Letshego Holdings denies default reports, confirms strong financial health

Letshego Africa Holdings has refuted recent reports in the Kenyan media regarding loan defaults in Kenya and Uganda, clarifying that such reports are inaccurate and misleading.

In response to a headline published by Kenya National Media Group on July 5, 2024, stating that “Letshego Botswana defaults on loans to Kenya and Uganda”, Letshego Africa Holdings has categorically stated that it has not defaulted or failed to meet any obligations of its subsidiaries. The financier categorically denied the allegations of default by Letshego Kenya and Uganda and claimed that the claims were false and incorrect.

The clarification follows the publication of the group’s 2023 annual results, which were initially released on 22 March 2024, which disclosed adjustments to the expected credit loss (ECL) methodology, which impacted financial results and required a restatement of figures for 2022. While Letshego Africa Holdings acknowledged that it had breached covenants with certain funders as a result of these adjustments, it stressed that it had proactively engaged with its funders and obtained a formal “no action letter” in relation to these breaches of covenants.

Despite these challenges, Letshego Africa Holdings assured stakeholders that it is financially sound, highlighting its strong liquidity and capitalisation. The Group expressed its gratitude to stakeholders, including funders and investors, for their continued support in advancing its pan-African inclusive finance strategy.

Letshego’s revenue for 2023 increased by 9% to P3.4 billion, however, this was offset by a 23% increase in interest expenses, which totaled P1.7 billion. Taking into account other income, the group reported a net operating income of P1.8 billion, down 14% from the previous period. Operating expenses soared 20% to P1.7 billion, and pre-tax profit of P121 million was a sharp drop of 82% compared to the P684 million pre-tax profit reported in December 2022.

After deducting taxes, Letshego posted a loss of P149 million, a sharp contrast to a P352 million profit in the same period last year. The 2023 financial report marks the first time the Botswana-based group has reported a loss in more than a decade.