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Deposit taking licenses key to Letshego’s growth

Letshego Group Managing Director, Christopher Low

Botswana’s biggest multinational company has made great forays into African markets, expanding organically or buying into operations, in ten countries besides the home country.

Letshego’s first 15 years have seen the financial services group transformed from a small standalone office in Gaborone, of about 30 people, in 1998, to Botswana’s largest indigenous company with a presence in 10 countries in southern and East Africa.

The company is Botswana’s most heavily traded stock, with the shareholders now at 38 percent international investors as well as a market capitalisation of P5.4 billion, ranking in the top 40 listing of sub-Saharan companies ex-South Africa.

“Put another way we are larger than most banks in the markets in which we operate – our Botswana operations made well in excess of P300 million in post-tax profits this last year,” said Low.

Though the Group was denied a banking license in Botswana, it has managed to acquire deposit taking licenses in Rwanda, Tanzania, Mozambique and Namibia.

“We have engaged in forums with the BoB (Bank of Botswana) in which they discussed their intention to review a tiered licensing structure. We welcome this development, as we believe it will aid financial inclusion and skills deepening across Botswana, and have indicated as much to the regulator.”

On the question of whether the Group will try again to obtain a deposit taking license in Botswana, Group Managing Director, Christopher Low, is previously quoted in another publication saying: “Given the projects currently being followed in Mozambique, Rwanda, Namibia, Tanzania, amongst others, we would rather wait until the BoB reverts with an update on the tiered licensing structure. Should this initiative progress, we would reconsider an application under the deposit-taking micro-finance tier.”

At Letshego’s Gala dinner which was held at Lansmore Masa hotel on Tuesday this week, Mr Low revealed that the company’s strategy will rely heavily on obtaining deposit taking licenses.

“However to really develop a fully-fledged diversified strategy we need to obtain deposit taking licences – we have gone live with these in Mozambique and Rwanda in 2014 and are aiming to do the same in Namibia this year” adding that, “once we obtain such licenses, we can offer our customers “any channel, anywhere” solutions to their financial needs, using the latest technology – these will be affordable, simple and appropriate to their needs.

Legodile Serema, board chair of Letshego group, affirming the stature of the Group, said that: “Letshego remains an indigenous Botswana force that is now a multinational company. It is effectively exporting Brand Botswana through the skills that are built amongst the more than 190 Batswana team members, approximately half of whom provide support at Group level to our 9 other country operations.”

The Group is expected to show strong growth in its financial results, with loans and advances to clients growing substantially.

Mr Low revealed that the Group’s revenue mix is improving, and following the acquisition of a micro-finance business with operations in Kenya, Tanzania, Uganda and Rwanda three years ago, some 6 percent of revenues come from this business. “We are looking to roll this model out to further countries, including in Botswana,” he said.

In the last two years, Letshego has raised medium term notes (debt finance) of over P 1 billion Pula on both the Johannesburg Stock Exchange (JSE) and the Botswana Stock Exchange (BSE) – which has assisted the Company to improve its balance sheet leverage.

The financial results of Letshego Holdings Group for the year ended 31 December 2014, which were released this week, reflect double digit growth in profit after taxation and advances to clients.

Profit before tax increased by 24 percent to P970 million. Margins were consistent with the prior period despite the prevailing competitive Environment. 60 percent of profits before tax were generated outside of Botswana. Cost to income ratio was reduced to 29 percent. Impairment charges were 2.0 percent on average net advances. Capital adequacy ratio remains above 60 percent.

Advances to customers (net) increased by 28 percent to P5.7 billion while the payroll portfolio increased by 26 percent to P5.3 billion. The microfinance portfolio increased 117 percent to P370 million. The customer base grew by 11 percent to 265,265. Customer access points have extended to 252.

The largest contributors to advances growth in absolute terms were Namibia, Mozambique and Botswana, contributing P944 million (75 percent) of net increase, as well as driving the payroll portfolio growth. Lesotho operations’ portfolio doubled to P190 million. Growth in the Swaziland portfolio was revived after product reviews, closing at P151 million, up 41 percent from the prior period. The Company has doubled the dividend payout ratio, paying out a dividend of some P197 million.

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Matsheka seeks raise bond program ceiling to P30 billion

14th September 2020
Dr Matsheka

This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.

“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.

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Lucara sits clutching onto its gigantic stones with bear claws in a dark pit

14th September 2020
Lesedi La Rona

Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.

A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.

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Botswana Diamonds issues 50 000 000 shares to raise capital

14th September 2020

Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.

A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.

Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.

In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.

The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.

In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.

Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.

The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”

In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.

Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.

The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.

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