IMPACT REPORT

1 Impact Report CONTENTS

ABOUT THIS REPORT 2

LETTER FROM OUR CHAIRPERSON 4

OUR IMPACT FRAMEWORK 7 Unpacking our Impact Model 9 Our Impact Model 10

OUR IMPACT 11 Increasing financing for sustainable agriculture 11 Collaborating to support healthcare delivery 13 Expanding access and use of financial solutions to help our customers manage the costs of education 14 Increasing gender equality and women empowerment 15 Promoting economic growth and employment and decent work for all 16 Strengthening domestic resource mobilisation 16 Ensuring access to adequate, safe and affordable housing 19

GOING FORWARD 21

2 1 Impact Report About this Report

We are pleased to present our first Impact Report. The focus of While directed primarily at shareholders and providers of this Report is our overall approach to sustainable development, capital, this Report should prove of interest to all our other the outcomes of our activities, and the difference our activities stakeholders, including our strategic partners, governments make in the lives of our stakeholders. We also aim to improve and regulators, as well as the communities in which we operate. the quality of information available to our stakeholders, by communicating the factors that affect our ability to create impact. This Report is not externally assured; however, the Letshego Lastly, by reporting on our impact, we hope to encourage other Board is responsible for ensuring corporate accountability and financial institutions to do the same. This is our first step in our the management of associated risks, combined assurance and impact reporting journey, but a continuation of our commitment corporate reporting. This Report is approved by the Letshego to transparent disclosure, stakeholder engagement, and our Board of Directors. goal to be a market leader in inclusive finance on the African Continent. We welcome written comments and feedback from our stakeholders that relate to both this Report and other general A combined approach was used to gather information required matters. Enquiries regarding the Report should be directed to for this Report. Firstly, quantitative ESG performance metrics Lauren Callie, Head of Group Corporate Affairs. “The focus of this Report is our overall approach to sustainable were collated. Qualitative information on ESG management and development, the outcomes of our activities, and the difference our operational experience was also obtained through a review of key documentation (such as ESG policies and management activities make in the lives of our stakeholders.” systems) and interviews with Letshego employees.

2 3 Impact Report | 2017 Letter from our Chairperson

It gives me great pleasure to introduce Letshego’s first Impact the other financial institutions working to achieve the SDGs This Report sets out to detail our impact performance, outlining Report in the year we celebrate our 21st anniversary of and believe our financial inclusion agenda is well matched with the measures taken to achieve our ethical responsibilities and committed service to financial inclusion in Africa. With a proudly these goals. demonstrates our continued commitment to transparency and Botswana heritage and a dedicated and growing regional team, meaningful disclosure to stakeholders. Also, this Report has we have enjoyed consistent growth since our establishment in Our approach to sustainable development places emphasis been developed to share some of the milestones that embody Gaborone in 1998. Our solid foundation, originally established on compliance with international standards such as those our commitment to sustainability, but also highlights where we in Botswana, is the cornerstone of Letshego’s growth story. outlined by the International Finance Corporation (IFC). We still have work to do. We are committed to improving aspects of A growth story which now improves more than 500,000 lives actively and directly support the integration of sustainability our performance where we can and must do better. across 11 Sub-Saharan Markets. consideration in our day-to-day operations. We have achieved this by ensuring strong partnerships and Board representation In reviewing this Report, I am heartened at the progress and Over time, Letshego’s competitive edge – its DNA – has been its to drive sustainable performance. contributions we have made to the Sustainable Development ability to deliver simple, appropriate and accessible solutions Goals, which we consider essential to Letshego’s continued to those who are typically excluded or under-served financially, Sustainability is embedded within all four pillars of our strategy success. We look forward to continuing our journey delivering in a responsive, inclusive and ethical manner. Letshego’s – Growing the Franchise, Enhancing Customer Experience, sustainable investments in Africa. Sustainability is embedded promise remains committed, clear and consistent – and that Embedding Future Capability and central to all, Embracing is to Improve Life as well as promote growth and diversity. We Financial Inclusion. Each pillar requires us to improve our within all four pillars of continue to invest in expanding our African footprint through sustainability by delivering consistent long-term growth and our strategy – Growing our people, our technology and the digital delivery platforms supporting the sustainability of our customers. We are growing we create. a franchise, which requires a deepened understanding of the the Franchise, Enhancing markets in which we operate, enhancing customer engagement The United Nations Conference on Trade and Development to better understand the needs of those markets, and improving E. N. Banda Customer Experience, (UNCTAD) estimates that achieving the Sustainable the customer experience, through the roll out of digital Chairperson Embedding Future Capability Development Goals (SDGs) by 2030 will require $3.9 trillion to platforms, and having increased our focus on measuring our be invested in developing countries each year, with an annual social performance. and central to all, Embracing investment gap existing of $2.5 trillion. We are pleased to join Financial Inclusion.

