In the African financial sector category, which currently has the second fastest growing banking market in the world (taking retail and wholesale banking together), 4G Capital, a capacity building microcredit company, was nominated and listed as one of the companies to inspire Africa in 2019.
Business Insider Sub-Saharan Africa (BISSA) sat down for a chat with its Founder and CEO, Wayne Hennessy-Barrett to try and get a picture of the fintech company that is revolutionizing the African SME scene.
Here is an excerpt of our conversation.
BISSA: In as fewer words as possible tell us who 4G Capital are?
Wayne: Fintech lender providing working capital and enterprise training to the informal market in SSA.
BISSA: Since 2013 when 4G capital was established, how has the journey been like and what are some of the biggest milestones’ you guys are proud of today?
Wayne: Every day has been unique, and an adventure. Biggest milestones centre around our clients’ success; an independent survey by Technoserve (one of our amazing partners) reported our clients grow their revenue by an average of 82% over 12 months.
Successfully launching and expanding into Uganda has been a big achievement. I personally love seeing many of our original team now in senior management positions, and growing as individuals as the company matures and develops.
BISSA: What are some of the trends that you continue to notice in micro and small businesses in Sub-Saharan Africa and how has it informed your overall business strategy?
Wayne: Business fundamentals in SSA are incredibly resilient. There are always challenges, whether from drought or volatile commodity prices, but people weather each setback with incredible spirit. We try to emulate our clients in this regard, and by remaining focused on their needs, we remain highly flexible and adaptive.
BISSA: How is 4G Capital exploiting Data and Analytics, and Artificial Intelligence to grow micro and small businesses in Sub-Saharan Africa and what are you doing to ensure sensitive information don’t land in the wrong hands?
Wayne: Data security and personal data sovereignty is the new human rights priority for the 21st century. We have an incredible machine learning algorithm which relates historic transactional and repayments behaviour into predictive assessments. This helps us only lend what a clients’ business can afford to repay, and keep our targets aligned with their trajectory.
This in turn translates into very high repayment rates (about 94% at due date, and we never refinance loans), and very high repeat business rates of around 82% month on month. We don’t on-sell or export client data, we don’t scrape or extract telephonic or social media records, and we don’t permit third party use. Our clients are often quite vulnerable, and part off our role to help them transition to digitization, so data awareness is critical.
BISSA: The World Economic Forum forecasts a net loss of over 5 million jobs in 15 major developed and emerging economies to Artificial Intelligence worldwide by 2020, in your opinion what can African countries do to tackle this looming crisis?
Wayne: I was honoured to be at Davos this year as a guest of Paypal, and was part of this debate. I disagree with the premise. We have it in our power to create a nightmare of redundancy and mass unemployment, or to create supercharged economies where AI augments people to make them exponentially more productive, working in safer and more rewarding environments, and in fairer societies. But none of this will happen on its own. We need to decide today the kind of world we want to live in, and design our technology and AI to help deliver it.
By way of example, we’re looking to use AI to help optimise and automate the repetitive and procedural elements of our loan officers’ work. But a machine will never be able to win the trust of a client, understand their business or family context, or make a value judgement of when not to lend because that loan will be misused. We tackle this crisis by articulating how we want to live and creating the policies and frameworks to get the best out of technology without destroying our societies.
BISSA: As a player in this fintech space, what are some of the sectors of the economy in Sub-Saharan Africa which are currently underutilized but have huge potential for growth?
Wayne: We see simultaneously an explosion in the youth population, together with a rise in the number of aged people as life expectancies improve. There is a huge opportunity here in the care economy, to ensure those who have given us this world are looked after with dignity and respect. There is an even more exciting opportunity for older members of society to act as mentors to the new generation in a relevant and responsive way using technologies like mobile social media. There is clearly a huge responsibility to protect our amazing wildlife and natural heritage.
The best ways to protect endangered species is to celebrate them through sustainable eco-tourism, and investing in the communities where our great beasts live so they are incentivised to be their protectors. And clearly education, the gateway to the future around the world, is a huge investment opportunity here as everywhere else in the world, so we can unlock the magic of African human capital to be a force for creation, not consumption.
BISSA: What are some of the biggest threats and opportunities of doing business in Sub-Saharan Africa and do you think Africa is the future?
Wayne: There have always been systemic risks around foreign exchange funding and the potential for global market confidence to lose sight of the long-term upward trajectory of Africa’s rise. Markets can be fickle. We’ve also seen some countries give in to the temptation to adopt short term populist measure which erode investor confidence, or indeed the viability of running a business at all.
The opportunities often arise from managing these risks. In whatever sector you’re in, a laser focus on solving a real customer problem, getting the individual unit economics right before then scaling will reap dividends. And execute with integrity. Support governments in their fight against corruption; don’t be part of the problem.
BISSA: In Sub-Saharan Africa what are some of the promising markets that you wish to enter say in the next 5 years?
Wayne: We’re really excited about the big and tech-oriented markets in the cardinal points of the continent. We’re incredibly proud to continue to play our part in Kenya’s story. We are interested in anywhere with a pro-business environment, an entrepreneurial culture and a pressing need for access to working capital.