Letshego Africa : INTEGRATED ANNUAL REPORT 2023

INTEGRATED ANNUAL REPORT

2023

LETSHEGO AFRICA HOLDINGS LIMITED

Integrated

report

SECTION 1

Consolidated annual financial statements

SECTION2

2 About this	4 Our business
report	X Who we are
	X Our business model
	X Our operating context
	X Our key relationships
	X Our strategy
	X Our sustainability
	framework
	Insights from
	22 leadership
	X Reflections from our
	Group Chairman
	X Board of directors
	X Insights from our Group
	Chief Executive
	X Group Executive
	committee

4

6

10

12

16

20

22

24

30

34

38 Our performance

X Product diversification	38
X Digitalisation	44
X Geographic rebalancing	48
X Execution engine	52
X Sustainable stakeholder value	56
X People and culture report	62
X Our social impact	66

71	Country reviews
	X Country chief executive	71
	officers
	X East and West Africa country	72
	reviews
	X Southern Africa country	84
	reviews
94	Governance report

118 Remuneration report

1. Group corporate information
2. Directors' report
3. Directors' responsibility statement
4. Independent auditor's report

134 Consolidated financial statements

236 Additional information	This report is best viewed in Adobe
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LETSHEGO GROUP INTEGRATED ANNUAL REPORT 2023

1

INTEGRATED

About this

Our

Insights from

Our

Country

1 REPORT

report

business

leadership

performance

reviews

Governance

Remuneration

About this report

The Letshego Africa Holdings Limited integrated annual report provides a balanced and accurate assessment of the Group's strategic and financial performance for the period

1 January 2023 to 31 December 2023 to our stakeholders.

Time horizons

SHORT TERM -	2024, in which we will continue to
drive our digital transformation.

2025 to 2026, with 2025 being the

MEDIUM TERM - year in which we aim to achieve our strategic targets.

The integrated report contains information that is relevant to all our key stakeholder groups to whom we are accountable, including our customers, employees, investors and founders, strategic partners, governments and regulators, and members of the communities in which we operate. It also contains information on the value outcomes for the period under review, as well as forward-looking information, to allow our stakeholders to assess the Group's ability to create value over time. Material information subsequent to year end has also been included.

This report is split into two sections comprising:

SECTION

1 Integratedreport

beyond 2026, we will drive positive

LONG TERM - impacts that improve lives and contribute to the United Nations Sustainable Development Goals (UN SDGs).

Boundary and scope

The integrated report covers our regional subsidiaries across all 11 markets - Botswana, Eswatini, Ghana, Kenya, Lesotho, Mozambique, Namibia, Nigeria, Rwanda, Tanzania and Uganda - as well as the risks, opportunities and outcomes associated with our operating context, industry and stakeholders.

Integrated thinking

Our mandate is to provide inclusive financial services and products to under-served individuals, small business owners and communities across our regional footprint. This strategy underpins our purpose to improve lives and remains central to continued enhancements and improvements to the way we work, the platforms and channels we use and how we make decisions.

Our strategy is designed to achieve a sustainable competitive advantage for our pan-African Group and deliver sustainable returns in the long term. The execution of our strategy is supported by corporate governance structures, processes and controls that have been developed in line with global best practice and are regularly reviewed to achieve continual improvement. Our Sustainability Framework, including our environmental, social and governance (ESG) strategy, continues to evolve and is becoming an integrated asset and differentiator for how we do business on the continent. Together, our strategy, corporate governance, commitment to sustainable business practices and stakeholder relationships will advance new and tangible value creation and preservation, and guard against the erosion of achieved value.

Disclosure

Letshego Africa is committed to balanced reporting, disclosing the material constraints related to our strategy and business model, including where value has been eroded due to factors within or outside our control. Information excluded from our report includes that which is considered immaterial, confidential and legally privileged, and competitively sensitive. This includes granular data on remuneration, yields and margins.

2 Annual financial statements

Certain statements in our report are forward-looking. These beliefs and assumptions are based on the information currently available to Letshego's Board of directors and management. Forward- looking statements are subject to certain risks, uncertainties and assumptions, particularly in terms of general market conditions, our ability to manage growth, future performance and changes in the regulatory environment, among others. There can be no assurance that these statements will be accurate, and actual results could differ materially from those anticipated in such statements. The words 'believe', 'anticipate', 'estimate', 'expect', 'intend', and similar expressions identify forward-looking statements. Letshego undertakes no obligation to update forward- looking statements to reflect subsequently occurring events or circumstances or to reflect unanticipated events or developments.