4 5 Impact Report Embracing Financial Inclusion

Embedding Future Capability

Growing the Franchise

Enhancing Customer Experience

Our approach to sustainable development places emphasis on compliance with international standards such as those outlined by the International Finance Corporation (IFC). 6 7 Impact Report PORTFOLIO SEGMENTS

Portfolio Mix as at December 2018

6% 10% 7% 9% Letshego at a glance 12% 14% 14% 12% 9% 16% 7% 12% 10% 18% 22% 29% 28% 18%

41% 6% PERCENTAGE 52% 58% 37% 29%

15% 28% 54% 18% 69% 23% 20% 12% 54% 8% 8% 72% 8% 81% 91% 9% 6% Botswana eSwatini Ghana Kenya Lesotho Mozambique Namibia Nigeria Tanzania Uganda Group

SUBSIDIARY

Agriculture Business Education Health Care Housing Other

LETSHEGO HOLDINGS LIMITED - OPERATIONS

100% 100% 95% 98% 78% 100% 100% 85% 100% 100% 85% 100%

LETSHEGO LETSHEGO LETSHEGO LETSHEGO LETSHEGO AFB LETSHEGO LETSHEGO LETSHEGO LETSHEGO LETSHEGO LETSHEGO FINANCIAL KENYA FINANCIAL FINANCIAL HOLDINGS GHANA SOUTH FINANCIAL TANZANIA BANK UGANDA MAURITIUS SERVICES LTD SERVICES SERVICES (NAMIBIA) PLC AFRICA SERVICES LIMITED TANZANIA LIMITED LIMITED (PTY) LTD LESOTHO BANCO LTD (PTY) LTD ESWATINI T/A FAIDIKA LIMITED (FORMERLY BOTSWANA LTD LETSHEGO (PTY) LTD AMDC SA LIMITED)

100% 100% 100% 100% 100% 100%

LETSHEGO MICRO LETSHEGO FINANCIAL LETSHEGO KENYA LETSHEGO BANK LETSHEGO FINANCIAL SERVICES SERVICES ESWATINI LETSHEGO BANK INSURANCE LTD NAMIBIA LTD MFB NIGERIA LTD NAMIBIA (PTY) LTD (PTY) LTD RWANDA LTD

Letshego Holdings Limited Group Structure as at 31 December 2018

SOLUTIONS

Borrowing solutions Savings solutions Payment solutions

8 9 Impact Report patterns, manage risks, and cope with shocks like emergencies on spending on food. A study in Kenya found that following the and large unexpected expenses. Financial inclusion makes it opening of bank accounts for women, daily food expenditures easier for people to manage financial emergencies (such as job and private expenditures (e.g. meals outside the home, alcohol, losses or crop failures) that would otherwise push families into cigarettes, and entertainment expenses) of female vendors (deeper) poverty.3 who gained access to an account increased by 13% and 38% respectively.8 Lastly, a study in Kenya found that giving people Increasing access to agriculture finance can improve agricultural a safe place to store money increased health spending by 66%.9 productivity, which in turn, enables better remuneration, and raises living conditions. These investments can also help to Our impact framework seeks to articulate our ability to achieve reduce pressure on scarce natural resources. the following three objectives:

When compared to people who live in urban areas, those living • Provide an understanding of the challenges relating to in rural areas are underserved and reflect lower socio-economic poverty, provision of education and health care, reduction development on average. They also tend to have higher poverty of hunger and impacts on the environment, as faced by rates, lower levels of employment, lower levels of education, our customers by understanding the situational context and more limited access to a myriad of opportunities for or baseline conditions before we begin operations in a economic improvement4. Studies have shown that expansion particular geography; into underserved markets can increase the chances of having a • Inform our solution offerings, define the targets, objectives bank account and securing a loan by 4 and 1 percentage points and indicators that we track, monitor and measure, based respectively. Letshego has developed innovative financial on these insights gained; and solutions, to empower rural customers to start and/or improve • Finally, provide a guideline for evaluations of changes the financial performance of their businesses, with the ultimate that occurred in the baseline conditions, as a result of our aim of improving their income levels. solution offerings, and how these results addressed the challenges previously identified. An increase in new businesses, run by low income entrepreneurs is associated with improvements in access to financial services5. Published data from the SDG center for Africa and Sustainable Some studies have shown that credit availability can influence Development Solutions Network, indicates the level of progress the profitability of entrepreneurship by as much as 8.5%. made in achieving the respective SDGs per African country. For the countries where Letshego operates, Ghana has achieved the The provision of finance for agricultural purposes can have highest score of 62, with Nigeria only achieving 48. The graph positive effects on production, with some studies reflecting on page 12 (2018 Africa SDG index ranking), shows the progress increases in output of up to 8% and improvement in earnings made towards meeting these SDGs per country in Africa. Yellow (daily wages) by 9–16%. In addition, food consumption also bars highlight the countries where Letshego operates. Our impact framework increased, with households being 11% less likely to run out of food6.

