Bereng Mpaki
THE Maseru Securities Market (MSM) is yet to get off the ground despite all the requisite infrastructure being in place for its operation.
According to the Central Bank of Lesotho (CBL), the bourse has not commenced operations since its opening in January this year due to the slow uptake by the private sector.
CBL Financial Markets Director, Bohlale Phakoe, told the Lesotho Times this week the apex bank had been approaching individual companies to motivate them to list on the MSM.
A stock exchange is an organised and regulated financial market where securities such as bonds, notes and shares are bought and sold at prices governed by the forces of demand and supply.
The MSM was established by the CBL to encourage wider share ownership and raise medium to long-term capital. The CBL’s role is to regulate and supervise its operations without being involved in the bourse’s day-to-day operations. It is currently based at the CBL building until the private sector can take over the bourse.
“When we launched the MSM in January this year, everything that needed to be set up from an infrastructure point of view was in place,” said Mr Phakoe.
“So, the next step, which is what we are currently doing, is approaching companies to encourage them to trade in the securities market.”
He said they could not compel the private sector to participate in the securities market hence the campaign to encourage companies to register.
“We need companies to offer their shares to the public and coming to list with the securities market or exchange. However, for that to happen, the firms need to convert from being private entities to public companies.
“They also need have financial statements for the past three years showing that they have been going concerns for at least three years,” Mr Phakoe said.
“We are convinced that some of the companies are now preparing to list on the MSM as we had one-on-one meetings with them explaining everything about the securities market.”
Among the merits of MSM, he said, was helping companies to raise capital through long-term loans of which some commercial banks were unable to deliver.
Mr Phakoe said the securities market would also help to ensure the efficient usage of finances by directing spare funds from the public to enterprises to develop their business operations thereby enabling them to increase their productivity and create more employment opportunities.
CBL Market Risk and Development Head Matsabisa Thamae said the campaign to encourage companies to list on the bourse was “promising”.
“So far there are no securities listed in the stock market. Many enterprises that we have approached indicated the need to raise funding for their businesses and some have responded in a positive manner.”
He said most of the companies they visited were private firms adding that the conversion to a public company was a process that took some time.
Mr Thamae said a number of companies were keen on listing debt securities since it did not take as much time as raising equity.
A debt security represents money that is borrowed and must be repaid, with terms that define the amount borrowed, interest rate and maturity/renewal date. Debt securities include government and corporate bonds, certificates of deposit, preferred stock and collateralised securities.
Equities represent ownership interest held by shareholders in a corporation, such as a stock. Unlike holders of debt securities who generally receive only interest and the repayment of the principal, holders of equity securities are able to profit from capital gains.
Mr Phakoe added that they were also waiting for financial brokers, advisors and dealers to register with the MSM in order to facilitate the trading process.
CBL Senior Financial Markets Developer Motebang Mphi chipped in saying they were holding talks with the Ministry of Finance towards a framework for the government to dispose of shares it holds in various enterprises to the public.
He said the government held the shares during the privatisation process for Basotho to ensure they can participate and benefit in developing the economy.
Meanwhile, an independent business consultant, Robert Likhang, told this paper very few companies in Lesotho had the capacity to meet the MSM listing requirements.
“We will probably have one or two companies getting listed on the stock exchange in the first year because most of the companies in Lesotho will not be able to meet the requirements,” Mr Likhang said.
The government, he said, needed to lead by example by disposing of some of the shares it held in state-owned enterprises.
“I feel the government can motivate the private sector by declaring some of its shares in the public enterprises for sale to the public. I think this will get the ball rolling.”
Mr Likhang added that an effective education campaign was also critical in drumming up support for the MSM.
