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Prime
Minister's Speech on 25th Anniversary of the Central
Bank of Lesotho
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HIS
MAJESTY KING LETSIE III
HONOURABLE PRESIDENT OF THE SENATE
HONOURABLE SPEAKER OF THE NATIONAL ASSEMBLY
YOUR LORDSHIP THE CHIEF JUSTICE
HONOURABLE DEPUTY PRIME MINISTER
HONOURABLE MINISTERS
HONOURABLE JUDGES OF THE HIGH COURT
EXCELLENCIES HEADS OF DIPLOMATIC MISSION AND HEADS
OF INTERNATIONAL ORGANISATIONS
HONOURABLE ATTORNEY GENERAL
HONOURABLE MEMBERS OF PARLIAMENT
CHAIRPERSON OF THE PUBLIC SERVICE COMMISION, THE
INDEPENDENT ELECTORAL COMMISSION AND THE TECHNICAL
SERVICE COMMISSION
GOVERNMENT SECRETARY
HEADS OF CHURCHES
PRINCIPAL SECRETARIES
GOVERNORS OF CENTRAL BANKS FROM SADC AND OTHER PARTS
OF AFRICA
GOVERNOR AND THE BOARD OF DIRECTORS AND STAFF OF THE
CENTRAL BANK OF LESOTHO
SENIOR GOVERNMENT OFFICIALS
HEADS OF PARASTATALS, PRIVATE AND NGO SECTORS
HEADS OF DEFENCE, POLICE, NATIONAL SECURITY AND
PRISON SERVICES
DISTINGUISHED GUESTS
LADIES AND GENTLEMEN
It is indeed a great pleasure and honour to address
you at this special ceremony marking the 25th
Anniversary of the founding of the Central Bank of
Lesotho. We congratulate the Central Bank for having
come this far amidst difficult circumstances of
limited financial resources and conflicting
interests.
On behalf of His Majesty’s Government, and indeed on
my own behalf, I wish to welcome you all to this
ceremony and to recognise the presence of all guests
of honour. These include, the Central Bank Governors
from our SADC region, the Governor of the Central
Bank of Kenya, the Governor of the Bank of Uganda,
the Chairman of the Association of African Central
Banks (AACB), representatives of international
financial institutions, as well as leaders of our
various collaborating institutions. Let me also
acknowledge the presence of former governors, and
deputy governors of the Central Bank of Lesotho,
most of whom are here today. Your presence here is a
source of encouragement and support, and we salute
you all!
Distinguished guests,
Ladies and Gentlemen,
As many of you will recall, the Central Bank of
Lesotho started its humble operations in 1980, as a
monetary authority, following the enactment of the
Lesotho Monetary Authority Act, in 1978. The Lesotho
Monetary Authority was established through much
appreciated technical assistance of the Bundesbank,
and inputs from both the South African Reserve Bank,
and the Swaziland Monetary Authority. Initially, the
Authority was preoccupied with the issuing of the
national currency, Loti. The amendment, in 1982, of
the Lesotho Monetary Authority Act, 1978, not only
changed the name of the Authority to the Central
Bank of Lesotho, but also and indeed more
importantly, extended its mandate to promoting
monetary stability and maintaining a sound financial
system in Lesotho.
Furthermore, major global changes, new methods of
central banking, and events in the financial sector
in Lesotho, particularly in the 1990s, influenced
Government to consider its role in monetary policy,
and to redefine its relationship with the Central
Bank, with a view to confer considerable autonomy on
the latter. Today, the Central Bank of Lesotho is,
in line with global trends, a fully autonomous
institution that drives the country’s monetary
policy. This statutory standing imposes a heavy
responsibility on the Central Bank to become
transparent and accountable in carrying out its
mandate. In this regard, we are proud to acknowledge
that Lesotho’s financial sector has since adopted
prudential guidelines compatible with international
standards.