Access to financial services can have a positive effect on social outcomes such as education, with some reports indicating an When we speak of measuring our impact, we are speaking Goals relating to society (SDG 2, SDG 3, SDG 4, and SDG 11), increase of up to 20% on education spend in households that of providing evidence that our activities are providing real are aligned to our financial inclusion mandate, with our solution have opened free bank accounts7. There are also positive effects and tangible benefits in the communities we operate in. Our offerings targeted at agriculture, education, health care, and impact measurement activities feed into our learnings and provision of affordable housing. Economic growth goals (SDG organisational practices, enhancing our ability to identify the 8, SDG 9, and SDG 10) further align to our Micro and Small opportunities, constraints, impacts and social risks associated Enterprise (MSE) solution offerings, with goals relating to with our policies, product design, implementation and gender (SDG 5) and partnerships (SDG 17) forming part and management. In addition, it assists us in framing our impact parcel of our strategy to further financial inclusion. discussion as they relate to the Sustainable Development Goals (SDGs) with our stakeholders. According to the African Development Bank1, improving access to financial services will mobilise greater household We consider ourselves to be in a good position to make a positive savings, marshal capital for investment, expand the class of contribution to a number of key SDGs. Financial inclusion can entrepreneurs, and enable more people to invest in themselves contribute to reduction in poverty and inequality, as well as and their families. Also, it has been noted that bank account increases in economic growth and employment. When financial ownership serves as an entry point into the formal financial 3https://navigatingimpact.thegiin.org/strategy/fi/improving-access-to-and-use-of-responsible-financial-services-for-historically-underserved-popula- solutions are targeted at social outcomes, impacts can be seen system and enables the poor to build up a credit history which tions/ in areas of increased access to education and health care, can facilitate future access to credit for activities such as 4https://navigatingimpact.thegiin.org/strategy/fi/improving-rural-economies-through-access-to-financial-inclusion/ reduction in hunger and the improvement of environment investment and education.2 Also, people included in the financial 5https://navigatingimpact.thegiin.org/strategy/fi/improving-rural-economies-through-access-to-financial-inclusion/ conditions. These outcomes will be tracked against various system are better able to improve their economic situations 6“The Impact of Food and Cash Loans on Smallholder Farmers in Zambia.” The Abdul Latif Jameel Poverty Action Lab. Accessed July 24, 2018. https:// SDGs. by investing in their health and education. They can make www.povertyactionlab.org/evaluation/impact-food-and-cash-loans-smallholder-farmers-zambia. short- and long-term payments, smooth out their consumption 7https://navigatingimpact.thegiin.org/strategy/fi/improving-access-to-and-use-of-responsible-financial-services-for-historically-underserved-popula- tions/ 1Financial inclusion in Africa, Triki, T. and Faye, I., AfDB, 2013 8Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya, Dupas, P and Robinson, J, American Economic 2The effect of financial inclusion on welfare in sub-Saharan Africa: Evidence from disaggregated data, Tita, A and Aziakpono, M, Economic Research Journal: Applied Economics Vol. 5, No. 1, January 2013 Southern Africa (ERSA), 2017 9Constraints to Saving for Health Expenditures in Kenya, Dupas, P and Robinson, J, Innovations for Poverty Action (IPA)

10 11 Impact Report Our impact framework Our impact framework

2018 AFRICA SDG INDEX RANKING UNPACKING OUR IMPACT MODEL

The Impact Model (shown on the next page) is to be read from left to right to facilitate the evaluation of Letshego’s activities on impact outcomes on a community level, namely: Morocco 66,1

Tunisia 65,9 • From the left, columns one and two in the table summarise the various forms of capital we contribute to developing our solution Mauritius 64,0 offerings. These forms of capital are focused on our inclusive finance agenda; Algeria 64,0 • Column three summarises the standards and guidelines used to inform how we undertake these activities; Cabo Verde 63,0 • Column four summarises the desired outputs on Group level due to activities taking place at each subsidiary. The objective is Ghana 62,0 through measurement of these outputs Letshego aims to drive positive impact on a community level as defined through linkages Egypt 60,9 made to specific SDGs; Gabon 59,0 • Column five summarises the desired outcomes on subsidiary level, which clearly unpack what has to be measured per output South Africa 59,0 required by the Group. It is envisaged that through measuring these outcomes, clear linkages between the SDGs being targeted São Tomé and Príncipe 59,0 will be established; and Rwanda 57,9 • The specific SDGs targeted by Letshego are summarised in Column six. Botswana 57,0

