Digital technology assists financial inclusion across Africa

Botswana-based microfinance company Letshego Holdings, which operates in 11 African countries, aims to use technology and digital solutions to effect economic redress in Africa and provide financial inclusion for the continent’s most underserved markets.

Letshego MD Chris Low explains that the company, which has increased its footprint to include Tanzania, Nigeria and Ghana in the past 12 months, focuses on providing affordable financing for basic human needs, such as education, health, agriculture and low-cost housing.

He adds that Letshego is aiming to provide more services regarding savings arrangements, such as short- or fixed-term savings products. “We have a variety of loan capabilities, as deduction at source is where we came from as a business, providing simple asset finance, such as working capital loans for micro- and small entrepreneurs, or biogas and water tank loans.

“For us, it is about providing simple appropriate and accessible solutions to the underserved, unbanked or those who are financially excluded,” he asserts, noting that the company provides financial services much like larger banks, but with a focus on creating additional value for customers. “This might be as simple as offering loans with some form of insurance in case the lender falls sick and loses their earnings or ability to save.”

Low notes that savings among many of Africa’s underserved individuals have generally been ignored, which is why Letshego is considering digital technology to find mobile solutions to improve consumers’ access to savings accounts. He adds that the company is increasingly entering into mobile solutions, such as mobile loans and savings, and hopes to add micro-insurance products in due course.

Letshego has a number of digital solutions aimed at lower- to middle-income population groups; however, Low points out that the uptake of digital solutions has been slow, despite mobile phones being a ubiquitous everyday item for most people. “We are trying to encourage the uptake of financial services on digital platforms to provide financial literacy education to help people understand their financial needs and then start them off simply from there.”

Letshego’s digital solutions cover many of the channels that those of a commercial bank do, such as Internet banking and unstructured supplementary service data, commonly known as USSD. Low highlights USSD as being particularly important, as it caters to most of the company’s target segment who still use analogue phones. The company is currently in the development stages of its own banking application, which it hopes to launch in the next 12 months.

Letshego also has branches and satellite touch points and is increasingly adopting a third-party agents model, which Low notes has been quite successful in East Africa.

“We now cover owned, partnered and third-party financial arrangements, enabling financial services to be moved closer to the customer,” he says, concluding that this is how Letshego aims to make financial services more inclusive.