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International Relations |
Introduction:
Lesotho continues to demonstrate a strong commitment to
economic cooperation through its membership and
participation in the activities of regional economic and
international organizations. These include the Common
Monetary Area (CMA), Southern African Customs Union (SACU),
Southern African Development Community (SADC), the African
Rural and Agricultural Credit Association (AFRACA), the All
African Central Banks (AACB), International Monetary Fund (IMF)
and the World Bank (WB).
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Common
Monetary Area [CMA] |
Lesotho’s fiscal and monetary policies operate
within the context of the membership of the Common
Monetary Area (CMA). This includes Namibia,
Swaziland and South Africa . In terms of the CMA
Agreement, the national currency, the loti – is
fixed at par to the South African rand. The latter
is also legal tender and co-circulates with the loti
in Lesotho.
In spite of several benefits that Lesotho derives
out of the CMA arrangement – such as easy
availability of rands to Basotho, the elimination of
exchange rate risk between Lesotho and South Africa,
and, more importantly, macroeconomic stability – the
Agreement poses some policy challenges for Lesotho.
These challenges hinge largely upon synchronization
of fiscal and monetary policies.
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South
African Development Community [SADC] |
SADC
comprises Angola, Democratic Republic of Congo,
Malawi, Mauritius,
 Mozambique,
Seychelles, Tanzania, Zambia, Zimbabwe and SACU
countries (Botswana, Namibia, Swaziland, South
Africa and Lesotho). In the SADC, two memoranda of
understanding (MoUs) were signed. The objective of
the MoU on macroeconomic convergence is to establish
a macro-economic stability coordination framework in
the SADC region.
The MoU on cooperation in taxation and related
matters seeks to harmonise tax regimes, promote the
application and treatment of tax incentives, direct
taxes and treaties to avoid double taxation,
indirect taxation, develop a dispute settlement
mechanism and foster cooperation on capacity
building in the area of taxation.
Work is ongoing to finalise MoU on investment. One
of the sub-structures of the SADC Finance and
Investment sector that was involved in developing
the MoUs was the Committee of Central Bank Governors
(CCBG). At the end of 2003, completed MoUs were
related to cooperation and coordination in the areas
of; payments, settlements and clearing systems;
information and communication technology; and
exchange control. These MoUs have also been endorsed
by the SADC. However, they await standardization by
the SADC Ministers responsible for Finance and
Investment, Legal sector and adoption by the SADC
Council of Ministers for eventual signing and
implementation by the CCBG.
For more information visit the website:
www.sadc.int and
www.sadcbankers.org
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Southern African Customs Union
[SACU] |
 SACU
comprises all CMA countries (Namibia, Swaziland,
South Africa and Lesotho) and Botswana. SACU
countries have continued their economic reform
programmes, where trade and investment
liberalization have played key roles. The 2002 SACU
Agreement provides for:
(i) A more democratic institutional structure
(ii) Dispute settlement mechanism
(iii) Requirement to have common policies on
industrial development, agriculture, competition and
unfair trade practices
(iv) New system regarding the common revenue pool
and sharing formula.
It is envisaged that, once in force, the ratified
Agreement, combined with multilateral trade
liberalisation and outward-orientation, will help
SACU countries to foster their integration into the
world economy. SACU members acknowledge that in
order to promote long-term economic growth, they
need to move towards sources of income other than
the SACU revenue pool. |
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The African
Rural and Agricultural Credit Association (AFRACA) |
AFRACA is
an association whose mandate is to promote rural
development by fostering cooperation among African
governments and financial institutions in
agricultural credit and banking aimed at rural and
financial development. The association is involved
in designing, organizing and coordinating training
programmes for members. In 2002, the AFRACA
Secretary General and the Chairman of the Southern
African Sub-region visited the CBL, and during their
visit, pertinent issues were discussed. Among
pertinent issues discussed during the visits were
the role of commercial banks in rural finance – a
study that was to be carried out in the sub-region,
some planned workshops and CBL’s requirements from
AFRACA.
Through AFRACA, certain achievements have been
possible with major strides including appointment of
Central Bank of Lesotho to the status of Deputy
Chair of AFRACA Executive Committee. As per
practice, the institution that has been elected to
this seat is supposed to host the next meeting of
the Executive Committee. In line with this practice,
CBL through Supervision Department facilitated the
hosting of AFRACA Executive Committee meeting, which
was held in Maseru in June 2003. Pertinent issues
discussed covered the following:
- The need to revive the Central Africa Sub-Region.
- AFRACA’s Diplomatic recognition by the Kenyan
Government.
- New membership fees.
- Review of AFRACA constitution.
- AFRACA Strategic Plan for 2003/2008.
- Themes for the Sub-Regional workshops 2003/2004.
- AFRACA audited accounts 2002.
The CBL through Supervision Department- Rural
Finance Division participated in microfinance
seminars in Sri-Lanka and Ethiopia, and in an
exposure programme at the Bank of Ghana. The
attachment of the Bank of Ghana provided
appreciation of rural banking in the context of
Ghana. The CBL through such exposure programmes, is
armed with the tools necessary for rural financial
intermediation.
More information on CBL-Rural finance visit website
link: www.centralbank/projects/rural or AFRACA’s
website:
www.afraca.org
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Other major international partners include the |
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