Chairman’s Statement
Overview
The year 2020 upended every key assumption on which entire countries and businesses based their plan. The year proved to be an unexpected baptism of fire for financial institutions around the world. Along with just about every business on the globe, Letshego was hard tested against its brand promise and business model by COVID-19. However, there is no doubt that the Group’s response to COVID-19 validated and burnished our corporate purpose of ‘Improving Lives’ and strengthened our core value of simple, ethical and inclusive services for customers.
I take this opportunity to compliment the Group Board and Senior Management for their proactive and committed response in seeking to mitigate the evolving risks arising from the unfolding crisis presented through the 2020 pandemic year.
At the beginning of 2020, Letshego adopted a Transformation Strategy whose resilience was aggressively tested sooner than anyone could have anticipated due to global COVID-19 measures and impacts. Thus tested, the Strategy has proven it is fit to meet and continues to meet the challenge. The pages of this report will chronicle how the COVID-19 pandemic led to our acceleration of a digitalisation strategy, proving that our future planning, as visualised in 2019, was well on point.
Towards the end of 2019 and throughout 2020, the Board completed the important task of strengthening its own ranks with new skills as well as strengthening and realigning the Group’s executive management. Letshego required an urgent refresh of its strategic direction to meet an evolving sector that required innovative thinking and more digital-orientated skill sets. With these imperatives in mind, the Group made new executive leadership appointments, introducing new expertise. Where skills were not already available internally, the Company recruited new personnel, all while reconfiguring certain existing roles to align with our new focus and vision.
It says much for the intrinsic stability of Letshego’s management and operations that the Group’s executive successfully implemented a strategic shift in organisational structure, all while managing the COVID-19 crisis and overseeing a fundamental reorganisation of Letshego’s internal processes.
Operating Environment
Economic growth in Africa had slowed in recent years, but 2020 will remain unforgettable due to the sudden and extreme challenges COVID-19 brought to societies and, by extension, to business operating environments across the world.
As people were infected by the virus and lockdowns were instituted, global trade and manufacturing were massively impacted, with service industries such as airlines, hospitality and tourism being driven to the verge of or, actual collapse. Thousands of businesses – particularly smaller and family-owned businesses – shut their doors for the first time in decades.
Protecting Our People and Communities
Letshego implemented several measures and interventions to prioritise the safety of our colleagues and customers, while also ensuring the continuity of our business operations. These health and safety protocols were aligned with national and international health directives across our 11-market footprint.
Letshego adopted and remains committed to a collaborative approach in managing COVID-19, involving all our communities and economies. The Group has, to date, contributed more than BWP3 million (three million pula) in financial support to regional government relief efforts and will continue to find avenues to support critical efforts until the pandemic has been pushed back.
Resilience and Business Continuity
The Letshego business remained resilient in the face of the COVID-19 outbreak. Stress tests and sensitivity analyses were conducted from the outset of the pandemic to map out potential downside scenarios and their financial impact on our business. We offered support via repayment holidays and other debt relief measures, while enhancing customer access through digital channels.
We ensured that our critical-to-operations processes were always available during this period. All processing systems were reviewed in line with effective ongoing monitoring systems. A robust remote working framework was developed to manage businesses as the world entered into a ‘new normal’ way of interacting and working.
Those economic sectors more severely affected by the pandemic were Travel and Tourism, Manufacturing, Trade and the Education. Our Micro to Small Entrepreneurs (MSE) segment, which comprises around 8% of Letshego’s total loan portfolio, was offered a three-month repayment holiday to support these business owners through this crisis.
Fortunately for Letshego, the authorities governing where we operate supported their employees and minimised retrenchments, which kept Letshego’s Deduction as Source (DAS) segment relatively unscathed. DAS products account for 90% of the Letshego loan portfolio.
Maintaining our supply chain is critical to our operations. Invoking our business continuity plan triggered a realignment of the Group’s supply chain with key suppliers and partners. We also extended Letshego’s internal health and safety protocols to onsite suppliers and contractors.