Uganda 56,8

Senegal 56,4

Côte d’Ivoire 56,3

Kenya 56,2

Namibia 56,1

Zimbabwe 55,0

Tanzania 54,7

Cameroon 53,3

Zambia 52,8

Malawi 52,7

Ethiopia 51,9

Swaziland 51,7

Burkina Faso 51,5

Mali 51,2

Mauritania 51,2

Togo 51,2

Mozambique 51,1

Lesotho 51,0

Benin 50,9

Burundi 50,9

Guinea 50,3

Gambia 50,2

Sierra Leone 50,1

Comoros 49,0

Congo 48,6

Niger 48,4

Nigeria 48,0

Djibouti 47,9

Angola 47,6

Madagascar 46,7

Liberia 46,4

Eritrea 45,0

Sudan 44,8

Guinea-Bissau 43,0

Democratic Republic of Congo 42,8

Equatorial Guinea 41,6

Chad 40,5

Somalia 36,2

Central African Republic 35,8

0 10 20 30 40 50 60 70 12 13 2018 AFRICA SDG INDEX RANKING Letshego: Countries of operation Impact Report Our impact framework

OUR IMPACT MODEL

HOW WE MEASURE OUR IMPACT

Guidelines Outputs Impacts - OUR INPUTS Outcome Indicators and (Measured at Group Contribution (Measured at Subsidiary level) Standards level) to SDGs

Financial Capital • Shift in gender Increase agricultural productivity • Training Spend profile of • Number of customers by gender, 2018 BWP 4.91m customers and and value of loan. staff • Per customer, type of agricultural Human Capital • Improved financial production, and size of yield year • Staff comple- performance on year (for repeat customers), ment – 1,882 of customer and number of staff employed. • >1,000 Training businesses • Increase in income of small-scale Interventions • Increased food producers year on year (for disposable repeat customers). Manufactured income amongst Capital customers Increasing access to social services • Access Points • Contribution to a (health, education, housing) – 315 countries GDP • Number and value of loans (health • Contribution to care, education, housing). Intellectual Capital Food Security • Split of loans by gender (health • LetsGo Account • Contribution care, education, housing). • Deposit Taking to additional • Increase in number of learners • Borrowing associated completing pre-primary, primary, • Blue Box Initia- (customer) secondary and tertiary education tive economic (slit by gender). • Mobilisation activities • Use of loan in the home. Teams • Average household expenditure.

Social Capital Ensuring women’s participation and

• LetsConnect THEMES INVESTMENT equal opportunities portal • Increase in proportion of women • Active Stake- in management. holder Engage- • Increase in proportion of women ment at Board-level. • Improved Cus- • Increase in proportion of women tomer Protec- in the organisation. tion Principles Communities Underserved To Of Financial Services Provision • Increase in female customer base. Imbedded Achieving higher levels of economic productivity & employment • Increase in average earnings of employees and customers. • Increase in number of access points.

Strengthening partnerships for sustainable development • Increase in taxes paid to governments. • Number of partnerships that support the achievement of the Sustainable Development Goals. 14 15 Impact Report | 2017 Our impact

INCREASING FINANCING FOR SUSTAINABLE AGRICULTURE IMPACT METRIX DEFINED OUR OUTCOMES OUR ESTIMATED IMPACTS Investing in the agricultural sector can address not only hunger and malnutrition • Access to loans in farming households can increase Letshego has increased its Total estimated jobs indirectly linked to loan provision have grown from 2 582 in 2017 to but also other challenges including poverty, production by around 8%.10 loan funding to agribusiness 3 949 in 2018. This further equates to BWP 5.98m in additional indirect economic spin-offs health, water and energy use, climate • Evidence from Ethiopia has shown that US$ 1 of customers significantly since associated with these agricultural businesses. change and unsustainable production and output generated in agriculture stimulated a further beginning to focus on the consumption. During 2018, we disbursed US$ 1.23 in economic activity in other parts of the agriculture sector three years Loans issued to the Agricultural Sector could have resulted in an estimated a 7 600 ton loans to the agricultural sector to the value economy.11 ago. Our customer numbers increase in production during 2017 and a 8 300 ton increase in 2018 respectively. of BWP 26m. This financial injection into the • An IFC study has shown that the impact on have increased to over 1 500. sector should have resulted in increased employment of US$ 1 million invested in agriculture is In Uganda, comparisons can be made year on year to the total tons produced by the customer yields for farmers, increased indirect spin-off 1,566 jobs.12 Typical use of funds which base, this comparison indicates that Letshego has facilitated an estimated ninety-two economic activities and associated jobs. are tracked include, purchase thousand tons, and one hundred and two thousand tons of food import substitution based on of raw material inputs, the support provided to the Agricultural sector during 2016 and 2017 respectively. improvement of infrastructure such as irrigation systems, purchase of land and implementation of business processes.