Unless otherwise indicated, all monetary values used in this report are in Botswana Pula (P or BWP).

Materiality

When deciding which information to include in the integrated report, we consider our stakeholders, sustainability, materiality, and completeness. We prioritise the matters, opportunities, and challenges that are likely to affect the delivery of our strategic intent and ability to create value for stakeholders in the short, medium, and long term as material.

Our material matters form an integral part of our strategic planning activities. Our five strategic transformational conversations, which are considered our most material matters - product diversification, digitalisation, geographic rebalancing, execution engine and sustainable stakeholder value - are explained in more detail in this report.

Restatements or reporting changes

While the nature of the content in this year's integrated report remains largely unchanged from that of 2022, the structure of the report has been refined to simplify the information for more meaningful disclosure.

The Group's auditors determined that loans in the Stage 3 maturity bucket should not be discounted in the calculation of expected credit losses (ECLs). While this is an area of judgement and subject to different interpretations, the Group agreed to accept the auditor's view of this estimate, to be more prudent in the calculation of ECLs. This was re-worked for 2023 and prior years and applied retrospectively as required by accounting standards, resulting in a P128 million ECL adjustment in the current year and a restatement of prior year financials. Further to this, in 2023, a number of professional organisations outside of Ghana, including global accountancy firms, determined Ghana to be a hyperinflationary economy, although this is disputed by the Institute of Chartered Accountants of Ghana (ICAG). The Group was required to adjust for this in accordance with IAS29 Financial Reporting in Hyperinflationary Economies, resulting impacting the Group's profitability with inflation adjustments amounting to P128 million. Further information relating to financial restatements or reporting changes can be found in section 2 annual financial statements.

Process disclosure

The following processes were followed in the preparation and approval of this report:

• A cross-functional and cross-regional team led by the Group Head of Corporate Affairs ensures that an effective report preparation process is followed.
• Information included in this report is sourced from a range of internal and external sources of information.
• Certain Board subcommittees review various sections of the annual financial statements to ensure their integrity and recommend them to the Board for approval.

Assurance

Assurance on financial information has been obtained in line with our combined assurance model.

EY conducted independent external assurance on the Group's consolidated annual financial statement and provided an unqualified opinion. The Group's internal audit function provided independent and objective assurance to the Group Audit Committee in accordance with the internal audit standards set by the Institute of Internal Auditors and in line with internal audit methodology.

Approval

The Board is ultimately responsible for ensuring the integrity and completeness of the integrated report. It has appropriately considered the accuracy and completeness of the material matters, as well as the reliability of all data and information presented in this report and has approved the Group's annual financial statements for the year ended 31 December 2023. In the Board's opinion, it has fulfilled its responsibilities in terms of the recommendations of King IV and believes that the integrated report has been prepared in accordance with the International Integrated Reporting Framework in all material respects.

On behalf of the Board:

Philip Odera

Group Chairman

Signatures removed for security purposes.

The report complies with the Botswana Companies Act, the Botswana Stock Exchange (BSE) Equity Listings Requirements, and the Debt Listing Requirements of the JSE Limited. The reporting frameworks applied in the preparation of this report include the principles of the International Integrated Reporting Framework (January 2021), the King Report on Corporate Governance for South Africa (2016) (King IV TM 1), and the International Financial Reporting Standards (IFRS®) Accounting Standards.

Feedback on	We welcome our feedback on this report. Please email your comments to the Group's Company
this report	Secretary at [e-mail]

1 King IV Report on Corporate Governance 2016. Copyright and trademarks are owned by the Institute of Directors in Southern Africa and all of its rights are reserved.

2

LETSHEGO GROUP INTEGRATED ANNUAL REPORT 2023

3

INTEGRATED

About this

Our

Insights from

Our

Country

1 REPORT

report

business

leadership

performance

reviews

Governance

Remuneration

Who we are

25-YEAR MILESTONES

1998

2017

Letshego Africa Holdings Limited is a Pan-African provider of financial products. Headquartered and listed in Botswana, we provide access to simple, appropriate and inclusive financial solutions for individuals, micro and small entrepreneurs (MSEs) and under-served populations across 11 sub-Saharan markets.

We leverage technology and innovation to create an expansive ecosystem that provides our customers with accessible and affordable financial and lifestyle solutions, products that help people improve their lives but which historically were not easily accessible. Our products are delivered with the upskilling and empowerment of our employees and customers with the digital skills that support sustainable financial inclusion and digital-savvy economies.

