Letshego Holdings, the Botswana Stock Exchange-listed consumer lender, was established in 1998 and has since evolved to become a fully fledged financial services company with a strong foothold in other African markets, including Mozambique, Namibia, Swaziland, Tanzania, Uganda, Zambia and most recently South Sudan, Kenya and Rwanda.
How we made it in Africa asks Jan Claassen, the group managing director at Letshego Holdings, about the role of micro-lending in Africa today.
In your opinion, what importance does micro-lending hold for Africa’s future?
As more and more financial institutions see the importance of servicing the low income earners who were previously excluded by the traditional commercial banks, competition is fast increasing within the micro-lending sector. It is therefore very vital to stay on top of your game as a consumer lending company as new regulations; security issues and measures; developments; products and technologies available; and workforce development all influence the quest to ensure maximum efficiency and profitability.
These new developments have been influenced by the increase in the demand for micro-loans and the phenomenal growth of the sector.
Therefore I believe micro-lending is a solution and will continue to be the solution to the financially excluded sector of any economy. It is a fact that mainstream banks will not be able to financially service all sectors of the economy due to various factors that affect the commercial banks’ lending models. Micro-lending gives an opportunity to the unbanked (individuals, SMMEs and women entrepreneurial groups) to improve the quality of their lives and give them back the economic opportunities that otherwise they would not have.
In what ways does Letshego reduce the risks of providing loans?
Letshego has put in place comprehensive credit policies and procedures across the group to ensure that thorough customer credit appraisal is done and due loan process is followed when granting loans to customers across the group. The Letshego Group also mainly operates through the use of the deduction at source model, which greatly reduces the risk of default.
You have plans to expand operations to South Sudan and Ghana. What is it about these countries that are attractive to Letshego and when do you plan to have a presence in them?
Letshego believes there to be an unmet demand for consumer lending in the low income earning bracket across Africa and our pan-African expansion plan continues with a lot of African countries, including Ghana, on our radar. In the case of South Sudan, Letshego has already entered the market through its recent acquisition of Micro Africa Limited (MAL).
MAL is an established company that has been operating in Kenya since 2000 with subsidiaries in Rwanda, South Sudan and Uganda and an associated company in Tanzania. It provides secured and unsecured personal, SMME and group loans. MAL has got 21 branches and a customer base of over 17,000.
It should be noted that Letshego enters countries after assessing investment opportunities that the individual countries presents. Through these opportunities we determine if the time is right for Letshego to enter the market and as such we cannot give you precise timelines regarding entry into other markets that Letshego does not have a presence in, even if we are currently assessing them.
Letshego doesn’t seem to show any interest in entering the South African market. Why is this?
Letshego does have interest in South Africa, but will only enter the market if a good business opportunity that makes good investment sense to the Group and is aligned with the Group strategy is identified or presents itself.