Seleke steadying ‘rickety’ LNDC
THE Lesotho National Development Corporation (LNDC) recently unveiled its five-year strategic plan. The plan highlights the corporation’s intention to diversify the country’s industrial output and its markets through mainly targeting commercial agriculture. In this wide-ranging interview with Lesotho Times (LT) reporter, Bereng Mpaki, LNDC’s young and exuberant chief executive officer, Mohato Seleke (MS), discusses the thinking behind the corporation’s new direction. He also talks about the challenges facing the country’s investment promotion agency as it celebrates half a century in existence.
LT: In what state did you find the corporation when you joined last year?
MS: When I came in on 1 December 2017, the cooperation was in a great state of uncertainty. First, in October and November of that year, the LNDC board had decided not to renew employment contracts of the entire executive management. Most of these executives had been with LNDC for close to 30 years. My new executive team was made of and continues to be composed of, managers in acting capacities.
Lack of clarity on the strategic direction of the corporation was another troubling aspect. The LNDC Strategic Plan 2015-2017 was coming to end around at the time. It was time for a new vison; a new plan for the corporation. Third, the organisation has been undergoing realignment of its structure for the past 16 months or so. The diagnostic and design work had already been done and now I came at a critical time of implementation. Lastly, there was very low staff morale, and the corporation had been unionised for the first time towards the beginning of the second quarter of 2017. LNDC was simply a volatile and toxic work environment, with tensions between management and staff simmering for years. I am told things were so bad in the previous year that they had to bring in a “healer”.
LT: What was your immediate reaction to the situation?
MS: I told myself to get ready, take control and move swiftly on what really matters. As Rahm Emanuel would say “Never let a good crisis go to waste”. I have gone through far rougher situations. My tentacles run deep.
LT: Can you tell us more about the thinking behind the strategic direction the organisation wishes to follow for the next five years?
MS: The strategy is about returning LNDC to its roots and reaffirming its centrality as a catalyst for diversified, inclusive and private- led economic growth. First, we are diversifying the economy on two fronts, namely the range of our industrial output and market destinations. We produce very few products and we ship to very few markets. In manufacturing, the plan is to diversify up the value chain in textiles and incentivise growth in non-textile areas. But our biggest focus is on agro-industries. That is where we intend to commit substantial resources. In terms markets access, we are accelerating our entry into regional markets, Europe and Mid East while defending our territory under AGOA.
Secondly, this time we are co-investing with our communities-the land owners, entrepreneurs, not only to create jobs but to raise income levels. In the agro-industries, land value is going to take an equity position in a good number of these mega-projects we preparing to initiate or facilitate.
Thirdly, the plan levels the playing field to allow the private capital to flow, check the project preparation facility, equity fund and introduction of national agricultural insurance.
LT: What will it take for the organisation to successfully realise the new strategic plan?
MS: Now that the new strategic plan is in place, I have to fast track the implementation of the structure that will shape the corporation for decades to come. Remember, we are moving away from eight traditional divisions to four new strategic business units (SBUs), namely the Development Finance Institution, Investment and Trade Promotion Agency, Property Development and Management. These are supported by Corporate Services. We will execute this in manner that synchronises seamlessly with corporate strategy.
Then I need the right resources, key being talent to drive our ambitious agenda. We also have to raise tremendous amounts capital to transform agriculture in this country. I think we are on track, slowly but surely.
LT: You mentioned that one of the key features of the strategic plan is diversification into agriculture. Why specifically the agricultural sector?
MS: About 40 out of 55 African countries are net importers of food yet Africa has close to 60 percent of world arable farmland. Only about 4 percent of the area under cultivation is irrigated, ena e nngoe re itšepetse Johavah feela (loosely translated as “the rest is rain-fed”). Here at home, over 65 percent of people earn their leaving from this sector. With proper investment, the right technology and the right scale to drive productivity or yields; agriculture holds tremendous potential for jobs, income growth and export earnings. Both National Strategic Development Plan I and II are spot on in identifying agriculture as a priority sector. We are therefore fully aligned. I can assure you that LNDC plans to play a big role in the sector. Agriculture is the new manufacturing for us in away.
