Letshego clinches financing deal

Brian Benza
Staff Writer | Tuesday January 15, 2008 00:00

The US $20 million loan facility has a seven-year term and will be used by Letshego to finance its existing operations in Botswana, Swaziland and Zambia.
This will be the IFC's second investment in Letshego following the acquisition of a 7 percent equity stake in 2005.

In a joint statement, the two institutions said that the loan would be provided in South African Rand and Zambian Kwacha by using local currency swaps.
'We are pleased to extend our cooperation with (the) IFC. We are committed to serving the widest possible customer base and providing financial services to more people who have not previously had access, particularly in countries such as Swaziland and Zambia,' said Jan Claassen, the Managing Director of Lestshego.'

IFC Director for Sub-Saharan Africa Thierry Tanoh said: 'Letshego is a good example of a local independent financial institution that has flourished by expanding regionally. IFC puts a priority of supporting businesses like Letshego that promote regional development and integration.'

The conclusion of the deal brings to an end the anxiety that was in the market following the flighting of cautionary statements last year by the company in which they were advising that certain minority shareholders were contemplating a possible disposal of their shares.

Early last year, Letshego concluded a loan agreement with FMO, the Developmental Agency of the government of the Netherlands, for a US $7.5 million loan facility to finance Letshego's operations in Tanzania. FMO is also an existing shareholder in Letshego.

Announcing their interim results in October for the nine months ended 31 July 2007, Letshego said that they were in negotiations for a US$50 million facility after having secured the US$7.5 million one.
In the results, Botswana was the major contributor to the company's revenues with all other African operations posting losses, except Swaziland, which contributed P9 million to pre-tax profits.

The group commenced its Zambian operations in October 2007 and, despite strong resistance from existing consumer finance operators, is reportedly very pleased with its performance.

The Zambian market is very competitive and Letshego is likely to use a diversified product range coupled with a favourable pricing structure to gain a competitive advantage.

Letshego, which was established in 1998 and listed on the domestic companies index (DCI) of the Botswana Stock Exchange (BSE) in September 2002, is one of the largest consumer finance companies in Botswana.