4G Capital has received a KES 285M term loan from Citi to reach more than 25,000 micro-enterprises in a move expected to address the inventory finance needs of last-mile distributors of fast-moving consumer goods (FMCGs).
The loan is part of the Scaling Enterprise guarantee facility, a Citi partnership with DFC and the Ford Foundation that enables earlier stage, innovative and inclusive businesses in emerging markets to access local currency commercial bank financing.
According to Wayne Hennessy-Barrett, CEO and Founder of 4G Capital: “We are delighted to be working with Citi as our strategic finance partner as we expand the reach and breadth of our services to Kenya’s MSME sector. 2020 has been a challenging year, but the backbone of our community and economy, the informal traders, have shown an inspiring degree of resilience. Together Citi, 4G Capital and our distribution partners can bring much-needed growth capital and strengthen financial inclusion, thus supporting the Kenyan Government and our UN Sustainable Development Goals. This is just the start of an incredible journey together.”
4G Capital will support Citi’s FMCG customers with its KUZA product that uses the company’s proprietary fintech to ‘plug and play’ with partner systems allowing businesses to buy on credit, rather than paying cash on delivery. This allows small shop owners to maintain minimum stock levels for continuous operation and increase order sizes, boosting their annual revenue by 82% on average, according to Technoserve, one of 4GCapital’s partners.
Distributors and vendors report increased sales of 30% and higher using 4G Capital’s services. The key to 4G Capital’s success is a combination of client-centric product design supported by an in-house machine learning algorithm that optimises loan terms for the borrower—resulting in high touch and high tech business model. In addition to the revenue growth, clients report 96% increased financial literacy and deliver a net promoter score (which measures customer satisfaction) of 82 out of 100. 81% of 4G Capital’s clients are women entrepreneurs.
Citi is a primary banker to FMCGs across Africa and seeks to assist its clients in expanding their businesses sustainably through the responsible provision of working capital credit to their MSME customers.
Martin Mugambi, Citi Country Officer & CEO, Citibank NA Kenya & East Africa said: “By collaborating with 4G Capital and DFC through a partnership to co-create and scale financial innovation, we will achieve positive social impact and inclusion that benefits underserved communities. This pioneering transaction represents many firsts for Citi in Kenya, but more importantly, it unlocks sustainable solutions for last-mile financing and distribution that will enable economic growth and progress across the country.”
Since its inception in 2013, 4G Capital, an accredited B-Corporation, has grown exponentially, lending over 950,000 loans valued at over $100million. The impact of COVID-19 lockdown measures have been challenging; however, 4G Capital has maintained its vital services without interruption, providing continuous lending and support to uphold the survival of small businesses, while also reducing prices and increasing its range of offerings.