53511 - MFP-CFLG-4G CAP

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Summary of Investment Information

Project Number

53511

Company Name

CFLG 4G

Date SPI Disclosed

May 24, 2026

Country

Kenya

Region

Africa

Projected Board Date

Jun 24, 2026

Environmental Category

FI-3 - No Impact

Status

Pending Disbursement

Last Updated Date

Jul 4, 2026

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Previous Events

Approved : Jun 29, 2026
Signed : Jun 30, 2026

Sector

Other Non-Banking Financial Institution (NBFI)

Additional Project Attributes

Blended Finance

Project Description

The proposed investment is an unfunded risk-sharing facility structured as a financial guarantee between IFC and Fourth Generation Capital Limited (“4G”) in Kenya. It will provide first- and second-loss coverage for a new loan portfolio of up to $44.4 million (local currency equivalent) to eligible micro, small, and medium enterprises (MSMEs) with a focus on microenterprises and women-owned microenterprises.

The first-loss amount will be up to US$2.2 million equivalent. Of this, IFC—acting for its own account and supported in its role as Implementing Entity of the IDA20 IFC-MIGA Private Sector Window Blended Finance Facility (“IDA PSW BFF”)—will cover up to US$2 million equivalent, while 4G will covers the remainder.

The second-loss tranche of US$42.2 million equivalent will be shared on a pari passu basis, with IFC’s exposure capped at US$4.2 million equivalent and the remaining balance borne by 4G. Thus, IFC's maximum overall risk amount under the Facility will be up to US$6.2 million equivalent, representing the aggregate of the IFC first loss maximum risk amount and the IFC second loss maximum risk amount. IFC's first loss catalytic investment will provide support in helping to unlock core mobilization of a minimum of 21x and help scale up lending for MSMEs in Kenya (the Project).

The Project will be processed under the Catalytic First Loss Guarantee envelope (“Catalytic FLG” which forms part of the MSME Platform), to expand lending to higher-risk and underserved MSME segments, thereby promoting financial inclusion and contributing to a more inclusive and resilient MSME ecosystem. The Catalytic FLG benefits from the support of IDA PSW BFF in PSW eligible countries, including Kenya. IDA PSW BFF was created by the Word Bank Group to catalyze private sector investment in IDA countries, with a focus on fragile and conflict affected states.

Associated Advisory Engagement

IFC's Advisory Services support will primarily consist of the Catalytic First Loss Guarantee onboarding support, enhance underwriting methodology and distributor finance product.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	8.20
Loan
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Guarantee	Loans to Microfinance

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Financial Additionality: Innovative Financing Structure- The proposed first- and second-loss risk sharing structure is expected to provide critical risk mitigation that will enable 4G to expand lending to underserved microenterprises, including women-owned businesses. The facility provides up to $2 million on the first loss tranche and $4.2 million on the second loss tranche of eligible loans, which will improve 4G’s risk absorption capacity. IFC’s first-loss coverage on the riskiest portion of the portfolio is uncommon in the Kenyan market and represents 4G’s first risk sharing facility, demonstrating an innovative approach to scaling MSME finance for digital credit providers. Non-financial Additionality: Standard Setting- IFC will support 4G to enhance their existing ESMS systems by ensuring that their grievance mechanism is more accessible and supply chain risks are identified and mitigated. The HR policy will also be improved to better protect contract workers, including field and collection agents. To support ESMS implementation, 4G will be required to provide the Environmental and Social Due Diligence reports for all claims for IFC’s review. In addition, IFC will support 4G to improve risk management through the following actions: (i) review the compliance reporting structure to require the Head of Compliance/MLRO to report directly to the Board Risk Committee and administratively to the CEO; (ii) automate the KYC onboarding and sanctions screening processes; (iii) adopt and implement a client risk assessment and risk scoring methodology; (iv) ensure compliance staff complete industry-recognized compliance certification training; and (v) complete an internal AML/CFT audit and submit the audit report to IFC along with an action plan to implement the audit recommendations.

Indicator	Metrics	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
Number of Outstanding Loans, Microenterprises	number	Not Available	Not Available	Not Available
Number of Outstanding Loans, Women-led Microenterprises	number	Not Available	Not Available	Not Available
Value of Outstanding Loans, Microenterprises	$	Not Available	Not Available	Not Available
Value of Outstanding Loans, Women-led Microenterprises	$	Not Available	Not Available	Not Available
Women-led microenterprise as a share of microenterprise loan portfolio	%	Not Available	Not Available	Not Available
Board Composition - Total (#)	number	Not Available	Not Available	Not Available
Board Composition - Women (#)	individuals	Not Available	Not Available	Not Available
Direct Employment (#) Operations And Maintenance	individuals	Not Available	Not Available	Not Available
Female Direct Employment (#) Operations And Maintenance	individuals	Not Available	Not Available	Not Available
Number of Senior Management Positions	individuals	Not Available	Not Available	Not Available
Number of Women In Senior Management	individuals	Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The Project is categorized as FI-3 in accordance with IFC’s Sustainability Policy. This classification reflects that the underlying portfolio is expected to comprise activities with minimal or no adverse environmental and social (E&S) risks and/or impacts.
The Project involves an unfunded risk-sharing facility supporting a portfolio of short-term loans to nano and micro enterprises. The use of proceeds is expected to be primarily for working capital purposes, and sub-projects are anticipated to be small-scale and short tenor. Accordingly, E&S risks associated with the Project are expected to be low, limited, and readily mitigated.

The client has developed an Environmental and Social Management System (ESMS) proportionate to the nature of its portfolio. The ESMS includes procedures to screen transactions against the IFC Exclusion List, assess E&S risks, and monitor portfolio exposure. Given the FI-3 nature of the Project, the ESMS focuses on ensuring that sub-projects meet eligibility criteria and do not involve activities with potentially significant adverse impacts.
The primary E&S risks relate to (i) labor and working conditions associated with the client’s operations, and (ii) indirect risks associated with the activities of sub-borrowers. These risks are expected to be limited given the small size, short tenor, and low-risk profile of the underlying transactions.
IFC’s E&S requirements will include application of the IFC Exclusion List and relevant national laws. The client will be required to maintain and implement its ESMS, as well as report to IFC on its E&S performance on a periodic basis, consistent with IFC requirements for FI-3 investments.

Contacts

For Inquiries About the Project, Contact

Fourth Generation Capital Limited
Austen Titford
Chief Financial Officer
+254 717 905085
Austen.titford@4g-capital.com
Africa Reit House, Africa Reit Lane, Karen
https://www.4g-capital.com/

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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