Letshego pulls out of Tanzania, South Sudan
The security situation in Africa’s youngest state, South Sudan has disintegrated to catastrophic levels. As ethnic fueled conflict rages on, the promise of a new dawn for the people of South Sudan is dashed with every bullet that is fired. The country’s economic promise was backed by western investors and several oil companies who salivated over the abundant black gold that flowed below the land. With a substantial population of 8.2 million, South Sudan also provided the promise of a new market for goods from all over the world. Escalating reports of corruption and looting of public funds have compounded South Sudan’s woes. The country is also struggling to overcome the problem of shortage of foreign currency.
The optimism that surrounded the promise of South Sudan has evaporated because of civil strife. Facing escalating security concerns, investors cannot wait to get on the next flight out of the country, taking with them the promise of economic prosperity. Once optimistic about the prospects of economic prosperity in South Sudan, Botswana’s very own Letshego Holdings Limited has lost faith and made a decision to divest. Inspired by the international attention and assistance leveraged to South Sudan, Letshego decided to invest in the sub Saharan country as a way of expanding the Group’s footprint in Africa.
This was announced by then Group Managing Director, Jan Claassen at the 2012 financial year end results presentation. The micro lender downplayed the security concerns that were raised by analysts at the time and swiftly acquired Micro Africa’s Kenyan operations and Micro Africa Group, a network of five independent micro-finance institutions spread across the East African block, including, Uganda (Micro Uganda Limited), Tanzania (Tujijenge Microfinance), Rwanda (Rwanda Microfinance Limited), Kenya (Micro Africa Limited) and South Sudan (Finance South Sudan Limited).
This week Letshego presented an impressive set of interim results, that showed a 31 percent increase in loan advances to a resounding P5 billion. The Group announced that the growth was largely driven by Botswana, Mozambique and Namibia business. In these countries, Letshego largely benefits from direct salary deduction codes, which lessen credit risk. Letshego further announced a profit before tax increase of 11 percent to P508 million. The Group also announced that it has entered into discussions to sell its 24percent shareholding in its associate micro finance business in Tanzania, Tujijenge Tanzania Limited.
As the security situation deteriorates, Letshego has also announced its decision to exit its investment in South Sudan, saying it is exploring all options around the situation. The Group has however eased investor anxiety about any significant losses on the two operations, saying divesting will not have a significant financial impact.