Letshego at a glance

Our brand is trusted across Africa based on our commitment to responsible and ethical lending, our full regulatory compliance in all our countries of operation and our responsiveness to the needs of our customers. Our products and services are designed to advance access to affordable housing, healthcare, education, small business and agriculture funding that focuses on entrepreneurs, the youth and women.

Our vision	Our
To be a world-class	mantra
retail financial	Simplicity
services organisation
that meets the needs	Focus
of mass and middle-
income individuals	Discipline
and MSEs.

Our values

Our values defne our culture and ways of working. They are guiding principles for improving

CORE BUSINESS HIGHLIGHTS

Deduction at Source (DAS) loan book

P11 872 million

(2022: P11 332 million)

UP 5%

Mobile loans book

P803 million

(2002: P421 million)

UP 90%

Customer deposits

P 1 537 million

(2022: P1 121 million)

UP 37%

Insurance revenue

P373 million

(2022: P250 million)

UP 49%

Interest income

P3 425 million

(2022: P3 146 million)

UP 9%

Inception

Letshego Botswana was established with private investor support to provide loans to low- and middle-income earners in the civil service sector. Our services met the needs of the underbanked, who were unable to access credit from traditional financial institutions and banks. Before long, we found that demand for our solutions exceeded our liquidity.

2002 Listing

	Letshego successfully lists on the
	Botswana Stock Exchange
	2005 - 2016
	Growth and expansion
	Africa's diversification strategy gains
	momentum
2005	Opened the first subsidiary in Uganda
2006	Opened in Tanzania and Eswatini
2008	Acquired EduLoan Namibia
2011	Opened in Mozambique

	Opened in Lesotho and acquired banking
2012
entities in Kenya and Rwanda
	Acquired entities in Tanzania and
2015
Nigeria
2016	Obtained banking licences in

Listed the Namibia business on the Namibia Stock Exchange and acquired Ghana business

2018

Celebrated 20 years

2020

Launched Transformation Strategy and digitised all channels

2021

Launched the LetsGo Digital Mall and initiated a programmatic approach as a dedicated green and social impact portfolio

2022

Launched five value streams via the Digital Mall

2023

Celebrated 25 years of improving lives

Renamed to Letshego Africa Holdings Limited

Merged the Tanzania entities into Letshego Faidika Bank

Letshego Mozambique's inaugural debt listing is largest corporate

the lives of our customers.

Ubuntu

Take full ownership

Thrive because of diversity

Be curious and forward thinking

Non-funded income

(excluding FX gains)

P514 million

(2022: P439 million)

UP 17%

Namibia and Mozambique

Letshego reaches

P2 billion revenue

raising event in the history of Mozambique's bond market

Defined and launched a new Culture Blueprint

Extended Solar Financing offering in Nigeria

Established a Group Sustainability

Management Committee and

operationalised ESG

Asset base over
USD1 billion	More than
1 375	7.7 million
customers
employees	(2022: 6.6 million)
(2022: 1 705 employees)

4

6.8 million

lending customers

(2022: 5.8 million)

1 000 037

savings customers

(2022: 894 541)

Recognition
X Letshego Namibia wins 2023 Best Locally	X Letshego Ghana received the Women's
Listed Company Award	Financial Solutions Institution of the year
X Letshego Microfinance Bank Nigeria named	award at the Women's Choice Awards
Affirmative Finance Action for Women in Africa	X Letshego Uganda wins a Digital Impact Award
initiative's first AFAWA Bank of the Year at	for Customer Financial Inclusion
African Business Awards
		LETSHEGO GROUP INTEGRATED ANNUAL REPORT 2023	5

INTEGRATED

About this

Our

Insights from

Our

Country

1 REPORT

report

business

leadership

performance

reviews

Governance

Remuneration

Our business model

RESOURCES	Inputs	Constraints and challenges

FINANCIAL

The pool of funds that support our business operations.

• Focused balance sheet management
• P4.9 billion equity capital
  (2022: P5.6 billion)
• P9.6 billion debt capital
  (2022: P8.0 billion)
• P1.54 billion customer deposits
  (2022: P1.12 billion)
• Accessing sustainability-linked funding

• An uncertain economic environment
• Investing in digitisation and growth while retaining the long-term support of our providers of capital

Our stakeholders

• A deep understanding of our stakeholders enables us to respond appropriately to their needs and expectations and thereby shape our strategy and operations to deliver enhanced and tangible value.

Our key relationships:

Page 12.

