CBL gov­er­nor hails new laws

Lesotho Times - - Business - Le­tuka Chafotsa

Cen­tral Bank of le­sotho (CBl) Gov­er­nor retšelisit­soe Mat­lanyane says the five new laws en­acted this year would en­sure the coun­try achieves the an­tic­i­pated eco­nomic growth through prop­erly ad­min­is­tered fi­nan­cial and in­surance in­sti­tu­tions.

Speak­ing dur­ing a press con­fer­ence held at Le­hakoe this week, Dr Mat­lanyane high­lighted the new reg­u­la­tions which she said would en­sure bet­ter reg­u­la­tion of the fi­nan­cial and in­surance sec­tors.

“The fol­low­ing laws and reg­u­la­tions were duly gazetted this year, namely the In­surance Act of 2014, Pay­ments Sys­tems Act of 2014, Fi­nan­cial In­sti­tu­tions (Money Trans­fer) Reg­u­la­tions of 2014, Fi­nan­cial In­sti­tu­tions (Credit Only and De­posit-tak­ing Mi­cro-Fi­nance In­sti­tu­tions) Reg­u­la­tions of 2014 and Fi­nan­cial In­sti­tu­tions (For­eign Ex­change Bureau) Reg­u­la­tions of 2014,” Dr Mat­lanyane said.

“The In­surance Act of 2014 re­pealed the In­surance Act of 1976 in or­der to pro­vide for the con­sol­i­da­tion, ad­min­is­tra­tion, su­per­vi­sion, reg­u­la­tion, pro­tec­tion and de­vel­op­ment of in­surance business in Le­sotho. It also en­sures the in­surance in­dus­try meets the de­mands of the econ­omy for risk-man­age­ment and stim­u­la­tion of growth in the in­vest­ment sec­tor.”

Dr Mat­lanyane also said it was “a well-known fact” that the re­cent global fi­nan­cial crunch be­gan through chal­lenges in the in­surance sec­tor, hence Le­sotho’s decision to take pro­tec­tive mea­sures.

“One of the lessons learnt by reg­u­la­tors from the global fi­nan­cial cri­sis is that there is in­creased need to en­hance the reg­u­la­tion of in­surance busi­nesses. Through this Act, the Com­mis­sioner of In­surance can make nec­es­sary reg­u­la­tory changes to achieve the de­sired su­per­vi­sion, reg­u­la­tion and de­vel­op­ment of in­surance busi­nesses in Le­sotho.”

Ac­cord­ing to Dr Mat­lanyane, there have been sub­stan­tial changes in the size and growth of Le­sotho’s econ­omy, hence the need for rel­e­vant leg­is­la­tion.

“The scope of op­er­a­tions by the in­surance sec­tor has also changed with the growth of the econ­omy. The re­pealed Act is there­fore, out of date and does not ad­dress the pre­vail­ing de­vel­op­ments and chal­lenges in the in­surance in­dus­try. Ad­di­tion­ally, the Act does not pro­vide the CBL, as the reg­u­la­tor and Com­mis­sioner of In­surance, with the nec­es­sary pow­ers and tools to en­able it to achieve ef­fec­tive reg­u­la­tion and su­per­vi­sion of the sec­tor. “Other pit­falls stem from the fact that most penal­ties un­der the In­surance Act were last for­mu­lated in 1976, and have now fallen be­hind in terms of value and are no l o ng

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“Li­cens­ing re­quire­ments are also loose, and other classes of in­surance are not catered for, such as mi­croin­sur­ance. Worse still, there are no pro­vi­sions re­lat­ing to com­bat­ing money-laun­der­ing and fi­nanc­ing of ter­ror­ism, thereby ren­der­ing the in­surance sec­tor vul­ner­a­ble to such il­le­gal ac­tiv­i­ties.”

On the Pay­ments Sys­tems Act of 2014, Dr Mat­lanyane said: “The ob­jec­tive of the Act is to pro­vide for the es­tab­lish­ment and op­er­a­tion of in­ter­bank pay­ment sys­tems, clear­ing houses and se­cu­ri­ties set­tle­ment sys­tems, in­clud­ing col­lat­eral and net­ting ar­range­ments, as well as re­lated pur­poses.”

Equally im­por­tant, she fur­ther noted, is the Fi­nan­cial In­sti­tu­tions (Money Trans­fer) Reg­u­la­tions of 2014, which would en­sure the CBL “strength­ens ex­ist­ing non-bank­ing fi­nan­cial in­sti­tu­tions and en­cour­ages the de­vel­op­ment of new ones.

“The ul­ti­mate aim is to en­able non-bank­ing fi­nan­cial in­sti­tu­tions to make a full con­tri­bu­tion to growth and poverty re­duc­tion by pro­vid­ing ac­cess to ap­pro­pri­ate and ac­ces­si­ble fi­nan­cial ser­vices for ur­ban and ru­ral ar­eas of Le­sotho.”

The Fi­nan­cial In­sti­tu­tions (Credit Only and De­posit-tak­ing Mi­cro­Fi­nance In­sti­tu­tions) Reg­u­la­tions of 2014 would also help Le­sotho strengthen non-bank­ing fi­nan­cial in­sti­tu­tions, she added.

“Le­sotho’s fi­nan­cial ser­vices are still dom­i­nated by loan prod­ucts de­signed for more tra­di­tional bor­row­ers and of­fered by banks. This leaves low-in­come house­holds, small busi­nesses, in­di­vid­u­als and mi­croen­ter­prises in the cold.

“Th­ese reg­u­la­tions tend to close this gap by pro­vid­ing an en­abling le­gal frame­work where Credit Only and De­posit-tak­ing Mi­cro-Fi­nance In­sti­tu­tions can of­fer prod­ucts that are ac­ces­si­ble, af­ford­able and de­signed to meet the needs of mi­croen­ter­prises and low-in­come house­holds,” Dr Mat­lanyane said.

The gov­er­nor also spoke about the Fi­nan­cial In­sti­tu­tions (For­eign Ex­change Bureau) Reg­u­la­tions of 2014.

“The ob­jec­tive of the For­eign Ex­change Bureau Reg­u­la­tions is to pro­vide for min­i­mum li­cens­ing re­quire­ments for the op­er­a­tion of a For­eign Ex­change Bureau, hav­ing re­gard to best prac­tice prin­ci­ples.

“The reg­u­la­tions are fur­ther meant to as­sist the gov­ern­ment in en­sur­ing that for­eign ex­change busi­nesses ob­serve ap­pro­pri­ate anti-money laun­der­ing and fi­nanc­ing of ter­ror­ism leg­is­la­tion.”

CBL Gov­er­nor Retšelisit­soe Mat­lanyane

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