OPEYEMI KAREEM, in this feature, tells the story of how former British Army officer Wayne Hennessy-Barrett arrived in Kenya with little experience in finance and a simple question: what do small traders need to keep their businesses moving? Thirteen years later, that question has helped build 4G Capital into a lender that has disbursed more than $1bn in loans.
Thirteen years ago, Wayne Hennessy-Barrett walked into Kenya’s informal markets with no bank, no loan book and, by his own admission, little conventional finance experience.
He had one question for the traders he met: what did they need?
The answers were remarkably simple.
“I walked around and asked people what they needed,” he said. “They just said, I need a loan now to buy stuff and sell it.”
That conversation would become the starting point for 4G Capital, the Kenya-based lender he would go on to build for micro and small businesses shut out of traditional finance.
The problem was not that these businesses did not need money. They needed it constantly — to replenish stock, take advantage of a good buying opportunity or keep trading when cash was tied up elsewhere. But many had neither the collateral nor the financial records that banks typically demanded before lending.
Hennessy-Barrett believed there was another way to decide who deserved credit.
Instead of asking a small trader to prove their worth through assets or years of financial statements, 4G Capital would lend them working capital, watch how they repaid it and use that behaviour to determine how much they could borrow next.
It was a simple idea, but one that would take the company from a $100 loan in its early days to more than $1bn in cumulative disbursements.
In June, 4G Capital said it had disbursed more than $1bn across over seven million loans, while maintaining a repayment rate of about 95 per cent.
The numbers are vastly different from where the company began. The underlying bet, however, has barely changed: that a small business does not necessarily need collateral to prove that it is creditworthy. Sometimes, it just needs the opportunity to demonstrate that it can repay.
That bet began in 2013, when Hennessy-Barrett arrived in Kenya after working in the British Army and set out to build an unsecured lending business.
Before he approved his first loan, he went looking for borrowers.
He found them in the informal markets, walking from trader to trader and listening to what they said they needed.
Building a lender on foot
Before finance, there was the military.
Hennessy-Barrett worked in the British Army, serving in conflict zones across the Balkans, the Middle East and South Asia. The experience left him with a conviction that communities emerging from conflict needed more than security. They needed jobs, functioning businesses and access to the capital required to build lives that could endure.
After leaving the military, he joined a South African startup that sent him to East Africa to build an unsecured lending business from scratch.
He arrived without the conventional finance background that might have seemed necessary for the job. Looking back, he believes that may have helped him.
“Maybe I was lucky in not having a conventional finance background where I wouldn’t have been as receptive to that opportunity,” he said.
So he started where the customers were.
Hennessy-Barrett walked through Kenya’s bustling informal markets, speaking to traders and trying to understand what was missing from their businesses.
“I walked around and asked people what they needed,” he said. “They just said, I need a loan now to buy stuff and sell it.”
He explained that these responses informed 4G Capital’s first product: a $100 working-capital loan repayable over 30 days. To decide who qualified for a loan, Hennessy-Barrett told TechCabal that he built small field teams that moved from business to business through the market. Prospective borrowers answered about 40 questions, and their responses fed into a credit calculator to determine how much they could realistically borrow.
Eighteen months after launching the operation, Hennessy-Barrett led a management buyout, allowing him to take ownership and begin trading as 4G Capital in 2015.
Refining the idea
For many startups, building a product the market wants is only the first step. Growth often brings the pressure to expand or pivot into other products. 4G Capital took a different approach. Instead, the company focused on improving the idea it started with.
“We landed on a really good product-market fit with the first shot,” he said.
As 4G Capital grew and issued more loans, it generated more data on users’ repayment habits. What started as the company’s credit calculator became Eva, Capital’s proprietary underwriting algorithm. Hennessy-Barrett explained the system analyses data points, including a business’s repayment history and seasonal trading patterns, to calculate how much it can responsibly borrow and how likely it is to repay. Today, Hennessy-Barrett said, the company’s underwriting process is almost entirely algorithmic.
He also noted that in response to the realisation that many of its customers struggled with bookkeeping and stock management, which made it harder to grow their businesses or qualify for larger loans, 4G Capital introduced enterprise training alongside its lending. According to him, the goal was to help entrepreneurs build stronger businesses to improve repayment outcomes.
As 4G Capital learned more about how goods moved between distributors and informal retailers, the company also introduced a supply-chain finance product. With this offering, distributors could receive immediate payment for goods supplied to retailers, while 4G Capital financed the transaction and collected repayment from the retailers over an agreed period. Still, Hennessy-Barrett said 4G Capital tested several new products over the years, but chose not to commercialise all of them.
“We’ve had some very promising small product pilots… and we put them on ice because we’ve got so much to do with what we’re currently doing,” he said.
The bet isn’t over
The business Hennessy-Barrett built from conversations in Kenya’s informal markets has changed in scale. What began with $100 loans has grown into a lending operation that has disbursed more than $1 billion across more than 7 million loans since inception. According to Hennessy-Barrett, the company’s average loan size remains between $120 and $130.
He noted that customers with a repayment history over several years can now access loans of up to $2,000, and its supply-chain finance business has average loan sizes of about $400.
Yet Hennessy-Barrett believes the opportunity is still much larger than the business 4G Capital has built. Kenya has an estimated 7.2 million micro, small, and medium enterprises (MSMEs), and the company has served just under 800,000. Even then, small businesses across the region still face a $19.3 billion financing gap, leaving him with what he sees as room for growth.
“We have barely begun, really,” he said.
More than a decade after he first walked through Kenya’s markets asking traders what they needed, Hennessy-Barrett said the answer has stayed the same. What has changed is 4G Capital’s ability to answer it.
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I am the CEO of 9JAGISTLAND.My name is Adedeji Timothy and my co-owner is Oyekola Damilare.This blog is born out of our passion to educating to people in all aspect of internet life.We are enthusiastic about writing posts and articles online.
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