Letshego Holdings battles to undo legacy of credit hitches

13Jan 2022
By Guardian Reporter
The Guardian
Letshego Holdings battles to undo legacy of credit hitches

LETSHEGO Holding Limited has said business in the country remained challenged last year as it struggles to address legacy credit portfolio challenges.

Letshego Holdings CEO, Andrew Okai.

The Gaborone based group which operates locally as Letshego Tanzania Limited said in its second half performance for last year, said through its digitalization programme known as LetsGo Mall, both East and West markets are set to achieve its five year plan to increase income and profit contribution towards 50 percent of earnings.

“In 2021, Ghana and Uganda have maintained their positive growth trajectories, with Kenya likely to join the BWP100 million PBT club. However, business momentum in Tanzania has remained challenged through 2021,” the report said.

On cost of credit risk, Letshego Holdings said it improved in the second half, and is projected to remain well below one percent for the full year. Progress in enhancing credit processes and frameworks within individual subsidiaries has been successful.

“Examples include addressing legacy credit portfolio challenges in Tanzania, and establishing regional standards in the automation of straight-through processing for government databases in Uganda,” the report noted.

The 2021 second half report further noted that creating a future-fit business after the launch of the LetsGo Digital Mall across ten markets marked a significant milestone in the digitilisation journey. The LetsGo Mall is expected to optimise customer experience given the ease of access and shortened processing times, the report noted.

Digitilisation is a key enabler for exponential growth in customer acquisition, which leads to enhanced franchise value. Enterprise Active Customers (EAC) on the LetsGo Mall is currently approaching 100,000, with new EAC registrations currently exceeding 10,000 per week. The Group is on course to achieve its targeted one million EAC by 2023, the report added.

As for targets this year, Letshego Holdings said momentum is strong as the group begins to reap the benefits from investments in derisking, diversification and digitalisation. “The ongoing pandemic, with the highly contagious fourth wave caused by the Omicron variant, will remain a factor to watch in terms of future impact and business performance,” the report stated.

During the past year, the Botswana Stock Exchange listed company was rated as stable by global rating agency, Moody’s. “Moody’s has affirmed Letshego Holdings Limited’s rating at a corporate family rating of Ba2, issuer ratings at Ba3/NP and outlook stable. Against the backdrop of ongoing fluid economic conditions arising from the pandemic, this is a very positive result,” the report explained.

Letshego’s second half has shown sustained business resilience, reflecting an overall solid financial performance and significant strides in the Group’s strategic agenda. Letshego’s top line performance in H2 is projected, at a minimum, to mirror the first half, while profit-before-tax is expected to surpass H1.