Botswana based financial services institution, Letshego Holdings Limited last week celebrated an eighteen year history of growth, diversity and improving lives across its 10 country African footprint. Today it prides itself as the largest indegenous company in the Botswana Stock Exchange by market capitalisation.
Letshego was incorporated in March 4, 1998 as Micro Provident Botswana Limited, a microfinance institution whose core function was to provide unsecured loans to clients. It then commenced trading in September 1998 and eventually listed in the Botswana Stock Exchange in 2002 through a successful initial public offer with an aim to go on regional expansion. The company started with an establishment of a small team of 30 professionals in Gaborone issuing loans of up to P1,000.
Today the group employs over 2,300 team members, across more than 20 nationalities.
Letshego is a Setswana word meaning “support” that epitomises the group’s ability to partner with individuals as well as micro and small enterprises (MSE) through provision of financial services. Since September 2002, the company has been dealing directly with its clients who are mainly employees of the central and local governments, parastatals or quasi government and some private companies. Today Letshego is the largest indigenous company on the BSE by market capitalisation in excess of US$634 million as at 31 December 2015 and profitability in excess of US$104 million profit before tax for the full year 2015. The company currently ranks among the top 40 market value sub-Saharan Africa companies excluding South Africa.
The group has more than 250,000 consumers being served by its micro lending subsidiaries across ten countries in Southern and East Africa. These subsidiaries provide short to medium-term unsecured loans to formally employed clients.
Letshego’s regional presence
Between 2005 and 2007, the group expanded to Uganda, Swaziland, Tanzania and Zambia. These were all through greenfield investments in these countries. In August 2008, the group made its first foreign acquisition when it acquired a majority stake in Eduloan, an MFI in Namibia. In the same year, the company adopted the Letshego brand as its official name. The expansion drive continued into 2009 with the setting up of a subsidiary in Mozambique.
In 2011, the group commenced its operations in Lesotho. In the same year, the group announced its intention to acquire a 62.52 percent in Micro Africa Limited, a Kenyan based MFI with subsidiaries in Kenya, Uganda, Rwanda and South Sudan. This acquisition gave the group access to three new countries and an increase in its Ugandan customer base due to its existing presence. This acquisition was completed on June 1, 2012. This saw the group having presence in 11 countries. Letshego Holdings took full control of Micro Africa Limited in 2013.On December 1, 2013 the group divested from Letshego Financial Services Zambia. This saw its exit from Zambia reducing the group's presence to 10 countries.
Letshego’s current loan book
As from 31st December 2015, Letshego evidenced strong growth, performance and returns to shareholders with a number of firsts recorded.Net advances exceeded P6billion, total revenues exceeded P2billion and profit before tax crossed the P1billion mark, making it the largest indegenous company on th BSE by market cap.
Financial inclusion goals
Letshego continues to embrace 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. In markets such as Mozambique, for example, this figure is at 70 percent, while Tanzania, Uganda and Rwanda see 60 percent each.Speaking at the anniversary last week, the group’s Managing Director, Chris Low emphasised that since 1998, what has set the company apart from the rest of other financial institutions is their deliberate positioning and clear focus to cater for those who conventional institutions see as “risky”. “We are humbled by, and proud of our invaluable niche that has improved lives by servicing hundreds of thousands customers, that in turn has positively impacted their families and their communities. Through our assistance to the underserved, we are grateful to have contributed towards Africa’s development.” Low highlighted that Letshego is focused on strategic partnerships to accelerate execution capabilities.As an example, new innovative financial solutions piloted by the business currentlyinclude micro insurance, agriculture supply chain financing and asset financing. Also, he shared that Letshego has done well in servicing the renewable energy industry through the provision of big loans for farmers, water tank loans, and energy efficient ’jiko’ stove loans and solar power loans – all of which they are working to roll out beyond the East African region.
What does “coming of age” symbolise?
According to Chris Low, who has been sitting at the helm for the past three years after the departure of Jan Claasen, “to me when I think back to my 18th birthday, I can vividly recollect standing on the prow of an Australian naval ship entering Sidney Harbour with the imposing architectural structure that is the Sydney Harbour Bridge ahead of me, the beautiful opera house to one side and dolphins chasing the bow waves. I was alone in that few knew my story of how I came to be on that ship, I had a sense of trepidation of what was next, yet also I had a feeling for the great things to come ahead of me – the whole world was there for taking and with my schooling and parenting, I was well placed to take advantage of the opportunities that the world presented.”
According to Low, Letshego feels somewhat the same as he did back then. “We have a vision to be Africa’s leading inclusive finance group. We have developed a strong business platform that will enable us to deliver on this intent and yet there are many challenges ahead and fast changing world from a technology perspective that we have yet to fully adopt. Success will come through our people and will require growth, an approach to diversity and a commitment to improving lives.”
Govermnet calls for private sector partnerships
Minister of Finance and Development Planning, Kenneth Matambo has stressed for the urgent need for increased collaboration between the government and private sector to drive national development. Matambo, who was the key speaker at the anniversary said, “as government, we remain committed to adopting policies and programmes aimed at stimulating local economic development. I therefore urge the private sector to take responsibility for aligning their operations with our National Development Goals so that, together, we move Botswana forward into the realisation of Vision 2036 and beyond.”