BOARD AND EXECUTIVE PERFORMANCE
I am delighted to report on a sound performance by Letshego’s Board and leadership teams in our 11 countries of operation. Despite the disruption of COVID-19 and the restructuring of executive roles at head office and in several countries, management kept the ball in play and delivered the goals set for the year.
Letshego’s delivery of profit before tax in excess of P1 billion, supported by satisfactory financial results, is discussed in detail by our Group Chief Executive within the body of this report. I must however praise our whole team for the swift and accurate rollout of Letshego’s digital transformation, which proved crucial to the Group’s resilience and ability to achieve targets in the face of an unrelenting pandemic. Newly appointed executives were thrown into the deep end and emerged with honour and respect. We are satisfied that management, for the most part, performed well against their KPIs for 2020.
In terms of strategy and operations, the Board’s focus during the year centred around Letshego’s digital transformation, the appointment and induction of new executives, and oversight of compliance with ongoing regulatory and fiduciary changes.
I am satisfied that the Letshego Board contains a suitable balance of skills, diversity, and experience, and that our Group Chief Executive and senior executives have succeeded in raising the bar in regional standards, governance, and specialist skills, cementing the foundation to meet our future strategic vision.
STAKEHOLDER RELATIONSHIPS AND SOCIAL SUSTAINABILITY
COVID-19 had the effect of bringing stakeholders together to face the crisis. Our relationships with our stakeholder universe deepened during this time, relationships we intend to deepen into our ‘new normal’ future. Letshego’s Group and country leadership prioritise stakeholder feedback when reviewing risks, challenges, and opportunities.
We also restructured the reporting and accountability relationship between the Group executive and the country leadership teams by realigning responsibilities and executive oversight, particularly in Operations and Risk. These refreshed reporting lines are delivering quicker and more coherent executive control of Group functions at all levels.
In the last year, I am satisfied that Letshego has taken decisive and definitive steps to ensure our business pivots towards long-term shareholder value and delivering tangible and measurable social benefits to our stakeholders. Our deep transformation into an agile and digitally empowered organisation goes hand in hand with our step-change in focus on our communities, social and environmental impact of our commercial activities.
Letshego acknowledges its responsibility and commitment to facilitating inclusive, simple, and appropriate access to financial services so that many more thousands of Africans may too improve their lives, and the lives of future generations.
The launch of our programmatic approach will not only deliver essential commercial benefits, but also stands to boost a measurable social and environmental impact in the long term by introducing ‘green’ solutions across multiple segments.
2021 AND BEYOND
At this point, the full impact and outcomes of the COVID-19 pandemic remain unpredictable. Although our countries of operation appear to have escaped extreme downside effects, ongoing waves of infection, and emerging variants render near-term eradication unlikely. COVID-19 variants not only threaten unvaccinated nations, but possibly even those that have been robust in their vaccine rollouts. Letshego’s focus on building and enhancing our business resilience will enable the Group and its subsidiaries to navigate future challenges.
Now that Letshego has emerged from the first year of COVID-19 having achieved milestone transformations, solid financial results, and renewed purpose, the Board is aligned on our priorities for the current 2021 financial year – Deepening our existing footprint, and supporting our regional business to uphold governance and risk standards, while expanding demonstrable value for our people, customers, stakeholders, and communities.
The Board has reiterated its optimism in the business by declaring a final dividend of 8.3 thebe per share, despite the difficult operating environment.
APPRECIATION
On behalf of the Letshego Group Board, I wish to conclude by expressing how grateful I am for the ongoing commitment of all our stakeholders during this turbulent year. To our senior management and my fellow Board Members, thank you for your unwavering loyalty as evidenced by the many extra hours worked this past year. You have all done us proud, and I am honoured to have been a part of this dynamic team.
To Andrew Okai, who took on the role of Group Chief Executive just ahead of a global pandemic, your tireless efforts over the past year have been an inspiration to us all.
Finally, as always, I would like to thank our valued shareholders for their continued trust and support. We are building a nation, a #LetsGoDigitalNation, that is centred around partnership and collective, sustainable prosperity. We look forward to expanding this movement in the next financial year.
Mr Enos Banda
Group Chairman
4 June 2021
