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COVID-19 sheds off 24 % of Letshego half year profits

The COVID0-19 pandemic has adversely impacted Letshegos performance for the half year period ended 30 June 2020, financial statement from the pan African micro lender reveals.

The company which operates in 11 African countries explained in a commentary alongside the results that the Pandemic conditions and lockdown scenarios across its regional footprint had a direct impact on transaction volumes.

Profit before tax decreased by 20% from P600 million in the prior year to P483 million for the period under review while Profit after tax decreased by 24% to P278 million, from P364 million registered at half year 2019. Year on year Net Interest Income (NII) saw a single digit decline of 6% to P973 million, from P1, 037 million in the same period last year.

Letshego directors shared that with almost two months of trading lost to pandemic lockdowns, as well as the longer term impact of Letshegos adjustment in affordability criteria (implemented at the end of 2019), the Group considers the single digit decline to be above expectations. A measured recovery of business momentum was experienced in the second quarter; however margin compression remains a reality in most of our markets.

Borrowing costs decreased by 20% year on year, as the Group continued its focus on retiring expensive borrowings and diversifying funding sources. Letshego Group CEO, explained that had the notional IFRS adjustment for mobile loans of P79 million been excluded from borrowings, the year-on-year decrease would have been 11%.

The Group remains committed to diversifying its funding base and reducing foreign currency risk by securing improved rates in local funding across its operations, he said. Non-funded income saw a steep decline of 51% year on year due to tougher economic conditions as a result of the pandemic, as well as adjustments to regulatory policy in Namibia. The impact was especially visible on income from insurance arrangements, which makes up 46% of other operating income.

This came down by 63% year on year as a result of a change in legislation in Namibia which resulted in the existing insurance arrangements being revised in October 2019 to meet new statutory requirements.

The Namibian subsidiary has since reviewed and adapted its loan structures to accommodate the regulatory adjustments, and continues to implement strategies to support longer term volume growth and volumes, despite narrowed loan margins.

Overall costs increased by 1% from prior year, with employee costs increasing 12% year-on-year and reflecting one-of exit costs. Other Operating Costs decreased by 6% as cost management efforts continued, coupled with reduced spend on historic expense lines due to support COVID-19 lockdowns.

As expected, Letshegos effective execution of our pandemic planning saw COVID-19 related expenses at P7.5 million, this includes donations to national COVID-19 relief efforts totaling P3.4million, and COVID-19 Operating Expenses of P4.1m, Okai explained.

In the first half of 2020 expected credit losses, as a percentage of provisions, increased by 7% compared to Full Year figures for 2019. Gross loans and advances increased slightly by 0.4% as a result of prioritized improvement in asset quality, and the impact of COVID-19 on borrowers and associated sectors on the MSE portfolio.

The Group provided relief to customers in the form of repayment holidays, amounting to P683.6million as at 30 June, making up 7% of the Groups total loan portfolio. Letshego also assisted customers by restructuring loans to accommodate individual changes in affordability.

90% of customers who were offered relief were Micro and Small Entrepreneurs (MSE customers) with a significant proportion of these customers from our Kenya subsidiary. The remaining 10% comprised Deduction at Source (DAS) Non-Government portfolios. Measures applied for smooth recovery of this book include enhanced collection and recovery strategies to cover potential impairment uplift up to and including December 2020.

The Groups Cost to Income ratio was 49%, up from 41% in the prior period. This increase is primarily due to lowered operating income in the pandemic. Although Letshego has experienced a measured downside impact as a result of slowed transaction volumes in pandemic conditions, Okai says the Groups business remains resilient.

In the second half of 2020, Letshegos progression in implementing the Groups transformational strategy, alongside the concurrent execution of effective pandemic plans, the Group is confident in the business ability to maintain resilience throughout ongoing pandemic conditions, managing risk and supporting the potential upside of new business flows via its digitised channels.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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