THE Central Bank of Lesotho (CBL) has launched the country’s first stock exchange which will facilitate the centralised trading of financial securities in the country.
The bourse, which is called Maseru Securities Market (MSM), was launched in Maseru last Friday amid pomp and fanfare with a host of local and regional dignitaries in attendance.
In her address, CBL Governor Dr Retšelisitsoe Matlanyane said the MSM was a centralized securities market meant to bring buyers and sellers of financial securities together to trade them in an organized and regulated environment.
She said the launch of the bourse was part of wider financial sector reforms to encourage wider share ownership and raise medium to long-term capital.
“The launch of Maseru Securities Market represents an effort to develop the corporate bonds and equities market in Lesotho. It is also an attempt to bolster secondary market development,” she said.
Dr Matlanyane said the MSM was established by law through the publication of Capital Markets Regulations of 2014 which provide the CBL with the powers to regulate the bourse.
The regulations, she said, were meant to enable the trading of financial securities in a secure environment which enhances confidence while also not being too strict to suffocate market development.
“While the Bank recognizes how fundamental market development is, it also puts investor protection at heart for integrity of the market,” she said.
“In order to achieve this, Capital Markets Regulations of 2014 were developed. In their development, a cautious decision was made not to suffocate the market with strict laws but to promote and nurture market fairness, orderliness and efficiency through minimum disclosure requirements.”
Dr Matlanyane said the MSM would be initially based at the CBL until the private sector can take over the bourse. She said once the bourse is fully operational, the apex bank would not be involved in its day-to-day operations and would leave the forces of demand and supply to hold sway.
“While the Central Bank has a role to play in financial markets development, its role is limited to preparing the playing field and an oversight function,” she said. “The ultimate responsibility to make this achievement worthwhile lies with the private sector-through provision of securities, becoming members (financial advisors, stock brokers, broker dealers etc), and actively participating in this market.
“I urge our businesses to approach the Central Bank and see how they can seize some of the opportunities coming with the Maseru Securities Market.”
Dr Matlanyane added: “The success of Maseru Securities Market rests solely on the private sector. You are the ones who are going to list your companies and raise capital or issue bonds to raise debt not the Central Bank of Lesotho.
“As a result, the plan is that once the private sector has matured, the Maseru Securities Market will be handed over. The Maseru Securities Market will be housed in the Central Bank of Lesotho in the interim while the private sector prepares itself to takeover.”
The MSM, Dr Matlanyane noted, provided a variety of opportunities for companies and investors to raise capital and meet various financial needs.
“Listed companies can have unlimited access to capital to finance their expansion plans. Being public owned and participating in the centralized market also improves a company’s image and brand,” she said.
“For individuals, the stock exchange represents an alternative investment opportunity. Through the Maseru Securities Market, Basotho can now invest in companies that they want. And, most importantly, in the companies that they know.”
On her part, Finance Minister Dr ‘Mamphono Khaketla said the MSM’s launch was momentous for Lesotho because capital markets played a crucial role in mobilizing funds for both businesses and governments.
“Capital markets enable those with surplus funds to invest them and earn a return, while those with a deficit are able to raise funds for various needs and hence assist the country to allocate funding to the country’s most productive sectors,” she said.
“As such, financial markets development is a strategic move in the government’s drive to achieve sustainable economic growth and address social development goals through creating investment opportunities that eventually improve the welfare of the nation.”
To support the MSM, Dr Khaketla said the government was considering offloading its shareholdings in selected companies in the corporate sector to spur participation and growth on the bourse.
“I am told that the same exercise is being carried out by the Ministry of Trade and Industry through the Lesotho National Development Corporation which has shareholding in a number of companies,” she said.
“When these activities are completed, I believe that there will be a sizeable number of stocks that will be floated on MSM. I also challenge companies present in Lesotho to embrace this effort and voluntarily grab opportunities presented by this initiative.”
The minister also urged the CBL to establish an alternative market to cater for small and medium enterprises.
“It is an indisputable fact that as a developing country, there are many small and medium enterprises than there are larger firms. I therefore challenge the Central Bank of Lesotho to not only target larger and established firms to float their financial securities, but also establish an alternative market for smaller and growing firms,” she said.