Kenya’s 4G Capital has raised $18.5 million in a Series C funding round with private equity fund Lightrock to scale its last-mile finance and enterprise training solutions to MSEs in Kenya and Uganda.
The micro and small enterprises (MSEs) lender will also use the funds to expand its use of digital channels and data science to complement its hybrid ‘touch-tech’ approach and expand its Kuza retail credit service to help store-owners, FMCGs and distributors boost their sales.
Wayne Hennessy-Barrett, the CEO and Founder of 4g Capital expressed the company’s delight to partner with Lightrock to further our financial inclusion mission.
“Lightrock bring unrivalled experience of Africa and emerging markets. This capital will have transformative effect in enabling us to scale the best products and services to the world’s most important sector,” Wayne said.
4G Capital provides 100% unsecured business loans for business growth, along with enterprise training, and access to digital solutions. The company blends client-centric relationship management with proprietary AI technology to minimize default risk.
Its clients maintain high repayment rates (around 94%) without the need for refinancing; on average customers increase their annual revenue by 82%. One of the world’s top 10 Finance B-Corporations, 4G Capital has positively impacted over one million people to date.
Through its plug-and-play lending service Kuza, 4G Capital allows low income entrepreneurs to obtain stock from distributors using its credit and partnerships, rather than traditional cash on delivery. 4G Capital also enables traditionally excluded groups to better access education, healthcare and improved living standards as their take-home income grows. 4G Capital’s focus on growing value chains from the bottom up means its model has the potential to scale in communities across Africa and wider global emerging markets.
Despite the pandemic, 4G Capital’s revenues for 2021 were 85% higher than in 2020 and in return for $9 million raised from 2016-to 2020, the company has loaned over $230 million to MSEs which, despite being the foundation of frontier economies, are more vulnerable than larger enterprises to shocks. Today’s raise will help the fintech increase effective financial inclusion which is critical to regional economic growth. The IFC’s SME Finance Forum reports MSEs in Sub-Saharan Africa account for 80% of total employment and contribute over 55% of GDP. Without access to institutional capital, 72% of MSEs rely on family or friends for loans, and 30% fail due to funding shortages.