Wayne Hennessy-Barrett, Founder and CEO, reveals how 4G Capital grows businesses with instant-access working capital loans and enterprise training.
NEXT-GENERATION BUSINESS LENDING
It’s still clear that we’ve only just begun to realise the potential of mobile and data technology in our lives.”
A lover of technology and its practical applications, Wayne Hennessy-Barrett is the Founder and CEO of 4G Capital, a digital lending company that provides micro and small businesses with instant-access working capital loans and enterprise training.
The former is especially important in Africa’s vast informal economy, which comprises over 80 percent of the continent’s GDP.
4G Capital, whose mission is to grow businesses with capital and knowledge, solves this financial inclusion challenge through last-mile digital financing via distributors, other aggregators, and its own hybrid channel.
“We have over 1,000 employees that serve the growing informal African market, including physical relationship managers in 192 locations across Kenya and Uganda,” Hennessy-Barrett informs us.
“72 percent of our clients are women, and on average they increase their revenues by 82 percent year-on-year using our services.”
Sustained growth is forecast in Africa over the next century thanks to the rising penetration of digital channels for both financial transactions and knowledge access.
These impressive figures exemplify how 4G Capital helps businesses to grow sustainably through capital loans and business training.
“We came up with a simple, short-term, unsecured loan design and an onboarding process centred around the individual customer. This evolved to include business training,” outlines Hennessy-Barrett.
From the get-go, the company’s culture and mission have been aligned around the success of its resilient, innovative customers.
“While liquid funds are usually lacking, the one thing our customers have in abundance is dignity. We therefore treat them with the respect they deserve and stand with them in both the good and bad times.
“Our staff are taught from day one that we succeed when our customers succeed. We also relate to our customers; many of us have tough backstories and parents or siblings who struggle from day to day,” shares Hennessy-Barrett, who himself was raised by a single mother that had to brave financial uncertainty during his upbringing.
BUILDING BLOCKS
4G Capital is focusing on its core markets of Kenya and Uganda, where it is well-positioned for growth.
The company looked at a multi-country strategy before deciding to concentrate on EBITDA (earnings before interest, taxes, depreciation, and amortisation) and cashflow positivity in the two East African countries whilst evolving its tech stack and artificial intelligence (AI) capabilities.
These will be deployed this year and deliver a step change in both user experience and scalability.
“With the ability to do more and do better in already successful markets, we will set the conditions to help small businesses across Africa and elsewhere in the future,” Hennessy-Barrett affirms.
Meanwhile, the company is putting in place scalable financing structures to support its growth rate.
Blessed to have tremendous backing to date from international and local banks in Kenya, as well as private impact funds, 4G Capital has high levels of ambition for the next five years as it diversifies its credit products and looks at other productive business assets it can finance.
“We’re building investment relationships and deal flow now so that we can focus on designing new products and managing growth,” he sets out.
The company has built its technology and management infrastructure to grow in a controlled and sustainable way.
For example, over the past few years, 4G Capital has moved to an entirely cloud-based banking-as-a-service (BaaS) architecture, allowing it to swap out various components when better options become available.
Equally, its evaluation algorithm (EVA) machine learning (ML) system ensures that the company lends the right amount for customers’ business dynamics.
Now that almost all of its clients have smartphones, compared to around a third a decade ago, 4G Capital also looks forward to supercharging the customer experience with a mobile app that will improve their journey and access to the right financial products, training, knowledge, and business toolkits.
“I was privileged to be part of one of our regular customer feedback sessions in April. We draw enormous strength and inspiration from our customers, who have the best view of their needs. They’re candid, smart, funny, and great company!” smiles Hennessy-Barrett.
NXTGEN SERVICE
As well as last-mile financing, 4G Capital has set up a high-fidelity, off-balance sheet lending service it calls NXTGEN.
The company works with institutions seeking to allocate capital to access grassroots businesses, providing experienced and seamless lending and fund management.
“We provide cutting-edge financial inclusion services to customer segments traditionally deemed too high-risk for retail credit,” Hennessy-Barrett explains.
Together with finance partners such as the Mastercard Foundation, 4G Capital helped over 40,000 small businesses survive the COVID-19 pandemic.
Since last August, the company has also assisted more than 20,000 female and youth start-ups in Kenya, as well as pioneering electric vehicle (EV) asset financing.
“NXTGEN allows us to offer our success to other finance partners in non-competing sectors and geographies,” he states.
Along with its finance partners, Hennessy-Barrett highlights the importance of 4G Capital’s partnership with local distributors, who represent an important channel to reach thousands of small retailers.
“We boost their sales, and those of their clients, effectively purchasing the inventory that the store is capable of selling. We take the strain so everyone grows together.
“This extraordinary success is complemented by our small teams of relationship officers, who are the heroes of the company,” champions Hennessy-Barrett.
As genuine business skill mentors in their communities, having these teams in the field provides 4G Capital with real-time feedback from clients and market conditions, enabling the company to pivot quickly to respond to local developments.
HELPING HAND
The core business of 4G Capital makes a remarkable contribution to the pathway to formality for low-income traders to integrate with their economies, attested by its B Corp score of 145 out of 200.
On top of this, the company’s field teams also partake in other corporate social responsibility (CSR) practices and try to make a difference in other ways where they can.
Support is currently being provided to victims of flooding in Nairobi, for example, where many of 4G Capital’s customers have been affected.
“In under a week, our wonderful team had donated over USD$5,000 along with clothing and bedding to help those affected, and we’re using company vehicles to help deliver this support,” Hennessy-Barrett prides.
During the COVID-19 pandemic, 4G Capital was also one of the few credit providers to continue lending and trading throughout the crisis.
“We knew our customers needed us to keep their businesses alive and provide essentials to their communities. We discounted our prices by 10 percent across the board and waived all late penalty fees for everyone since our inception in 2013,” he reveals.
The company additionally provided customers with locally-made, legally-required face masks to enable them to continue working during the pandemic.
Standing by its customers allowed 4G Capital to meet pent-up demand in 2021, and saw the company rewarded with outstanding loyalty in return.
Today, 4G Capital also carries out regular market clean-ups in the areas where it operates, makes donations to cover fees for school children with learning disabilities, and works with a local Christian charity to support a maternity clinic that it helped to build with donor funds, which has brought down infant mortality in the region from 30 percent to five percent.
“We also support an initiative to honour the Kenyan veterans of WWII with replacement campaign medals to recognise their heroism in the fight against global fascism, which threatened the entire world in the last century,” adds Hennessy-Barrett.
FUTURE ROADMAP
4G Capital has a laser focus on its roadmap for the future – upgrading its technology, securing debt funding, and being the best version of itself before looking outwards to new countries.
The company is blessed to have amazing customers, great products that work for them, incredible staff, and strong relationships with regulators, investors, and stakeholders.
“Together, this builds a level of resilience that allows us to push through global macro headwinds and demonstrate that East Africa delivers great returns in a sustainable way which investors can be proud of,” enlightens Hennessy-Barrett.
Thus, the company’s immediate priority is accessing local currency and putting those funds to work in the local economy.
“We can deliver competitive risk-adjusted yield to coupon holders because of the efficiency of our model, which in turn builds equity value to allow us to reach more customers,” he concludes.