Letshego Agri-business Increase in Economic Activity Estimated Improvement Customers and Jobs in Yield - Uganda

2 000 35 20 000 200 30 16 000 1 500 25 150 102 410 20 12 000 92 1 000 100 15 8 000 10 500 50 85 92 181 4 000 5 1168 32 601 17 21 26 BWP m NUMBER OF JOBS THOUSAND TONNES NUMBER OF AGRI-BUSINESS CUSTOMERS NUMBER OF AGRI-BUSINESS 0 0 0 0 2017 2018 2017 2018 2016 2017

Number of Agri-Loans Issued by Total output of agri-business Letshego (BWP m) Letshego agri-business customers (Men) customers Degree of Additional Spinoff Estimated improvement Number of in output of Letshego agri-business Economic activity Generated agri-business customers (Women) (BWP m) customers

Number of Jobs Linked to Loan Value (Jobs)

16 17 Impact Report Our impact

COLLABORATING TO SUPPORT HEALTHCARE DELIVERY IMPACT METRIX DEFINED OUR OUTCOMES OUR ESTIMATED IMPACTS Good health plays a critical role in contributing to quality of life, well-being • The estimated Return on Investment (ROI) to society The Letshego health care funding program has been tailored to A return on investment for the health spend provided by and social participation. Also, it contributes of preventative healthcare programs is between focus on the reduction of Non-Communicable Diseases (NCD), Letshego, is estimated to result in a total of BWP 2m to BWP significantly to economic growth, employment US$ 0.26 and US$ 2.12.13 in Botswana, Kenya, Lesotho, Mozambique, Namibia, Rwanda 16m being release into the participating countries. This and reducing income inequality. According to • A WHO 2018 Report cited that for every US$ 1 and Uganda. This program has been running for 3 years and has contributed to additional stimulus in the economies of the Global Strategy for Women’s, Children’s, invested in scaling up interventions to address NCDs has focussed on strengthening management capacity to the Botswana, Kenya, Lesotho, Mozambique, Namibia, Rwanda and and Adolescent’s Health (2016-2030), 70% of in low- and lower-middle-income countries, there will provision of systems to care for those with these diseases. Uganda where these programs have been focused. Non Communicable Disease (NCD) related be a return to society of at least US$ 7 in increased This program will continue for an additional 2 years, before it adult deaths are linked to risk factors that employment, productivity and longer life.14 is taken under review for further investment by the Group. Direct increased employment productivity and the contribution begin during adolescence. By focusing on to a longer life in these regions have also jointly added an prevention of non-communicable diseases, additional BWP 53m into the economy of these countries. we contribute to creating safer populations by reducing susceptibility and improving resilience to infectious disease outbreaks. Also, we assist in reducing the economic burden of illness and death. Number of People Served (2015-2018) ROI MINIMUM 100 000 BENCHMARK (BWP m)

80 000

Strengthening The Quality Of Clinic 60 000 Management In Primary Care Health Centres 1 956 633

40 000 Improving Standardised NCD Care Through Guidelines and Training

15 000 15 000 Providing A Whole System For NCD 20 000 Care ROI MAXIMUM Linking NCD Care to Village and 100 000 100 000 BENCHMARK (BWP m)

NUMBER OF PEOPLE 0 Loans Savings Groups 15 954 085

Funding for Healthcare Programme (BWP m) (2015-2018)

8

7

6 Increased return to 5 Strengthening The Quality Of Clinic Management In Primary Care Health Society through Centres 4 Increased Improving Standardised NCD Care 3 Through Guidelines and Training Employment Productivity and 2 Providing A Whole System For NCD Care Longer Life BWP 52 678 581 1 0,63 0,65 Linking NCD Care to Village and 7,53 7,53

