For the year ended December 2023, Letshego reported an 82% drop in pretax profit from P684 million to P121 million.
The downward trend extends further to the previous financial year in 2022 where Letshego reported a 30% drop in pretax profits to P801 million, with the weaker performance partly due to below-par performances in Ghana, Tanzania, Kenya, Nigeria, and Rwanda. The pre-tax profits for the year to December 2022 were later restated to P684 million to take account of the effects of inflation in accordance with international accounting standards.
BIHL, the country’s largest diversified financial services group which holds 30% in Letshego, has been a loyal shareholder to the microlender, riding through recent periods of reduced profit contributions and growth.
Last week at the announcement of the group's full-year results, BIHL was reluctant to comment on what options the group is looking at with regards to its investment in Letshego.
When quizzed about BIHL’s strategy for Letshego, BIHL group CEO, Catherine Lesetedi, declined to comment.
“I am not free to talk about Letshego because we also sit on the board so at this point I think it’s best we don’t comment (on Letshego),” she said.
Previously, BIHL said it wanted to see a turnaround in Letshego’s East and West African markets and was prepared to push for an exit from these areas should weak performances continue.
“There are turnaround markets which have been identified by Letshego and those markets must account for themselves,” Lesetedi said last March at the results briefing for the year ended December 2022. “There are views that if management doesn’t want to turnaround these [markets], at some point we need to exit because they are draining resources.”
Last week, BIHL Group's chief financial officer, Kudakwashe Mukushi, said that Letshego’s revenue contribution to the group was a negative P77 million which had led to a drop in the equity value of the group by over seven percent mainly due to Letshego's financial woes.
“Our share of profit of associates is down by 64% to P79 million with the group equity value down by seven percent to P5.38 billion, mainly due to Letshego as an unprofitable associate,” he said.
BIHL, which has been a long-term partner to Letshego, has a history of accommodating the microlender’s lower returns while cutting the valuation of its stake as well.
Letshego’s troubles have been linked to once-offs, as well as, foreign exchange fluctuations and inflation-induced volatility, especially in Nigeria and Ghana. The microlender anticipates these challenges to persist only in the first half of this year and taper off in the second half, contingent on macroeconomic conditions.
“We continue to monitor Ghana and other economies and are prepared with contingency plans,” said Letshego group CEO, Aupa Monyatsi.
For several years the microlender has battled to lift the performance of its East and West African divisions, which includes operations in countries like Ghana, Nigeria, Tanzania, Uganda, Rwanda, and Kenya.
