THE RURAL SAVING AND CREDIT
SCHEME
Rural Financial Intermediation Policy
The Central
Bank of Lesotho (CBL) promotes a policy of rural financial
intermediation throughout the country. The policy targets
the low income and rural communities and advocates a linkage
banking programme whereby the informal sector is linked to
the formal banking sector through a savings and credit
approach. The objective of this policy is to encourage rural
sector borrowing for productive activities and thus improve
the standard of living of the rural households.
Basically
the rationale is to increase access to credit by providing
basic banking services to the target group while increasing
their income levels through affordable savings based credit.
Strategies to achieve this include inter alia;
· the
use of Rural Savings and Credit Groups (RSCGs) as avenues
through which credit to rural people is delivered;
· legalisation
of RSCGs through registration under the Societies Act of
1966;
· linking
the RSCGs with the formal banking sector under a linkage
program.
Progress Achieved
Extensive
work on sensitisation of rural communities has been
accomplished with much concentration in the remote parts of
the country. Communities living there have shown great
interest in the scheme and are willing to participate. Other
achievements include the following:
· Signing
of the Memorandum of Understanding (MoU) between the CBL, on
behalf of the Government (GOL), and the participating
commercial banks.
· Identification
of Non-Governmental Organisations (NGOs) as trainers of
RSCGs to complement the field staff of the Ministries of
Agriculture and Food Security and Trade, Industry,
Cooperatives and Marketing.
·
Establishment of a Credit Guarantee Fund by the CBL
amounting to M2.5 million.
·
Approval
and financing of loans by the participating commercial banks
under the guarantee of the CBL managed Credit Guarantee
Fund(CGF). To this end, three groups’ loans to the value of
M81,050 were implemented per schedule with activities
bordering on poultry.
Recent
Developments
Subject to a plea from the target communities, CBL took an
initiative to translate the Blueprint for RSCGs to Sesotho
language. The Sesotho version has been passed for approval
and ratification by the Cabinet.
Challenges
Although
the scheme has taken off, there certainly are challenges
facing operations on the ground, these impinge on:
a)
Difficult conditions in rural Lesotho featuring small
populations scattered over large areas thus jeopardising
outreach levels.
b)
Difficult transport logistics to markets with very
few linkages to sustainable markets.
c)
The detrimental spread of participating commercial
banks due to their concentration in the district urban
centres, leaving rural communities at a disadvantage.
d)
Expansion of array of modes of attracting savings
with products tailored to suit the needs of the sector
together with expanded access to economically active
population through financial intermediation processes.
e)
Augmenting the CGF to accommodate a wider intermediation
base. |
