THE Central Bank of Lesotho (CBL) has “set the ball rolling” for the establishment of a local securities exchange in the 2015/2016 financial year, the Lesotho Times has learnt.
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.
According to CBL Director of Financial Markets Bohlale Phakoe, the apex bank had already played its part in creating a platform for the formation of a securities exchange.
“The Central Bank of Lesotho cannot run the securities exchange. We can only draw up and level the playing field, after which it will be up to the private sector,” Mr Phakoe said.
He added that the CBL had created an enabling environment for the securities exchange by setting up the infrastructure and institutional framework as well as through public awareness campaigns.
“As of yet, however, there are no companies ready to be listed as many still have to be registered as public companies, issue a memorandum of understanding and conclude their initial public offering.
“The ball is now in the LNDC’s (Lesotho National Development Corporation) court since they can determine which companies are ready to list through their large business database,” he said.
Mr Phakoe said Moruo Development already had a system in place in which the public can purchase over-the-counter shares while other companies had been invited to list on the bourse.
“Such companies as Vodacom and Metropolitan have been approached and invited to list on the MSE because of their size.”
On its part, the LNDC said its working towards creating an equity fund through which it can fund businesses with potential and expedite their growth.
According to LNDC Domestic Investment Manager, Semethe Raleche, the equity fund, which is expected to be functional by the last quarter of the 2015/2016 financial year, would allow the corporation to finance non-listed companies and stimulate their growth so they can be listed on the MSE.
He said the initiative was also meant to encourage foreign investment in local companies.
“We need to walk the talk. Foreign investors need to see us taking risks and investing in the Lesotho market,” said Mr Raleche.
“One day we will attract pension funds to inject additional capital and grow the LNDC equity fund. Such funds would then be channeled to good quality assets and these would be domestic financial assets as opposed to those available in foreign markets such as South Africa.”
He further noted that through fund pooling, more money would become available for venture capital.