4G Capital is a financial institution that focuses on providing responsible and inclusive lending solutions to micro and small businesses in emerging markets.
The company operates with a unique approach that combines technology and a deep understanding of the local markets in which it operates. 4G Capital leverages innovative mobile technology to deliver financial products and services to businesses that may not have access to traditional banking services.
We recently sat down with Genevieve Hennessy-Barrett, the co-founder of 4G Capital. With a strong focus on promoting sustainable development through ESG (Environmental, Social, and Governance) aligned lending practices, Genevieve has been at the forefront of driving positive change within the financial sector.
Her expertise and leadership in this area have earned her recognition and admiration from peers and industry experts alike. In our conversation, we delve into the significance of ESG-aligned lending practices and explore how they contribute to sustainable development.
- Can you update us on 4G Capital operations since your raise last year?
It’s been 15 months since our successful Series C fundraiser, where we raised $18.5 million. Since then, we’ve experienced exponential growth, having lent over 1 million loans totalling over $130 million. Our client base has increased by 130,000, and we now serve over 370,000 clients. In the ten years since our inception, we have disbursed over $360 million. This year, we have incorporated our new risk-based pricing technology, received our CBK licence and very recently, the Financial Times recognised us as one of Africa’s Fastest Growing Companies.
2. Going back to the raise, Lightrock were the lead investor; they focus on Impact Investment and, as per their messaging, “back purpose-driven companies tackling the world’s biggest challenges” What was it about 4G Capital that sealed the deal?
Our investors and ourselves understand the challenges facing ‘Financial Inclusion’ and the positive impact we can have if services are executed within a broader ESG framework that works towards delivering Sustainable Development Goals.
Lightrock are supporters of our business model, where we focus on providing microcredit together with business training and financial literacy; our clients gain the capital and also the knowledge they need to grow their businesses; this de-risks the unsecured lending and has a positive impact on the business and community.
As an Impact Investor, Lightrock values that we are not an ‘App-only’ service; we have just under 154 branches across Kenya and Uganda and employ over 1000 staff dedicated to supporting and educating our clients. We complement this with our technology and AI, which can determine the right level of affordability and deliver ‘risk-based’ pricing. This means our due diligence and relationships are human-based but augmented with technology, rather than the other way around; we call this ‘touch-tech’.
Finally, our Governance Structure ensures that our company protects not only our clients but also our staff.
3. You’ve covered the S and the G within ESG in this answer, but what about the E, Environment? How are you addressing your company’s environmental impact?
Until now, our primary focus has been the social impact of microfinance and how we can bridge the finance gap, financial literacy and the pathway to formality to strengthen the resilience of our clients.
Now that we have proven our model works, we can go further and focus on our environmental impact. We’ve recently conducted a Carbon Footprint calculation, offsetting scope 1 and 2 emissions to neutral, and an Environmental risk report, which assessed all the environmental risks faced by our organisation and our customers and opportunities for us to use our network and business model for environmental good.
We have designed a new Green Finance service; micro- investments in green technologies which will benefit our customer’s businesses and also reduce environmental damage in the long term. We are looking for partners with innovative businesses that offer sustainability solutions for our MSME clients – whether in transport, energy, cooking, agriculture, or water irrigation.
4. How does 4G Capital incorporate ESG principles into its lending practices?
As well as ensuring financial inclusion and lending responsibly, we maintain open dialogue and build relationships with our clients. Through this, we can measure our impact and make sure that what we are doing is helping. The majority of our clients are in the informal sector, and we aim to guide them onto a Pathway to Formality, one they can trust and have faith in, and that the end result is rewarding.
We also offer training and guidance on sustainable business practices such as effective waste management and responsible business.
We recently gained recognition as one of the Best for the World B-Corp, for our positive impact on our clients, staff and community.
5. We hear that 4G Capital is a certified B Corp. Can you explain what this is and how you managed to achieve this certification?
B Corps are businesses verified by B Lab to meet the highest social and environmental performance standards, public transparency and legal accountability. It is a rigorous assessment that evaluates a company’s business model and operations, looking at its governance structure and the impact on customers, communities, workers and the environment.
We are one of over 6,200 B Corps in over 70 countries across over 150 industries worldwide. This is a strong community of impactful companies determined to drive positive change.
The principle of continuous improvement is integrated into the B Corp Certification. Companies must update their B Impact Assessment every three years and are encouraged to continue implementing improvements to their social and environmental practices once Certified.
This Recertification process is an opportunity for companies to measure and verify these improvements, as well as set goals for the future. Our recertification was finalised this year, and we achieved a score that had grown from 136.4 to 145.2 out of 200, which means that we are the highest-scoring financial services B Corp in Africa.
6. Is there a correlation between being an ESG focussed, B-Corporation and being profitable?
A company is not sustainable unless it is profitable. By prioritising ESG, our staff and clients are more loyal, and our partnerships are more meaningful.
B Corp’s emphasis on continuous improvement has also prompted us to constantly evolve our business model and operations to provide greater, innovative financial access to support the resilience of low-income people in Africa.
The third-party validation is a differentiator from other industry players, helping us stand out and stand by our mission to grow business with capital and the proper training.
As a B Corp-certified company, we belong to a global community of 6,200 businesses. This network allows us to connect, collaborate, and exchange insights to improve our practices.
Lastly, scoring so highly in the B Impact Assessment has demonstrated to our shareholders the power of the 4G Capital model and methodology, where we design around our clients’ needs, blending human interactions with technology.
7. As you prepare for further funding, being a B-Corporation, does this attract investors?
Absolutely! The benchmarking and transparency, verifiable measurements of impact and commitment to a circular economy coupled with the enthusiasm within the movement are extremely attractive to investors, especially Impact Investors.
Only 1% of Global Impact Investment currently finds its way into Africa. We hope this will soon change. There could still be incorrect perceptions of risk in Africa, but our ongoing success delivers proof that a business for good can thrive here. We are the perfect case study for a high-return Impact Investment in Africa.
8. What should we anticipate from 4G Capital in the coming months?
We are thrilled to announce the launch of ground-breaking technology that will significantly enhance the experience of our employees and customers. Our commitment to green loans remains unwavering, and we are actively working on introducing other innovative products in Kenya and Uganda. Our upcoming debt round will enable us to sustain our remarkable growth trajectory. We owe our success to our exceptional team and investors and are immensely grateful for their support.
