Microfinance lender disburses Sh4 billion to SMEs

Kenya-based microfinance venture 4G Capital has lent Sh4.3 billion ($41.69 million) to small and medium enterprises over the past year, co-founder and CEO Wayne Hennessy-Barrett, says.

The firm has more than 89 branches across Kenya with more than 80,000 customers, 75 percent of whom are women, and 77 percent from rural areas.

“This last year has been remarkable, high demand for our services saw a 111 percent year on year (Quarter three 2018 to Quarter three 2019) increase in the total capital deployed through our loans, that’s double what we’ve lent since we started,” Mr Hennessy-Barrett told the Business Daily in an interview.

“Eighty percent of our customers take out repeat loans. We believe this is due to our ability to focus on their unique needs and provide the right solution,” he said.

The micro credit financier founded by Mr Hennessy-Barrett, a former British infantry officer who is now based in Kenya, says it mixes customer oversight and training with unsecured SME loans to achieve a 94 percent average repayment rate.

By end of its first full year – 2014 – 4G Capital says it had lent about Sh455.8 million ($4.3 million). It lent Sh4.3 billion between the third quarter of this year and the third quarter of last year.

“By year end we expect to lend over $46 million (about Sh4.7 billion) to our Kenyan customers,” Mr Hennessy-Barrett said. “The average size of loan is $115 (about Sh11,935).

4G Capital recently closed a deal with an unnamed local lender and is eyeing more capital for onward lending. It is eyeing to lend Sh4.7 billion more by end of 2019.

“We are ensuring our financing strategy maps the right balance of equity for strategic investment and local currency debt lines for onward lending,” he said.

Customers without access to credit from banks are turning to firms like 4G Capital due to the credit crunch.

Bankers say the cap limiting commercial lending rates to four percentage points above the benchmark has forced them to cut back on loans to high-risk groups. Normal bank lending is now capped at 13 percent.