Sunday, September 20, 2020

Letshego aims to take African market by storm

Jan Classen, the Managing Director of Letshego Holdings, is a troubled man! He is troubled by his thoughts and by the itch to follow the cue from the bold, brutal and results-orientated board chairman, Moses Lekaukau.

He can not be faulted for that, since the outfit is being backed by corporates and individual shareholders who are bent in seeing returns on their investments.

Top among the shareholders are the monied institutions like the Botswana Insurance Holdings Limited (BIHL) and the Saudi billionaireÔÇö Prince Alwaleed Abdulaziz Alsaud who is also one of the biggest individual shareholders, at 5 percent in Citigroup ÔÇö the world’s biggest commercial bank.

“The accreditation to IFSC presented us with a lot of opportunities and the board took a decision to expand the business outside Botswana,” he said, flanked by his lieutenant, Colms Patterson, the Finance Director.

Letshego is a big brand nowadays, compared to the late 1990s when clients, mostly government employees, queued from Debswana HouseÔÇöthe then headquarters of the company — right across the Independence Road from the shaving hour until late at night.

Now the chaotic mood that used to be there some 10 years ago has vanished and it operates in a more corporate style. Its branches have grown from four to nine across the country while staff compliment has jumped from 38 to over 140 employees.

By 2007, its capitalisation was P 2.2 billion and built assets to the tune of P 1 billion.

Despite all the recorded achievements, Classen is craving to print more money. Not only in pula terms but also in the world’s most respected international exchange currency, the United States dollar.

He is even screaming at the top of his voice, encouraging shareholders to put more on the table and asking for mandates to raise more in the form of debt instruments.

Towards the close of last year, he went to shareholders to ask them to give him one of the most seemingly ambitious mandates to raise P 1 billionÔÇöto be issued in tranches –and on top of that he re-surfaced in January this year with a shareholders’ special offer for P 360 million ÔÇöa plan that coincided with the global economic crunch.

Some of the shareholders were furious to hear that the offer looked more enticing when it was first muted last year but, when they met to make the final decision, some, but very few, stopped short of calling for his public thrashing.

The problem was not his; it started in the United States of America and, at the time of voting on the offer, the share price has slumped below the special price for already existing shareholders.

Classen and his team’s idea has always been and still is that they want a strong war-chest in order to go into competition head-to-head with some of the continent’s most greased institutions in his own league.

The other challenge is that his peers have been in the game long before the formation of Letshego.

Some of the giant micro-lending companies, which are fiercely working across the African continent, are Blue Financial Services and Bay Port, both originating from South Africa.
Blue has been around for slightly 8 years.

“We believe that we are in a good position at the moment. We will be able to re-pay our loans and use some of our debt to the growth of the business across the region. This is the next (interesting) growth stage of Letshego’s growth,” Patterson said.

Since the accreditation by IFSC, Letshego Holdings has opened shops in Swaziland, Tanzania, Uganda and Zambia and is about to open another in Namibia.

With the cash that they are holding and the anticipated tranches from the P 1 billion yet to be raised, it should be easy to open in Lesotho, Mozambique and Ghana, but Zimbabwe, which is only three weeks old into a government of national unity and still bedeviled by economic and political troubles, is not far from his radar.

“Ghana is an English-speaking country and we have a company that is registered there. Ghana offers different opportunities. They have had democratic elections and we’ll use it as a stepping stone into West Africa,” he said.

He added: “We are in the process of starting a business in Mozambique and if our people could master Portuguese we will look at Angola.

“Our philosophy is that there is a lot of opportunity out there. If you do not have a loan with us you are a potential customer. We proud us about our service, it has to be better and our brand,” he said.
Among all these things Letshego is urging to move to another level in terms of service delivery and product roll-out in a bid to deal with customers’ aspirations.
It is on the verge of coming up with insurance product and electronic banking cards, such as, credit cards or debit cards.

Letshego is also in the process of starting to accept depositsÔÇöa milestone development that will see it being treated like other commercial banks and will immediately call on the intervention of the central bank to ensure that depositors’ money is safe.

That will shore up its standing against its peers given that the Bank of Botswana is renowned to be one of the most stringent central banks in the world.

The products will be rolled-out to other countries where it has operations and countries where it is planning to register its operations.

“In 2004, we opened in four countries and they are all now successful and we are now going to other countries. What would make us different is the broadening of our product base. Legalguard has been successful and what the group has to do is to grow various product options,” Patterson emphasised.

The relative political stability and economic progress within the continent prior to the global economic crunch emboldened Classen and his team who have a string of friends and associates sprawled across Africa, feeding them with a lot of information on the economic and political stabilities of different countries.

That information goes into their data bank and later followed up and when opportunities arise they register companies.

Of late, the company prefers to have a banking license wherever it goes to lay the foundation that will provide it with the necessary fire-power to become the biggest commercial bank in Africa in the future should the opportunity arise.

“We have a network of friends and they tell us what is happening and that saves us a great deal in terms of having our people on the ground,” Classen said.

RELATED STORIES

Read this week's paper

Sunday Standard September 20 – 26

Digital copy of Sunday Standard issue of September 20 - 26, 2020.