THE Central Bank of Lesotho (CBL) has pleaded with the government to offload some of its shares held in state enterprises onto the Maseru Securities Market (MSM) to set the ball rolling on the initiative.
The plea was made by the CBL’s head of financial markets, Bohlale Phakoe, during his presentation about MSM at the Inventors and Financiers Forum on Thursday.
Mr Phakoe said the government should take a leading role to break the apathy that has characterised the MSM since its inception in 2016.
The forum which sought to deliberate issues around access to finance as a key factor for successful investment, was part of the recently held Job Summit. The Job and Investment Summit was part of the Big Fast Results initiative, which government is employing to expedite job creation.
The Big Fast Results strategy was adopted by the government from Malaysia to spur economic transformation. The government engaged PEMANDU Associates, a Malaysian consultancy firm to implement the strategy.
The initiative has identified 77 high impact business projects with a total investment of M19, 9 billion that have the potential to create 30 000 jobs, while there are many other projects yet to secure funding.
The CBL is currently incubating the MSM to facilitate a centralised trading of financial securities in the country. MSM was brought into existence through the Capital Markets Regulations of 2014.
However, since its official launch in 2016, the MSM has struggled to get off the ground with no single company having listed to date.
The MSM is part of wider financial sector reforms aimed at improving financial sector in the country and to encourage the wider share ownership of previously privatised and majority of the companies in Lesotho and facilitate raising of medium to long-term capital.
“We have been trying for the longest time to engage the government and we are still talking, to offload some of the shares it has on the state owned enterprises to enable us to at least have one listed stock on the stock exchange,” Mr Phakoe said.
Mr Phakoe said that government should look no further than the MSM to raise funds for the Big Fast Results initiative.
“We have noted from the presentations overview that the government needs M1 billion to support the projects. Within the MSM, the bond programme is continuing and the Ministry of Development Planning just has to package its projects and to give us the prospectus we can fly with it and collect funds on behalf of the government.”
He however, expressed confidence that despite it taking long to take off, the MSM will eventually come good as there is a market for it.
“We launched in 2016 and to this point there are no stocks listed. But then we are still on time. We note that the Rwandan stock exchange, from launch to the first transaction took three months, we also note that the Botswana stock exchange took 10 years, and we are somewhere in between,” Mr Phakoe said.
He said there was excess liquidity in the market that can enable the MSM to operate smoothly giving an example of recent forex scams that have managed to raise huge sums of money in short periods.
“When we launched, we thought everything was in place because the legal and regulatory framework had been established. The infrastructure was there, investor education is ongoing and the institutional framework is on course.
“We have registered brokers and investment advisors. We have the capacity to help both private companies and the government to issue debt and equity,” Mr Phakoe said.