Letshego Africa Holdings Limited has produced a set of results that, at first glance, appear discouraging. A headline loss of BWP235.5m for 2025 would normally raise questions about strategy and stability. Yet beneath the accounting fog lies a lender that is, by most operational measures, in far better shape than a year ago.
The red ink is largely the result of a once-off, non-cash impairment of BWP570m, triggered by the decision to classify parts of its East and West African portfolio as discontinued under IFRS 5. Strip that out, and the picture changes markedly. Profit from continuing operations surged more than fourfold to BWP284m, suggesting a business that has rediscovered both discipline and direction.
The improvement is most evident in credit quality, long a weak spot for African microlenders. Net impairments fell by 77%, pushing the loan-loss ratio down to a tidy 1%. That reflects tighter underwriting and more effective collections, as well as a conscious retreat from riskier legacy lending. In Botswana, the firm’s home market, the clean-up has been particularly visible: impairments plunged and profitability rose by nearly a quarter, even as the operating environment remained difficult.
Revenue growth, though less spectacular, was steady. Operating income rose by 8%, while non-funded income, fees, insurance and digital services, jumped by 26% to BWP552.8m.
Revenue growth, though less spectacular, was steady. Operating income rose by 8%, while non-funded income, fees, insurance and digital services, jumped by 26% to BWP552.8m. This shift matters. Like many lenders, Letshego is trying to wean itself off pure interest income, which is vulnerable to both regulation and borrower distress. Insurance and digital lending, faster-growing and often higher-margin, are becoming increasingly central to its model.
Funding, too, is evolving. Customer deposits climbed to BWP2.2bn, part of a deliberate pivot towards more stable, locally sourced funding. For a business that once relied heavily on external credit lines, this diversification reduces vulnerability to global liquidity swings.
Geographically, the firm is becoming more selective. Southern Africa, especially Namibia, Botswana and Mozambique, now anchors performance. Mozambique stands out, with profits rising by 56%, driven by stronger deposits and better asset quality. Elsewhere, Letshego is trimming its footprint. The planned exit from parts of East and West Africa is less a retreat than a reallocation of capital to markets where returns are more predictable.
There are hints, too, of a broader repositioning. Over half of its borrowers are now classified as aligned with environmental, social and governance (ESG) criteria, and nearly half of disbursements are directed towards “productive use”, a sign that the firm wants to be seen not merely as a lender of last resort, but as a partner in economic development.
