How Central Bank, LRA saved  Vodacom

How Central Bank, LRA saved Vodacom

MASERU-THE Central Bank of Lesotho (CBL) and the Lesotho Revenue Authority (LRA) could have saved Vodacom Lesotho from losing its licence.
thepost understands that by the end of May, LCA boss, ‘Mamarame Matela, had been convinced that Vodacom had not made a strong case to persuade her against revoking its licence.

She had dismissed nearly every point the company had made in its three letters to her office and had concluded that the company was deliberately defying or ignoring the LCA’s orders.
Matela believed that the company was not remorseful enough.

On several occasions between March and May Matela told Vodacom that its representations were not substantial enough to avoid losing the operating licence.
She had the same attitude to the company’s three letters imploring the LCA to reconsider the plan to cancel the licence.

Matela makes the same observation in her letter to Vodacom this week.
Slapping the company with a M134 million fine, Matela hints that she would have preferred to revoke the licence had it not been for submissions from the CBL and LRA.

“On careful examination of the representations made by Vodacom, coupled with improper conduct of Vodacom throughout the process, the Authority found the representations insufficient to warrant a different determination,” Matela said.

What seems to have stopped her from cancelling the licence are the views of the CBL, LRA and other stakeholders. Of major concern to the LRA and CBL was the potential disruption to their operations if the licence was revoked.
Matela says the LRA indicated that “revocation would affect its operations as it utilises Vodacom for on-line systems such as dedicated leased lines for the primary and secondary data Centres …”

The LRA also told her that it’s using Vodacom’s data services for employees working from home during the Covid-19 crisis. The revenue authority also said it relied on the company for local and international telephone services.
“LRA also submitted that the impact would mostly be felt on the online services and call centre services, which are self-service channels for taxpayers as well as the trading community that uses their systems to lodge declarations for import and export purposes.”

The LRA however said it could switch to other service providers but that would leave it over-reliant on a “single point for all services”.
The CBL said revoking the licence would have a significant impact on the entire financial system. The apex bank told the LCA that the financial system relies heavily on Vodacom network connectivity services for “backup of national payment systems in Lesotho to maintain monetary and financial stability as well as to fulfil its core function as a banker of the Government of Lesotho”.

It said Vodacom also provides systems and back-up for other financial institutions, mobile money service providers and fintech start-ups.
In a nutshell CBL was saying the decision would affect the monetary and financial systems as well as disrupt financial inclusion.
“It also posited that revocation would result in a major impact on the economy at large,” Matela said.

She however said the bank was quick to caution that it did not condone contemptuous behaviour from any regulated entities. The bank said it places high value on compliance and good market conduct.

Those submissions as well as the prevailing economic and market conditions seem to have persuaded Matela that “there may be reasonable grounds to reconsider revocation despite the absence of compelling representations from Vodacom to warrant a different determination”.

She also considered that the Covid-19 pandemic’s impact on the mining, textile and manufacturing sectors is likely to affect the communications sector in the short to medium term.
“Notwithstanding the inadequate substantiation and improper conduct, the Authority considered the submissions of other regulators in determining whether to revoke the Vodacom licence,” Matela.

“After having considered the matter holistically, the Authority has decided to reconsider the revocation of the unified licence and impose a penalty.”

Staff Reporter

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