Letshego Holdings Limited Group says it has recently witnessed select sub Saharan markets progressing toward reviving economic activity with easing levels of lockdown.
The micro lending group also says it expects the region’s gradual easing of lockdowns and economic recovery to reflect a typical “W-shaped” recovery, with potential isolated, viral resurgences precluding smooth and predictable economic recoveries.
Letshego Group chairman Enos Banda stated in the newly released 2019 annual report that Letshego’s scenario and operational planning thus accommodates due flexibility and adaptability given current, unpredictable environments. He is of the view that private and public sector collaboration remain essential in Africa’s ability to navigate a sustainable path through this pandemic.
“Looking at this year’s performance, we started the year on track through the first quarter. However, following the subsequent onset of COVID-19, we expect our financials to reflect the downside impact of the pandemic from April onwards,” said Banda.
He further stated that since varying levels of national lockdowns were implemented across the region, underwriting new business has been limited, adding that they have maintained a level of prudence with respect to specific industries and segments severely impacted by the pandemic.
“The full financial implications of COVID-19 will be more apparent as lockdowns are lifted and economic activity is reignited in the second half of this year,” he said.
Stated in the report is that COVID-19 related disruptions will lower sub-Saharan Africa’s GDP growth in 2020 to between 1.5 percent and 2.5 percent, down from the projected 3.6 percent pre-COVID-19 projections. Added is that the extent of the downside impact is dependent on the level of action taken by regional governments to contain the virus, and the pace at which global conditions stabilize.
Banda is of the view that for multinationals operating in Africa, the economic transition to the ‘new normal’ will be diverse, as it is disparate. He stated that with the lack of predictability, some markets are likely to experience more severe infection rates than others, pushing health and related economic sectors well beyond their limits. He said other markets may manage to bypass the extremes of the pandemic, but none will be immune given Africa’s increasing interconnectedness and inter-regional economic activity.
“Letshego will ensure that regional strategies factor in country-focused analysis and action to bolster an holistic risk and operational approach,” said Banda.
Meanwhile, for the 2019 financial year, Letshego posted solid results with profit before tax up 11 percent year on year and profit after tax up 35 percent. Return on equity increased from 12 percent in 2018 to 16 percent last year, with Earnings per share gaining 41 percent year on year, with 7.7 thebe as a declared dividend for the second half.
Further stated is that Letshego achieved a marked increase in digitized loan applications and transaction processing, increasing the volume of digitized transactions by 136 percent compared to the previous year.
Banda stated that pandemic planning has spurred a proactive response, bringing forward medium term digitalization investment strategies within their 6-2-5 strategic roadmap. He added that this prompt response has enabled business continuity as well as digital access for their customers without the need to travel into the branches.