Letshego gets banking licence in Namibia
Staff Writer | Friday July 25, 2014 14:51
In a statement to the Botswana Stock Exchange, the company said the Central Bank of Namibia has granted Letshego Namibia a provisional banking license on July 15, 2014.
“The provisional license is subject to the fulfillment of certain conditions within a six month period before any new operations can commence,” reads the statement.
Letshego, which operates a micro-lending business in 10 African countries, has plans to venture into commercial banking services in all the countries it operates in.
Already the group has deposit-taking licences in Mozambique and Rwanda.
In the 2013 annual report released this week, Letshego said that it launched fixed deposit taking in Mozambique in February 2014.
“This is the first step towards deposit taking in the group with the long term intention of diversifying the funding base. However it is recognised that significant deposit mobilisation will take considerable time to be put into place,” reads the report.
Having planted roots in Botswana in 1998, the group now operates across Eastern and Southern Africa, servicing over 250,000 customers with an excess of 250 customer service points. Letshego employs over 1,300 staff members, and is richly diverse with more than 20 nationalities represented.
In Botswana, Letshego had its baking licence application declined by the Bank of Botswana (BoB).
Letshego managing director Chris Low recently told BusinessWeek that the group would not be re-applying for a banking licence in Botswana anytime soon. The micro lender says it has opted to build capability from other African markets it operates its business, before re-applying for the banking licence in Botswana.
In 2012, BoB declined Letshego’s banking licence application for reasons, which the microlender says, were not explained.
Briefing the media on the company financial results for the year ended January 2014 in Gaborone recently, Low said they are gaining experience from their African operations, and by the time they re-apply for the banking licence locally they would have acquired enough experience.
“When we applied before, we had no deposit taking capability, but now we have as in other African countries we are operating in, we do take deposits,” Low said.
For the first time since inception, Letshego generated the lion’s share of its profits from outside Botswana as the group reaps dividends from its aggressive geographical diversification efforts.
Low said that in the group’s financial results for the year ended January 2014, more than half (58 percent) of the company’s profit before tax was generated outside Botswana from 40 percent in the previous period.
In the group’s 16-year old history, Botswana has consistently contributed the majority of the microlender’s profits but expansion into new markets, including the East African region has not diversified the group profit and asset mix but significantly cut down Botswana’s contribution to the stable.
In 2008, a mere eight percent of Letshego’s profits were generated from outside Botswana before increasing to 35 percent in 2012 and 40 percent in the year ended January 2013.
In the period, profit growth was flat year on year increasing by one percent to P849 million on prior year, which the group says was a result of the pressure on margins, various strategic investments in technology and group expansion initiatives. On the balance sheet, total advances soared by 33 percent to P4.43 billion contributing to a 16 percent increase in total assets.