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Bank not yet licensed, Central Bank warns

MASERU — Probably eager to avoid another MKM disaster, the Central Bank of Lesotho (CBL) has been quick to react to the news that some Basotho are planning to start a commercial bank. The bank issued a statement, warning people that the proposed bank is yet to be licensed. “This is to advise the public that the project has not yet been licensed by the central bank,” the central bank said in a statement on Monday.

“The public is strongly advised to avoid placing money in the project until such time that a banking licence would have been issued by the Central Bank”. The statement follows a meeting the central bank held with the people behind the project on October 5. Although there have been no suggestions that the proposed project could be dubious, the central bank has decided to take precautionary measures so that people don’t burn their fingers. The central bank has been criticised for its slow reaction in dealing with MKM, a Ponzi scheme that operated for years before it was closed.

By the time the company was closed in November 2007, it had taken more than M400 million worth of deposits from nearly half a million people.

Three quarters of the money collected from depositors could not be accounted for and the accounting books were a mess.

Although the company is now in liquidation the damage it inflicted on the financial sector, livelihoods and the central bank’s reputation is still being felt. Kennedy Lefothane, the project’s senior coordinator, said his group assured the central bank that they are going to comply with the rules before operating. “We are building a legitimate institution that will comply with all the rules of the country.”

“The key to us is honesty. We are not promising short-term gains,” Lefothane said.

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