MOBILE money transfer platforms have helped empower consumers and brought thousands more into the financial sector, according to the deputy governor of the Central Bank of Lesotho (CBL), Masilo Makhetha.
Makhetha was speaking at the launch of the Mobile Money Campaign on Monday. The campaign to promote the use of mobile money platforms will end on Friday.
Launched in 2012, Vodacom’s M-Pesa and Econet Telecom Lesotho’s Ecocash have helped thousands in rural areas make financial transactions and save money.
Nearly 70 percent of Lesotho’s 2 million people live in rural areas.
The central bank sees the platforms as a solution to its ambition to bring more people, especially those in rural areas, into the financial sector.
Lesotho’s geography means some people live in far-flung areas in the mountains where commercial banks don’t see economic value in putting branches.
Using the existing mobile network, money transfer platforms have bridged the gap between customers and the financial services. Distance is no longer a barrier.
Once thought to be just a convenient way to communicate, the mobile phone is now providing ways to send and receive money as well as paying bills. The result is that a farmer in the backwaters of Mokhotlong, for instance, can pay for his fertilizer in Maseru.
People once considered unreachable by commercial banks now have access to financial services.
Banks too have been quick to tap into the mobile money market, both as a way of fending off competition from mobile networks and enhancing convenience.
Insurance companies have also entered the fray, using the platforms to offer simplified products and easier ways of paying premiums.
All these, according to Makhetha, have helped improve levels of financial inclusion in Lesotho. And this is happening without the need for huge investment in Automated Teller Machines (ATM) and bank branches in remote areas, he noted.
“It cannot be disputed that mobile money is changing the face of banking globally. Traditional banking was built with branches, cards and large deposits in mind, whereas billions of users are small depositors and business located far from branches,” Makhetha said.
He said this means the conventional banking system has not been able to provide financial services to larger numbers of low-income and poor people especially in the remote areas because of the high costs of physical infrastructure and operational costs.
“On the contrary, mobile phone systems can be placed anywhere as long as there is wireless phone connection and this overcomes the problem of distance and lack of bank branches in remote areas,” Makhetha said.
“For people without bank accounts they can easily use this system which will enable them to save and use money in a safer manner than putting it under mattresses”.
He revealed that since last December M-Pesa and Ecocash have circulated at least M68 million. Comparative figures for the same period last year are not available.
As of December 2015 there had been 751 743 airtime purchases, 243 169 cash withdrawals, 321 768 bill payments and 221 257 domestic money transfers.
Makhetha however said the tremendous growth has not been without huge challenges, most of which have nothing to do with system but market dynamics.
The use of the platforms as a way to pay salaries is yet to catch on in the market.
This is despite the mobile money’s “potential to reduce the hurdles of salaries processing of contracts and casual workers by different organisations in the country including the government of Lesotho,” said Makhetha.
He said banks, mobile operators, retailers and independent companies have to work together to enhance the use of mobile money platforms.
“In this context, payments and banking must be available everywhere for people to trust it. We have to strengthen the legal and regulatory framework. To this extent, e-money regulations have been drafted”.
“Even though the Payment System Act 2014 is in place there is need for further improvements on the legal and regulatory framework.”
He said there is need also to promote mobile money literacy among low income groups because people in the most remote areas of Lesotho don’t understand how to use mobile money.
Other problems have to do with the concentration of mobile money agents in towns and their lack of liquidity. Makhetha said there is an opportunity for Lesotho to reach the same level as Kenya and Tanzania in mobile money usage.
“For this to happen we appeal to mobile money operators to protect the system because there are people who abuse its usage. For example, pyramid schemes that are taking advantage of people,” he said.
A 2011 survey showed that Lesotho has a very high level of access to financial products – the highest among 15 countries surveyed. The FinScope survey revealed that only 19 percent of Lesotho adults are not financially served.
This is compared to 27 percent in South Africa, 31 percent in Namibia, 33 percent in Botswana and 37 percent in Swaziland. The writers of the report on the survey were however careful not to equate access to financial products to financial inclusion.
This high level of inclusion, they said, is driven by very high usage of insurance, primarily funeral insurance (formal as well as informal), which is used by 62 percent of adults.
