Monday, December 11, 2023

Letshego growth in Africa to overshadow local subsidiary

Letshego Holdings Limited, the pan African micro lender, is poised to reduce strain on the local subsidiary as the full year results showed other operations in the continent are slowly growing advances to customers.

A trading announcement posted by the BSE-listed outfit showed that although Letshego Botswana is still strong, loan books from outside the country are on the verge of matching the Botswana performance.

The Botswana domiciled consumer lender said loan book outside of Botswana now represents 40 percent of total loans compared to 33 percent in the same period in 2011 as shown by the audited results for the year ended 31 January 2012.

Previously, the Botswana subsidiary accounted for between 80 ÔÇô 90 percent of the group’s loan book explained mainly because the company originated here.

Loans from outside the country were only between 10 -20 percent of total group loan book, but now the ratio is slowly narrowing to 60- 40 percent.

The financial results showed the group’s loans and advances to customers exceeded P3 billion, a 32 percent increase on the prior financial year.

“All subsidiaries continue to perform well with Botswana, Mozambique, Tanzania, Uganda and Zambia exceeding budgeted targets,” the company said.

“The subsidiary in Mozambique, which commenced trading during February 2011, has performed very well for a start-up operation and started to make a monthly operating profit from August 2011 onwards.”

The ratio will further be bolstered by the award of a deduction code in Lesotho where Letshego is already licensed as a non-deposit taking credit institution with the Central Bank of Lesotho.

“This will allow Letshego Financial Services Lesotho, a 95 percent subsidiary of Letshego Holdings Limited, the opportunity to commence operations in Lesotho during the 2012/13 financial year and to further add to the Letshego footprint in the continent,” the company said.

The growth of the loan book outside Botswana comes at a time when there are unresolved deduction issues with the collection methodology in Botswana.

Although Letshego said the ‘operations of the Central Registries in Botswana continue as normal and collections remain at historical levels via the deduction at source basis’, government still has unfinished wars with the unions.

There are concerns that should Central Registries discontinue the current deduction method, level of impairments will go up with people rushing to the bank to cash money before Letshego deducts installments.

However, Letshego countered that it has the capability to collect loan repayments via electronic debit orders. It also hoped that customers will be responsible enough and service their loans.

“The last thing people want is to have court cases against them,” Managing Director of Letshego Holdings, Jan Claassen, said.

Letshego is also targeting more markets in the continent by acquiring a controlling stake in Micro Africa Limited. The acquisition of the Kenya based outfit will make the company a player in Kenya, Rwanda and South Sudan.

Currently, Letshego has operations in Botswana, Mozambique, Namibia, Swaziland, Tanzania, Uganda and Zambia.


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