Letshego Financial Services Limited

Understanding Letshego Financial Services Limited in Lesotho

Letshego Financial Services Limited, often referred to as Letshego Lesotho, has established itself as a key player in the microfinance sector within the Mountain Kingdom. Incorporated in Lesotho under the Companies Act 2011 and licensed as a Credit-Only Microfinance institution by the Financial Institutions Act 2012, Letshego Lesotho began its operations in September 2012. It operates as a vital subsidiary, with ninety-five percent ownership by Letshego Holdings Limited, a prominent entity listed on the Botswana Stock Exchange, and five percent held by local shareholders. This structure provides robust regional backing and local integration, fostering trust among its growing customer base.

The company's core business model focuses on providing unsecured loans to a broad spectrum of the Basotho population. Their target market includes low- to middle-income earners, salaried individuals from both public and private sectors, and micro and small enterprises (SMEs). This inclusive approach aims to support financial inclusion and economic development across the nation. Under the leadership of key executives such as Chief Executive Officer Selloane Tsike, Letshego Lesotho strives to deliver accessible and relevant financial solutions to its clientele. With a commitment to reaching customers across all ten districts, both through physical branches and advanced digital channels, Letshego is a significant force in Lesotho's financial landscape.

Tailored Loan Products and Services

Letshego Financial Services Limited offers a diverse portfolio of loan products designed to meet various financial needs of individuals and businesses in Lesotho. Understanding these offerings is crucial for potential borrowers.

Personal Salary-Based Loans (LetsBorrow)

These are the flagship offerings, primarily targeting salaried individuals. The "LetsBorrow" product provides unsecured loans with flexible terms:

• Minimum Amount: Clients can borrow as little as M 500.
• Maximum Amount: The facility extends up to M 700 000, which is approximately USD 38 900, offering substantial financial support for larger needs.
• Loan Term: Repayment periods range from a short one month up to an extended ninety-six months, allowing borrowers to choose terms that suit their income flow.
• Repayment: Loans are unsecured, meaning no physical collateral is required beyond a salary assignment. Repayment is conveniently managed through direct salary deductions or a standing order, ensuring consistent and timely payments.

Business and SME Loans

Recognizing the importance of supporting local entrepreneurship, Letshego offers specialized loans for small businesses and SMEs:

• Invoice/Purchase Order Financing: This product helps businesses with immediate liquidity by financing their confirmed receivables. Borrowers can access up to M 200 000 (approximately USD 11 100).
• Tenor: The repayment period for invoice financing is typically short, lasting up to four months.
• Exclusions: It is important to note that this financing excludes government invoices that are expected to be paid beyond four months.
• Collateral: These loans are unsecured, with the approved receivables themselves acting as the underlying support for the facility.

Loan Consolidation

Letshego provides a valuable service for individuals looking to simplify their finances through loan consolidation. This allows borrowers to merge multiple existing loans from different providers into a single facility with Letshego. The amount limits for consolidation loans are the same as those for personal salary-based loans, offering substantial relief and potentially more manageable repayments. The company often runs specific campaigns for loan consolidation, with one such market campaign ongoing through December 2024, highlighting its commitment to helping clients manage their debt more effectively.

Interest Rates, Fees, and Terms

While Letshego markets its interest rates as competitive, specific annual percentage rates (APRs) and exact percentages are not publicly disclosed. They are noted to offer reduced rates for consolidation loans, which can be a significant advantage. Prospective borrowers should be aware of the following regarding fees:

• Origination/Processing Fees: These are not specified publicly.
• Late Payment Fees: Charged per installment, in line with the terms and conditions typically associated with mobile money services like M-PESA, if that is the chosen repayment method.

For a complete understanding of all charges, including any origination fees, it is strongly advised that potential borrowers request the full fee schedule directly from Letshego at their branches or through customer care.

Navigating the Application Process and Digital Access

Letshego Financial Services has embraced both traditional and modern approaches to make its services accessible to a wide audience across Lesotho. Understanding how to apply and what is required is essential for a smooth experience.

Application Channels

Letshego offers multiple convenient ways to apply for a loan:

• Digital Channels: For tech-savvy customers, applications can be initiated through web forms on their official website or via WhatsApp. They also leverage USSD technology, accessible through the "LetsGo Digital Mall," which is particularly useful for those in rural areas with limited internet access.
• Mobile Application: The "LetsGo Digital Mall" is also available as a mobile application for both iOS and Android devices. This code-light interface allows users to apply for loans, view their account details, and check repayment schedules. While specific user ratings are not publicly available, the app aims to provide a streamlined digital experience.
• Physical Branches: For those who prefer face-to-face interaction or require assistance, Letshego maintains a network of five physical branches located in key areas: Maseru, Butha-Buthe, Leribe, Mafeteng, and Mohale’s Hoek. These branches ensure that customers in various regions can access services directly.