	The capabilities, experience	X Experienced and ethical leadership team	X Attracting and retaining scarce
	X Innovative and high-performance culture	talent in an environment	OUR
	and innovation of our	X 1 375 skilled permanent employees	characterised by fierce
HUMAN	employees, who drive	competition for skills	CONTEXT
(2022: 1 705)
	the achievement of our	X P5.2 million training and development	X Maintaining a motivated
	Transformation Strategy.	spend	workforce when there is a risk of
		(2022: P5.1 million)	change fatigue among employees
		X 707 physical access points
		(2022: 903)
	The facilities and general	X P26 million invested in physical
MANUFACTURED	infrastructure, including upgrading	X Balancing our physical footprint
infrastructure that support	our branches
with digital customer access
	our business operations.	(2022: P72 million)
		X Digital platforms supported by
		information technology and
		enterprise infrastructure

Our operating context and related risks and opportunities

• Our ability to create value is impacted by a number of factors in our operating environment, which we are not able to fully mitigate against as they are not entirely within our control.
• Our enterprise risk management framework ensures that we effectively identify, assess, monitor, control and report our risks and maximise our opportunities. Stakeholder feedback is considered when reviewing our risks.

Our operating context:

Page 10.

INTELLECTUAL

The institutional knowledge and experience that protects our reputation and drives our competitive advantage.

• A trustworthy brand that resonates with customers
• P120 million invested in our digital transformation, including enhancements to the LetsGo Digital Mall
  (2022: P223 million)
• Ongoing market and data analysis supports our offerings

• Regulation associated with new business development
• Automating routine tasks may reduce the need for certain roles as efficiencies are improved

Our strategy and 6-2-5 execution roadmap

X	Our strategy enables us to achieve our vision:
	to be a world-class retail financial services
	organisation that meets the needs of mass
	and middle-income individuals and MSEs.
X	We prioritise five strategic conversations for

		X Quality of our stakeholder relationships
SOCIAL AND	Our relationships and	X Business activities that deliver a positive
social impact	X Balancing the diverse interests of	OUR
partnerships with key
RELATIONSHIP	X Responsible ESG practices	key stakeholder groups
stakeholder groups.	APPROACH
		X Green funding options provided
		to Affordable Housing customers
	The renewable and non-	X Water usage	X Responsibly manage the impact
	renewable natural resources
NATURAL
X Energy consumed (electricity and fuel)	of our business activities on the
needed for everyday
		environment
	activities.

6

our Transformation Strategy - Product

diversification, Digitalisation, Geographic

rebalancing, Execution engine and Sustainable

stakeholder value.

X Our 6-2-5 execution roadmap focuses on what

we will deliver over time.

- 6: Strengthening our foundation

(productivity of solutions).

- 2: Become customer-led (invest in

transformative technologies).

- 5: Create the future organisation (leverage

platform thinking).

Our strategy:

Page 16.

LETSHEGO GROUP INTEGRATED ANNUAL REPORT 2023

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INTEGRATED

About this

Our

Insights from

Our

Country

1 REPORT

report

business

leadership

performance

reviews

Governance

Remuneration

OUR VALUE STREAMS

LENDING

SAVINGS

Product diversification:

Page 38.

ACCESS TO FUNDING

We offer loans at affordable interest rates and focus on the productive use of funding.

MOBILISING SAVINGS

Our savings accounts offer competitive interest rates and customers are guaranteed access to their money whenever they need it.

CUSTOMERS

EMPLOYEES

X Access to a wide range of

financial solutions that are simple,

appropriate and accessible from

multiple, convenient and

easy-to-use digital channels.

X Customised solutions that support

MSE growth.

X An agile organisation able to

respond quickly to changing

consumer needs.

X A safe working environment and

access to employee wellness

programmes.

X Opportunities to advance careers

and professional development

while upskilling to digitally

enabled ways of working.

X 37% employee turnover rate

X Customised credit scoring tools

that support access to credit for

more customers.

X Exceptional customer experience

delivered on digital platforms and

by trained and knowledgeable

employees who are supported by

data analytics that provide an

enhanced understanding of our

customers.

X P612 million paid in salaries and

benefits (2022: P586 million).

X 90% of employees received

training (2022: 82%), with

X 2 784 learning hours completed

(2022: 22 627).

X Women comprise 42% of the

OUR

CONTEXT

Page 10.

PAYMENTS

OUR

OUTPUTS INSURANCE

AND

ACTIVITIES

LIFESTYLE

SIMPLE AND SECURE PAYMENTS

We support access and safer transacting for customers to make payments, send and receive money and save and borrow at their convenience.

