Mathatisi Sebusi
AN alarming 60 percent of state-owned enterprises (SOEs) and companies in which the State owns shareholding have failed to pay dividends to the government as expected. In fact, some of them, according to a parliamentary report, have never paid any dividends to the State, since their inception, raising suspicions that they might be engaging in creative accounting to prejudice Basotho
However, other companies in which the government owns shares like Standard Lesotho Bank (SLB), Aon Lesotho, Maluti Mountain Brewery, Avani Hotels have excelled in producing dividends for the State. They paid a total of M225.5 million in dividends in the 2024/2025 financial year, according to a parliamentary portfolio committee report on the Economic and Development Cluster.
The report notes with trepidation, that some companies in which the State owns shares have never remitted any dividends to the State since their inception, claiming operational losses.
The startling claims are in the committee’s Consolidated Report on the Annual the Budget and Estimates of Revenue and Expenditure for the Financial Year 2025/2026.
The report notes that the government holds shares in approximately 20 SOEs, including the Lesotho Electricity Company (LEC), the Basotho Enterprise Development Corporation (BEDCO), and the Water and Sewerage Company (WASCO). The report incorrectly classifies some companies in which the government owns minority shares as SOEs, possibly just for ease of internal reference. However, these companies like SLB and Econet, cannot by any stretch of the imagination be called SOEs.
“Alarmingly, 60 percent of these entities have never paid dividends. Reasons for nonpayment vary, including persistent financial losses due to high staff turnover and inefficiencies in revenue collection, among others,” the report reads.
For the 2024/2025 financial year, the government collected only M225 million in dividends from “state-owned enterprises”, including the Central Bank of Lesotho, Standard Lesotho Bank, Aon Lesotho, Maluti Mountain Brewery, MHG-Avani Hotels, Lesotho Post Bank, and Lesotho National Assurance Company.
The report lists the following entities as having failed to pay dividends: Lesotho Electricity Company, Water and Sewerage Company, Lesotho Post Bank, Basotho Enterprise Development Corporation, Lesotho Tourism Development Corporation, Lesotho National Development Corporation, Loti Brick, OK Bazaars, Lesotho Flour Mills, Econet Telecom Lesotho, Letšeng Diamonds, Storm Mountain (KAO), Lesotho National Insurance Group (General Insurance Co. Ltd.), and National Life Assurance Co. Ltd.
The committee recommended that the “government must take stringent measures against SOEs that fail to pay dividends.”
Contacted for comment regarding nonpayment by mines, Commissioner of Mines, Pheelo Tjatja, attributed the lack of dividend payments to a decline in the global diamond market.
For the 2024/2025 financial year, the government had anticipated collecting M90 million in dividends from mines but only managed to collect M75 million, which was solely paid by Letšeng Diamond Mine. Other mines reported that they were not making any profits, preventing them from declaring dividends.
Mr Tjatja explained that while Letšeng Diamond Mine initially reported a profit, its performance was still negatively affected by a decline in the diamond market during the last two quarters of the previous year.
“Mines have reported losses due to a drop in the global diamond market. As a result, some mines have requested deferrals of dividend payments to the 2025/2026 financial year, while others have been under care and maintenance since last year. This market decline is anticipated to continue into the next financial year, increasing the likelihood of no dividend collections from the mines,” Mr Tjatja said.
Also contacted for comment, Acting Minister of Energy, Mohlomi Moleko, told this publication that the LEC was struggling to pay dividends because it had prioritized settling its debts with its power suppliers, ESKOM and EDM. He explained that LEC faced financial challenges and even struggled to finance its own operations due to low tariffs, which were not cost-effective.
Mr Moleko said the LEC buys electricity from ESKOM and EDM at a high price and sells it to customers at a significantly lower price, resulting in financial losses.
“LEC buys electricity from ESKOM for M5.89 and sells it to customers for M1.41,” Mr Moleko said.
He called for an increase in LEC tariffs to make them cost-effective and align with ESKOM and EDM’s rates. He noted that while ESKOM raised its tariffs by 24%, the Lesotho Electricity and Water Authority (LEWA) only increased LEC’s tariffs by 15 percent.
He urged LEWA to increase tariffs so that LEC could sustain itself. Mr Moleko added that once tariffs were increased, LEC would be able to pay dividends to the government.
“Currently, LEC collects revenue but still requires government funds to pay ESKOM and EDM, which are priorities. Even if LEC were to pay dividends, it would still need to request funds from the government to settle payments to its suppliers….It makes no sense for LEC to pay dividends while defaulting on payments to key suppliers. This situation will persist until tariffs are adjusted accordingly,” Mr Moleko said.
Efforts to obtain comments from Lesotho Flour Mills and WASCO were unsuccessful. Calls to Flour Mills went unanswered, while WASCO spokesperson, Lineo Moqasa, yesterday said the relevant official was attending a workshop and would only be available to respond on Thursday (today).
