Kenya-based fintech 4G Capital announced that it has secured $18.5 million in a Series C funding round from global private equity firm Lightrock to scale its lending operations.
Launched by Hennessy-Barrett in 2013, 4G Capital provides micro-loans and enterprise training to power Micro, Small and Medium Enterprises, (MSME) growth.
The new funding will be used introduce new products, a new app so as to appeal to more customers and rise above its current micro-sellers market segment to lend to bigger businesses in the agri-value chain.
4G Capital also intends to increase its credit limit to customers from $1,000, and allow longer repayment periods from the current maximum of one month. It hopes this will attract more customers and increase profits.
According to Hennessy-Barrett, 4G Capital has provided loans to businesses valued at $230 million since it launched operations and loaned over 1.75 million micro-businesses over the same period, recording a 90% year-on-year growth
“We will be building new loan products this year, with longer durations and larger amounts and lend to bigger businesses in the agri-value chain…We are also planning to launch an app that will allow our clients to run their businesses better, have access to our goods and services, and connect them with other providers like FMCG (fast moving consumer goods) distributors. The future of 4G, is a really enriched value proposition for our clients driven by data and AI,” said Hennessy-Barrett.
4G Capital is conducting trials of its latest retail finance product dubbed Kuza, which allows clients to access goods from FMCG producers and distributors on credit.
The fintech is also looking at entering into the West and North African markets by way of partnerships in Ghana, Nigeria and Egypt.
As 4G Capital plans to scale its operations , it intends to invest in data science enhancements for its evaluation algorithm, and grow its management team in evolving its core banking system.
Commenting on the deal, Lightrock’s partner Shakir Merali, who now joins 4G Capital’s Board, says “Often used to justify the backing of many African companies, ‘financial inclusion’ has not always translated into positive outcomes for customers. What is needed on the continent is investment capital to back companies with the mission of financial empowerment. 4G Capital provides liquidity to the vast market of economically generative businesses – the mobile phone repairers, hairdressers and food sellers – that dot the landscape of Africa.”