PROTECTING AGAINST RISKS

We offer a comprehensive range of insurance offerings, including digital and embedded insurance products in key markets, providing instant access to insurance.

BEYOND BANKING

We are extending our offering beyond banking.

INVESTORS

AND FUNDERS

OUR

OUTCOMES

FOR...

STRATEGIC

PARTNERS

GOVERNMENTS

AND

REGULATORS

(2022: 13%).

X A Transformation Strategy that

will develop distinctive capabilities

that create a competitive

advantage.

X Disciplined capital allocation

through a capital optimisation

plan.

X Strong balance sheet supporting

the growth of our competitive

market position.

X Mutual benefits and profitability

enhanced by shared markets,

services and technology.

X Taxes paid of P321 million

(2022: P345 million).

X Ethical culture ensuring material

compliance with relevant

workforce (2022: 48%).

X A corporate mandate that strongly

focuses on financial inclusion and

related positive social impacts,

supporting our social licence to

operate.

X Cost-to-income ratio of 75%

(2022 restated: 61%).

X Total assets of P18.1 billion,

up 8%.

X Capitalisation ratio of 24%

(2022 restated: 30%)

X Well-designed enterprise and IT

infrastructure that supports quick

deployment of partner

technologies.

X Ongoing collaboration with

industry and regulatory working

groups and governments to

strengthen the financial services

OUR	OUR MANAGEMENT SYSTEMS
Page 20.
APPROACH		Support functions	Control functions	Corporate governance
		X People and culture	X Compliance management	X Oversight of strategic
		X Transformative	X Risk management	execution
		technologies	X Internal assurance (audit)	X Setting an ethical tone

• Strategic partners

Governance: Page 94.

COMMUNITIES

legislation, governance

frameworks and industry

standards.

X Our programmatic lending

approach which supports access

to affordable housing, healthcare,

education and agriculture funding.

X Hiring locally in our markets of

operation, supporting over 2 500

jobs, including direct and indirect

sales agents.

sectors in our markets of

operation.

X Invested P2.5 million in corporate

social investment initiatives

(2022: P2.0 million).

X Responsible waste and emissions

management with a focus on

sustainable use of natural

resources.

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LETSHEGO GROUP INTEGRATED ANNUAL REPORT 2023

9

INTEGRATED

About this

Our

Insights from

Our

Country

1 REPORT

report

business

leadership

performance

reviews

Governance

Remuneration

Our operating context

In a dynamic and interconnected business landscape, a comprehensive understanding of the operating context is crucial for organisational success.

The multitude of external factors and conditions that can influence a business's operations, performance, and sustainability stem from diverse sources, including economic, political, social, technological, environmental, and regulatory factors. By adeptly navigating these complexities, we bolster our ability to predict and respond to challenges, seize opportunities, and foster sustainable growth over time.

FLUID MACROECONOMIC ENVIRONMENT

Sub-Saharan Africa's economic environment is diverse and dynamic, shaped by a combination of factors including natural resources, demographics, governance, infrastructure, and external influences. Although the region's economic recovery slowed for the second year in a row, the economic outlook remains positive, although growth is likely to remain uneven across the region. Monetary and fiscal policies varied materially across as sovereigns responded variously to local economic challenges and prevailing headwinds during the year. Ripples from geopolitical tensions, rising risk of debt distress, and climate-relatedshocks are the main risk vulnerabilities to the region's economic prospects in the near term.

WAR FOR TALENT

Intense competition remains among countries, industries, and organisations to attract and retain highly skilled and talented individuals. As the global economy becomes increasingly knowledge-basedand reliant on specialised and digital-basedskills, the heightened demand for talent has led businesses and nations to compete fiercely to secure the best talent.

The ease of international travel and the interconnectedness of economies have made it easier for skilled workers to move across borders in search of better opportunities. This has led to a more globalised labour market and increased competition for talent on an international scale.

In response, organisations and governments are implementing various strategies to attract and retain skilled workers. This includes offering competitive salaries and benefits, providing opportunities for training and development, creating inclusive work environments, and investing in technology to improve productivity and employee satisfaction.

Opportunities	TOP BUSINESS RISKS OUR RESPONSE
X	An employee value proposition that attracts and retains key	X	Operational risk.	X Execution engine.
	talent.	X	People risk.
X	Development programmes that future-proof our business.

Opportunities

• As sectors and industries become more resilient in current economic climates this may accelerate Africa's development.
• East and West African markets are expected to outperform Africa's average GDP growth in the next five years.

