CARLOS J. NHAMAHANGO

Mozambique 2020 | FINANCE | INTERVIEW

With 85,000 loan customers and almost 40,000 savings customers, Banco Letshego is gradually expanding its goal of reaching all provinces in Mozambique.

BIOGRAPHY

Carlos J. Nhamahango joined Banco Letshego Mozambique in 2011 as chief financial officer and became CEO in 2018. Prior to this, he held various management positions at Banco ProCredit, including CFO and regional manager. He is an agile, strategic leader with experience in the conduct of financial function, human resources, risk, financial inclusion, and financial sector operations. He holds a bachelor's in business administration from Universidade Politécnica in Maputo and a certification in leading digital money market and digital money from DFI and Tufts University.

How has Banco Letshego grown its operations in Mozambique, and how satisfied are you with your YoY performance?
Letshego's group vision is to become a leading African financial inclusion group. Banco Letshego has been in Mozambique for nine years now. We started tackling the market through lending to government employees, which was an untapped niche with strong demand. In the first year, we recorded almost 8,000 customers and MZN570 million in terms of our loan book to the government. After the first few years, we pushed for a diversification strategy to increase profits. In 2016, we were granted a commercial banking license. We started as a micro-bank and later branched out to receive deposits through current and savings accounts. We started offering additional services through tech platforms, processing customer loans through WhatsApp, and engaging customers through web forms and Facebook campaigns. We keep growing YoY, and 2019 was the best year ever in terms of results, recording a profit before tax of MZN986 million. Diversification has been a key factor in our growth. We cannot compete with traditional banks in Mozambique in terms of margins and have always strived to find niches to grow and get low cost of funds. I am extremely pleased with our performance in Mozambique and the team that made it possible. Of the 11 markets we cover, Mozambique is now number three in terms of overall operations, following Botswana and Namibia. In terms of the Mozambican market, we swing between sixth and seventh place out of 19 banks looking at various ratios as per KPMG and the Bank Association Survey. This is particularly impressive given that the Mozambican banking sector has been traditionally dominated by four large banks. Letshego looks like a small bank; however, we are solidifying our position year after year.

How is Banco Letshego tackling financial inclusion?
We have been targeting financial inclusion since we launched our agency banking model in 2016. One of the objectives of financial inclusion is reducing the distance people have to travel, which reduces the cost of transactions. Through our agency model, we place agents close to the customers, who can reach out directly to them and do not need to travel. Thus, we partnered with a few organizations to reach unbanked rural segments of the population and offer them financial services, executing transactions for them. We are gradually expanding the goal of reaching all provinces: from the branches in each provincial capital, we reach all the rural communities. So far, we have reached 85,000 loan customers and savings of almost 40,000. Through our efforts, we are contributing to the government's 2016-2022 agenda to expand financial inclusion. We are seeing significant improvement in levels of financial inclusion, though we would advocate for some improvements in regulations from the central bank. A priority issue is to implement liquidity requirements for agents. We need to influence the change of agent regulation to allow other players to act as agents. Second, we need to allow liquidity to the agents and pass liquidity to the other agents. A third aspect is access to official documentation such as IDs in rural areas, which is often difficult to retrieve. We need the government to allow other means of identifying customers. In our agency model, we operate authentication with biometrics, enabling customers to carry out transactions through fingerprint authentication.

What are your priorities for 2020?
Currently, we are piloting a solution with MasterCard called Tap & Go, wherein during the one-year pilot program we have been able to bank 107,000 customers. We are now finalizing a few regulatory requirements with the central bank to go commercial. Once out, this will be a major success. Another priority is micro and small enterprises (MSMEs). Because of COVID-19, we had to push this focus of our agenda for 2H2020, when we will start providing loans to this segment. There will be a pilot in 2020, and depending on the results we might be extremely strong in 2021 in MSMEs.