- Halts Interim Dividend due to external economic pressures
- DAS Loan Book up by 6 yoy to P11.9bn (P11.2bn first half 2023)
- Micro & Small Entrepreneurs portfolio down 5% yoy to P1.01bn
- Affordable Housing (a subset of the MSE) down 2% yoy to P572m
GAZETTE REPORTER
Leading microfinance institution, Letshego Africa Holdings Limited, anticipates continued robust growth in loans and income primarily driven by its Deduction at Source (DAS) offering and mobile loans.
However, Group Chairman Philip Odera and Group Chief Executive Aupa Monyatsi have acknowledged that the company remains vulnerable to external economic pressures in the company’s interim results for 2024.
“We still expect to see downside impact from expected credit losses for the remainder of this year, although tempered by effective collection efforts and cost optimisation,” Odera and Monyatsi wrote in the report.
Transformation Strategy
In light of these challenges, the company has decided not to declare an interim dividend, opting instead to preserve its capital base to safeguard future performance.
From a strategic standpoint, Letshego’s Transformation Strategy, which was launched in September 2020 and is guided by the company’s 6-2-5 execution roadmap, is set to conclude in 2025.
Odera and Monyatsi highlighted that Letshego Africa has made significant strides in strategic planning that will steer the Group into its next chapter of sustainable growth.
Ever-changing markets
“Stakeholders will be updated once final planning and governance are completed,” they wrote.
“Letshego remains committed to maintaining a strategy and structure that deepens our impact, enables agility in ever-changing markets, and, most importantly, unlocks a tangible and measurable return for our customers and all valued stakeholders.”
They emphasised that Letshego’s flagship DAS offering remains the foundation from which other product solutions continue to grow and evolve.
“Mobile or Instant Loans is one of the Group’s more recent growth streams that stand to bring future growth value, given the access and benefits in providing micro capital to more underserved members of the community,” they wrote.
Resilience of DAS
The company looks forward to articulating its revised focus beyond 2025 at its next presentation.
Meanwhile, during the first half of 2024, Letshego Africa exhibited a balanced performance across its various product lines. The DAS Loan Book portfolio grew by 6 percent year-on-year, reaching P11.9 billion compared to P11.2 billion in the first half of 2023.
This growth underlines the resilience and continued appeal of DAS as a core offering in the company’s portfolio.
Conversely, the Micro & Small Entrepreneurs (MSE) product portfolio experienced a 5 percent decline year-on-year, dropping to P1.01 billion from P1.06 billion in the same period last year.
Namibia’s Affordable Housing
Affordable Housing, a subset of the MSE portfolio, also saw a slight decrease of 2 percent, falling to P572 million from P583 million in the first half of 2023.
But inspite of these declines, there were notable successes within specific markets.
Namibia led the way in the Affordable Housing portfolio, with an impressive increase of 181 percent, raising its portfolio value to P31 million from P11 million in the previous year.
Currently, MSE loans constitute 7 percent of Letshego’s overall loan portfolio.
Strategic review in MSE
“The MSE portfolio has undergone a strategic review to assess market performance and align growth initiatives with key opportunities,” the executives noted.
This review is part of a broader effort to ensure that the Group’s offerings remain competitive and responsive to market demands.
One of the standout performers in the first half of 2024 was Letshego’s Mobile Lending or Instant Loans segment, which saw significant growth.
The portfolio value increased by 73 percent year-on-year, reaching P909 million compared to P525 million in the first half of 2023. This growth reflects the increasing demand for instant access to credit, particularly among underserved communities.
Botswana’s loan disbursements
Tanzania’s Instant Loan business, which was launched in the first quarter of this year, has already begun generating value, with net payouts growing to P138 million.
In Botswana, Instant Loan disbursements saw an extraordinary rise of 1000 percent year-on-year, reaching P55 million compared to just P5 million in the previous year.
Ghana’s award-winning mobile loan, “Qwikloan,” also reported substantial growth, increasing by 69 percent year-on-year to reach P650 million from P384 million.