Connect with us

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


The COVID0-19 pandemic has adversely impacted Letshego’s 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 Letshego’s 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, Letshego’s 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 Group’s 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 Group’s 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 Group’s business remains resilient.

“In the second half of 2020, Letshego’s progression in implementing the Group’s 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.”

Continue Reading


Gambling Authority tender dangles as a jittery lottery quandary

30th November 2020

Lucrative and highly anticipated national lottery tender that saw several Batswana businessmen partnering to form a gambling consortium to pit against their South African counterparts, culminates into a big power gamble.

WeekendPost has had a chance to watch lottery showcase even before the anticipated and impending national lottery set-up launches. A lot has been a big gamble from the bidding process which is now set for the courts next year January following a marathon legal brawl involving the interest of the gambling fraternity in Botswana and South Africa.

This content is locked

Login To Unlock The Content!

Continue Reading


The uncertainty of getting the next meal in Botswana

30th November 2020
uncertainty of getting the next meal

Households representing more than half of Botswana’s population-mostly residing in rural areas- do not know where their next meal will come from, but neither do they take into consideration the quality and/or quantity of the food they consume.

This is according to the latest Prevalence of Food Insecurity in Botswana report which was done for the 2018/19 period and represents the state of food insecurity data even to this time.
The Prevalence of Food Insecurity was released by Statistics Botswana and it released results with findings that the results show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.

According to the report, this translates to 27 percent of the population being food secure that is to say having adequate access to food in both quality and quantity. According to Statistician General, Burton Mguni, when explaining how the food data was compiled, Food and Agriculture Organization of the United Nations (FAO), is custodian of the “Prevalence of Undernourishment (PoU)” and “Prevalence of moderate or severe food insecurity in the population based on the Food Insecurity Experience Scale (FIES)” SDG indicators, for leading FIES data analysis and the resultant capacity building.

“The FIES measures the extent of food insecurity at the household or individual level. The indicator provides internationally comparable estimates of the proportion of the population facing moderate to severe difficulties in accessing food. The FIES consists of eight brief questions regarding access to adequate food, and the questions are answered directly with a yes/no response. It (FIES) complements the existing food and nutrition security indicators such as Prevalence of Undernourishment.

According to the FIES, with increasing severity, the quantity of food consumed decreases as portion sizes are reduced and meals are skipped. At its most severe level, people are forced to go without eating for a day or more. The scale further reveals that the household’s experience of food insecurity may be characterized by uncertainty and anxiety regarding food access and compromising the quality of the diet and having a less balanced and more monotonous diet,” says Mguni.

The 50.8 percent of the population in Botswana which was affected by moderate to severe food insecurity are characterized as people experiencing moderate food insecurity and face uncertainties about their ability to obtain food. These people have been forced to compromise on the quality and/or quantity of the food they consume according to the report on food insecurity.

Those who experience severe food insecurity, the 22.2 percent of the population, are people who have typically run out of food and, at worst, gone a day (or days) without eating. According to the statistics, rural area population experienced moderate to severe food insecurity at 65 percent while urban villages were at 46.60 percent and cities/town were at 31.70 percent. Those experiencing the most extreme and severe insecurity were at rural areas making 33.10 percent while urban villages and towns were at 11.90 percent and 17.50 respectively.

According to a paper compiled by Sirak Bahta, Francis Wanyoike, Hikuepi Katjiuongua and Davis Marumo and published in December 2017, titled ‘Characterization of food security and consumption patterns among smallholder livestock farmers in Botswana,’ over 70 percent of Botswana’s population reside in rural areas, and majority (70%) relies on traditional/subsistence agriculture for their livelihoods.

The study set out to characterize the food security situation and food consumption patterns among livestock keepers in Botswana. “Despite the policy change, challenges still remain in ensuring that all persons and households have access to food at all times. For example, during an analysis of the impacts of rising international food prices for Botswana, BIDPA reported that food prices tended to be highest in the rural areas already disadvantaged by relatively low levels of income and high rates of unemployment,” said the study.