LT: You are one of the youngest CEOs to lead the LNDC. Does this put you under pressure to prove that the younger generation indeed has what it takes to hold such a high profile public office?
MS: I am not sure if age really matters. Some people believe it does. I have my doubts. If I fail, it will be because I did not have the right skills to take this organisation forward. It would be because even if I had a great vision, I failed to execute it. I only hope to be judged on my vision, my plan and my ability to pull it off; nothing else.
LT: As a young executive, are you content with the kind of policies that the LNDC employs to empower the youth?
MS: We have a long way to go in this regard. However, we have taken the first step. We have set up an Innovation Fund to support innovation and research in higher learning institutions. Currently, the fund is financing feasibility studies for Lesotho’s first knowledge-based industrial park for the National University of Lesotho aimed at hosting about 13 factories, with a potential to create thousands of jobs. We have allowed ourselves time to refine the mandate of the fund to extend its coverage to broader society, the youth. This is work in progress.
LT: Some people believe domestic investment needs to be promoted vigorously to develop the local private sector as opposed to focusing mostly on foreign investment. What is your take on this?
MS: When you look at the savings at our disposal as a country through vehicles like the pension fund, pensions of other public institutions, insurances and other collective investments; I suspect we have shipped over M15 billion of Basotho savings to pay for infrastructure and other developments in other countries. However, in order to tap into these savings, you also need to have developed viable assets and instruments through which the funds can be funneled. The LNDC Development Finance Institution is set up, among other reasons, to de-risk projects and structure deals to allow for a decent risk-reward trade-off between savers and those in need of capital. But this is also a policy and regulatory space.
LT: The government is estimated to owe its suppliers millions of maloti a situation some believe can be rescued though usage of LNDC’s Supply Chain Finance initiative. Kindly share your thoughts on this.
MS: The LNDC Supply Chain Finance is basically a repertoire of solutions on the trade finance side but mostly geared towards our diversification efforts. It is not yet at the scale where we can support an exposure of that magnitude. You will also realise that we are planning to set up the product with the private sector players. The product will be operational once the LNDC Development Finance Institution is up and running.
LT: Many prospective tenants often complain about the high rental fees they have to pay in order to secure commercial space in LNDC owned properties, perhaps partly answering why a number of unoccupied offices are visible along the Kingsway main street. What is your take on this?
MS: It is a persistent problem. The management and the board are working towards addressing some of the underlying challenges of bad debts. All I can say for now is that something big is coming in a matter of weeks. Stay tuned.
LT: There are concerns that LNDC is currently developing an industrial park in Butha Buthe, while other industrial sites like Tikoe are yet to be fully occupied by tenants. Can you kindly clarify this?
MS: We are in dire shortage of factory shells. It is a painful situation. All the factory shells you see (except Mafeteng), either have pending litigations or are allocated to a tenant awaiting equipment. There is no unallocated factory shell in Ha Tikoe. Even the shells that were officially handed to LNDC by the contractor this year at Ha Tikoe have all been allocated and are only awaiting equipment from China.
LT: The LNDC has previously encountered problems with a factory operator in Maputsoe who left a trail of debts including employees’ salaries and rents to the LNDC. What is the corporation doing to ensure that such does not recur?
MS: The company had employed about 980 people when it ran into problems in February 2017. When I came in, it was in liquidation and the process continues. However, we have secured new investors. The first will create 1000 jobs and the other will employ at least 500 workers.
In general, the problem may be solved at three levels. At policy level, maybe it is time that the country develops an unemployment insurance fund to cushion workers in situations like this. At another level, we need to strengthen our collaboration with the Labour Commissioner to go after the defaulters in their countries of origin. This would be helpful when the respective company is not in liquidation and that there is clear fraudulent activity by the directors that led to the collapse of the business. The last layer is routine surveillance to pick up early warning signals. This will be more effective when LNDC, WASCO and LEC adhere to credit thresholds. These are agreed from the start.