Kenya-based fintech firm 4G Capital has raised $18.5 million (Sh2.1 billion) in a Series C funding from global private equity firm Lightrock. The company which provides unsecured lending to micro businesses will use the funds to expand its market and grow profits by rolling out new products and services including an increased credit limit of $1000 with a longer repayment period from the current one month limit.
Lightrock’s partner Shakir Merali also joins the 4G Capital Board of Directors.
“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.” Merali said
“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.”
Wayne Hennesy-Barrett, CEO and founder of 4G said the company is also planning to launch an app that will serve as a digital marketplace place and networking platform where their clients can be connected to other providers such as delivery services. The app is expected to launch later this year.
“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 has granted credit worth $230 million and lent to over 1.75 million micro-businesses since its start, according to Hennessy-Barrett, representing a 90 percent year-on-year increase.
The lender has also partnered with a number of debt investors, including Alphamundi, a Swiss impact investor, the Ford Foundation, Kenya’s Co-operative Bank, Citi Bank which advanced them $3 million in credit in 2020, backed by the US International Development Finance Corporation and high-net-worth individuals.
4G Capital is also looking into additional expansion prospects in West and North Africa, with a particular focus on partnerships in Ghana, Nigeria, and Egypt, which will take place once the company has expanded its market share and enhanced its customer value proposition in its core countries.
“We want to make sure that we’re growing at the right pace so we have the capital that we need to move to the next phase, and that we’re building the foundations properly to enable that digital scaling,” said Hennessy-Barrett.
The latest funding round takes 4G Capital’s total equity funding raised since 2016 to $27.5 million (Sh3.1 billion).