Letshego Africa Holdings Limited Integrated Annual Report 2023
Reflections from our Group Chairman
“Letshego’s commitment to ethics,governance, and stakeholder trust serves as our guiding beacon. We recognise that navigating challenges demands unwavering integrity and principled leadership. Through our steadfast dedication to our core values, we aim to unlock growth opportunities, while also ensuring that every step forward delivers enduring value to all stakeholders.”
Philip Odera Group Chairman
Operating environment
Sub-Saharan Africa’s economic recovery slowed for the second consecutive year, with growth estimated at 2.9% in 2023 compared to 3.6% in 2022. The recovery trajectory is likely to be characterised by disparities across the region, reflecting varying levels of resilience and adaptation to prevailing challenges. Monetary and fiscal policymakers responded differently across markets as governments grappled with local economic constraints and external headwinds. Despite these hurdles, the economic outlook for the region remains positive, with GDP projected to accelerate to 3.8% in 2024 and further to 4.1% in 2025. However, cross-continental geopolitical tensions, escalating risks of debt distress and climate-related shocks pose significant vulnerabilities that could impede progress in the near term.
Throughout the year, policy tightening persisted, evidenced by increases in monetary policy rates across seven of our 11 presence markets. Currency devaluation was prevalent, notably in Ghana, Kenya and Nigeria, underscoring the volatility and susceptibility of currencies to external pressures. Projections indicate continued currency strain across markets, potentially reversing the inflationary moderation observed in 2023.
Despite the challenging macroeconomic backdrop in 2023, our business fundamentals remained strong. Net advances experienced a commendable 7% year-on-year growth, propelled predominantly by the sustained expansion of the Group’s core Government Deduction at Source (DAS) product. Southern African markets, including Mozambique, Botswana, Namibia, and Lesotho, played a pivotal role in bolstering DAS performance, contributing to 7% net book growth. Moreover, deposit growth was remarkable, surging by 37% year-on-year, albeit from a modest base.
In summary, while the global economic landscape and operational context in Sub-Saharan Africa present formidable challenges, our business resilience and strategic focus on core products has strengthened our position amid this uncertainty. Continued vigilance and adaptability remains imperative as we navigate the evolving economic dynamics to sustain growth and create lasting value in the region.
Strategic performance
Letshego’s Transformation Strategy, guided by our 6-2-5 execution roadmap has maintained positive momentum. This year, we initiated ‘Plan 5’, our final phase of the strategy. This phase will seethe consolidation and maximisation of sustainable returns from our latest phase of investments, system automation, and digital platforms as well as the diversification of products. The objective of Plan 5 is to leverage our transformation components into an integrated ecosystem that will serve and support our stakeholders,while embedding governance and operational frameworks that generate sustainable value for generations to come to support our overall ambition of creating a future-fit business.
Ethics, governance and leadership
As a purpose-led business that operates at the heartbeat of financial inclusion, I would like to underscore the crucial roles that governance, risk management, regulation and ethical conduct play within our organisation. Our sustainability framework and Environmental and Social Governance (ESG) policies encompass the holistic value of an integrated culture of governance, risk and social impact as well as environmental returns.
Our commitment to fostering a #peoplefirst culture where employee engagement remains paramount is critical to deliver as we recognise that a highly engaged workforce is integral to our organisational success. Notably, we have established platforms like our ‘Lekgotla’, facilitating meaningful dialogue between employees and leadership on pertinent matters. Additionally, our implementation of Long Service Awards and Excellence Awards highlights our dedication to recognising and celebrating colleagues who exemplify excellence and commitment in their roles. These various human capital-orientated levers and tools enhance and enable the flow of value that people generate for our business. They are encapsulated by our most recent human capital initiative, the creation of Letshego’s unique ‘Culture Blueprint’.
The purpose of Letshego’s ‘Culture Blueprint’ is to officiate the value that a healthy culture plays in business and social sustainability. Founded on personal collaboration and direct contribution from employees from ‘all corners’ and levels in our business, Letshego has now arrived at a refreshed set of values to support our ways of working and engagement, and a set of solutions and roadmaps for our Country Culture Councils to choose and adapt in bringing our pan-African family together, in unison, with one vision and objective – to improve lives of all our stakeholders.
In our pursuit of organisational excellence, we continue to prioritise strengthening leadership capabilities. Through targeted leadership and specialist skills development programs such as those offered by GIBS and McKinsey, and Letshego’s own Digital Mastery Programme, we continue to hone the skills and competencies of our leaders and future leaders in line with our succession plans. These initiatives stand as a testament to our unwavering commitment to effective governance, prudent risk management, adherence to regulations, and upholding ethical standards in all aspects of our operations.
