Diaspora pumps  in M4 billion

Diaspora pumps in M4 billion

MASERU – BASOTHO in the diaspora are estimated to be remitting about M336 million every month, about M4 billion a year, to their families in Lesotho.
That is according to a latest report by 2021 Finscope Consumer Survey. The survey said 60 percent of Basotho in the diaspora send money on a monthly basis to their families in Lesotho.
The research was based on a representative household survey that provides information on the demand, access, use of and behaviour towards financial services by the adult population.

According to Jabulani Khumalo of Finmark Trust, remittances have shifted from being predominantly done through family, friends, and public transport to more formal methods.
“In 2011, 52 percent remitted money through informal channels such as friends, family or public transport,” Khumalo said.
“However, in 2021, there is a significant shift as remitting through informal channels only accounts for 19 percent,” he said.
He attributed the decline in remitting through informal channels to the advent of mobile money and other non-bank facilities like Shoprite and Mukuru.

These facilities are more easily accessible and cost effective to consumers.
Banking channels though still utilized, have suffered a slight decline in usage as compared to 2011.
In 2011 banking channels, which was a combination of bank transfers and bank deposits, accounted for 46 percent of formal remittances while in 2021 banking channels only account for 25 percent.
On behalf of the Bankers Association of Lesotho, Nkau Matete, said two major events have disrupted the financial sector, the entrance of Mobile Network Operators (MNOs) and the Covid-19 pandemic.

The MNOs, he said, have presented traditional banking industry with an opportunity to gain access to consumers they would previously not have been able to access.
“When you look at it, it is a game of partnership with the MNOs because now you are able to move cash through a cellphone number which previously needed someone to have a bank account,” Matete said.
MNO, he said, presents a chance for collaborations in order to enhance consumers’ experience in the financial sector.

“What they have brought in is that we have to work with others, we have to share the risk, we have to share the experiences for the benefit of the client,” he said.
The Covid-19 pandemic, he said, also accelerated the need for banks to digitilise their services and minimise physical interaction to access services.
Boniswa Nhlapo, on behalf of mobile money issuers, said although mobile money has transformed the financial landscape, there is still more that needs to be done especially where remittances are concerned.
Nhlapo said the MNO industry was given a mammoth task to improve financial inclusion and the financial literacy landscape.

Nhlapo said they are already looking at challenges like those related to inadequate number of agents in places resulting in consumers walking for at least 30 minutes to access the services.
“We have come up with strategies to solve access challenges especially now that we are also looking into introducing more services in our product offering,” Nhlapo said.
“However, there are challenges like that of poor network access which needs to be tackled from a policy perspective. Network cable theft is rife and needs to be stopped hence the need for punitive measures on the perpetrators,” he said.

Nikki Kettles, the Executive Head of Programmes at Finnmark Trust, said they focus on financial inclusion and economic inclusivity to reduce poverty in the region by making financial services work for the poor.
Lesotho, she said, has a good story to tell where remittances are concerned as the country has the cheapest corridors in the world for cash-to-cash solutions out of South Africa.
“Data is needed to support impact and Finscope provides this much needed data to ensure the appropriate policy and regulatory issues are addressed,” Kettles said.

“The data is used to create programmes which then directly impact the most vulnerable in our countries,” she said.
The Governor of the Central Bank, Dr Retšelisitsoe Matlanyane, said the Finscope Survey identifies the drivers of, and barriers to financial access and stimulates evidence-based dialogue that will ultimately lead to effective public and private sector interventions that will increase financial inclusion.
“Since the development of the strategy we have seen the implementation of over 70 percent activities and reforms,” Dr Matlanyane said.
She mentioned the licencing of mobile money companies and the establishment of the credit bureau as some of the sector’s milestones.

Lemohang Rakotsoane

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