No private sector, no tax revenue!

No private sector, no tax revenue!

The question why Lesotho’s national tax collection will forever hover around M7 billion is very simple. The answer is that the private sector is too weak to provide enough tax revenue.
A weak private sector results in weak tax revenue collection. It’s as simple as that. You don’t even have to waste thousands of Rands and Maloti on a tax khotla/summit to figure that one out. No private sector, No tax revenue!
However, we live in a very strange country, a country that does not believe in the private sector. We also live in a strange country that is obsessed with hoarding assets that have somewhat become rundown.

Our government in particular, is obsessed with running and destroying state owned-enterprises that could otherwise run profitably in the hands of the private sector.
Well, when referring to the private sector, I am not referring to the Asian community that seems to have dominated the business sector in Lesotho. I’m not in anyway trying to sound xenophobic but I am referring to a balanced and fair field of opportunities that can be opened up for Basotho businessmen and women.

We need enterprises that operate profitably to provide jobs for Basotho youths. We don’t need enterprises such as the Loti Brick, which are operating artificially with the support from the government.
As things stand, Loti Brick is in ICU and on a life support machine. Its lungs are still pumping air because of a respiratory machine similar to the one keeping the Lesotho Post Bank alive. Why not sell Loti Brick to Corobrick in order to save and generate new jobs?

To demonstrate the fact that our country does not believe in the private sector, let me ask you a few questions that still remain a mystery.
Why is the LNDC still running Trent Tyre and the LNDC Centre? When will the LNDC sell its stake in the brewery? Why is the Lesotho Housing still operating old flats such as the Friebel Estates and Letsie Flats? Why is the Lesotho government still holding on tight on rundown assets such as the Victoria Hotel?

Why is the Lesotho government clutching on sites such as the Senate Office, the Ministry of Agric headquarters and the Central Charge office site? Why doesn’t the Lesotho government consider selling buildings such as the Post Office Building and Moposo House?
Why isn’t the Moshoeshoe One airport sold and operated privately by Emirates Airlines? Isn’t the Lesotho government to blame for the crisis called unemployment?

The answers are very simple. As I have mentioned above, Lesotho does not believe in the private sector yet it expects a rainfall of tax revenue and jobs. How is that even possible?
Allow me make a reminder to our leaders that may be reading this opinion piece. It is not possible to run a government without money. It’s like trying to travel in a car without petrol. It’ll get stuck!

Tax revenues are possibly the single most important streams of income for any government to function and to deliver basic services. Tax revenues enable governments to build schools, to provide education, to provide health care, to build roads, to provide national safety and security in the form of policing.
They also provide social grants to the poor and the marginalised sector of society.

Money does not grow on trees. To achieve all those obligations, the government has to have strong sources of income that come in the form of taxes. Without taxes, a government will fail to render even the most basic of services such as replacing bulbs in traffic lights and painting the road surface.
Without taxes, policemen and women will walk around in torn uniform and lack dignity. Hospitals will be run by bogus doctors that can’t even stitch a wound all because the government won’t be able to afford good doctors.

Furthermore, without taxes, a government won’t be able afford good teachers. Schools will be infested with monsters who would molest girls on a daily basis. Look, I’m not trying to be sarcastic, but those are the realities of the modern day Lesotho.

The money spent by the government (tax), is generated by hard working businessmen and women. Someone, somewhere has to wake up in the early hours of the morning and work hard in order to generate business. There isn’t a bottomless pit full of money where government can get money and spend it recklessly on overseas trips and Toyota Prados. It does not exist.

So, this brings me to a few pertinent question that came up in a conversation I recently held with one of my friends. Why doesn’t the Lesotho Government consider selling the Lesotho Post Bank to the private sector? Perhaps to Capitec Bank?

Why is the Lesotho Post Bank still under the Ministry of Communications? Why are government bank accounts transferred to the Post Bank? Why is the Post Bank still receiving government support in the form of subventions? Why is there a move to convert the Post Bank into a development bank? When will the state stop interfering in the day to day running of the Post Bank?

Well, your guess is as good as mine but we can all conclude that it doesn’t make business sense at all. A business is a business for one reason only. The reason is to generate money (profit). If it can’t, it is categorised as a charitable organisation.
Take for instance, the issue of Lesotho Post Bank.

Why, for instance, has there been a sudden shift of the target market from the grassroots (lower LSM’s), to the urban market (middle to upper LSM’s)?
Why is the Lesotho Post Bank fixated with competing with established banks such as Standard Lesotho Bank and FNB, yet it was built on the backbone of catering for the low income and rural population?

Who will then cater for the low-income earners and rural population? In my discussions with friends, a suggestion was raised that maybe it’s about time that the government considers selling the Post Bank to Capitec Bank.
Capitec Bank is a modern day success story in the financial services sector. It was founded in Stellenbosch as a money lending company mainly to the low-income earning groups and the rural population of the Western Cape, in South Africa. Due to its success and growth rate, the deposits were substantial enough for it to apply for a fully-fledged commercial banking license in 2001.

Due to the success of knowing the money lending business, Capitec Bank grew by leaps and bounds and attracted new markets such as the unbanked and the youth (young adults). Capitec Bank is now the fifth largest bank by reserves/balance sheet and the fourth largest bank by the number of active accounts, in South Africa.

The success rate has been so high that it is still on a move to roll-out new branches as some of the well-established banks such as Standard Bank, have begun to cut down on fully fledged branches.

What made Capitec successful? It is run by people who are well experienced in banking, who are innovative and are in-touch with the market. Moreover, the business does not have political and government interference.
So, I want to pose this question yet again; does the government want the Lesotho Post Bank to die in its hands rather than selling it to the Private Sector?

Lastly, sentiments do not put bread on the table. Young people are living in desperation because sentiments which are somehow pointless and senseless. Sentiments based on “national interest”. Look at the Basotho Canners!
Young people need jobs and dignity in order to support their families. It is evident that unemployment can be defeated if only the private sector could be given a chance.
Remember: No private sector, no tax revenue!

The views expressed in this article are of the writer and do not represent the views of the newspaper. In the interests of fairness we shall be requesting Lesotho Post Bank to respond if they so wish.

‘Mako Bohloa

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