Letshego Holdings Limited has delivered satisfactory results that have yielded good growth at half year for the period ended 30th June 2017. This has seen growth in loans and operating income with Ghana featuring first time since the 100 percent Afb Ghana acquisition in March 2017. The Group’s strategic agenda to build Africa’s leading inclusive finance group, is underpinned by embedding future capability with investment in people and systems to enhance customer experience. Financial highlights for the six months ended 30th June 2017 show total assets increase by 16 percent to P8.7billion from P7.3billion in the same reporting period in 2016.
Profit before tax was P498million, a 2 percent increase from P489million in 2016 and total revenues exceeded the P1.2billion representing a 15 percent increase. The group has declared a dividend of 8.5 thebe per share retaining a 50 percent dividend payout ratio. Group Managing Director, Chris Low commented, “Our most recent acquisition in Ghana is already demonstrating positive results in integration and growth potential, and brings Letshego’s footprint to a total of eleven Sub Saharan markets. “Our positive loan growth will continue to benefit from our increasing diversification into savings solutions, with successful pilot launches in Tanzania and Nigeria’s education and housing sectors.
“Our award-winning agency model currently being rolled out in Mozambique is evidence of our commitment to extending our reach into the most rural areas.” Letshego’s drive to diversify its solutions across existing markets is gaining traction, with a number of educational facilities in Tanzania and Nigeria now enjoying both credit and savings solutions. The Group’s agency network in Mozambique and Tanzania uses a number of different business models, with the aim of increasing access points for customers wherever they may be located.
Mozambique is the first market to pilot ‘Blue Box’, a technology-driven agency banking model which uses biometric authentication to on-board customers, while providing both saving and loan solutions for the under-served community. Low added, “Strategic partnerships remain an important catalyst to achieving our expansion ambitions within all of our markets. “In Rwanda and Ghana for example, we have partnered with a fintech business and local mobile operators to pilot projects which stand to reach many thousands of new customers.
“Home improvement and affordable housing now constitutes 5 percent of our total loan portfolio, a percentage we aim to raise in the medium to long term.” Letshego group’s consumer lending segment is 88 percent of the overall loan portfolio with MSE (micro and small enterprises) at 12 percent. Loans and advances to customers are up 19 percent in Pula terms year-on-year (14 percent excluding Ghana), supported by stable interest margins and cost of funding. The quality of the loan book remains at targeted levels with the exception of Rwanda, where the group has taken additional provisions on a specific segment of the loan portfolio.
Customer deposits grew marginally, however the impact of Letshego customer savings solutions is only expected to reflect in subsequent reporting periods. Letshego introduced new funding lines resulting in a 45 percent increase in borrowings, and a strong funding pipeline is in place to support the business growth going forward. Letshego continues to work towards delivering a meaningful and positive impact for customers and communities, as well as returns for shareholders. The Group’s recently launched campaign entitled ‘Improving Life,’ rewards and celebrates customers for productive and responsible financial behaviour. Letshego remains committed to providing simple, appropriate and accessible solutions to the financially under-served, in a sustainable manner.
‘Manufacturing holds key to economic growth’
Barclays bank’s economist Naledi Madala has urged the country to consider manufacturing, as a key tailwind to drive the economy and reduce inequality.
She was speaking at a gathering organised by the bank which focused on economic outlook for 2019. “We should not make a mistake of leapfrogging without manufacturing,” said Madala, lamenting that the country’s diversification remains a pipeline dream, as the diamond is still the economy’s mainstay. She bemoaned that mining activities in the country could not spring forward diversification, though non-mining GDP has been steady over the years.
“Extractive industries are not good stepping stones for diversification, the sector does not prepare us for the next step,” said Madala at the Barclays’ Economic Outlook Forum Review 2019. The economist further noted that government should confront head-on challenges of productivity and competitiveness to attract the much needed Foreign Direct Investment (FDI). Though diversification efforts continue to hit a brick wall, Madala said the country should expect increased activities in the mining sector hinged to ramp up in coal production in the year ahead.
She also implored government to consider a welcoming attitude towards foreign investors and generous tax incentives to businesses that set up in the country. Madala is also upbeat that the use of public private partnership model could also help diversify the economy coupled with privitisation. “Privitisation will offer opportunities for growth, through the renewed optimism from government, as business confidence has improved,” said Madala.
She implored the government and the business community to access what is going to drive and hinder growth highlighting that key headwinds to growth are income inequality, diversification challenge and productivity, among others. “The pace of poverty reduction has slowed down, while income inequality goes up,” said Madala
MINISTER BEWAILS BAD REPAYMENT BY YOUTH
Minister of Youth Empowerment, Sports and Culture Development, Tshekedi Khama has told parliament his ministry continues to face challenges on the repayment of Youth Development Fund (YDF) loans.
Recently presenting the budget to Parliament, Khama said this financial year the ministry has received a total of 2582 YDF applications and approved 983of them to the value of P98 million. He said the programme attracts a high level of interest from youth but the ministry is only limited to funding a maximum of 1200 youth projects annually due to budget limitations.
“However the greatest challenge for the Fund is the repayment of the loan component by the majority of the youth businesses. The youth have advanced number of challenges for this including high rentals for operating spaces, low market access owing to tight competition and limited production capacities,” said Tshekedi, adding that they continue to pursue beneficiaries to repay the loans.
Out of the 919 businesses funded 1058 jobs have been created. The minister highlighted that disbursements of funds will continue to be undertaken until the end of the financial year. “The YDF is currently under review in line with the pronouncement made by the President, Dr Mokgweetsi Masisi in the State of the Nation Address, to improve beneficiaries through training, and encourage consortia and cooperatives,” said Tshekedi.
The ministry assists YDF beneficiaries in marketing their products and services through fairs and exhibitions. The ministry also runs entrepreneurship-training seminars for youth and in the past year 3692 young people were trained. Over 600 youth businesses attended fairs and exhibitions to market their products and services. Currently the ministry is collaborating with Local Enterprise Authority (LEA), First National Bank Botswana and Citizen Entrepreneurial Development Agency (CEDA) on training in entrepreneurship development and mentorship of YDF beneficiaries.
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