BWP m 0 Loans Savings Groups

18 19 Impact Report Our impact

EXPANDING ACCESS AND USE OF FINANCIAL SOLUTIONS TO HELP OUR CUSTOMERS MANAGE THE COSTS OF EDUCATION IMPACT METRIX DEFINED OUR OUTCOMES OUR ESTIMATED IMPACTS • ROI to society from US$ 1 spent ensuring secondary Letshego has increased its loan funding Return on investment to society calculated focusses on those who received Education is a fundamental human right school completion is US$ 4.11 for education. Our customer numbers have Secondary Education through the use of the loans disbursed. In 2018 27% and is indispensable for the achievement • Average Gross National Income across Letshego increased to over 900. On average 27% of of all loans disbursed were used for this purpose. The return on investment of sustainable development. Investment countries of operation is BWP 21 851. our customers make use of our loans for associated with these loans increased from BWP 65.5m in 2017 to BWP 89.6m in in education has positive impacts related • Impact of 1yr of tertiary education on income is an supporting secondary school education, 2018. to income, economic growth, poverty increase of 20.2%.16 this equates to approximately 261 students reduction. Also, educational investment • Impact of 1yr of secondary education on income is an supported. Collective increased earning potential for those who used the funds for a supports developmental outcomes such as increase of 17.7%.17 secondary education in 2018 are estimated to be over BWP 1m, those who used health, fertility, women’s empowerment, the funding for a tertiary education are estimated to have collectively increased risk management, individual and community their earning potential to BWP 3.1m, this equates to an additional BWP 4 414 per resilience, civic engagement and increased person on average per annum. tolerance.

Number of Education Return on Investment to Society Customers by Gender Based on Loans Provided for Secondary Education (BWP m) 600 100 The improved levels of

500 80 education among our

400 customers and their 60 300 dependents are seen 558

40 89,6 200 as a way of improving 229 65,52 20 100 the future financial 409 22,4 81 16,38 BWP m NUMBER OF CUSTOMERS 0 0 positions of families 2017 2018 2017 2018 where these funds are Male ROI

Female Loans Disbursed for deployed. Secondary Education

Value of Loans Secondary Education

BWP 3 868 per 261 annum Increase x Students = BWP 1 009 798 2017 BWP 22.4m in Earnings in 2018

Tertiary Education

BWP 16.38m 2018 BWP 4 414 per 706 annum Increase x Students = BWP 3 115 815 in Earnings in 2018

20 21 Impact Report Our impact

INCREASING GENDER EQUALITY AND WOMEN EMPOWERMENT IMPACT METRIX DEFINED OUR OUTCOMES OUR ESTIMATED IMPACTS Gender inequality is costing sub-Saharan Africa on average US$ 95 billion a year, • According to MSCI, strong female leadership Letshego has increased female representation, both in their Letshego Group Holding is a listed company, and their ability peaking at US$ 105 billion in 2014– or six generates a ROE of 10.1% per annum vs 7.4% with customer base and operations. Female customers now to provide value to their shareholders is dependent on them percent of the region’s GDP. By reducing those without strong leadership.18 represent 41% of their portfolio, and they are proud to say that harnessing their talents. The inclusion of women at all levels, gender inequality and promoting women’s • Firms with at least 3 women on the board experience they have achieved 38% female representation on their board is key to their success, and their performance results are effective participation in the management of ROE gains of 10% points.19 and 30% female representation across leadership positions. closely aligned with these levels of inclusion. Africa’s resources we will contribute towards • It has been found that annual household consumption an equitable, transformative and sustainable expenditure increases US$ 0.22 for every additional The impact of providing financial solutions to women is continent. US$ 1.22 borrowed by women from credit programs, widely acknowledged, and we have seen that despite woman Letshego Customer Percentage of Hires by compared with US$ 0.13 for man.20 partaking in a smaller share of our portfolio, they are able to Profile by Gender Gender generate much higher degrees of impact in their communities

100 100 when compared to their male counterparts. 15 36 80 38 41 80 43 47 44 50 Shift in Return on Equity Year Share Value

60 60 on Year 40 4 2015 - 2016 85 40 40 35 64 62 26% 59 57 56 30 3 50 53 20 20 New Board 25 Appointed 20 2 % NEW HIRES % LETSHEGO PORTFOLIO % LETSHEGO 0 0 38 2016 – 2017 2015 2016 2017 2018 2015 2016 2017 2018 15 19 25 Male Male 10 1 15 17 14% Female Female 5 12 8 Restructuring 148 60 74 120 PERCENTAGE 0 0 NUMBER OF WOMEN of Business 2016 2017 2018

% Women on the Board 2017 - 2018 46%39% 54%61% % Return on Equity 31% Number of women on Board Female Representation at level Board, Exco, Country CEO Level STAFF

40 % Loan Book Issued vs Impact generated on household consumption expenditure (2018) 35

30

25

20 38 33 15 33 41% 59% 27 30 25 25 of women make up the of men make up the 10 20 18 17 customer base customer base 5 13 8 148 60 74

% FEMALE LEADERSHIP 0 2016 2017 2018 54% 46% % Women at Board Level % Women at Exco Level of loan value provided of loan value provided to women is deployed to men is deployed % Women at Country CEO % Women in Leadership productively in the productively in the Level Positions community/household community/household

