4G Capital secures $2m GIF Growth funding to bridge East Africa’s ‘missing middle’ credit gap

• East African fintech 4G Capital plans to scale ‘touch-tech’ lending model as it eyes $1 billion lending milestone and prepares for Series D round.
• Since its establishment in 2013, 4G Capital has disbursed over $800 million in loans to over 755,000 borrowers in Kenya and Uganda.
• The fintech has issued 6.8 million loans, supporting entrepreneurs a majority women founders to grow their businesses and build more resilient livelihoods.

East Africa’s micro and small enterprise segment, which accounts for over 80 per cent of jobs in the region, has long been starved of formal credit. While the traditional banks deem informal businesses too risky, emerging digital-only lenders often fail to reach entrepreneurs without smartphones or the requisite financial knowhow.

Now, 4G Capital, a Nairobi-based fintech, is building a bridge between these two worlds and is getting a big funding boost. The company has secured a $2 million strategic investment from GIF Growth, the growth-stage vehicle of the Global Innovation Fund, to expand its hybrid business lending model targeting borrowers in Kenya and Uganda.

In a statement on Friday, 4G Capital said the funding comes at a critical moment as it is on track to surpass $1 billion in cumulative lending this year. This milestone underscores the scale of unmet demand for loans among millions of East Africa’s informal business owners.

The ‘missing middle’ that traditional finance overlooks

Across Africa, tech-enabled startups face a familiar obstacle as they scale. They lack access to adequate debt financing options, a unique challenge that the Global Innovation Fund calls the “missing middle.” This is the gap between microfinance products that are too small to fuel growth and bank loans that are too large or have rigid conditions that scare away owners of early-stage enterprises.

Currently, small businesses account for over 80 per cent of employment opportunities in Kenya and Uganda. Yet, the majority of these entities remain excluded from formal credit systems, partly due to limited financial records. An estimated 400 million people across sub-Saharan Africa rely on informal enterprises for their livelihoods. A majority of these enterprises often operate outside regulated financial systems.

4G Capital has been addressing this gap since its founding in 2013. The company has disbursed over $800 million in loans to over 755,000 borrowers across its two markets. This has seen the financier issue 6.8 million loans that have supported entrepreneurs to grow their businesses and build more resilient livelihoods.

“The MSE sector is the heartbeat of growth in Africa,” said Wayne Hennessy-Barrett, 4G Capital’s founder and executive chairman. “4G is proud to be responsible for generating over $3 billion of economic impact.”

A ‘touch-tech’ model that blends digital efficiency with human connection

What sets 4G Capital apart from the proliferation of digital-only lenders in the region is its hybrid loan model. The company deploys local field officers who visit businesses before approving first-time loans, a practice that its leadership considers essential for responsible underwriting.

“We operate what we call a ‘touch-tech’ model,” Julian Mitchell, the company’s CEO, explained at the Africa Tech Summit in Nairobi in February. “If you own a shop in Kawangware [Nairobi] and need working capital, one of our loan officers will visit your business. We don’t believe first-time lending to micro and small businesses should be done purely remotely. Seeing the business in operation and understanding how it trades allows us to size credit responsibly”.

Loan officers assess stock turnover, supplier cycles, and daily sales before recommending a loan. This data is usually processed in real-time through the company’s in-house loan scoring platform, which is then fed into its internal decision engine, EVA.

This credit model has yielded strong results. 4G Capital reports a 92 per cent on-time repayment rate, a striking performance in a market where Kenya’s banking industry is grappling with a gross non-performing loan ratio of 15.5 per cent. The average working-capital loan tickets range between $30 and $2,000 and are accessed entirely through mobile money, with pricing that adjusts as customers build a repayment history.

Read also: The silent struggle: Women entrepreneurs in Africa and the financial divide

GIF Growth: Catalytic capital for high-impact

The investment comes from GIF Growth, a growth-stage vehicle that is modelled to offer flexible, catalytic debt financing to high-impact businesses in Africa and Asia. The fund focuses on the $1 million – $5 million range, a funding ticket size demand that the Global Innovation Fund says remains underserved, even as debt financing becomes more prominent in African startup ecosystems.

“Access to finance is one of the biggest barriers facing informal businesses,” said Dianah Irungu, GIF investment associate and deal lead. “Through our Growth Fund investment in 4G Capital, we are providing the resources and support needed to help the company scale its innovative ‘touch-tech’ model”.

The GIF Growth vehicle acts as a conduit for funding from leading development finance institutions, including those backed by the US, UK and Canada, alongside corporate partners such as multinational, Unilever. The fund’s second investment, following its launch, reflects a focus on backing scalable solutions that address systemic barriers to economic opportunity.

Avinash Mishra, GIF’s chief investment officer, said the fund aims to “fuel businesses like 4G Capital to scale faster, demonstrate even stronger financial performance and ultimately unlock more commercial and impact capital”.

Financing women entrepreneurs for inclusive growth

A key feature of 4G Capital’s portfolio is its focus on women entrepreneurs. The company reports that 72 per cent of its borrowers are women, and its workforce is 51 per cent female, meeting the 2X Global criteria for women in leadership, employment, and consumption.

This alignment with gender-lens investing is vital. Development finance institutions are increasingly prioritising investments that empower women, who often face stricter collateral requirements and limited financial networks compared to their male counterparts.

Hennessy-Barrett highlighted that the GIF Growth investment will enable 4G Capital to extend working capital and enterprise training “to more of Kenya’s nano, micro and small businesses, especially women and youth-led, who are often overlooked by traditional lenders”.

Scaling SME funding’s next chapter

The $2 million investment will support 4G Capital’s continued development in digital infrastructure and strategic partnerships, improving service delivery while maintaining its strong community-based engagement. The company processes approximately 120,000 loans per month and operates across 90 locations in Kenya and Uganda.

Looking ahead, 4G Capital is considering launching a Series D funding round in the near future to support its next phase of digital scaling. The company’s trajectory reflects a broader trend: debt is becoming more prominent in African startup financing, with venture debt accounting for 38 per cent of VC deals in 2024, up from 25 per cent in 2022.

Yet the $1 million – $5 million range remains a neglected segment, even as high-growth startups need this ticket size for working capital and steady expansion. By filling this gap, GIF Growth and 4G Capital are demonstrating that appropriately sized, flexible debt can unlock the potential of businesses that form the backbone of East Africa’s economy.

“We are delighted to partner with the Global Innovation Fund,” Hennessy-Barrett said. “This investment provides us with the right kind of capital to scale our model sustainably and expand access to working capital and training for underserved entrepreneurs.”

Read also: The blockchain frameworks set to enhance fintech development in 2026

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