Application Requirements and Process

To ensure responsible lending, Letshego has a clear set of requirements and an underwriting process:

• Know Your Customer (KYC) and Onboarding: Applicants must provide valid identification for verification. Proof of income, typically in the form of payslips or bank statements, is also required.
• Credit Bureau Check: In compliance with the Credit Reporting Act 2011, Letshego conducts a credit report check via a licensed bureau. This helps assess an applicant's creditworthiness and financial history.
• Underwriting and Credit Scoring: Letshego utilizes internal credit-risk models that incorporate various data points, including salary history, credit bureau scores, and behavioural data. For smaller loans, decisions may be automated through the LetsGo digital platform, while larger loan applications typically undergo a manual review process.

Disbursement and Collections

Once approved, funds can be disbursed through various methods for customer convenience:

• Bank Transfer: Funds can be directly transferred to the borrower's salary or personal bank account.
• Mobile Money: Disbursement via M-PESA mobile money wallet is also an option, providing quick access to funds.
• Cash Pay-out: Borrowers have the option to receive cash directly at any Letshego branch.

For collections, the primary method is through salary deduction agreements. Additionally, Letshego employs SMS reminders and call centre follow-ups to ensure timely repayments. In cases of default, legal recovery procedures are initiated in accordance with the Microfinance Regulations 2014.

Regulatory Oversight, Market Standing, and Borrower Advice

Understanding Letshego's regulatory environment and market position, coupled with practical advice, can empower potential borrowers to make sound financial decisions.

Regulatory Status and Compliance

Letshego Financial Services Limited operates under stringent regulatory oversight, ensuring consumer protection and sound financial practices. It holds a credit-only microfinance license under the Financial Institutions Act 2012 and adheres to the Microfinance Regulations 2014. The Central Bank of Lesotho acts as its primary regulator, ensuring compliance with national financial laws.

Letshego maintains robust internal audit processes and anti-money laundering controls, conducting regular reporting to the authorities. There are no publicly recorded regulatory actions against the institution, indicating a strong commitment to compliance. For consumer protection, Letshego provides transparent loan terms, ensures access to the Credit Information Reference Bureau (CIRB), and participates in complaint resolution mechanisms via the National Financial Services Ombudsman.

Customer Reviews and Market Position

Letshego is recognized as one of the top three microfinance lenders in Lesotho, holding an estimated thirty percent market share. Its key competitors include Lesotho Post Bank, various local Savings and Credit Cooperatives (SACCOs), and Vodacom Financial Services, particularly with its M-PESA offerings.

Letshego differentiates itself through its pan-African backing, extensive digital channels, and proactive loan consolidation campaigns. While specific customer reviews indicate mixed feedback, praise often centers on the convenience of its digital platforms. Some unverified complaints have touched upon occasional processing delays or customer service wait times. However, Letshego actively addresses service quality through a centralized call centre and annual audits of its in-branch service standards. The company also highlights success stories, such as campaign winners and positive impacts from debt consolidation, showcasing its commitment to customer satisfaction.

Comparison with Competitors in Lesotho

Compared to traditional banks like Lesotho Post Bank, Letshego offers more agile, unsecured lending, often with quicker processing times, especially for salary-based loans. Unlike local SACCOs, which typically require membership and savings history, Letshego focuses on broader access to credit for salaried individuals and SMEs. Its digital channels, particularly the "LetsGo Digital Mall" and USSD access, give it an edge over some competitors in reaching rural populations and providing convenience. Its partnership with M-PESA also integrates it well into the mobile money ecosystem, a significant factor in Lesotho's financial landscape.

Practical Advice for Potential Borrowers

For anyone considering a loan from Letshego Financial Services Limited, here is some essential advice:

• Request Full Disclosure: Always ask for the complete Product Disclosure Statement. As interest rates and some fees are not publicly detailed, this document is crucial for understanding the exact costs of your loan, including interest rates, processing fees, and any other charges.
• Understand Terms and Conditions: Before signing any agreement, thoroughly read and understand all terms, especially regarding repayment schedules, late payment penalties, and the process for early repayment if applicable. Be aware of the M-PESA terms and conditions for late fees if you choose that method.
• Assess Your Repayment Capacity: Realistically evaluate your ability to repay the loan comfortably. While salary deductions are convenient, ensure the installment amount leaves you with enough disposable income for your living expenses.
• Utilize Digital Tools: Take advantage of Letshego's digital channels, including the "LetsGo Digital Mall" app and USSD service, for convenience in application and managing your loan account.
• Consider Loan Consolidation Carefully: If you have multiple debts, the loan consolidation product can simplify your finances. However, ensure the new consolidated loan's terms, including the interest rate and total repayment amount, are genuinely more favorable than your existing debts.
• Check Your Credit Report: Before applying, it is wise to check your own credit report through a licensed Credit Bureau. This gives you an idea of your creditworthiness and helps identify any discrepancies.
• Contact Customer Service: Do not hesitate to contact Letshego's customer care or visit a branch for any questions or clarifications before, during, or after your loan application.

Letshego Financial Services Limited offers accessible and tailored financial solutions for many Basotho. By being informed and proactive, potential borrowers can leverage these services responsibly to meet their financial goals.