28 May 2018
Pan African micro finance lending Group, Letshego Holdings Limited is exploring prospects of tapping into the Agricultural sector as a way of diversifying its portfolio and contributing to the national economic diversification agenda of Botswana.
This was revealed by Letshego Group Executives in Gaborone this week on the sidelines of their Shareholders General meeting. When presenting the group 2017 financial results in Gaborone recently the Chief Executive Officer, Chris Low, said Letshego already has a sustainable and profitable model in Uganda and Rwanda financing watershed agricultural projects that contribute to employment creation in those countries.
Chris Low highlighted that in Rwanda and Uganda his company finances dairy farmers using different arrangements and packages such as resourcing farmers with complementary funds that improve their balance sheets in order for them to qualify for existing government subsidies. The CEO gave the example of their Rwanda agricultural pilot projects and pointed out that it the agriculture sector was crucial for Rwanda's growth and reduction of poverty.
He said agriculture has proved to be the backbone of the economy in Rwanda, noting that it accounts for 39 percent of Gross Domestic Product (GDP), 80 percent of employment, 63 percent of foreign exchange earnings, and 90 percent of the country's food needs.
This according to Chris Low made business sense to them with regards to profitable outputs. “The Agricultural Sector in East Africa is very profitable and as a matter of fact a major economic segment hence we began piloting our Agricultural Financing in that part of our Pan African market,” he said.
This week Letshego executives noted on the sidelines of their Shareholders General Meeting that the company recognizes the potential in Botswana’s Agricultural sector as a key sector for the county national economic diversification quest considering the fact that the economy is currently depended on mineral revenue.
Chris Low appreciated that agriculture creates jobs in large scale if it is operated commercially and profitably. However, he expressed the concern that financing the sector was highly risky and sometimes was very difficult to come up with sustainable models. “We are currently working on setting up and commencing our Micro & Small Entrepreneurs Business (MSE) segment for Botswana. Our financing basket will encompass agriculture, housing and other non-major business streams,” Chris Low said.
He explained that the process is currently at the regulatory authorities such as the Non-Banking Financing Regulatory Authority (NBFIRA) and others. The Letshego CEO added that it was imperative for the setting up of this segment of the business to undergo all due diligence and market intelligence processes to ensure that his company comes with the best packages and products that are unique and complimentary to the existing services.
“One of our pillars just as enacted in our brand “ Letshego” is inclusive financing packages, we believe that inclusive finance requires the provision of simple, appropriate and affordable financial services to those who have historically been excluded from the formal financial sector.” Chris Low explained that through the MSE portfolio his company seeks to further support businesses that do not only contribute to the national economic development but directly cultivate potential and support communities and lives of the ordinary citizens.
“We know that agriculture is on the talks for potential substitution to mineral dependency but we will be selective to ensure that at the end of the day we get value for input at the same time impacting lives of our clientele positively.” Chris Low also shared sentiments of other stakeholders and captains of industries that for financing institutions to go into agriculture in large volumes the regulations, ease of doing business and supportive initiatives have to be put in place by government and other major role players. “This sector is risky for lending thus to ensure and convince investors that their capital is safe infrastructure has to be in place and regulations must be loosened up,” he said.