Saturday, July 2, 2022

Letshego should intensify its financial literacy program

Micro lender Letshego Holdings on Thursday night celebrated its 18th anniversary at the Gaborone International Conference Centre (GICC). We congratulate Letshego on such a milestone achievement. Not only does Letshego continue to make its shareholders proud but its expansion into the other part of the continent is a great market tool for our country. 

Just to share part of its financial success, the group’s annual report shows that by December 2015, it evidenced strong growth, performance and returns to shareholders with a number of firsts recorded. Its Net advances exceeded P6 billion, while total revenues exceeded P2billion, and profit before tax crossed the P1billion mark. This makes Letshego the largest indigenous company at the Botswana Stock Exchange by market capitalisation. All this from a company that started in our soil is a great achievement that needs to be commended and be spoken about with heads high. The question though is how did Letshego reach such an achievement? At whose expense did the company turn out to be amongst Botswana’s success story?

When Finance Minister Kenneth Matambo who was the guest speaker at the #Lets18 gala took to the podium he showered nothing but praises to the company. Matambo stated that the government applaud the contributing role of private sector partners, such as Letshego, to the national agenda in creating greater prosperity for Batswana. 

Our wild guess is that by “greater prosperity” Matambo meant the “countless” number of times that Batswana have visited Letshego offices. Letshego’s annual report shows that its customer advances book grew to the value of some P6.5 billion as of December 2015. 

These loans were disbursed to some one hundred and twenty thousand civil servants most of them still struggling to pay back. Is that prosperity? Perhaps we are blaming Letshego for no good reason. Maybe our finger should point towards the direction of whoever failed to empower Batswana “financially”. This financial empowerment entails teaching them the basics of debt management and money use. 

Like we have said before, the root cause of poverty and unemployment among indigenous Batswana is undoubtedly a result of the many misguided and unsustainable citizen economic empowerment programmes that our government has pursued over the years. These policies include those that failed to include financial literacy into our schools curriculums. 

On Thursday Letshego said that it is embracing financial inclusion; this includes responsible lending practices and encouraging productive use of loans. The Group highlighted that they have completed research indicating the social impact it had achieved across its markets pointing to loans being used for education, health, business, or livelihood purposes. We dare Letshego to make the findings of such research public. In as far as we are concerned most of locals borrow money solely for leisure and luxurious items. 

The company said Thursday that it has entered into a 3 year partnership with the Directorate of Public Service Management to deliver financial literacy training to civil servants. We wait to see the results of such a programme. It is too early to declare it “useless” but it is evident that we still have quite a large number of civil servants (who form core part of Letshego’s customers) still practising hand to mouth. That is to say quiet a number of civil servants despite earning peanuts each month end, they also record zero gains. This is heavily due to lack of understanding of finance matters – Without basic understanding of finance, wrong and misinformed decisions prejudicial to households (and even business)  are regularly made. 

Apart from a large number of civil servants who flood Letshego for loans, the recent listing of the BTCL has also shown how much most of our people are lacking basic knowledge of use of money. The truth of the matter is our people need knowledge, support, services and opportunities in order to thrive financially. Not companies who will overly charge them and leave them poor and nothing to show for the money they had borrowed. The sad reality is that for a very long time, Botswana have been recording the lowest levels of savings per household and one of the highest levels of debt per household in Africa ÔÇô What could be an explanation to such scenario? 

Whatever the answear is to that question, we strongly believe that well-designed financial education initiatives can reduce demand-side barriers to more effective financial inclusion and can empower vulnerable individuals economically, so that they can better manage household resources and develop income-generating activities. 

The #Bottomline therefore is that as much as we commend Letshego for its prosperity and its attempt to help the highly indebted civil servants, it should however do more. The DPSM agreement is highly likely not to bear much fruits given what we see on the ground. 

At the same time, we also argue the government to consider an inclusion of financial education in the school curriculum. This would go in a long way to save the future generations from becoming what their parents are now. 

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