‘Pri­vate sec­tor re­mains key’

Lesotho Times - - Big Interview -

The Pri­vate Sec­tor Com­pet­i­tive­ness and eco­nomic Di­ver­si­fi­ca­tion Pro­ject (PSCEDP), un­der the Min­istry of Trade and In­dus­try, in part­ner­ship with the Min­istry of Agri­cul­ture and Food Se­cu­rity, is rolling out the first-ever com­mer­cial horticulture projects through­out the coun­try.

The projects are set to see the coun­try’s de­cid­u­ous fruits farm­ers re­ceiv­ing ex­per­tise in pro­duc­ing ap­ples, peaches, apri­cots, cher­ries and plums, for com­mer­cial use.

Pro­ject Man­ager Chaba Mokuku (pic­tured), speaks to Le­sotho Times (LT) reporter, Lekhetho Nt­sukun­yane, about the ini­tia­tive and other de­vel­op­men­tal strides the PSCEDP is en­gaged in.

LT: Could you please first tell us about the PSCEDP and its role in the coun­try?

Mokuku: The pro­ject started way back in 2005. Govern­ment, to­gether with var­i­ous de­vel­op­ment part­ners in­clud­ing the World Bank as well as civil so­ci­ety and the pri­vate sec­tor, met to try and iden­tify ways of im­ple­ment­ing Vi­sion 2020. In par­tic­u­lar, we were fo­cus­ing on the is­sue of eco­nomic growth ex­plor­ing how we can grow the econ­omy. How do we cre­ate jobs and al­le­vi­ate poverty?

The fo­rum led to the for­mu­la­tion of the coun­try’s Poverty Re­duc­tion Strat­egy. The idea was to strengthen the pri­vate sec­tor so that more jobs can be cre­ated. The pro­ject was con­ceived based on that prin­ci­ple that we need to do all we can to en­sure that we grow the pri­vate sec­tor and strengthen it. And so the Pri­vate Sec­tor Com­pet­i­tive­ness and Eco­nomic Di­ver­si­fi­ca­tion Pro­ject was es­tab­lished.

LT: What was the pro­ject’s main aim?

Mokuku: The idea was to im­prove pri­vate sec­tor in­vest­ment in the econ­omy. Here we are say­ing govern­ment should get out of busi­ness. We should have the pri­vate sec­tor play­ing a big­ger role. One of the pro­ject’s main com­po­nents is the need to im­prove the busi­ness en­vi­ron­ment.

We iden­ti­fied ob­sta­cles to pri­vate sec­tor in­vest­ment and tried to re­move them. Most ob­sta­cles are es­sen­tially le­gal, reg­u­la­tory and ad­min­is­tra­tive. For in­stance, peo­ple used to hus­tle to reg­is­ter a com­pany. At that time com­pany registry was still at Law Of­fice, and it used to take more than 30 days to reg­is­ter a com­pany. So the ad­min­is­tra­tion of that law was an ob­sta­cle.

To im­prove the busi­ness en­vi­ron­ment we had to re­view that law. We tried to stream­line pro­ce­dures by re­mov­ing un­nec­es­sary pro­ce­dural steps. We also had to mod­ernise the whole com­pany reg­is­tra­tion sys­tem by com­put­er­iz­ing it. We au­to­mated the sys­tem so that things were done elec­tron­i­cally.

LT: What changes have you in­tro­duced in terms of reg­is­ter­ing a com­pany and start­ing a busi­ness in Le­sotho to­day?

Mokuku: The pro­ce­dure is that you reg­is­ter a com­pany, but it doesn’t op­er­ate im­me­di­ately. You still need a li­cense to op­er­ate the busi­ness. So li­cens­ing was at Min­istry of Trade and In­dus­try’s Ones Stop Busi­ness Shop, and com­pany reg­is­tra­tion was be­ing done at Law Of­fice. We then moved the com­pany reg­is­tra­tion func­tion from Law Of­fice to the Min­istry of Trade. So you now have reg­is­tra­tion and li­cens­ing un­der one roof.

