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Letshego issues fresh bond in South Africa

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Letshego Holdings Limited has announced that the new Johannesburg Stock Exchange (JSE) listed bond notes has boosted its total debt issuance to R880 million on the JSE.

The listed micro-lender and also a financial inclusion focused group with consumer, micro lending and deposit-taking subsidiaries across Southern, East and West Africa, said in a statement that it has successfully re-financed and issued new JSE-listed bond notes, raising R655 million in addition to an existing base of R225 million, bringing Letshego’s total debt issuance on the JSE to R880 million.

“The money was raised from a number of South Africa based fixed income investors, and the ZAR bonds are part of the Group’s strategy to diversify its funding portfolio, as well as to create depth in local debt capital markets. Settlement was on 14 December 2015,” reads the statement.

Letshego, group Managing Director, Chris Low said they had initially planned to raise R500 million and it was increased to R655 million due to strong appetite from financial institutions who like and understand the Letshego story.

“The fact that we provide international investors with geographic and credit diversification makes Letshego a good investment-destination for funds seeking sub-Sahara Africa opportunities,’’ said Low. The proceeds of the issue were partially used to refinance R475million of ZAR notes that matured in December 2015, whilst the remainder of the funding will be deployed to growing the Letshego franchise, and its financial inclusion agenda.

The three new ZAR issuances, that include both fixed and floating rate senior secured notes maturing in 2018 and 2019, are part of Letshego’s JSE-listed ZAR2.5 billion Domestic Medium Term Note Programme.

This is in addition to Letshego’s BWP350 million of bonds listed on the Botswana Stock Exchange, and MZN72 million in unlisted paper in Mozambique. Meanwhile the company, which operates in 11 African countries, is currently seeking to enter the continent’s biggest economy-Nigeria.

If it gets the nod, the company will acquire 100 percent of a depositing taking institution in Africa’s most populous nation. A similar deal is currently being pursued in Tanzania. 

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‘Manufacturing holds key to economic growth’

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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

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MINISTER BEWAILS BAD REPAYMENT BY YOUTH

Keikantse Lesemela

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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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