Letshego spearheads financial literacy campaign
Isaac Pinielo | Wednesday March 4, 2015 11:20
Speaking during the presentation of the group’s financial results for the eleven-month period ended 31 December 2014, the group’s Managing Director, Chris Low said the high volumes of household debt in the country are a huge concern for his company.
He said Letshego was working with the government to set limits on indebtedness, adding that they have introduced a central system in which they limit the amount and number of loans a customer applies for. “This allows the customer to have only one loan at a time. We have the responsibility to discourage over borrowing,” he said.
There have been concerns over the high level of indebtedness amongst households, with individuals borrowing simultaneously from multiple sources such as commercial banks, hire purchase and savings cooperatives.
According to Bank of Botswana, borrowing has over time exceeded growth in income. It said consumers’ real incomes had declined over the last few years, which forced many people to borrow more to make up for the shortfall. Industry players have also expressed concern that lack of a regulatory framework further resulted in reckless credit and over indebtedness.
The International Monetary Fund (IMF) has cautioned the country’s banking sector of potential vulnerabilities rising from the increase in household debt and unsecured loans. Last year, it was reported that individuals (households) owed commercial banks P23.4 billion, with approximately 62 percent of this classified as ‘unsecured’ debt; meaning banks would have difficulties recovering part of, or all of the due debt in case of default by borrowers.
Meanwhile, Letshego’s advances to customers were at P5, 686,796 as compared to P4, 427, 757 in the previous period. This is an increase of 28 percent.
The group recorded a profit before tax increase of 24 percent in the full-year period ended on December 2014 to P970 million. The group said margins were consistent with the prior period despite the prevailing competitive environment. Sixty percent of these profits before tax were generated outside of Botswana.
Letshego operates in eight southern and east African countries including Namibia, Mozambique, Kenya, Uganda, Rwanda, Swaziland, Botswana and Lesotho.