LESOTHO is set to establish its first stock exchange on the 22 January 2016, Central Bank of Lesotho (CBL) Senior Marketing Developer Motebang Mphi has said.
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.
Once the bourse, which would be called Maseru Securities Exchange (MSE), is established, the CBL’s role would be to regulate and supervise its operations without being involved in its day-to-day operations.
Mr Mphi said companies eligible for listing on the MSE should have at least a million shares, a thousand shareholders and at least 20 percent of their shares in public hands.
The companies, he said, must also be public companies and registered on the Ministry of Trade and Industry’s database.
Mr Mphi said already three companies were ready to list on the securities exchange.
“We recently completed negotiations with three companies that have shown an interest to list on the MSE. Three stockbrokers have also come on board,” he said.
Mr Mphi said the bourse would be initially housed and operated by the CBL.
“This is in line with experiences in other third world countries where the private sector does not have enough resources. As soon as there is enough volume, CBL will then handover the bourse to the private sector to operate,” he said.
“Initially, the facility would be accessed physically by stockbrokers responsible for facilitating the trading. Only when it becomes cost effective for the service be offered electronically will the CBL facilitate that option”
Mr Mphi said from next month Basotho would be able to invest in listed companies through registered and licensed stockbrokers who are also members of MSE.
“In the event that a member of the public intends to buy shares, they would need to approach a stockbroker who would be a member of the MSE. The broker will then represent the client in buying or selling stocks and other securities,” he said.
Mr Mphi said the establishment of the bourse was also a way of raising capital for corporate and other business ventures.
“After we realised that lack of access to capital was one of the major obstacles for local businesses, the CBL started to work towards establishing the MSE to create opportunities for them to access sources of funding from different investors,” he said.
“The idea behind the MSE is to create an alternative platform to the usual route of going to a bank for a loan.
“Individuals who buy the shares would also be presented with a chance to generate income in the form of dividends accrued from their investment. They could also enjoy capital gains which refers to profit that results from a sale of a capital asset, such as stock.”