Letshego Holdings, a Botswana-based transnational financial services business partly owned by Malawian banking billionaire Hitesh Anadkat, has defaulted on a loan of Ksh3.9 billion ($30.5 million) for its Kenya and Uganda subsidiaries. This large default represents a problematic era for the lender in the area.
In addition to the defaults, Letshego Holdings has cut 142 employment in the impacted units, just 15 months after warning of a possible exit from the region owing to deteriorating economic conditions. The lender’s financial woes are exacerbated by a Ksh1.39 billion ($10.82 million) deficit recorded at the end of its fiscal year 2023, raising concerns about its capacity to continue operating.
The Botswana-based lender’s total debt is Ksh27.15 billion ($210.95 million), including loans defaulted in Kenya and Uganda. The loan covenant breaches total Ksh3.26 billion ($25.37 million) in Kenya and Ksh658.77 million ($5.12 million) in Uganda. These defaults have prompted questions regarding Letshego’s liquidity and funding stream.
Despite these problems, Letshego Holdings is working to improve the situation. The lender is in contact with funders and is hopeful of gaining some relief. However, the lender’s annual report for 2023 warns of a projected cash deficit of almost BWP3.5 billion if it fails to secure fresh finance and roll forward current facilities.
As part of a strategic restructuring, Letshego cut its personnel in Kenya, Tanzania, and Uganda by 43, 69, and 30 employees, respectively, while modestly expanding workers in Rwanda. Last year, the lender hinted at potential closures in Kenya, Rwanda, and Tanzania due to poor economic conditions.
The financial difficulties and reorganization initiatives underline Letshego’s struggles in navigating a challenging economic context. The corporation has designated these territories, together with Ghana and Nigeria, as ‘turnaround markets’ and named Fergus Ferguson as regional CEO to manage their recovery.
Malawian banking magnate Hitesh Anadkat owns 2.9 percent of Letshego Holdings, making him the company’s largest private stakeholder.
In 2022, he earned BWP5.71 million ($498,000) in dividends from his stake in the Botswana-based firm, which operates in ten Sub-Saharan African nations.
In addition to Letshego Holdings, Anadkat has holdings in Telekom Networks Malawi, Malawi’s first telecommunications provider, and FMB Capital Holdings Plc, the country’s first bank.