TOP BUSINESS RISKS

• Credit risk.
• Market risk.
• IT and Cybersecurity risk.
• Compliance risk.
• Operational risk.

OUR RESPONSE

• Our Transformation Strategy and 6-2-5 execution roadmap.
• Our dynamic Enterprise Risk Management Framework.
• Our people, culture and risk infrastructure.

INCREASING LEVELS OF CYBERCRIME

With technological advancement comes an increase in cyber threat, exposing Africans to connectivity-driven crime across multiple access points and increasing the risk for organisations like financial services providers that hold valuable data.

In addition, cyberattacks are becoming increasingly sophisticated, meaning that the costs to secure and upgrade systems are burdensome for many African companies, with many being unprepared for cyberattacks.

Opportunities

TOP BUSINESS RISKS OUR RESPONSE

RAPID TECHNOLOGICAL ADVANCES

Africa has seen significant advancements in technology in recent years, driven by a combination of factors including increased access to mobile phones and the internet, growing tech entrepreneurship, and investment in infrastructure.

Digital technology has the potential to drive socio-economic growth, improve living standards, and address longstanding challenges across various sectors.

Africa has leapfrogged traditional landline telecommunications infrastructure and embraced mobile technology. Mobile phone penetration rates are high across the continent, leading to the rise of mobile banking, mobile payments, and other innovative services tailored to mobile users. This supports fintech innovation, with companies developing solutions to provide Africans with access to financial services even in remote areas.

African companies and researchers are increasingly leveraging artificial intelligence (AI) and data analytics to address local challenges and drive innovation. From using AI for healthcare diagnostics to applying data analytics in agriculture for better crop management, there is a growing recognition of the potential of these technologies to make a positive impact.

X A reputation for having secure and stable digital platforms	X Operational risk.	X Digitalisation.
that allow people to save their money safely and protects	X Compliance risk.
X Execution engine.
their personal information.
X IT governance and
X Employee awareness and training.
cybersecurity risk.

LAGGING DEVELOPMENT PROGRESS

Financial inclusion, the access to and usage of financial services at affordable costs by individuals and businesses, can have significant social impacts in Africa. By achieving our purpose of Improving Lives, we contribute to addressing through the simple, innovative products and services we provide to contribute to poverty reduction, economic empowerment, gender equality, and social development in Africa.

With the consolidation of government central registries and the digitisation of core government process, the business and risk infrastructure is improving across our footprint. This, together with enhanced payment solutions and increasing interoperability of the Mobile Network Operators, is expected to help simplify customer journeys and support critical partnerships in the financial services ecosystem in the medium to long term.

Opportunities

X The mass and middle-income segments present

approximately USD5 billion in market opportunities across

the countries in which we operate, and MSEs approximately

USD1 billion.

TOP BUSINESS RISKS	OUR RESPONSE
X Operational risk.	X Product diversification.
X Strategic risk.
X Digitalisation.
	X Social impact.

Opportunities

• Partnering with fintechs and mobile network operators to transform our business and improve our service to customers.
• Cross-regionalintegration of our systems, products and services.
• Intelligent decision-making supported by data analytics and data-led risk and compliance management.
• Accelerating beyond the core by leveraging an improving landscape to achieve maximum value from the ecosystem, particularly in credit risk analytics and collections processes.

10

TOP BUSINESS RISKS OUR RESPONSE
X Operational risk.	X Product diversification.
X People risk.
X Digitalisation.
X Compliance risk.
X Execution engine.

• IT governance and cybersecurity risk.
• Product risk.
• Market/business risk.

X Developing innovative products and services that support

financial inclusion, home ownership, healthcare, education,

agriculture and gender equality.

X Delivering digital channels that bring more people into the

formal financial system.

X Working with sector experts, our customers and

governments on collective action that supports inclusive

and sustainable socio-economic development.

X Creating a connected community of like-minded Africans to

drive Africa's growth.

LETSHEGO GROUP INTEGRATED ANNUAL REPORT 2023

11

INTEGRATED

About this

Our

Insights from

Our

Country

1 REPORT

report

business

leadership

performance

reviews

Governance

Remuneration

Our key relationships

Our key relationships

Our stakeholders are integral to achieving our vision of becoming a world-class retail financial services organisation and they have either a direct or indirect interest in our strategy and success.

Building robust relationships with our stakeholders and ensuring transparent and open communication in addressing their feedback and concerns helps us to shape and enhance our strategy and operations to deliver tangible value and leverage opportunities to collaborate and realise mutual benefits.

