As part of its rationalization process, Pan African financial services group, Letshego, is contemplating exiting some of the markets in which it operates.
The public listed entity currently operates in 11 countries and, although its headquarters are located in Gaborone, its footprint is dominated by East Africa.
This week, when addressing stakeholders whilst presenting the group’s financial results, Letshego interim CEO, Dumisani Ndebele explained that besides geographical rationalization, the process would include discontinuing certain products and channels.
Founded in 1998 as a micro lender, lending primarily to government employees, the group has since embarked on an extensive expansion strategy.
This led to Letshego establishing itself as a Pan African financial services group, in the process becoming one of the most successful homegrown companies in Botswana’s history.
At this stage it is not yet clear which markets the group would exit.
However, one market Letshego has traditionally struggled in is Tanzania, where it has been operating since 2015 after acquiring a local bank.
It will become clearer which markets face the chop after a comprehensive rationalization and optimization of aspects of the group has been completed during the second half of the year.
As Letshego weighs up which markets to leave, Ndebele, who has been the acting CEO since the abrupt resignation of Smit Crouse back in March, added they do not expect to enter any new markets over the remainder of the year.
“I think currently our hands are full. Also, with regards to all the geographies in which we are operating, there is a strategic review that is currently taking place. As part of the rationalization or optimization of our different markets we are looking at all the variables available to try to build on our strategy for the business,” noted Ndebele.
The group’s desire to quit some of their African markets comes just over a year after Letshego announced securing P250 million in funding from specialist and impact investors who focus on micro and inclusive ventures.
The funds were reportedly meant to help push Letshego’s expansion across the continent.
The rationalization process, according to Ndebele, may also lead to discontinuation of certain channels.
“Even in geographies there are no holy cows – and should that be the case then there are certain due processes to be followed,” continued Ndebele, who previously served as the group’s Company Secretary.
As the group contemplates exiting other markets, it intends to beef up its informal lending in the digital space in countries like Ghana, where Ndebele says there is potential that needs to be tapped into.
Meanwhile, for the six-month period ending 30 June, Letshego registered profit before tax of P600 million, a 2 percent increase from the corresponding period.
However, after tax profit stands at P364 million, which is actually 2 percent lower than the previous parallel period.