Board changes
During the year, Gerrit van Heerde retired from the Board of Letshego Africa Holdings Limited. Through his own vast experience and career, enriched by pan-African financial services, the Board, our executives and our broader operations have gained immense insights and support from Gerrit’s deep commitment to quality in execution, relevance in time and effort, and foresight in the delivery of value-adding solutions. On behalf of the Group Board, I would like to extend our sincere gratitude and appreciation to Gerrit for nine years of rich contributions and valued insights. We wish you every success in your future endeavours.
Moreover, the Board has taken a proactive step in enhancing the Group’s governance by appointing a Deputy Chairperson to ensure succession. Mr Christopher Mokgware has been appointed to fulfil this pivotal role, reflecting the Board’s commitment to fostering effective leadership and ensuring continuity within the organisation’s governance structure. This strategic decision not only bolsters the leadership framework but also underscores the Board’s forward-thinking approach towards sustainable organisational development and best governance practices.
Delivering a measurable social and environmental impact
Sustainability is core to the Letshego purpose and our operations across Africa.
During the last year, Letshego strengthened its ESG commitment by converting country ESG policies into action with expert training, policy and guideline upgrades and the appointment of ESG Champions across country divisions. Identification, monitoring and escalation of potential environmental and social risks is no longer an asset but imperative in doing business in today’s sustainability-conscious society. The establishment of Letshego’s Group Sustainability Management Committee, chaired by our Group Chief Risk and Compliance Officer, will further formalise the entrenchment of sustainable and ESG compliance business practices.
Letshego measures ESG against the following identified themes: Governance, Risk Management, Social, Environmental, Disclosure & Reporting, Training and Stakeholder Engagement and Reporting. We are making tactical strides in building a robust Sustainability Framework that encompasses the multiple cross-divisional benefits that social and environmental governance achieves for our regional operations, stakeholders and communities.
From an impact financing point of view, over 50% of our customer base are women or women owned businesses. We are also achieving our gender targets in line with global standards following the recent qualification of a country facility within the ‘2X the Challenge’, an international qualification that enables investors and investees to track investment funds to entities that officially provide financial support to women and women owned businesses.
Letshego Nigeria was also recognised by the African Development Bank (AfDB), with the AfDB AFAWA Award for extending the reach of financial solutions to more women. Over the last three years, Nigeria has increased the proportion of financial support for women from 25% in 2020 to 54% in 2023.
Looking ahead
With the Group’s business fundamentals steadfast, and beneficial progress in deepening our Governance, Risk and Sustainability Frameworks, Letshego’s focus continues to be centred on reaping the rewards and future benefits that arise from the first two build and investment phases of its 6-2-5 execution roadmap. Our current and final stage, ‘Plan 5’, aligns well with the themes in our sustainable goals, including the consolidation, integration and efficacy of a growing ecosystem.
The development of our ecosystem environment was facilitated by our Transformation Strategy, with automation and technical enhancements to channels, platforms and infrastructure driving our operational evolution towards a future fit business. Our enhanced infrastructure and operations not only provide improved support and experience for our current stakeholders but, through the benefits of API enhancements, invite and attract the inclusion of new strategic partners. Letshego will continue to seek strategic partnerships that make commercial sense, deliver sustainable returns and enable continuous improvement either from a strategic, technology, customer experience or financial perspective.
Acknowledgements
In closing, I wish to extend my sincere appreciation to my fellow Board members for their hard work and personal contribution throughout 2023. Despite confronting difficult economic challenges and market conditions, the commitment shown by the Group’s Board, Executive and Country Management Committees is commendable. I am continually inspired by their dedication, energy and enthusiasm.
I would like to express gratitude to our employees, clients, regulators, investors, both public and private partners and all other stakeholders who continue to support Letshego’s journey. We remain committed to generating significant and lasting value, and enhancing livelihoods for a sustainable future.
Philip Odera
Group Chairman
The contents of the post above were obtained from third parties, which We, AfricanFinancials, believe to be reliable. However, We do not guarantee their accuracy and the above information may be in condensed form. The reader is encouraged to refer to the original source of the information, which, in most cases, is in PDF format and on the originating company's letterhead. While We endeavour to replicate the original content accurately, We cannot guarantee the absence of errors in the above article and We disclaim any liability regarding reliance on information provided in this article.