We mod­ernised the reg­is­tra­tion pro­ce­dure and we are cur­rently mod­ernising the li­cens­ing as­pect. We would like busi­nesses to ul­ti­mately reg­is­ter to op­er­ate in one day. Even the com­pany reg­is­tra­tion is not re­ally fully ef­fi­cient in the sense that we man­aged to re­duce that 30plus days to four days to reg­is­ter. We want the process to take a day. We have a new in­dus­trial li­cens­ing law but it is yet to be im­ple­mented. It is also a mod­ern law. We are go­ing to use au­to­ma­tion to speed up the pro­cesses.

LT: Tell us about the com­mer­cial fruit pro­ject which you are cur­rently rolling out through­out the coun­try?

Mokuku: This is the se­cond as­pect of the pro­ject (PSCEDP) where, bas­ing our­selves on the Na­tional Strate­gic and De­vel­op­ment Plan, we have iden­ti­fied three key pri­or­ity sec­tors for de­vel­op­ment, namely com­mer­cial horticulture, tourism and hos­pi­tal­ity, and man­u­fac­tur­ing. We had to plan in­ter­ven­tions around th­ese sec­tors.

So we first iden­ti­fied sub­sec­tors within the com­mer­cial horticulture, and by just ob­serv­ing you can tell that there is plenty of fruit va­ri­eties we are able to pro­duce in this coun­try, but we are un­able, con­versely, to do that com­mer­cially. So we pi­loted this pro­ject with just three farm­ers start­ing from Fe­bru­ary 2007.

The farm­ers were al­ready into com­mer­cial de­cid­u­ous fruit farm­ing. We then planted ap­ples, cher­ries, apri­cots, peaches and plums in the or­chards of th­ese farm­ers. We in­vested a lot in this be­cause we had to in­stall ir­ri­ga­tion sys­tems.

It was more of an ex­per­i­ment be­cause we wanted the fruits to grow un­der a con­ducive en­vi­ron­ment. So we did this in Thuathe, Qo­qolos­ing and Ma­hobong. The trees we planted started bear­ing fruits in year three. This en­abled us to iden­tify which va­ri­eties were do­ing well than the oth­ers.

We started with 1600 trees per orchard but we have since ex­tended that in the re­cent roll­out up to over 14 000 trees in Ma­hobong. Now, th­ese are ru­ral farm­ers who used to grow grain, like maize, and made at most M2000 per hectare.

And for fruit trees when they are ma­ture the farm­ers are able to make M4000 to M5000 per hectare. So there is big dif­fer­ence. This is an op­por­tu­nity for cre­at­ing jobs be­cause th­ese fruits are not only be­ing pro­duced for the lo­cal mar­ket, but they are also be­ing ex­ported.

LT: Does Le­sotho there­fore stand a bet­ter chance of be­com­ing a com­mer­cial fruit pro­duc­ing coun­try?

Mokuku: Be­cause of our al­ti­tude and weather con­di­tions, we tend to have high qual­ity fruits. With the same va­ri­ety of fruits, you find that, be­cause of our al­ti­tude and weather con­di­tions, the taste is dif­fer­ent from other coun­tries. In Le­sotho the fruit be­comes sweeter than in say in South Africa.

Again, the same va­ri­eties ripe ear­lier in Le­sotho than in South Africa. This is im­por­tant be­cause it means we are the first on the mar­ket. Not only that, we also have va­ri­eties which ripe much later, which also is an ad­van­tage. We have that com­par­a­tive ad­van­tage which we are now uti­liz­ing.

LT: How many farm­ers are al­ready reap­ing the re­wards from this pro­ject?

Mokuku: At the mo­ment we a farm­ers’ com­pany with nine share­hold­ers in Ma­hobong; one farmer in Qo­qolos­ing and one farmer in Thuathe Ad­di­tional 27 house­holds in the new roll out sites in Ma­hobong and Likhet­lane will start ben­e­fit­ting when they get their first har­vest in 2017. I must the main­te­nance of the ex­ist­ing or­chards and es­tab­lish­ment of new farms have also cre­ated em­ploy­ment for the lo­cal com­mu­ni­ties.

LT: Why did you choose Ma­hobong?