Customers

Our customers are the reason we are in business. Our market knowledge, customer engagement channels and data analytics contribute to our understanding of our customers and enable us to develop relevant and attractive products in an increasingly competitive sector.

HOW WE ENGAGE

• Marketing campaigns.
• Customer polls, surveys and focus groups.
• Physical branches, call centres and digital access channels.

THEIR NEEDS AND EXPECTATIONS

• Simple, appropriate and accessible financial solutions.
• Convenient access to excellent, fast and efficient service through physical and digital channels.
• Transparency.
• Ethical and fair treatment.

OUR RESPONSE

• Stable and secure systems and digital channels that offer an increasing range of relevant products and services.
• Automated processes that shorten turnaround times and drive efficiencies to reduce costs.
• Ethical and compliant market conduct.

12

Employees

Our people deliver our brand promise to improve lives and are central to our ability to create an exceptional experience for our customers. They enable the successful delivery of our strategic objectives, and their creativity and collaboration in delivering value to our stakeholders underpins the long-term success and sustainability of our business.

HOW WE ENGAGE

• Intranet and email updates.
• Group and country townhall, and team building events.
• Training and development.
• Employee engagement events, including surveys and virtual sessions.
• Employee performance and incentive frameworks.

THEIR NEEDS AND EXPECTATIONS

• Effective performance management with fair remuneration and recognition.
• Clear and open communication.
• A safe and healthy working environment.
• Training, skills and career development supported by transparent talent management.
• An empowering culture.
• Consistent human resources policies and practices.

OUR RESPONSE

• PeopleFirst strategy.
• Culture Blueprint and Roadmap.
• Clear employee value proposition.
• Employee recognition and reward programmes.
• Increasing digitisation, including online learning platforms, and digitised performance management.
• Employee wellness programmes.

Investors, funders and shareholders

Earning and keeping the trust and confidence of our investors and funders provides us with access to the capital and funding we need to deliver on our strategy and growth ambitions. We are transparent about how we aim to achieve long-term sustainability, clearly motivate our strategy, and describe our efforts to enhance our operations.

HOW WE ENGAGE

• Online investor portal with automated email alert mechanism for investor subscription.
• Financial results and releases together with financial, integrated and impact reporting.
• Engagement events and global investor calls.
• Website, investor and funder updates, together with share price alerts.

THEIR NEEDS AND EXPECTATIONS

• Sustainable financial returns delivering long-term shareholder value.
• An attractive and sustainable growth strategy.
• Transparent reporting and disclosure.
• Strong and experienced leadership.
• Sound governance.
• Business resilience and sustainability.

OUR RESPONSE

• Responsible business practices.
• Robust corporate governance structures supported by effective risk management frameworks.
• Clear Transformation Strategy supported by the execution roadmap.
• Proactive balance sheet management and capital optimisation.

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INTEGRATED

About this

Our

Insights from

Our

Country

1 REPORT

report

business

leadership

performance

reviews

Governance

Remuneration

Strategic partners

Our strategic partnerships support a differentiated customer value proposition and experience. We partner with leading- edge and well-established organisations that provide either the funding to support our programmatic lending or the technology and know-how to provide diversified digital products and services.

HOW WE ENGAGE

X Financial, integrated and impact reports.

X Shareholder and investor announcements and updates.

THEIR NEEDS AND EXPECTATIONS

X Mutual benefit and profitability together with extending market reach.

X Alignment on maximising benefits to stakeholders and positive social impact.

X Clear agreement terms and adherence to agreements. X Ethical business principles and practices.

OUR RESPONSE

X Selecting appropriate partners to maximise synergies and impact.

X Sharing services with partners who have complementary customer segments to maximise benefits.

X Partnering with businesses with a strong presence in Africa to extend reach in top growth markets.

X Ethical and compliant market conduct.

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Governments and regulators

The financial services sector is highly regulated and compliance with the requirements of governments, central banks, prudential authorities and other regulatory bodies enhances our reputation and builds stakeholder confidence and trust. Robust relationships with these stakeholders supports our understanding of how to ensure we comply with current and upcoming regulations in the markets in which we operate.

HOW WE ENGAGE

• Government relations framework, regulatory updates and reporting.
• Financial, integrated and impact reports.
• Shareholder and stock exchange notices, as well as investor and funder updates
• Engagement events.
• Annual general meetings

THEIR NEEDS AND EXPECTATIONS

• Compliance with applicable legal and regulatory requirements.
• Appropriate capital adequacy and liquidity.
• Responsible tax practices.
• Strengthening national financial systems and support for government objectives to improve financial inclusion and access to credit for under-served segments.
• Active participation in industry and regulatory working groups.

