Home Big Interview Political instability affecting business: Matete

Political instability affecting business: Matete

by Lesotho Times

IN June this year, Nedbank appointed Nkau Matete (NM) as its managing Director, making him the first Mosotho to hold the top job at the bank.

This week, Mr Matete spoke to the Lesotho Times (LT) editor, Herbert Moyo concerning his time so far and the challenges that lie ahead. Below are excerpts from the interview.

LT: You are very new in your appointment as Managing Director of Nedbank. How would you describe your experience so far?

 NM: This is my third month because I started on the 1st of June. During the first two months I was not behind my desk. I was going around visiting the (Nedbank) group’s various operations in different countries. I was at the head office in Sandton, South Africa for three weeks. The next two weeks I visited the subsidiaries. Nedbank has several subsidiaries in Africa. I also visited the Mozambique subsidiaries. They are new to the Nedbank group. I also visited Nedbank Namibia and they are quite a big operation. So, it was a good experience just to understand how the bank operates.

But the last three weeks I have been behind my desk here in Lesotho. Last week was about meeting the staff, getting to know who is who and their aspirations. When you get into a company, you also need to understand its culture and the aspirations of the people that you will be leading just to ensure that you are aligned with them in terms of where you want to take the company. In summary, I must say my experience so far has been really good.

There is a positive, forward-looking attitude on the part of the staff. They are happy that there is a change in leadership which is all the more welcome because Nedbank has never had a local managing director. This is the first local managing director so the challenges are massive but they are not insurmountable. They are challenges that one looks forward to meeting and overcoming.

LT: How has/ is the bank been performing in the prevailing harsh economic environment?

 NM: The economic environment has been very bad. It is bad for everybody not just the banks but the business sector in general. Banks keep money and that money comes from businesses and it also comes from individuals. So, when there is low economic activity and the economy is not growing like it hasn’t been growing, it is really bad. Last year we only 1, 6 percent growth in the gross domestic product (GDP) and it is currently estimated that the next growth will not be more than 2 percent. This means that the economy is stagnant. This is a factor of the global situation.

There is a trade war between the United States and America and China, and as they say, ‘when two elephants fight, it is the grass that suffers’. So, the effects of that trade war are felt by the developing economies. Coming closer to home, in South Africa the effects of everything that has happened since the Guptas and the (state capture) commissions that have been set up are all being felt in the economy and once that (South African) economy is not growing, we are not immune and we are affected by those developments.

But also, in our situation in Lesotho, we have not covered ourselves in glory. We have this never-ending political instability which has a huge effect on the business climate. Business people are investors. They assess the environment and if they feel that the political risk is too high there will be a cost to that. They will factor that cost into whatever they do because it is a risk that has to be paid for by someone. So, who pays for that here in Lesotho? It is me and you. And the economy suffers because of that. So, we really have to put our house in order.

Quite often, business is shy to talk but there comes a time when somebody just needs to say, “hey we can’t continue like this”. I think that’s what us, as the business sector, need to start telling our political leaders. And it’s not just government but also the opposition. Our politicians need to consider the people and not just themselves.

LT: So, have you engaged the government and the political leaders with your concerns as the business sector?

 NM: It is a big challenge when you know that people’s (politicians’) minds are focused on (party and government) succession, who wins and who loses, when are we having the next vote of no confidence; such people are just not in the right state of mind to listen because their focus is on politics and not on moving the country forward.

So even when you engage them, they will speak to you but without any commitment. It’s like you’re speaking to a person who doesn’t know whether or not they will still have a job tomorrow. The unfortunate part is that there’s lack of focus and continuity in what government thinks or tries to do.

Just last week there was a jobs summit organised by the government which is really welcome but you look at some of the projects that were presented there and ask, “did we think about this or they are just to answer a political question on whether or not the government is achieving anything”. So, while this (jobs summit) is a good step, we are also asking whether there is the political will.

Will there be a follow up or this is just noise to remove the attention from the real issues which are political. So, the situation is not good. It is really dire. As business people we do engage the government. In our case, our political head is the Finance minister (Moeketsi Majoro).

