Letshego pushes financial inclusion strategy

Letshego, a micro-lending titan will continue to drive its financial inclusion strategy despite posting a drop in profit after tax, the company directors have said.

For the interim results to June 2016, the company posted a profit of P387 .9 million, representing a marginal fall of 4 percent the same period last year. The BSE listed company, wants its launched financial inclusion strategy to benefit the previously unbanked, small medium enterprises and other sectors such as education and health. In pushing this initiative, the BSE listed company is well aware of the challenges that the above segments post to the group’s profitability.

For example, SMMEs in the African markets, where Letshego has operations have been largely avoided by financiers as they are considered ‘risky’. However, the Chris Low managed company is not scaling down on this strategy, as it has medium to long term benefits.

“Letshego continues to drive its inclusive financial services strategy and to strengthen its operations through investment in people, technology and strategic partnerships,” said a company statement.

Meanwhile, Letshego which aims to be the biggest financial services company South of the Equator in the medium term, said the period under review was characterised by depreciating exchange rates, higher inflation and interest rates and lower economic activity in most markets the group operates in. “The depreciation of local currencies continues to have an impact on the results with a further P297 million reduction in shareholders equity, nonetheless the group remains well capitalised,” said Low.

Furthermore, Letshego Chief Executive said the quality of the loan book remains at targeted levels. He said loan growth in Pula terms is nine percent while in local currency is 22 percent. “Loan loss ratios remained less than three percent while we continue to increase our coverage ratios,” said Low. He said in Botswana market household improvement loans now make up six percent of the loan portfolio and the consumer-lending segment for the group is now 89 percent of the overall loan portfolio.  Despite a fall in profitability, shareholders will get a 9 thebe dividend.

BUSINESS EDITORs NOTE: Headquartered in Botswana, Letshego has been featured in Botswana Investor top companies to look for in the next fifty years.  The latest edition of the monthly publication comes out this week.