Letshego increases profit in micro entrepreneurs segment
Letshego recorded double increase in profit before tax on its most vulnerable portfolio segment, the Micro and Small Entrepreneurs ( MSE) despite decrease in the loan book.
The segment registered three percent decrease in net value to P817 million during the first half of 2021. Commenting on the published results Letshego Chief Executive Officer, Andrew Okai stated that despite the decrease, Letshego MSE profit before tax more than doubled following improvements in credit recoveries as well as lowered costs due to digital efficiencies.
He said the group continues to progress its ‘ Programmatic Approach’ to maximise value for the MSE segment, while mitigating downside risks in the segment. “Programmatic Approach initiatives include eco- friendly lending solutions in Ghana and Educational Impact solutions in Botswana, Ghana and Kenya. With partner support, Letshego is increasing products and solutions that achieve a social and environmental impact within targeted economic segments that include Housing, Education, Agriculture and Health.”
MSEs are mostly affected by employee retrenchments, salary reductions and general slowdown in economic activity. The group reported in its half year financial statement that the ongoing pandemic has impacted Letshego’s most vulnerable customer segment, micro
and small entrepreneurs. In the last period, the group experienced growth in the MSE portfolio with the largest markets being Botswana registering four percent, Namibia seven percent and Mozambique registering two percent growth.
The Deduction At Source net loan book portfolio grew by 19 percent to P9.9 billion compared P8.3 billion recorded in the same period last year. A company or person making a payment is required to deduct tax at the source if the payment exceeds certain threshold limits. Profit before tax for this portfolio increased by 31 percent in the first half to P677 million. “Growth is attributed to the rapid deployment of digital channels to meet evolving customers’ needs during the pandemic, as well as supporting our ‘ digital first’ ambitions. Supported by ‘ Digital Eagles’ ( front line employees), and in- house sales teams, 74 percent of our DAS customers have now transitioned to digital channels,” states the group.
For the Mobile mass lending loans segment the group experienced resilience through the pandemic given the ease in customer access, as well as enhanced credit management and credit automation processes. The net loan book value for the mobile lending portfolio grew significantly by 219 percent to P364 million compared to P114 million recorded last year. Profit before tax for this segment increased by 19 percent to P8.3 million. Customer usage of the mobile lending platforms increased by 30 percent year on year, with more than 6 million transactions processed over the period. “Letshego continues to invest and grow this segment, deepening strategic partnerships for longer term return.”