22 23 Impact Report Our impact

PROMOTING ECONOMIC GROWTH AND EMPLOYMENT AND DECENT WORK FOR ALL STRENGTHENING DOMESTIC IMPACT METRIX DEFINED OUR OUTCOMES OUR ESTIMATED IMPACTS RESOURCE MOBILISATION • Every US$ 1 invested in MSEs generates on average Letshego has supported more than 35 000 MSE customers We estimate that the impact of providing loan finance to our an additional US$ 12 in the economy. Of the US$ 12 with loan funding to the value of BWP 282m during 2018. MSE customers in 2018 has resulted in additional stimulus to Our financial inclusion agenda supports more than 41% benefits those outside the enterprise.23 the economy of just over BWP 3 384m. economic growth, employment, and the • Mobile money adoption can increase income within an We have increased our physical and digital footprints to enable achievement of broader developmental goals MSE by at least 5%.22 the accessing of our solutions, and now at least 51% of our Of the BWP 3 384m, approximately BWP 1 387m equates by creating more stable financial systems and customers can access our solutions within 10kms of their to stimulated activity in areas outside of the MSE. Typical economies, mobilising domestic resources location. activities outside the MSE could include support to other through national savings and helping to businesses, the addition of revenue to government coffers for boost government revenue. Use of digital and In addition, large portions of our customer base are able to use distribution and economic stimulus in other regions, and the mobile channels will benefit customers by mobile channels to access our solutions. development of community infrastructure. extending the reach of financial solutions and reducing the costs associated with financial The use of mobile banking by MSEs reduces operating transactions, especially for rural customers. expenditure through facilitating payment of suppliers and Also, by creating access to savings products, services, placement of bulk orders at preferential rates etc. in we can increase productivity and build MSE Portfolio Growth the current customer base this is estimated to have liberated resilience to economic shocks. BWP 9m to the MSE customer base in 2017 and BWP 8m in 2018. 2017 326

2018 282

0 50 100 150 200 250 300 350 BWP m

Value of loans Economic Growth due to Loans Disbursed to MSEs

Additional 1 387 income 2018 Typical Letshego Customer 2018 3 384 released not related to enterprise 1 604 2017 58% 3 912 Additional Make use of Mobile Solutions income 0 1 000 2 000 3 000 4 000 released into the Economy 59% BWP m 41% 73% Customer Satisfaction Level 85% Additional Income with Use of Mobile Solutions Savings Culture Potential Increased Income Due 92% to use of Productive Loan Use 2017 189 Mobile Solutions

2018 164

51% 0 70 140 210 280 350 Within 10km of accessing a Letshego product BWP m

24 25 Impact Report Our impact

ENSURING ACCESS TO ADEQUATE, SAFE AND AFFORDABLE HOUSING IMPACT METRIX DEFINED OUR OUTCOMES OUR ESTIMATED IMPACTS

Africa continues to experience urbanisation • Research has shown that for every US$ 100 spent Our affordable housing solutions have been Africa has the highest rate of urbanisation growth, but the least developed at a rapid rate as people seek economic on housing finance activities in Africa, US$ 36.50 are extensively taken up by more than 900 of our housing finance in the world (World Bank 2014). opportunities. However, the cost of housing added to per capita GDP while US$ 225 are added to customers. This equates to the disbursement remains high due to factors such as location, GDP.23 of BWP 407m in 2018, an increase of 172% The literature indicates that housing finance affects economic growth by transportation and lack of economies of scale. from 2017. reducing the cost of capital, increasing savings, increasing tax revenues, Affordable housing finance provision in the increasing investment in education, reducing vulnerability, and increasing lower income groups of the economy, can Loans for affordable housing issued to financial deepening. By reducing the cost of capital, housing finance can spur have a positive effect on economic growth, our customers are utilised for household economic growth. and reduces inequality and vulnerability in improvement such as the provision of or this customer base. improvement of sanitation, energy and The financing of affordable housing in our operating countries has led to an water, the extension to homes, the purchase additional BWP 50m in GDP per Capita, and BWP 551m in GDP, this is distributed of land and building of new homes. across the five countries in which we offer this solution.