According to the paper, about 9 percent of households were found to be food insecure and this category of households included 6 percent of households that ranked poorly and 3 percent that were on the borderline according to the World Food Programme’s (WFP) definition of food security.

Media reports state that the World Bank has warned that disruption to production and supply chains could ‘spark a food security crisis’ in Africa, forecasting a fall in farm production of up to 7 percent, if there are restrictions to trade, and a 25 percent decline in food imports.

Food security in Botswana or food production was also attacked by the locust pandemic which swept out this country’s vegetation and plants. The locust is said to have contributed to 25 percent loss in production.

Continue Reading


Solid demand for diamonds towards the ‘gift’ season

30th November 2020

Global lockdown have been a thorn in diamonds having shiny sales, but a lot of optimism shows with the easing of Covid-19 restrictions, the precious stones will be bought with high volumes towards festive season. The diamond market is however warned of the resurgence of Covid-19 in key markets presents ongoing risks amid the presence and optimist about the new Covid-29 vaccines.

The latest findings published as De Beers Group’s latest Diamond Insight ‘Flash’ Report, which looks at the impact of the pandemic on relationships and engagements, has revealed that in the US that more couples than ever are buying diamond engagement rings. Bridal sales is mostly the primary source of diamond jewellery demand in recent months, De Beers said.

According to De Beers, interviews with independent jewellers around the US revealed that the rate of couples getting engaged has increased compared with the period when Covid-19 first had an impact in the US in the spring.

“In addition, despite challenging economic times, consumers were spending more than ever on diamond engagement rings – often upgrading in colour, cut and clarity, rather than size. Several jewellers speculated that with consumers spending less on elaborate weddings and/or honeymoons in the current environment, they had more to spend on choosing the perfect ring,” said De Beers.

According to De Beers, a national survey of 360 US women in serious relationships, undertaken in late October in collaboration with engagement and wedding website, The Knot. This survey is said to have found that the majority of respondents (54%) were thinking more about their engagement ring than the wedding itself (32%) or the honeymoon (15%), supporting jewellers’ hypothesis that engagement ring sales were benefiting from reduced wedding and travel budgets in light of Covid-19 restrictions.

When it came to researching engagement rings, online was by far the predominant channel for gaining ideas/inspiration at 86% of consumers surveyed, with 85% saying they had saved examples of styles they liked, according to De Beers. According to the survey, only a uarter of respondents said they had looked in-store at a physical location for design inspiration.

“For many couples, the pandemic has brought them even closer together, in some instances speeding up the path to engagement after forming a deeper connection while experiencing lockdown and its associated ups and downs as a partnership. Engagement rings are taking on even greater symbolism in this environment, with retailers reporting couples are prepared to invest more than usual, particularly due to budget reductions in other areas,” De Beers CEO Cleaver said.

According to De Beers Group, its Diamond Insight Flash Report series is focused on understanding the US consumer perspective in light of Covid-19 and monitoring how it evolves as the crisis evolves. Also, the company said, it is augmenting its existing research programme with additional consumer, retailer and supply chain touch-basis to understand the pain points and the opportunities for stakeholders across the diamond pipeline.

Demand for diamonds is as hard and resilient as the precious stone itself. De Beers pocketed US$ 450 million in its recently held ninth rough diamond sales cycle, and the company says it is more flexible approach to rough diamond sales during the ninth sales cycle of 2020, with the Sight event extended beyond its normal week-long duration.

“Steady demand for De Beers Group’s rough diamonds continued in the ninth sales cycle of the year, reflecting stable consumer demand for diamond jewellery at the retail level in the US and China, and expectations for reasonable demand to continue throughout the holiday season. However, the resurgence of Covid-19 infections in several consumer markets presents ongoing risks,” said De Beers CEO Bruce Cleaver recently.

High expectations are on diamonds being a sentimental gift for holiday season or as the most fetished gift. However the ninth cycle was lower than the eighth which registered US$ 467 million. For the last year period which corresponds with the current one, De Beers managed to raise US$ 400.

Continue Reading
Do NOT follow this link or you will be banned from the site!