Locals must seize opportunities to grow their businesses: PS Masoebe
PRIME Minister Moeketsi Majoro recently appointed 54-year-old Maile Masoebe as principal secretary in the Ministry of Trade and Industry. A proud holder of a Master’s Degree in Operations and Supply Chain from the Liverpool University, Mr Masoebe is not new to the public service. His first senior position was that of director of youth affairs in the Ministry of Gender and Youth, Sport and Recreation in 2005. He also served as Lesotho’s ambassador to India for six years. He worked in the private sector at Metropolitan Lesotho as operations manager for three years. The Sunday Express’ (SE) senior reporter Pascalinah Kabi caught up with Mr Masoebe this week to discuss his vision for the ministry. Below are excerpts of the interview:
SE: You bring in rich experience into a ministry many people see as a major player in driving the country’s economic growth. How will you use that experience to fulfil the nation’s expectations of economic recovery and growth?
Mr Masoebe: I am very excited by the responsibility to lead the Trade and Industry ministry which is viewed by many as the milk cow that feeds the entire economy.
I liken Lesotho’s economy to an emaciated dairy cow which is never fed by those who milk it. The herdboys, who masquerade as foreign investors, have milked this cow to an extent that even the closest family members cannot afford a single meal from its milk.
They are simply just creaming off the profits and reinvesting them back in their own economies. The undeniable fact is that money never circulates in our economy and as a result Lesotho’s economy remains underserved.
We have lost control of our economy to foreigners such that in every small village, the general cafes and bars that were owned and run successfully by our forefathers are now in the hands of foreign nationals and we are happy to work for them. That has to end like yesterday.
There is a clear list of business areas strictly reserved for indigenous Basotho and expatriates should not have been licensed to run those business. The critical first step is to correct this anomaly and gradually reintroduce and support indigenous Basotho. In short, everybody who is in some form of business activity they are not supposed to be in must leave it for Basotho. There are ongoing discussions regarding the ministry’s final position and very soon there will be an official announcement.
The challenge ahead of us is to ensure that Basotho will be ready to take over when the lightning strikes. We have a collective responsibility as government ministries to ensure that the fund for small businesses and the credit guarantee facility set up by the government are used as a transition mechanism through which our people will be able to set up, run and sustain their businesses.
It is also worth mentioning that this time around there seems to be good political will which is a fundamental requirement to the success of this government policy.
We are in a difficult period where the Coronavirus pandemic has taken control of our lives and the economic activities have been negatively affected.
But as a ministry, we want to turn this period into an opportunity and focus our attention on the finalisation of policy and legislative frameworks to help kickstart the economy. Among other documents that we are finalising are the Consumer Protection Act, Investment Policy, Competition Policy. All of these are at an advanced stage. The most important milestone is the establishment of Lesotho Standards Institution (LSI) responsible for standardisation, testing and certification of products.
Another challenge we face as a country is the poor performance of our state-owned enterprises (SOEs) which are currently under the Ministry of Finance. But I am happy that through the Prime Minister’s delivery unit, I will be able to make some policy contributions. There are very many critical questions that our authorities should be asking. For example, how do we, as government, ensure that these SOEs make a meaningful contribution to Lesotho’s industrialisation and economic development? How do we make them more accountable in their reporting? What should be the composition of their board of directors? How do we appoint the right people who understand the government mandate? What kind of economic interventions do we need to put in place to ensure the increased productivity of SOEs and Lesotho’s private sector?
I will make my contributions by way of guiding questions addressed to the prime minister’s delivery unit. We need to ensure that the government delivers in the next two years. I know this sounds like a mammoth task, but I take comfort in the fact that there is political will and my own minister, Dr Thabiso Molapo, is in full support of my approach.
SE: What is your response to some suggestions that there is not enough money locally for investment and foreign direct investment is therefore crucial to economic growth?
Mr Masoebe: We have plenty of resources locally but we are very poor in our thinking. Our prolonged reliance on foreign aid has blindfolded us. Basotho are generally financially illiterate and therefore we fail to see the opportunities right in front of us.