Letshego Housing customers Letshego impact on GDP per Capita

BWP m 1 000 0 100 200 300 400 500 Housing Finance (BWP m) 800 443 312 2017 114 Impact on GDP per capita (BWP m) 600

276 407 400 2018 149 552 200 302

NUMBER OF CUSTOMERS 0 2017 2018 Letshego Impact to GDP

Housing customers 60 (Men) 45 Housing customers (Women) 30

15 13,27 7,85 3,86 0 1,90 0,10 0 0 0,30 0 0 30,33 53,82 17,69 20,74

MILLION $ 0

400

300

Africa continues to 200 405,44 376,28 408,61 experience urbanisation at 100 70,53 79,51 88,27 47,65 51,73 56,66 27,62 26,35 25,31 148 8,48 9,14 9,94

BILLION $ 0 a rapid rate as people seek Nigeria Rwanda Kenya Tanzania Uganda economic opportunities. 2016 GDP Billion $ 2016 Letshego Contribution to GDP Million $

2017 GDP Billion $ 2017 Letshego Contribution to GDP Million $

2018 GDP Billion $ 2018 Letshego Contribution to GDP Million $

26 27 Impact Report REFERENCES

REFERENCE DESCRIPTION

1 Financial inclusion in Africa, Triki, T. and Faye, I., AfDB, 2013

2 The effect of financial inclusion on welfare in sub-Saharan Africa: Evidence from disaggregated data, Tita, A and Aziakpono, M, Economic Research Southern Africa (ERSA), 2017

3,7 https://navigatingimpact.thegiin.org/strategy/fi/improving-access-to-and-use-of-responsible-financial-ser- vices-for-historically-underserved-populations/

4,5 https://navigatingimpact.thegiin.org/strategy/fi/improving-rural-economies-through-access-to-financial-in- clusion/ Going forward 6,10 “The Impact of Food and Cash Loans on Smallholder Farmers in Zambia.” The Abdul Latif Jameel Poverty Action Lab. Accessed July 24, 2018. https://www.povertyactionlab.org/evaluation/impact-food-and-cash- loans-smallholder-farmers-zambia.

8 Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya, Dupas, P and Robinson, J, American Economic Journal: Applied Economics Vol. 5, No. 1, January 2013 We believe that we are on the right track, and the recognition and support that we have received from our stakeholders and partners, both local and international is testament to that fact. As we continue our transformational journey, we will continue to improve on the 9 Constraints to Saving for Health Expenditures in Kenya, Dupas, P and Robinson, J, Innovations for Poverty measurement of our impact. Action (IPA) 11 The future of work in African agriculture: Trends and drivers of change, Jayne et Al., ILO, 2017 We are aware of areas where we can improve our impact measurement and are already in the process of implementing such measures. These include enhanced customer tracking, and better integration of social data into our reporting processes. As we further segment 12 Socio-Economic Impact of IFC Financing in Ghana, IFC, 2012 our portfolios, we will be better able to track the impact of individual initiatives, such as the effect our financial literacy training is 13 The return of investment for preventive healthcare programmes: A calculation framework for GSK’s Partner- having on the financial behaviours of our customers. Whilst avoiding survey fatigue for both our customers and staff, we will continue ship for Prevention, RAND Corporation, 2017 to engage more with our customers, and develop greater insights into how our solutions have changed their lives. 14 Saving lives, spending less: a strategic response to noncommunicable diseases. Geneva, Switzerland. World Health Organization; 2018 FUTURE AREAS OF FOCUS INITIATIVES UNDER CONSIDERATION 15 Benefits and Costs of the Education Targets for the Post-2015 Development Agenda, Psacharopoulos, P., Copenhagen Consensus Center, July 2014

16,17 Returns to Investment in Education: A Decennial Review of the Global Literature, Psacharopoulos. P & Further integration of SDG While we have started to report on our estimated impact and contribution to Patrinos. H, World Bank, April 2018 focus into strategy and achieving the SDGs, we recognise the need to further integrate and align our targets strategy and targets to specific target-level SDG criteria 18 Women on Boards: Global trends in gender diversity on corporate boards, MSCI Research, 2015 19 https://www.msci.com/www/blog-posts/the-tipping-point-women-on/0538249725

We are pleased with our contributions thus far. However, as we increase our 20 Empowering Women through Microfinance: Evidence from Tanzania, Kato. M & Kratzer. J, ACRN Journal of contributions to achieving the SDGs, we need to be mindful of the possible negative Entrepreneurship Perspectives, February 2013 Quantifying the trade-offs implications for our business. For example, increasing our efforts to improve 21 From Poverty to Prosperity: Understanding the Impact of Investing in Small and Medium Enterprises, SEAF, financial literacy will have a negative impact on our operating expenses. 2014

22 Morawczynski O, Pickens M (2009) Poor people using mobile financial services: observations on customer Currently we are using research from well recognised national and international usage and impact from M-PESA. CGAP: Washington, D.C Improving measurement bodies to estimate our impact. We intend to enhance our measurement by of outcomes improving our data collection measures, so that we report on our actual impact, 23 Housing Finance and Inclusive Growth in Africa: Benchmarking, Determinants, and Effects, Nguena, Tchana rather than estimated impact. Zeufack, World Bank Group, December 2016

We look forward to presenting improved impact measurement in our next iteration of this Report, while remembering that all journeys begin with a single step.

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