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‘PostBank living up to mandate’

 

AS the only wholly 100 percent government-owned commercial bank in the country, Lesotho PostBank (LPB) occupies a unique space. Established in 2004, the financial institution mainly serves the unbanked and under-banked segment of the population. 

As a result of the bank’s stated mandate, more is expected of it in comparison to other financial institutions.

In this wide ranging interview, Business Journal (BJ) reporter, Bereng Mpaki, speaks to LPB Managing Director, Molefi Leqhaoe, on the bank’s unique role among other issues.

BJ: What is the mandate of LPB?

Leqhaoe: As a retail banking institution, our mandate is to mainly serve the unbanked and under-banked economically active urban and rural population which does not have access to financial services in a sustainable manner.

This mandate can be broken down further as a triple-bottom-line mandate to be sustainable, to ensure financial inclusion and to plough back to our communities through our corporate social investment policy.

BJ: What is the strategy the bank employs in order to achieve this mandate?

Leqhaoe: Our strategy is to implement modern technologies which will reduce the costs of transacting. We are aggressively pursuing a sales and service strategy. This enables us to improve our lending capacity and afford the unbanked access to finance. We continuously develop our products and services that are tailored to the needs of our customers and the market to ensure relevance and usability to clients. Most importantly, LPB’s offerings are based on transparent and affordable pricing that is cost-based. There are no hidden costs to the customer.

With these initiatives, we will truly live our slogan of “Affordable. Accessible. Anytime.”

BJ: Are you satisfied with the performance of the bank in regards to achieving its mandate so far?

Leqhaoe: We have come a long way to get to where we are to-day. The bank is now making profits. However, a lot still needs to be done lest we become complacent. As such, we have identified focus areas for expanding our footprint and offering affordable services through modern technology such as digital channels and e-Money.

BJ: What are some of the challenges the bank encounters in its quest of delivering its mandate?

Leqhaoe: Our mandate by, and of itself requires us to offer services in underserved areas with low economic activity. We serve in a high volume, low profitability market. We therefore have to look for solutions that are profitable whilst at the same time ensuring financial inclusion.

Our current delivery channels are branches and ATMs whose expansion is capital intensive. Our technical infrastructure is in a closed loop and does not offer our card holders the ability to use other banks’ infrastructure.

BJ: What interventions have been adopted in response to the challenges that are being met?

Leqhaoe: We are diversifying and increasing our focus on digital delivery channels. These channels will reduce cost of transacting and will be available anywhere, anytime.

We are taking firm steps to increase our presence through a widespread merchant and agent network.

BJ: What sets LPB apart from the rest of the banks available in Lesotho?

Leqhaoe: There are a number of important characteristics that set us apart. One of these is our pricing which is totally transparent, simple, cost-based and affordable. We will still be strengthening this differentiator through our ongoing initiatives.

As the only wholly Basotho-owned bank in the country with a workforce that is predominately Basotho citizens, we are attuned to the needs of our people and our nation. As such, we have retained the passbook despite the successful upgrade of our core banking system. LPB offers local businesses/contractors opportunities in its projects.

BJ: Local banks are often accused of not doing enough to help private business development by way of giving loans. What is your take on this?

Leqhaoe:  LPB has signed agreements with a number of entities in order to address the problems faced by local businesses. Through these relationships, the bank has increased its lending especially to businesses. The following are entities with agreements with LPB:

Ministry of Small Business Development, Cooperatives and Marketing, Tobaka Lesotho Investments, Wool and Mohair, LENAFU, LNDC partial credit scheme, Lesotho Chamber of Commerce and Industry

We are soon signing with BEDCO and Lesotho Mineworkers. We engage with institutions that promote and support entrepreneurship such as National University of Lesotho, LOIC etc.

BJ: What needs to be done in order to address the problem of lack of access to finance by businesses?

Leqhaoe: The key reasons why banks do not extend credit to businesses include, but are not limited to, ability to repay, the quality of business plans, and the perceived or real riskiness of green field businesses. The borrowers, on the other hand, are concerned about the cost of credit and banking requirements for loans.

The relationships forged with entities referred to above are creating trust which is a crucial ingredient in lending. The guarantee schemes from LNDC and the Ministry of Small Business Development, Cooperatives and Marketing have also helped reduce the bank’s exposure to non-repayment of loans.

The incubation of SMEs (small to medium-sized enterprises) is important to graduate micro businesses to SMEs and ultimately to large SMEs or even corporates.

BJ: Tell us about some of the notable achievements the bank has made since its establishment?

Leqhaoe: The bank has become prominent in the last three or so years. One of the achievements is that of profitability since 2014 and a growing balance sheet which has enabled expansion. Our market share has increased.

The recent core banking system upgrade was a huge milestone, especially because the project was completed on time and well within budget without affecting existing business.

While many may not be aware, we offer electronic transfers domestically and within the SADC region at affordable prices. This has been available as far back as 2011.

LPB won a Golden Arrow award from PMR for “Outstanding – 1st Overall in Investment Services” in 2016 and 2017 and the LNDC award for the “Most Promising Bank” in 2015/16.

BJ: What are some of the exciting developments clients of the bank can expect in the near future?

Leqhaoe: Very soon our customers will be able to transact anywhere, anytime through flexible internet and mobile banking channels. Customers in remote areas will access banking services through our network of agents and merchants. The bank will also offer its own affordable mobile wallet to the population at large.  This wallet will be integrated with utility providers and government agencies. Our customers will be even more excited to have our cards accepted at all merchants locally and abroad. We have also diversified our product offering to include vehicle finance and housing loans.

We are opening a business centre at our new branch at Bonhomme House, Cathedral area. The branch will be dedicated to businesses (small to medium) through the new department of Small Business. At Mafike house, a newly established Customer Service Centre will be opened soon.

LPB will be the first bank in Lesotho to offer real time cash deposit-taking ATM’s across the country.

BJ: Long queues of clients waiting for service are sometimes visible at the LPB centres especially at the headquarters in Maseru. Is this also happening in other branches?

Leqhaoe: This is not a norm or culture within LPB. We are definitely governed by core values specifically “placing customer first” at all times. We appreciate and respect these customers. However, growth comes with challenges and part of this has been notable increase in our branch where people queue for services.

Measures are adopted to deal with the situation and we appeal to our customers to bear with us a little longer as we prepare to move some services to Bonhomme House soon and to the Customer Service Centre.

We also anticipate to deploy the Self Service Channels (Digital channels) in the first quarter of 2018 which will assist us in reducing the long queues.

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