There is money everywhere in this country and that’s the reason why we have an increasing number of financially literate foreign nationals settling in Lesotho and taking control of our economy and repatriating the profits to their own countries.
We will never get things right if we do not think straight. Our focus should be on unlocking the potential for domestic investment and supporting economic diversification.
Let us develop our private sector and also build the capacity of the public sector. Through the economic empowerment programmes that the government is setting up, we should aim to produce more Matekanes, Nthanes and Ramelas. We should do this when these business moguls are still around to provide guidance and support.
There is absolutely no reason why we still have multitudes of graduates moving around and seeking employment. It says a lot about our education which seems to produce good employees rather than good entrepreneurs. Promoting local investment and supporting our small entrepreneurs to set up businesses will directly increase the absorptive capacity of our economy.
That is not to say we completely do away with foreign investment. It will however be important to revisit our investment promotion policy. The government needs to urgently revisit the incentive packages meant to attract foreign investment. I feel that the packages are designed in a manner that allows investors to manipulate our systems and they do not provide any room for partnerships with our local private sector.
We have also failed to make the transfer of skills to locals mandatory so that when these foreign-owned firms shut down, our factory workers- with capital support from government- are able to take over. If they are to eventually take over, our people need to understand the entire supply chain from sourcing raw materials to the export of the final product. They need to understand the market dynamics while they work in different factories. It is these and other discrepancies that we are hoping to correct through the revised investment policy.
We need foreign direct investments (FDIs) with spillover effects into the local economy to transform it for increased productivity. We do not need FDIs that impact negatively on domestic competitiveness as is the case now. In other words, we do not need FDIs that out-competes our domestic firms and crowd out domestic investment thereby increasing our reliance on the foreign contributions and economies.
Correcting such anomalies should be the main focus of our policy frameworks for investment. That is why we need to revisit our incentive packages for attracting FDIs to ensure that such investment also brings benefits beyond just job creation.
The sad reality is that people invest in our country and take the money out. Most of the small to medium foreign owned businesses you see around are not owned by the people you find in the shops.
They represent their masters back in their home countries who inject capital to help them set up and out-compete locally owned businesses. In most of those businesses, especially supermarkets, the payment methods are such that there is no audit trail. This is a deliberate act to avoid paying taxes and it makes it very difficult for our tax authorities to audit their books.
They deliberately avoid using speed points for transactions. Rather they use the simple tills that won’t show the shop name or tin number on the receipt and we have allowed this to happen. In the process this country is losing millions of maloti in unpaid taxes.
But I am happy because this is being discussed at the highest level and our government is revisiting the business regulations to address this particular issue. We need to eliminate the cash transactions and use proper digital payment systems that will provide the audit trail and minimise or eliminate tax evasion and money laundering.
It is imperative that we have business regulations that directly address market failures to ensure the relevance and productivity of any investment made in our economy and that such an investment serves the interests of both the firms and our society.
Our tax laws must also be tightened to safeguard against transfer pricing as this is another channel through which our government has been losing millions as companies fraudulently declared losses each year.
Inter-company transactions must be documented and regulated by law to enable fair auditing. We need to be careful, however, that we tighten these regulations in a manner that does not harm the investment climate by exposing firms to business risks and high levels of uncertainty culminating in barriers to fair competition.
We now have to revitalise the indigenous industries. We need to sensitise the local communities to take advantage of the business opportunities presented to them by the government through the small businesses fund and the credit guarantee scheme.
Building small businesses, owned by local people, will provide a strong basis for stimulating economic growth. We cannot achieve this without the participation of the communities both in formal and informal business sectors. I call upon those in the informal sector to get their businesses registered and apply for small business loans.
It is time we woke up as Basotho and took the responsibility to build our own economy. We have been prisoners of foreign investors for a long time with consequences. Government is extending a helping hand and Basotho must be ready to accept the challenge.