Letshego Holdings, the Pan-African micro-lending titan, last year signaled that it would begin to adopt a conservative approach in Botswana, the home market and for long the group’s lifeline.
There were two reasons for this. First with effect from December 2011, government said it would stop facilitating the deduction of Letshego’s loan repayments from its employees. And then in last year’s budget, Kenneth Mathambo, the Minister of Finance, said government’s employment roll would be cut by 5 percent.
Political instability in Swaziland and the country’s credit crunch and economic malaise prompted a similar approach there, meaning the group would expect some negative movement on the loan book in the two countries.
However Letshego last week announced another set of impressive financial results for the year to January 2013. Attributable profits had grown to 14 percent to P659 million from 12.7 percent the previous year.
The group’s acquisition of Micro Africa Limited (MAL), now being branded as Letshego across East Africa, has given the group a footprint in four countries ÔÇô Kenya, Rwanda, Uganda and South Sudan. Acquisition of MAL has been achieved in two phases ÔÇô first the purchase of 62 percent in 2011 at US $ 3.3 million (P27.3 million) and more recently the balance of shareholding snapped up for US $ 1.9 million.
The MAL option has given Letshego exciting prospects in South Sudan, which is beginning to pump oil after the ceasing of hostilities with Sudan after the split between the two countries.
Meanwhile, the Mozambique operation conducted brisk business, the loan book there growing by 150 percent. Tanzania, Namibia and Uganda registered double digit growth. It is a measure of how far Letshego has come since it opened doors as a home-grown entity in 1998. Today the group, accounts for more than half of the shares traded on the Botswana Stock exchange (BSE).
With the group applying for banking licences in Botswana, Namibia and Swaziland, Letsego’s effort to diversify both its portfolio and product range continues apace. “We are finalising our banking platform in terms deposit taking,” says Jan Claassen, Letsego’s group managing director.
Already, Mozambique’s central bank has given the micro-lender a commercial banking licence. However, the Bank of Botswana (BOB) has expressed unhappiness with Letshego’s envisaged business model. “Getting a banking licence in Botswana will obviously be a longer process,” he admits.
Claassen explains that in going the commercial banking route, the focus will be on consumer retail banking. With banking, Letshego will offer transmission accounts, deposits, savings accounts, mobile and internet banking. It will also look at offering medical finance and home loan finance in countries where it is profitable. “But our core business will remain the largest one,” he says.
In its core business of giving unsecured loans to government employees, the Botswana operation continues to be the most significant market for the Group, contributing 60 percent to total net advances. “With the phased growth in the rest of Africa, that will dilute further,” says Claassen.
Letshego funds itself through medium term loans from banks and other financial institutions the African Development Bank, the East African Bank, FMOs, the German Fund and even the IFC.
In pushing with its Pan-Africanist plan, the micro-lender has set aside P800 million, while actively eying the markets in Ghana, Nigeria and Zimbabwe. It’s Mid Term Note, valued at P2.5 billion and listed both on the BSE and the Johannesburg Stock Exchange (JSE) lends Letshego added flexibility. It has used only P 700 million of the note.
Claassen believes leadership is a continually evolving discipline. But the time-tested ideals and principles remain: best practice, policy and procedure. A key role of a business leader is communicating for efficiency. Crucially, a dedicated business leader does not abdicate his role and plays the monitoring role scrupulously no matter how tedious the detail may be.
But it is the entire collective that works in tandem to create the flourishing entity that Letshego Holdings is today. That includes stability in at high management level, a deep knowledge of market behavior and the dynamics at play across the continent.
“Also, it’s important to see what other flourishing companies are doing right and learn from them,” he says.