Remarks by His Honour The Vice President Lt. Gen. Mompati S. Merafhe, MP, on the Occasion of the 10th Anniversary of Letshego Micro Provident Botswana

source: Republic of Botswana (11/10/08): TAUTONA TIMES no 31 of 2008
The Weekly Electronic Press Circular of the Office of the President "Democracy, Development, Dignity and Discipline"

B2) 10/10/08: REMARKS BY HIS HONOUR THE VICE PRESIDENT LT. GEN. MOMPATI S. MERAFHE, MP, ON THE OCCASION OF THE 10TH ANNIVERSARY OF LETSHEGO MICRO PROVIDENT BOTSWANA LTD:

[Salutations]...Ladies and Gentlemen,

1. Good evening. Let me begin by expressing my gratitude to the Chairman of the Letshego Board Mr. Lekaukau and his team for the invitation to be with you at this the 10th Anniversary Commemoration of Letshego. To them I say an event like this one is not only a moment for celebration, but for reflection and indeed inspiration to all those who are involved in the success that is Letshego.

2. I trust that as you celebrate your achievements, reflect on your past and contemplate the future, you will put customers at the centre of that discourse. After all, it is customers who ultimately determine the viability and success or otherwise of any business entity.

3. Needless to say that for any business to prosper, it has to be sensitive and responsive to the needs and expectations of its clientele. In this respect, I am convinced that this 10th Anniversary Commemoration attests to Letshego's clear commitment in that direction.

4. Director of Ceremonies, the financial system in Botswana has been growing impressively in the last ten years keeping pace with, and in some cases contributing quite significantly to the country's economic growth and development. This is a result of, and in line with, Government's development plans and strategies to diversify the economy away from dependence on mineral resources to other sectors such as manufacturing, tourism and indeed financial services.

5. It is important to note that the expansion of the financial services also entails growth in the micro lending sector. As a result this has enabled a large number of households that were traditionally excluded from the formal financial system, to have access to credit, in the form of personal loans.

6. In other words, micro lending has to a large measure empowered many of our people who were hitherto marginalized; it has given them the opportunity to fight poverty and face the future with confidence. It is therefore only proper to commend Letshego and other responsible micro-lenders for the important role they are playing in ensuring that many of our people have access to the much needed micro-credit to alleviate poverty and better the human condition in general.

7. You may wish to know that there is now a growing international consensus that credit is not only a fundamental human right, but a necessary tool to fight hunger and poverty. In December 1998 the United Nations General Assembly through Resolution 53/197 proclaimed 2005 the International Year of Microcredit.

8. Through the resolution the UN Assembly urged all those involved in the fight against poverty to take additional steps to make credit and other related services for self-employment and income generation available to an increasing number of people living in poverty, particularly women.

9. To buttress the UN's commitment, the Group of 8 countries has in various ways supported and recognized the importance of microcredit and finance as vital tools for fighting poverty and implementing the Millennium Development Goals. It was in clear recognition of the vital importance of micro-credit that in 2006 the Nobel Committee awarded Professor Muhammad Yunus of Sri Lanka and his Grameen Bank a Nobel Prize for what they called "creating economic and social development from below".

10. Since 1983, Professor Yunus and Grameen Bank helped the poor in Sri Lanka escape poverty by providing loan on terms suitable to them and by teaching them a few sound financial principles so that they could help themselves.

11. Ladies and Gentlemen, the moral of Yunus 2006 Nobel Prize is clear and compelling. The objective of micro-lending should not be indiscriminate generation of profit, by hook or crook.

12. It must, as of necessity, be geared towards contributing to the development of the country and thereby improving the living standards of many of our people, including the needy. This means that micro-lending institutions should have the welfare as well as empowerment of their clients and communities in which they operate as an integral part of their strategies and operations.

13. The logic is simple: you cannot hope to sustain the profitability of your business ventures in an environment that is fraught with poverty, hunger, ignorance and social despondency.

14. While the Government of Botswana encourages consumer lending businesses, we are equally concerned at the mushrooming of the money lending companies, commonly known as Bo-Machonisa, that have decided to ignore all business ethics in their quest to make profit. These are unscrupulous money lenders who care very little about the welfare of their clients, let alone the law of the land. We have heard of incredible stories where people's identity cards, bo-Omang, and bank cards are taken away by these entities as some form of security.

15. Ironically, when the visionary Professor Yunus and his Grameen Bank impart the required financial management skills to their clients and compatriots, nearer home our very own micro-lenders, quite inconceivably, are busy collecting people's ATM and identity cards ostensibly to ensure compliance.

16. Worse still, some of these micro-lenders charge exorbitant interest rates that leave most of their clients in precarious financial position. This is unacceptable.