We have engagements with Dr Majoro. We had informal dinner meetings that were held regularly last year but we have not had them for the past six months now which is not good. And this is precisely because of politics because since February you can’t speak anything to the government or the All Basotho Convention (ABC) because they are on this never-ending dispute over which is the right leadership of the party.

Last year we had two engagements with big businesses where we they would share with us where the focus of government was. Another area which is linked to the jobs summit is the economic laboratories where areas that can kick start the economy were identified. So, as financial services we are needed and we will want to know if there is government support so that we see where to invest our money.

LT: Two months ago, you also said it was high time that the private sector takes matters into their hands and not wait for the government. What did you mean by this? What exactly do you think the private should be doing?

 NM: The country has to move forward and the economy has to grow. So, if the government takes forever, business can’t just wait on the side and say they are waiting for the government to sort out the political issues. We need to see what we can do and start acting. Take for instance the bank that I lead, Nedbank is here, we have been here for more than 20 years and we are not about to close shop.

We will still be here tomorrow. So, we can’t just sit and not do business because government is blowing hot and cold. So, as business, we also have to pave our own way so that by the time politicians sort out their issues, we are already ahead. So, what I meant was that we can’t just wait and not do anything because we are not getting the support that we need from the government.

LT: What role does Nedbank intend to play on the capital markets of Lesotho? We have the Maseru Securities Market which since establishment has not had a single listing? Will the bank be eventually listed on the Maseru Securities Market?

 NM: The Maseru Securities Market has been there for a while now without a single participant. From Nedbank’s perspective, it’s not something we are thinking about and it’s not something we will think about in the near future. But like any other economy, the country needs a secondary capital market where those who want to raise capital can go. But for Nedbank, and I think that applies to all the banks, the issue is not the need for capital because we do have capital.

We have the capital but we just don’t know where to spend it. We have the cash but what we lack are the bankable projects. So, we are not thinking about the Maseru Securities Market but I also feel that the government and the Central Bank need to engage more in terms of how the Maseru Securities Market can be made to succeed.

LT: How do you see the bank performing at the end of this financial year? Do you see it meetings its targets?

 NM: We are struggling but I’m confident that by the end of the year we would have achieved our targets. The banking business is split between the corporate and the individual banking. On the individual side of things, we are really struggling, the individuals and small businesses are struggling. But we fortunately have big projects.

There has been an influx of capital for medical cannabis and the mining sector. So, it is these big industries that have helped our bank to stay afloat. Medical cannabis is a new and very scary industry but when you hear the amounts of investments they talk about in that sector, there is a potential to transform our economy because Lesotho was the first in Africa to legalise the growing of medical cannabis.

So, we are a step ahead and what is good is that that industry is geared towards export meaning that there will lots of foreign exchange, dollars coming into our space. We were able to lend to this industry. The good thing is that everything had to go through all our governance structures before we could lend. I’m glad we ticked that box and the shareholder allows us to lend. There is a policy to lend out to the medical cannabis industry.

LT: In terms of credit extension to business, how big is your loan book and your non-performing loan (NPL) ratio?

 NM: Things are good. We are not the biggest but our loan book is decent. Fortunately, we are very strict on how we lend. We have been very prudent so we almost do not have any non-performing loans. Unfortunately, when you have low economic activity in a country there will be job lay-offs and those who lose their jobs will not be able to service their loans.

So, whenever you are in a situation that we are in, you need to be extra careful on how you lend. Responsible lending is what we practice and what has helped us to have a clean loan book.

LT: Any final words to the political leaders? 

NM: The political leaders need to grow up and stop looking at their own personal gains and think about the man in the street and how we can move this country forward. We have become an embarrassment to the region and the world so we need to play our meaningful role and take the country forward.

The wool and mohair debacle is one of those things that happen when you have a good idea but everything becomes messy because of lack of adequate consultation with all stakeholders. Wool and mohair have become a mess in this country and the situation has cost a lot in terms of trust among business, the politicians and the electorate.

My advice is that while government may come up with policies, it is very important not to leave anybody behind when you do a major shift in policy.

You may also like

Leave a Comment