Letshego CEO 'Cautiously Optimistic' About 2023; 'Bullish' On 2024

Aupa Monyatsi, group CEO of pan-African micro-financier Letshego, has stated that he is bullish about the company's fortunes in 2024. For the rest of 2023, Monyatsi said that he was "cautiously optimistic", pointing to challenging macroeconomic environments as the reason for the cautious optimism.

Speaking at a media engagement to present the company's H1 results on Monday morning, Monyatsi referenced the company's much-lauded "6-2-5 strategy" as the reason for expecting promising fortunes in 2024, adding that it was now entering the final phase of the strategy's execution.

"In 2023 we started stage five [of the strategy] which is the last part that takes us to the end of 2025. It talks about scaling through partnerships. You will recall that in plan two, we built an investment in digitalization and digital capabilities. In stage five, we want to leverage those to plug into other ecosystems to create new products, scale current ones, and reduce our costs," Monyatsi said.

Letshego's "geographical rebalancing" was another area Monyatsi stated that the company had done well to warrant much optimism going forward. Despite initially eroding shareholder value, Monyatsi said the company's operations in East and West Africa, where most markets had achieved double-digit growth over H1 2023, had turned their fortunes around, now performing optimally minus beyond-control macroeconomic factors. 

"We're starting to see quite some good growth in stakeholder engagement, which covers regulator governments, the communities and shareholders. I am very proud of the work that we do and continue to engage with our regulators and the relationships keep getting stronger. Our partnerships with our host governments across Africa also keep getting stronger and it is something that we will continue to try harder.," he added.

On the challenging macroeconomic factors, he pointed to increasing interest rates in the likes of Nigeria and Ghana as well as currency depreciations in the respective countries. In Nigeria and Ghana, rates increased from 13% to 17% and from 24% to 33% respectively. Currency-wise, the naira depreciated by 69% against the pula while the cedi depreciated by 31% against the pula.  The depreciation led to Letshego taking a P14 million pula foreign exchange knock, leading to a 7% decline in profit before tax. 

Digitalisation Strategy Execution On The Horizon

Over the course of H1 2023, Monyatsi said that Letshego signed contracts with some of Africa's largest mobile network operators that gave the company access to their tens of millions of customers. From H2 2023 until the end of 2025, as part of the 6-2-5 strategy, Monyatsi said that they will leverage those customer bases to launch more consumer-facing products. In Nigeria, for example, the company launched "LetsGo Pay", a mobile lending in partnership with MTN. Over the course of the next two years, the company will be doubling down on such products.

"In Botswana, we did a "test and learn" with what you call individual lending, which is almost like open market lending which is important because it includes low-income folks. But we also got some lessons late because as part of it, we saw some connection issues so we've had to stop that experiment and refine the process. You'll start to see that opening up in the second half of the year again," Monyatsi said.

Still on the digitalisation front, Monyatsi said that the LetsGo Digital Mall had surpassed its target of 1.3 million Enterprise Active Customers (EACs), with the next step being to increase the average revenue per user (ARPU). Monyatsi hinted at a future where Letshego will be availing its lending APIs to telcos across its markets to allow customers to have access to some of the services offered in the mall.

In addition to giving shareholders a 5.1 thebe dividend per share, Letshego will also be utilising its cash holdings to embark on a share buyback scheme to help recover the company's share price which fell to its lowest level in two years in July, trading at P0.98. It is currently trading at P1.26.

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