Distinguished Guests,
Ladies and Gentlemen,
Today’s occasion presents us with the opportunity to
reflect on the successes, and challenges of the
Central Bank of Lesotho. It is also an opportune
time to map out future strategies. There is little
doubt that since the early days of the Lesotho
Monetary Authority, this Bank has achieved a great
deal and has made invaluable impact on the
socio-economic development of our people.
The promulgation of the Financial Institutions Act,
1999, together with its ancillary regulations, and
the Central Bank Act No.2 of 2000, laid a firm basis
upon which the Central Bank of Lesotho could carry
out its mandate of freely formulating and
implementing monetary policy. These pieces of
legislation came, in part, as a response to the
banking crisis of the 1990s, as well as being in
tandem with international central banking standards.
Furthermore, the legislation provides a stable and
secure environment for Lesotho’s financial sector,
by setting prudential requirements in line with
international standards, as set by the Bank of
International Settlements.
The Central Bank deserves our commendation for
successfully drawing cardinal policies aimed at
financial intermediation. Under the Rural Savings
and Credit Groups Scheme, the Central Bank supports
rural-based communities by linking Rural Savings and
Credit Groups to commercial banks. Since the
collapse of the Lesotho Agricultural Development
Bank, with its rural branch networks, micro-lenders
such as cooperative societies and other non-formal
financial entities, have assumed the role of
providing financial services to the low-income
households in the rural and peri-urban areas. Thus
this situation challenged the Central Bank to take a
proactive role in facilitating financial
intermediation in these areas through linkages with
the formal banking sector.
In addition, the Central Bank has continued to
intensify efforts to put in place an efficient
system for the delivery of credit to local
exporters. To this end, the reform of the Export
Finance and Insurance Scheme, facilitates the
provision of short-term export financing. This
thoughtful reform, largely geared towards indigenous
exporters, truly deserves our praise. On a similar
note, Government has also dedicated some money
towards the establishment of a fund for the
development of the private sector. An account that
is administered by the Central Bank of Lesotho has
been opened, and both Government and the Bank are
considering the operational modalities of the Fund.
The Central Bank has also made great strides in its
efforts to regularise the banking sector in Lesotho.
A notable example is the reform of the Lesotho
national payment system. This came as a result of
the rude awakening to the disturbances in payment
system operations in the 1990s, and as a consequence
of the SADC initiative of payment system reform. In
this regard, the Central Bank has put in place an
effective payment and clearance system for cheques
and other financial instruments. This has reduced
the long periods of clearing cheques through the
banking system from over ten days to four days.
Today, we are proud that the operations of the
Lesotho banking industry have been greatly enhanced
in the domestic economy as well as cross-border
payment and settlement system. We hope that more
work will be done to further improve the processes
to achieve appropriate and more effective payment
and settlement system for Lesotho.
The upsurge in the number and variety of financial
institutions has continuously challenged the Central
Bank’s capability to effectively ensure
sustainability of a sound financial system. It is
against the background of these emerging supervisory
challenges that the Central Bank continues to
develop expertise in supervisory and regulatory
activities, in line with developments in the
international community. The liquidation and
privatisation of Lesotho Bank and the closure of the
Lesotho Agricultural Development Bank, as well as
the generally poor financial intermediation in
Lesotho, have deepened the Central Bank’s resolve to
reinforce the supervisory framework, and focus on
the whole enabling environment for a sound financial
system. To this end, Government, on the advice of
the Central Bank, has established a commercial court
to curb the culture of non-repayment of loans, the
culture that contributed significantly to the
downfall of the two state-owned banks. The Court has
been established to provide necessary infrastructure
for handling legal actions arising from transactions
of a commercial nature such as banking and finance,
suretyship, insurance, international trade and
credit. At this point, necessary training and
induction has already been given to the officials of
the High Court. I take this opportunity, therefore,
to urge those responsible to expedite the
operationalisation of the Commercial Court. The
importance of such a court in the economy cannot be
over emphasised.