OUR RESPONSE

• Robust compliance and risk management frameworks.
• Proactive balance sheet management and capital optimisation.
• Responsible taxpayer in all jurisdictions of operation.
• Robust cybersecurity frameworks and controls.
• The Group's financial inclusion mandate.

Communities

We find ways to engage with communities to understand how our products and services impact them and identify opportunities

to ensure that our products and services meaningfully address critical societal concerns and deliver positive impact for society.

HOW WE ENGAGE

• Open dialogue and interaction.
• Social media, website and digital platforms.
• Advertising and marketing campaigns and surveys.

THEIR NEEDS AND EXPECTATIONS

• Access to financial advice, products and services that enhance their lives and contribute to their financial wellbeing.
• Financial education and inclusion.
• Social investment and community upliftment.

OUR RESPONSE

• The Group's financial inclusion mandate.
• Our corporate social investment initiatives.
• Our programmatic lending approach is designed to increase access to affordable housing, healthcare and education funding.

LETSHEGO GROUP INTEGRATED ANNUAL REPORT 2023

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INTEGRATED

About this

Our

Insights from

Our

Country

1 REPORT

report

business

leadership

performance

reviews

Governance

Remuneration

Our strategy

Transformation strategy

Our Transformation Strategy is designed to reposition Letshego as an inclusive, digital-first,retail financial services provider that supports mass and middle-income segments and MSEs in Africa; a world- class organisation that has the stability, security and experience of a traditional bank but is also adaptable, agile and technology-driven like a fintech with the skills and capabilities needed to be future-fit.

Our transformation will unlock significant enterprise value for our customers and investors and deliver tangible social benefits for all stakeholders.

6-2-5 execution roadmap

PLAN 6

PLAN 2

Become customer-led

January 2021 to December 2022

Transformative technologies

Over the past two years - the second phase of our roadmap - we invested in building capabilities and platforms, and implementing the processes to drive our digital transformation and support our transition to an agile and efficient business that better serves customers' needs, and supports sustainable stakeholder returns.

What we set out to achieve

X Expand our product offering to include

payments and insurance products.

Completed

Achieved

We are

here

PLAN 5

Create the future organisation

June 2020 to December 2025

Our 6-2-5 execution roadmap sets out how we will achieve our Transformation Strategy.

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Strengthening our foundation

June 2020 to December 2020

Productivity of solutions

In the first six months of our strategy implementation, we aimed to return Letshego to stability. Our focus areas were to strengthen our core business - providing DAS accounts

• and lay the foundation for product diversification and digital platforms. Many of our Plan 6 targets were achieved ahead of schedule.

What we set out to achieve

• Develop acquisition strategies for all three customer segments (mass, middle income and MSEs).
• Develop a compelling value proposition for each customer segment.
• Leverage our DAS strength and know-how to grow deposits, launch new solutions for MSEs in key markets and identify a diversified product set.
• Digitise access channels for DAS and our savings customers.
• Develop end-to-end digitalisation and automation to increase operational efficiencies.

PLAN 6 KEY TARGETS

Profit before tax of P1 billion

Digital adoption of 69%

X Implement end-to-end automation of

processes.

X Launch digital tools and platforms to improve

customer access and convenience.

X Secure strategic partnerships (both

technology-driven and funding partners) to

expand our reach and develop inclusive

products for existing and potential customers.

X Scale-up solutions that address the needs of

each customer segment and deliver greater

positive impact.

X Further improve the speed at which we

disburse loans - a key differentiator for the

Group - supported by digitisation and agile

methodologies.

X Realign our organisational structures to

support our digital transformation and Agile

Ways of Work programme.

PLAN 2 KEY TARGETS

Grow to 1 million customers by 2022.

Platform thinking

Plan 5 of our strategic implementation sets out our goals to 2025. Particular focus will be placed on providing a refreshed and comprehensive customer value proposition, leveraging our digital assets and continuing to diversify our products to grow revenue and optimise costs.

What we aim to achieve

• Improve and deepen customer centricity and experience.
• Become a fully digitised organisation with an end-to-end digital product offering and a leading information technology enterprise architecture.
• Scale-upall value streams across all three customer segments and in all key markets.
• Create ecosystems that support the entire customer ownership lifecycle of key assets such as homes and vehicles.
• Embed a culture of innovation and high performance.
• Operate a mature talent management approach that supports talent mobility.

PLAN 5 KEY TARGETS

See five conversations on the following pages.

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