used to justify support from many African companies, the term ‘affordability’ does not always lead to positive outcomes for clients. Investment capital is needed on the continent to support companies with a mission to expand financial opportunities. 4G Capital provides liquidity to a huge market of economically productive companies – mobile phone repairers, hairdressers and food vendors – located throughout Africa.

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