Letshego Holdings Limited (BSE:LETSHEGO), a Botswana based financial institution involved with micro-lending in Southern and Eastern Africa, has recently announced the acquisition of a 75% stake at Advans Bank Tanzania (ABT) to diversify its clients’ base and tap the growing demand in micro, small and medium-sized enterprises (MSMEs) lending in the country.
The acquisition, which was executed by the subscription of newly-issued shares worth USD 7 million or TZS 15 billion, made Letshego the majority shareholder in ABT with Advans SA and the Netherlands Development Finance Company (FMO) holding minority stakes.
According to ABT, the transaction not only supported the bank to meet the new minimum regulatory core capital for banks in Tanzania of TZS 15 billion raised from TZS 5 billion by the Bank of Tanzania (BOT), but also reinforces the shareholding structure and provide the resources needed to enhance its operation and expand its reach in the country.
Letshego currently serves over 44,000 Tanzanians under its brand Faidika Tanzania, consumer financial services provider with a total of 105 branches and more than 230 commission based sales staff.
With this lasts acquisition the group will now be able to broad its range of products by taking deposits, execute payments, issue business loans, and provide different options of savings solutions.
ABT’s acquisition is a demonstration of Letshego’s commitment to provide and strengthen financially inclusive services to low and middle-income segments in the Tanzanian society, whose development had been constrained by poor lending from the traditional commercial banks and lenders, explained Letshego’s Group Managing Director, Chris Low.
Now with Letshego as a new shareholder, ABT will be able to better tap the growing Tanzania’s financial sector while providing specially adapted financial services to MSMEs, explained Advans SA Executive Director, Claude Falgon.
Tanzania is a country with steady and inclusive growth with a focus on infrastructure development and financial inclusion, reason why ABT’s acquisition comes at the right time to tap this growth and support the country’s agenda for economic development in all segments, Mr. Low added.
In Tanzania, long-term loans signed with the private financial sector have grown from USD 20.56 million in 2007 to USD 654.30 in 2013 at an average rate of 78.02% per annum, above the Sub Saharan regions growth from USD 7,810.40 million to USD 17,093.13 million in the same period but an average annual rate of 13.94% according to the World Bank (WB).
According to a research by the African Development Bank (AfDB) in the East African banking sector, MSMEs account for 37% of these long-term loans signed in Tanzania representing only 30% of the banks’ interest income while in Uganda they represent 62% and in Kenya 42%.
