From 'The Rest' to 'The West': 4G Capital tackles inclusive financing in Africa
4G Capital fintech solutions are accelerating financial inclusion in Africa
US $26M worth of loans disbursed to date
Customers financial literacy grows with adoption of the service
When the African Development Bank reported in 2013 that over 75% of people in Africa did not have access to an account at a formal financial institution, it brought the issue of inclusive financing to the fore. Whilst for many this may have appeared as a limitation – a barrier to the ease of doing business – for some big-thinkers, it was an opportunity.
The same year, 4G Capital was founded in Nairobi by Wayne Hennessy-Barrett. Offering microfinance to small businesses, 4G worked with a vision to digitizing the informal economy, and connecting African enterprises to the world. Today, the company's financial services are expanding across sub-Saharan Africa, with $26M worth of loans awarded to date.
What makes 4G Capital shine, however, is their mission to combine microfinance with both digitization and education. Alongside loans, customers receive financial education, and the stats testify to the success of this, with 94% of customers reporting increased financial literacy. Meanwhile, Hennessy-Barrett is also working to make 4G Capital smarter. Collecting data via SMS surveys, 4G Capital is reaching those excluded from formal finance – and from internet connectivity. This is not merely bringing the company insight, but when customers come to graduate to a formal financial institution, they can take their credit data with them.
“There is a great gap in the market for affordable debt financing in local currencies, which places more risk on solid enterprises than would otherwise be the case in other markets. ”
We spoke to Wayne Hennessy-Barrett to find out more about 4G Capital's impact in Africa, his thoughts on inclusive financing – and, of course, who he's most excited to hear from at The Annual Debate.
So you founded 4G Capital, a microinvestment company providing microfinance and financial education - where have 4G Capital had the biggest impact to date?
Wayne Hennessy-Barrett, Founder and CEO, 4G Capital
As one of Africa's few profitable fintechs, our greatest impact has been the transformation of wealth creation for the majority of our clients. By ensuring we only lend working capital to viable businesses, and rightsizing credit lines with affordability, we have seen a marked growth in client business size and personal economics in a significant proportion of our client base. We're now matching bottom line profit with top-line growth as we scale in earnest with partners.
An impressive feat - you also report a 94% increase in financial literacy amongst your customers. How important do you believe financial education has been to the success of 4G Capital?
We think it is fundamental to delivering the skills to use credit to grow wealth, rather than to cover immediate living costs.
In your opinion, what is the most significant issue hindering inclusive financing in Africa?
The issues which hinder our clients are the same issues which hinder businesses across Africa - access to affordable capital. There is a great gap in the market for affordable debt financing in local currencies, which places more risk on solid enterprises than would otherwise be the case in other markets.
For those who have gained access to finance via 4G Capital, 86% are achieving increased sales - what are 4G Capital hoping to achieve in the future?
We are exponentially ambitious by design. We want to digitize the informal sector across Africa, connecting the vast opportunities in the growing informal sector with global value chains. We then want to see the best in class products and technologies migrate from African markets - 'The Rest' - back to developed markets in 'The West', to help solve the same problems of social and financial exclusion which hold us back from creating the world we want for our childrens' children.
Inspiring words! Speaking of which, who amongst our speakers at this year’s Annual Debate are you most looking forward to hearing from?
Impossible question! This is a stellar group of thought leaders and experts, I'm going to learn a lot and I'm very honoured to support it. I'm most interested to see how representatives from the UK government will describe Britain's engagement strategy with business in Africa. We live in a fast-moving world, and connecting capital with expertise and execution in exponentially growing markets in no longer a luxury for the few - it's a necessity for economic development everywhere.
To hear more from Wayne Hennessy-Barrett, join us at The Annual Debate 2018, where Wayne will be speaking on our panel Inclusive Financing in Africa.
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