A Kenyan small-business lender says 92% of its customers repay on time, even as Kenya’s banking sector grapples with its highest non-performing loan ratio in years, making it an apparent outlier in a strained credit cycle.
4G Capital, which lends to micro and small enterprises in Kenya and Uganda, says its on-time repayment rate is 92%. Earlier, public disclosures have cited default rates of about 5%, with 95% to 97% of customers repaying on schedule. However, detailed portfolio-at-risk metrics have not been publicly disclosed.
In February, the Central Bank of Kenya reported a gross non-performing loan ratio of 15.5%, underscoring stress across the wider banking system.
Founded in 2012, 4G Capital says it has disbursed $889 million across 6.8 million loans to more than 723,000 customers in Kenya and Uganda. It processes roughly 120,000 loans each month.
Typical working-capital loans range from $30 to $2,000 and are processed entirely through mobile money. Its flagship product, Upia, offers 30-day loans from KES 5,000 ($32) to KES 149,999 ($970), with pricing that adjusts as customers build a repayment history.
Chief executive Julian Mitchell said the company’s performance stems from its underwriting process before funds are disbursed.
“We operate what we call a ‘touch-tech’ model,” Mitchell told on the sidelines of the Africa Tech Summit in Nairobi in February.
“If you own a shop in Kawangware and need working capital, one of our loan officers will visit your business. That’s the ‘touch’. 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 size. The data is processed in real time through the company’s in-house loan scoring platform, which feeds into its internal decision engine, EVA.
“All data captured during the visit is processed in real time through our bespoke core platform,” Mitchell said. “Credit decisions are powered by our internal decision engine, EVA, enabling secure and consistent underwriting without the customer ever leaving their shop.”
Unlike fully digital lenders such as Tala and Branch, 4G Capital maintains field operations alongside automated scoring. The model increases operating complexity but aims to reduce early-stage defaults by matching loan sizes to observed cash flow.
Repayment discipline, Mitchell said, starts at origination rather than collections.
“Repayment performance starts at the point of sale,” he said. “The work we do upfront — visiting the business, understanding how it operates, and setting the right loan size — is critical,” he said. “We build a real relationship. The loan officer who onboards the customer forms an ongoing working relationship through training and regular check-ins. Customers know they can access larger loans over time as their business grows and track record is demonstrated.”
New borrowers begin with short 30-day cycles and qualify for higher limits after successful repayment. The company also provides 21-day retail stock credit, supplying inventory rather than cash and tying repayment to sales turnover.
Mitchell said the company has refined its underwriting over the past decade.
“We have issued millions of loans since 2012, and we continuously analyse performance data to improve underwriting and customer support,” he said. “Strong repayment rates are not accidental—they are the result of disciplined lending, structured training, relationship-based engagement, and consistent use of data.”
4G Capital said 72% of its customers are women, and 81% operate in rural markets. It reports average customer revenue increases of 82% and says borrowing capacity typically doubles over 36 months, though detailed methodology is not publicly disclosed.
The lender is funded almost entirely in local currency through commercial paper issuance and relationships with local banks, supplemented by debt from impact investors, including Untapped Global. In 2024, it launched a KES 500 million ($3.2 million) corporate debt programme through Dry Associates Investment Bank, a Nairobi-based investment bank.
A 2022 investor note said $9 million of capital between 2016 and 2020 supported more than $230 million of lending, implying a high lending-to-capital multiple relative to industry norms.
The company also partners with the Consultative Group to Assist the Poor (CGAP), a financial inclusion body housed at the World Bank, on an early-warning system designed to detect client stress, though details of its stress-testing framework are not public.
