Letshego faces growth challenges

Guardian:

Botswana’s gigantic unsecured lending outfit –Letshego must prepare itself for a decline on growth due to market saturation and intensifying competition, a report from Stockbrokers Botswana revealed this week. Historically, the local market has contributed a large chunk of the Botswana Stock Exchanges (BSE) listed company’s revenue. “We are of the view that the Botswana market, which has been the group’s significant market over the years, is now reaching maturity and we expect growth to slow down going forward,” Stockbrokers said in a statement but did not give specific figures on how much Letshego’s performance would be affected financially.  The company offers loans to formally employed clients, mainly government workers. However, the report added that the addition of a promising unsecured lender-Bayport Financial Services-would exacerbate the Pan-African company’s woes. Bayport, which just like Letshego operates in several countries, has grown from one branch in May 2010 to the current ten, with further expansion planned. Like many micro lenders operating in Botswana, Letshego has since started paying Non-Bank Financial Institution Regulatory Authority (NBFIRA) annual levies, which are meant to finance regulation activities. Already the company has parted with 0,5 percent of its loan book for the 2011/12 financial year. Despite challenges in the economy, Letshego’s loan book increased to a historic P3 billion in the year ending January 2012, up by 32 percent when compared to previous reporting period. Botswana, as always, led loan book as it contributed 60 percent of net advances. Meanwhile, in an apparent move to deal with a decline in growth, Letshego has announced plans to enter into the banking area, which will allow it to be able to take deposits. It is still unclear whether it will also offer other services that mainstream commercial banks provide. The bank’s finance director, Colm Patterson, told a local newspaper that they have acquired a new system that will allow for the introduction of retail banking services.  A Botswana Investment and Trade Centre (BITC)-accredited company Letshego has branches in seven African countries including Botswana, Swaziland, Tanzania, Uganda, Zambia, Namibia and Mozambique.  More acquisitions have already been planned by the cash rich company, with a market capitalisation of P2, 7 million at the local bourse. The company is in the process of acquiring Micro Limited Africa (MAL), a financial company with centres in Rwanda, South Sudan, and Uganda and an associated company in Tanzania. Stockbrokers said the acquisition would further boost the company’s growth in the short to long term. In a statement accompanying the company results to January 2012, the company’s Chief Executive Jan Classen said they would tread carefully in their lending approach, since government has announced she will cut workers in the next three years.