Botswana Leads The Letshego Pack

By Business Reporter | Monday August 11, 2008 00:00

 

According to Stockbrokers Botswana research note on the Botswana Stock Exchange (BSE) listed outfit, the Botswana operations contributed about 92.4 percent to the group's profit before tax, with a loan book of P606.4 million or 77 percent of the loan book.

The brokerage firm led by chief executive officer (CEO) Geoffrey Bakwena revealed that government, the largest employer in the land, increased civil service salaries by 15 percent while also paying 40 percent scarce skills bonuses to select public service workers. Letshego offers unsecured loans to formally employed clients, including public service workers.

'These measures are expected to increase the amount of disposable income and are expected to have a positive effect on Letshego', noted the research note. 'We expect that this will boost the level of disposable income in the economy and may lead to an increase in the demand for loan products and as a result drive the loan book.

However, the brokerage observed that while Botswana continued to shine challenges like inflation, which is in the double digits, might affect disposable income affecting Botswana operations.

'Going forward, we believe that Botswana's contribution to the loan book will decline as other operations' contribution increase'. 'Inflation is however a major challenge in the short term. Driven by rising food and oil prices in international markets, inflation has been on an upward trend since the last quarter of 2007. This poses a challenge to disposable income and may consequently negate gains that would have otherwise been achieved'. The research note also added that the competition is aggressive with commercial banks also targeting the Letshego market, which has forced the outfit to come up with attractive products like direct sales agents and telesales facilities.
Other initiatives are the move to come up with agreements with the mining sector to cash in on the boom that will create thousands of jobs.

Meanwhile, Swaziland operations followed on the heels of Botswana with 12 percent (P100.5 million) contribution to the loan book, then Tanzania 7.3 percent, Uganda 2.6 percent and Zambia 0.4 percent. Micro Provident Swaziland (MPS) contributed about 17 percent to pre-tax profit.