The survey found that 38 percent of adults have a bank account and a further 23 percent have another form of formal financial service.
This, the report said, means that 61 percent of Lesotho adults are formally included. A further 20 percent are only served by informal financial services.
“Informal usage is very important. In total, 62.4 percent of the adult population use informal financial mechanisms, spread across informal savings, insurance and credit.’’
Why invest for the future
AN investment plan forms a critical pillar of a financial plan, says Tokiso Nthebe, a local author and financial services adviser.
Nthebe, the founder of TKO Financial Wellness and Advisory, says when people invest, they can use their money to buy assets that will increase in value over the long term.
He says these assets can help them build wealth.
“When you invest, your money starts to work for you by providing returns that will beat inflation,’’ Nthebe says.
Nthebe says there is a huge difference between saving and investing.
He says investing requires that you take some level of risk in exchange for an expected return or growth.
Nthebe says Basotho should consider many factors before they decide to start investing.
“It is important to have a clear strategy that guides your investment decisions and to work with qualified professionals,” he says.
Nthebe says one should consider their growth mind-set, investment goals, and their risk tolerance.
In addition, one should consider what kind of growth or return they expect.
He says one should find out whether the institution they invest in is licensed or regulated and how long one should invest.
Nthebe says one should further consider what risks are associated with the investment option and whether there are any associated costs.
He says it is also important to remember that investments take time.
“There are no short cuts to building wealth. Do not fall prey to get-rich-quick schemes,” he says.
Moreover, Nthebe says the investment landscape comprises commercial banks, asset management companies, and insurance companies.
He says each provides different financial products and services.
Nthebe says the Central Bank of Lesotho (CBL) also offers investment solutions such as treasury bills and treasury bonds that Basotho can consider.
Depending on your investment goals, he says financial service providers have a wide range of investment solutions to choose from that cater for short, medium, and long-term goals.
“I encourage Basotho to do thorough research and seek professional advice before making financial decisions,” he says.
Vince Shorb, the United States National Financial Educators Council CEO, writes that “many of the financial problems people face today started when they were young and making their first financial decisions”.
Shorb further says taking on too much debt, not investing early, and failing to plan can take one decades to recover from such.
However, it takes financial literacy to make good decisions, he says.
Financial literacy has been perceived as a tool that gives you the opportunity to be confident and empowered to live the quality of life you have worked hard for.
Shorb says one of the wisest decisions one can make to prepare for the future is to invest.
Investment has been defined as the commitment of funds with a view to minimising risk and safeguarding capital while earning a return.
When Covid-19 hit and the government shut down all gatherings in April 2020, there seemed no way out for ICONICS (Pty) Ltd, a budding events management company based in Leribe district.
They had two options: shut down or innovate to keep the business going.
They chose the latter.
Three years down the line, ICONICS (Pty) Ltd has completely transformed itself from an events management and public relations company into a manufacturing company that is now the envy of Lesotho.
“The closing of events translated into the closing of our business,” Rapitso Mosebetsi, one of the co-founders of ICONICS (Pty) Ltd told thepost this week.
Mosebetsi established ICONICS in partnership with Tumo Mahapa.
Faced with collapse, Mosebetsi say they began buying Personal Protection Equipment (PPE) such as surgical gowns, disposal coveralls and safety apparel for resale.
Eventually they decided to manufacture the PPEs and safety clothing. That was the turning point.
But since the company was already down, Mosebetsi says diversification was a hard nut to crack.
“It became quite a long journey (for us),” he says. “We had to come up with something new for the industry.”
He says they had to overcome stiff competition from giant companies and come up with something unique that would set them apart.
“That was how thermal heating apparel was born,” he says.
“We are the first company to produce thermal heating apparel,” he says.
The company manufactures thermal clothing, which is electric clothing, using power banks of five voltages.
“The voltage is so low to electrocute a person,” he says.
The clothing also has a power button to turn it on and off.
Mosebetsi says the thermal heating apparel is on corporate clothing as well as high-visibility clothing.
Mosebetsi says they started the journey with the support of several organisations, such as the Lesotho National Development Corporation (LNDC) and the Basotho Enterprises Development Corporation (BEDCO), to build their capacity.
Mosebetsi says they also got mentorship support from organisations such as the Global Entrepreneurship Network.