The establishment of a credit bureau in Lesotho is
further testimony to the resolve of the Central Bank
to strengthen the financial sector in Lesotho. This
credit information database is aimed at restoring
the commercial banks’ confidence in the extension of
credit, and would assist in the assessment of the
credit worthiness of borrowers, both individual and
corporate. The Central Bank has already engaged in
public campaigns geared towards sensitisation for
the establishment of the Bureau. It is envisaged
that once all modalities have been put in place the
Bureau shall commence operation.
Another milestone in the history of the Bank is the
revival of the Post Bank. In line with its
responsibility of ensuring an orderly functioning of
the financial sector, the Central Bank advised
Government on the need to revive the Post Bank. The
Post Bank will cater for the unbanked population,
particularly in the rural areas of our country,
following the very unfortunate demise of the Lesotho
Agricultural Development Bank. The conventional
banks are, unfortunately, reluctant to extend their
services to these areas on account of lack of
necessary infrastructure. However, I find the latter
thinking or argument as patently circuitous and
unimpressive as the proverbial chicken and egg
phenomen!
Master of Ceremonies,
Ladies and Gentlemen,
On the international front, the accession by Lesotho
in 1998 to Article VIII of the IMF Articles of
Agreement, removed restrictions hitherto imposed on
payments and transfers of current international
transactions. Similarly, the Central Bank has also
liberalised the capital account to enable market
participants to effect capital transfers to open
domestic and off shore accounts, thus promoting
foreign direct investment and assisting exporters to
minimise foreign exchange risk. This move has placed
Lesotho at par with other members of the Common
Monetary Area. All of these actions, have
contributed to a multilateral payment system free of
restrictions as well as giving confidence to the
international community that Lesotho will pursue
sound economic policies. And indeed she has, as
evidenced by her selection for the Millennium
Challenge Account and the upgrading of her rating
from B+ to BB- by Fitch Ratings. Lesotho’s selection
for the Millennium Challenge Account is a reflection
of the great strides the country has made in the
areas of political, economic and social policies
promoting economic growth. The upgrading of
Lesotho’s rating by Fitch Ratings, on the other
hand, signals our country’s strength in economic
governance.
The Central Bank also continues its endeavours to
take the lead in anti-money laundering initiatives.
For example, it played a major role in the drafting
of the Money Laundering and Proceeds of Crime Bill.
It is hoped that once enacted, this legislation
shall give assurance to the international community
that Lesotho is committed to thwart and eradicate
from our soil all forms of economic and commercial
crimes.
Distinguished guests,
Ladies and Gentlemen,
The Central Bank of Lesotho has performed well in
the past twenty-five years and we are proud of its
record. Nevertheless, there are still many
challenges to be tackled. The dawn of the new
millennium has heralded an era of economic
globalisation, liberalisation and structural
reforms. Yet these economic trends or policies have
thus far failed to bring about any tangible
improvements to the lives of our people. On the
other hand, we in Lesotho, have experienced very
difficult economic conditions in recent years. These
conditions have been characterised by massive
retrenchments of the Basotho migrant mineworkers,
and a heavy financial burden posed by most of the
public enterprises that never made profits but
relied on the national treasury for subvention. The
latter funds could have been used to improve other
sectors in national life. On the other hand, the
ability of the Central Bank to meet its objectives
and ultimate targets of monetary policy depends on
the support of Lesotho’s fiscal policy. The latter
must provide an anchor to the former. However,
fiscal policy in Lesotho has been under considerable
strain in the new millennium due to several risks.
These include poverty and famine, erratic climatic
conditions, unemployment, and the HIV and AIDS
pandemic. Notwithstanding these risks, His Majesty’s
Government has taken necessary measures to contain
government expenditure, especially recurrent
expenditure, while at the same time, improving
revenue buoyancy. These measures have been adopted
under an IMF and World Bank supported poverty
reduction and growth facility programme.
