IFC launches its first catalytic guarantee programme in Africa, with Kenya among the first beneficiaries.
4G Capital has partnered with the International Finance Corporation (IFC) under a new first loss guarantee programme which aimed at increasing access to financing for Kenya’s micro and small businesses, including women owned enterprises.
The partnership is part of IFC’s first Catalytic First Loss Guarantee (CFLG) transactions in Africa, alongside Equity Bank Kenya and KCB Bank Kenya. The three transactions are expected to facilitate about $144.4 million in local currency lending to microenterprises, women owned businesses and climate-focused enterprises.
IFC has committed $24.2 million across the transactions, supported by $11 million from the International Development Association’s Private Sector Window (IDA PSW). The structure is expected to mobilize an additional $120.2 million in MSME financing, targeting an 11:1 leverage ratio.
Under the CFLG model, first loss coverage helps reduce the risk faced by participating financial institutions, allowing them to extend financing to businesses that may otherwise struggle to secure affordable credit.
The initiative comes as Kenyan MSMEs continue to face a significant financing shortfall. The sector represents about 90% of businesses in Kenya and employs more than 15 million people, while the MSME financing gap is estimated at nearly 21% of GDP.
For 4G Capital, the facility backed by IFC will support expanded lending to underserved entrepreneurs, with a particular focus on women owned businesses and working capital needs.
IFC said the programme will also involve capacity-building support for participating institutions to strengthen their ability to serve MSMEs and develop sustainable financing products.
The partnership adds to IFC’s broader efforts to expand private sector financing in Kenya through banks and digital financial service providers, with the latest transactions targeting businesses that remain underserved by traditional credit channels.
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