Letshego Holdings’ subsidiary in Namibia moved ahead of Botswana, with reports indicating that the consumer lender is in line to be granted a banking license that will allow the company to go retail. The Botswana Stock Exchange (BSE) listed group–with market capitalization of P4.9 billion–said on Friday Letshego Namibia now needs to fulfill unnamed conditions before it starts fully trading as a deposit taking entity.
“The Board is pleased to inform Shareholders that the Central Bank of Namibia has granted Letshego Namibia a provisional banking license on the 15th July 2014,” read a statement from Letshego. “The provisional license is subject to fulfillment of certain conditions within a six month period before any new operations can commence,” it added.
Letshego entered the Namibian market after the group bought all the shares of Edu-Loan (Namibia), a registered Namibian company since 1997.
The subsidiary is registered as a micro-lending company, regulated by the Usury Act (Act 73 of 1968) and supervised by the Namibian Financial Institutions Authority (NAMFISA). Letshego Holdings launched fixed deposit taking in Mozambique during February 2014.
“This is the first step towards deposit taking in the group with the long term intention of diversifying the funding base. However it is recognized that significant deposit mobilization will take considerable time to be put into place,” the company said on its latest annual report.
However, the Central Bank in Botswana rejected Letshego’s application for a banking license, citing dissatisfaction with the proposed operational model. Managing Director Chris Low said the focus on Botswana operations will now be building on expanding payroll systems and diversifying product portfolio.
“We are not striving to be a commercial bank; payroll deduction will remain core of our business,” Low said when unveiling the group’s results for full year ending 31 January 2014.
Botswana is Letshego’s stronghold, where it has a 21 percent penetration of government employees and a loan book of P1.8 billion or 42 percent of group’s loan book. The company said it has discovered that there is a large adjacent customer base that is marginal for commercial banks and embraces financial inclusion. Letshego Holdings Limited was incorporated in 1998, is headquartered in Gaborone and has been publicly listed on the Botswana Stock Exchange (BSE) since 2002.
It is a holding company with consumer and micro financing operations across ten countries in Southern and East Africa – Botswana, Kenya, Lesotho, Mozambique, Namibia, Rwanda, South Sudan, Swaziland, Tanzania and Uganda.