Against this background, I should stress the need
for all agents of development in Lesotho to come
together to confront these 21st century challenges.
In this regard, it is of utmost importance that we
periodically review the traditional role of the
Central Bank of Lesotho with a view to keeping it in
harmony with the needs of our people. The Central
Bank must not become alienated from the practical
socio-economic problems of our people. The Central
Bank, like many other institutions of its kind,
cannot afford to be an ivory tower in the midst of
squalor. Through its tremendous reservoir of
professional expertise, talent and capacity, it can
and must serve as a force of stimulation, motivation
and enthusiasm in the battle for the economic
upliftment of our nation.
Master of Ceremonies,
Distinguished Guests,
Before I conclude my remarks, allow me to thank most
sincerely, all our cooperating partners for their
invaluable contribution towards the growth and
development of our Central Bank. However, without
minimising the contribution of our other valued
benefactors, I wish to single out the efforts made
by the Government and people of Germany, over the
years, on the growth and development of our Central
Bank. Their assistance, which has not ceased to
date, includes the provision of training and
development of staff, as well as provision of
experts in various areas pertinent to effective
central banking. Let me also thank the management
and the staff, past and present, for the monumental
contribution they have made in the birth and growth
of our bank.
Motsamaisi oa Tšebeletso,
Bo-ntate le bo-’mè,
Ke qetella ka ho boela ke etsa thapeli, ke ipiletsa
ho lona le ho sechaba sa Basotho ka kakaretso, hore
re eleng hloko lefu la HIV le AIDS. Le ntse le le
teng, lea hola, ha le fokotsehe ’me le sekhahla sa
tšoaetso se ntse se phahama ka tsela e sa jeseng
litheohelang, le hoja re tiisitse hakana ho se
loantša.
Kea tseba hore ba bang ba se ba ntse ba honotha ba
re: “O se a le teng, ka ABC e mona ea hae”. E hlile
ke se ke le teng, ’me ha ke na ho khaotsa ho bua ka
HIV le AIDS ho fihlela Mosotho e mong le e mong a
phethahatsa leano lena la ABC, ’me sekhahla sa
tšoaetso se notloa kapa se khinoa. Ke hona feela
mohla re fihlileng moo, Motlotlehi a tla robala
boroko a tseba hore bophelo ba Basotho bo
sireletsehile; ke hona feela ’Muso oa Motlotlehi le
bohle bao a tšoarisaneng matsoho le bona ho loantša
lefu lena, o ka tsebang ho robala boroko. A re
itlhokomeleng hle, maapara-kobo a matle, re se
fetoheng liphofu tsa lefu lena le sehloho.
Bo-ntate le bo-’mè, ruri re lebohela Banka e Kholo
ea Lesotho ka mosebetsi o motlehali oo e o
phethileng lilemong tsena tse mashome a mabeli le
metso e mehlano. Le liemahale ke tsena rea li bona
tsa meaho e majaba-jaba e bontšang hore ruri ha rea
ema nqa e le ’ngoe, re ntse re tsoelapele. Re leboha
le ho lebohela botsamaisi le basebetsi ba Banka ena,
bao e sa leng ba e-oa ba tsoha le eona. Rea le
thoholetsa ba heso, re re pele-a-pele ntšo tsa
bo-Ntšebo! A e hole, a e matlafale le ho feta,
’Malibanka ea Lesotho; moruo oa Lesotho o hole, o
ntlafale; Basotho ba une molemo.
Master of Ceremonies,
Let me conclude by once again congratulating the
Central Bank on its 25th Anniversary and by wishing
it well in the next twenty five years which no doubt
will be full of new and complex challenges,
challenges that will require partnership with the
public and private sector, challenges that will
require flexibility, innovation and intellectual
leadership. I want to assure you of the continued
support of His Majesty’s Government in all your
endeavours towards meeting these challenges.
I wish you joyous celebrations, and thank you all
for your kind attention.
LIKHOMO BASOTHO!
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