The results of years of hard work are now all out for everyone to see.
In 2022, ICONICS won the M100 000 Business Plan Competition hosted by BEDCO.
This grant enabled them to acquire land and buy five more industrial machines.
This did not only enable the company to increase their production to 100 worksuits a week, but it further created permanent jobs for five people as well as three temporary workers.
Last year, the company took part in the Exporter of the Year event hosted by the LNDC in partnership with the Lesotho Post Bank and the United States Agency for International Development (USAID).
Mosebetsi says they won the award for Lesotho’s most innovative and versatile exporter.
He says this did not only put them in the spotlight, but it further encouraged them to do more.
ICONICS was announced as the best exporter of the year at an event hosted by the LNDC earlier this month.
Mosebetsi says this made them proud, as the award is aligned with their vision.
The award further gives the company an opportunity to participate in the regional competition.
He says this opportunity will further give the company a competitive edge in terms of production locally and globally.
“It will be an honour if we can win the regional competition,” he says.
In terms of markets, Mosebetsi says the company has had the opportunity to list their products in the African Trade Market since 2020 with the support of USAID.
This is an e-commerce platform that opens up the market for African countries to list their products.
Mosebetsi says the company did not only get publicity, but the client database also increased.
He says they moved from supplying individuals only to big companies, different organisations, and different government departments such as those involved in mining and health.
Considering the decline of the Lesotho textile industry, Mosebetsi says their secret to success has been their being innovative.
“Our sustainability is matched with innovation,” he says.
Mosebetsi says it also requires patience coupled with lots of investment in terms of time.
“Rome was not built in one day,” he says.
He says working as a team also plays a critical role.
Despite their achievements, Mosebetsi says the market for innovative industries is one of the hardest nuts to crack.
He says the company is in the process of not only making their products known but also educating people about their safety.
Mosebetsi says the other challenge is the decline of the South African Rand as compared to the US Dollar.
He says some of their materials are sourced from China.
Therefore, it is more expensive to buy such materials.
ICONICS is not only seeking to make their brand well known globally, but Mosebetsi says they are also seeking to create more jobs for our youths.
LetsGo and Win!
LETSHEGO Financial Service has launched the LetsGo and Win loan consolidation campaign where customers win weekly and monthly cash prizes of up to M150 000.
The campaign, which was launched yesterday, will end on November 8.
The LetsGo and Win campaign rewards customers for consolidating their loans.
It is aligned with Letshego Lesotho’s version to offer competitive products that cater for the evolving needs of its customers.
The financial services company operates in Lesotho, Botswana, ESwatini, and Zambia.
The Marketing Manager and Business Partner, Tšotetsi Seema, said Letshego Lesotho is committed to delivering increasing value and options to customers.
Seema said this programme is a testament to that commitment.
“The campaign invites customers to consolidate their loans into one low and easy repayment with reduced rates and they stand to win weekly and monthly prizes,” Seema said.
“The weekly cash prizes will be won by lucky customers randomly selected and notified through Letshego Radio shows,” he said.
Additionally, he said two lucky customers will be randomly selected each month and given a chance to spin the wheel of fortune with a chance to receive a maximum of M20 000 each.
“The loans consolidation campaign makes it easier for customers to choose Letshego Lesotho as their preferred financial services partner.”
He said this innovative campaign aims to help individuals streamline their debt payment while benefiting from reduced interest rates.
“Debt consolidation can help customers get a lower monthly payment, pay off their debt sooner, increase their credit score and simplify their life.”
Letshego Lesotho’s Head of Sales, Distribution and Marketing, Motebang Moeketsi, said managing multiple loans can often be overwhelming with varying interest loans due dates and terms.
“The campaign addresses this challenge by combining multiple loans into a single, easy to manage repayment plan,” Moeketsi said.
He added that this simplification not only eases the financial burden on borrowers but also potentially leads to significant savings over time.
Moreover the new consolidation campaign invites customers to take advantage of their best-in-class financial services provided through Letshego Lesotho branch network and digital platforms.
“Letshego Lesotho is committed to increasing financial inclusion through its efforts to serve underbanked communities, promoting financial literacy and delivering positive social impacts for its customers and communities.”
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