17. That is why in December 2006 Parliament passed the Non-Bank Financial Institutions Regulatory Authority Act to regulate and supervise non-bank financial institutions in order to ensure the following:

* Safety and soundness of non-bank financial institutions;
* Highest standards of conduct of business by non-bank financial institutions;
* Fairness, efficiency and orderliness of the non-bank financial sector;
* Stability of the financial system and reduction as well as deterrence of financial crime.

18. It is our hope and expectation that the Non Banking Financial Institutions Regulatory Authority will provide the required oversight and give the micro-lending sector order and positive direction.

19. Ladies and gentlemen, as I said earlier, this Commemoration of the 10th Anniversary of Letshego should also be a cause for celebration for a journey well travelled.

20. Of course the question is: What are these achievements that we are talking about? I am informed that the majority of loans by Letshego clients are mainly for expenditures incurred on purchase of residential plots, construction, alteration of residential houses; purchase of durable households assets, among others.

21. I am further advised that Letshego's loans have been extended for expenditures on medical treatment, education, as well as marriage ceremonies. Given the foregoing, I hope you will agree with me that all of us here tonight have a good cause to appreciate the service that Letshego is rendering to many of our people.

22. Some how, they have been able to overcome the major challenges facing commercial banks in extending services to large numbers of low income earners which involve, among others, relatively high maintenance costs for such accounts. That notwithstanding, I am aware that some of the local banks have started focusing on this so-called the unbankable segment of our population. This is commendable.

23. The facilitation of access to finance for ordinary citizens, who 10 years ago had very limited options as they were labelled high risk by some commercial banks, has empowered many of our people and in some instances given them necessary tools for self-employment and productivity. That is how it should be.

24. Yes, it is true the utility of micro-lending depends on how much people spend those finances on productive and meaningful enterprises. Therefore any propensity to spend loans on ostentatious lifestyles will inevitably land our people in an endless debt trap and a future full of want, desperation and despair. In this context I want to encourage Letshego, other consumer lenders and micro-credit agencies, including the rest of the financial services fraternity in this country that as they grow and consolidate their business gains, they should design programmes that will pass knowledge to their clients about financial discipline and prudence as well as how to invest and wisely use credit. I believe that is in your best interests, because in the final analysis you will have a disciplined, reliable and empowered clientele that is well positioned to pay back their loans without unnecessary delays or difficulties.

25. Of course, without being cynical, it is much better than collecting ATM and National Identity Cards!

26. Director of Ceremonies, I have noted with keen interest how all of our financial institutions have worked hard in the last ten years to improve their credentials, quality of service and overall performance. For instance, I heard recently of a case where someone wanted a small emergency loan and one established bank proposed three days to complete the procedures while Letshego did it in a day.

27. I also understand that Letshego is consolidating its brand presence across its operations in the region. I hope that the brand consolidation will bring with it the promise of a renewed focus for the business and its customers. Our financial institutions must be about efficiency, effectiveness and professionalism.

28. Indeed as Government our efforts to attract foreign direct investment and diversify the economy will to a great extent be enhanced by an efficient banking sector that is not encumbered by long and tedious procedures that frustrate customers. We all agree that efficient service delivery leads to customer satisfaction.

29. Satisfied customers mean good business for any organisation. The confidence of a customer has to be won, retained and constantly renewed for the betterment of the organization. I am confident that as Letshego steps into the next decade, innovation and quality service will underpin its vision and mission in this regard.

30. Ladies and Gentlemen, Government will continue to work hard through supportive legislation and other measures necessary to strengthen the financial services sector in this country. We are fully convinced that this sector has tremendous potential to contribute significantly to the growth of our national economy and, most importantly, enhance Government economic diversification efforts. That is why we have taken up the challenge of promoting Botswana's attractiveness through the International Financial Services Centre (IFSC).

31. I am happy to learn that it was through accreditation to the IFSC that Letshego has reaped some benefits which made its expansion into the rest of Africa possible.

32. Distinguished Ladies and Gentlemen, allow me to pay tribute to the recipients of the Letshego long service awards. I believe it is through their commitment and loyalty that we are here this evening to commemorate the 10th Anniversary of Letshego.

33. Ladies and Gentlemen, I am informed that at a special general meeting of the company held yesterday, the shareholders approved the change of name of the company from Micro Provident Botswana Limited to Letshego Holdings Limited. It is therefore my pleasure to unveil the new name Letshego Holdings Limited which, hopefully, heralds a brighter future for the company for many more decades to come.

34. On that note, I now wish to invite the Chairman of Letshego, Mr. Lekaukau and the Group Managing Director and indeed everybody to join me in a toast to the success of Letshego, Management and Staff and wish them many, many returns today and in the future. I thank you for the courtesy of your attention.