Mokuku: The roll-out site was se­lected af­ter care­ful con­sid­er­a­tion and de­tailed as­sess­ment of cli­matic con­di­tions, soil pro­file, ac­cess to wa­ter, prox­im­ity of pow­er­lines and in­ter­est by vil­lagers and the vil­lage chief which a po­ten­tial roll-out site needed to have. The pro­ject has also pro­duced na­tional and suit­abil­ity maps for de­cid­u­ous fruits which serves as a ba­sis for site se­lec­tion.

LT: What about the other ar­eas…?

Mokuku: The Thuathe pi­lot pro­ject has now be­come a demon­stra­tion cen­ter. We have signed a con­tract with the farmer there. He is now on his own. We don’t sup­port him any­more fi­nan­cially.

But we have agreed that he should pass on the knowl­edge to other farm­ers. We are go­ing to use an­other demon­stra­tion cen­ter but that one we are go­ing to own it in a dif­fer­ent lo­ca­tion but still in Ma­hobong.

This is where we are go­ing to test new va­ri­eties and en­cour­age farm­ers to grow those which will grow well. We have ex­panded to cover 35 ad­di­tional hectares in other ar­eas of the coun­try re­cently. But when look­ing at the suit­abil­ity map, there are still many other ar­eas iden­ti­fied. About 5000 square me­ters of land has been iden­ti­fied through­out the coun­try.

We can de­velop a whole new in­dus­try out of this. What we have also dis­cov­ered is that we can have op­ti­mum pro­duc­tion in year eight. Pro­duc­tion in­creases ev­ery year as the tree grows and as the farm­ers de­velop more ex­pe­ri­ence.

LT: Have you equipped the farm­ers enough to sus­tain the projects?

Mokuku: That’s ex­actly what we are do­ing. We are train­ing them reg­u­larly with the help of ex­perts from South Africa. We have also adopted in­ter­na­tional cer­ti­fi­ca­tion on good agri­cul­tural prac­tices. Es­sen­tially, this is for ex­port pur­poses. The Bless­ings farm in Thuathe has al­ready been cer­ti­fied by Global Gap Cer­ti­fi­ca­tion, which is an ap­proved in­ter­na­tional cer­ti­fi­ca­tion agency. In­ter­na­tional au­di­tors will be com­ing soon to au­dit the farm.

LT: Will get­ting the mar­kets not be­come a se­ri­ous chal­lenge as you con­tinue the roll­out?

Mokuku: The lo­cal de­mand from re­tail­ers such as Sho­prite, Game, Pick’n Pay, Fruits and Veg, and is cur­rently higher than the sup­ply. How­ever, as the ini­tia­tive ex­pands, we will have ac­cess to the re­gional and in­ter­na­tional mar­kets as all farms would have at­tained in­ter­na­tional cer­ti­fi­ca­tion for good agri­cul­tural prac­tices known as Global G.A.P. cur­rently, one pi­lot farm is cer­ti­fied, and the Ma­hobong roll out the other pi­lot sites will be cer­ti­fied dur­ing the first quar­ter of cur­rent cal­en­dar year. As vol­umes in­crease, there will be more se­cond and third fruits that for pro­cess­ing. This in­cludes can­ning, juic­ing or dry­ing.

LT: Who are your part­ners in th­ese in­ter­ven­tions?

Mokuku: We, as a pro­ject, are sim­ply fa­cil­i­ta­tors. We bring ex­per­tise and re­sources. There are spe­cific min­istries that are tasked with the re­spon­si­bil­ity. For in­stance the Min­istry of Trade will be re­spon­si­ble for in­dus­trial li­cens­ing, so we work with it on that par­tic­u­lar re­form area.

We also have other ob­sta­cles, such as ac­cess to fi­nance. We are work­ing with the Cen­tral Bank of Le­sotho (CBL) in that re­gard. CBL is lead­ing that par­tic­u­lar ini­tia­tive to­gether with the Min­istry of Fi­nance. In fact CBL is our di­rect part­ner…... For in­stance, we are work­ing with them on the credit bureau, which is al­ready op­er­a­tional. Right now we will be as­sist­ing them to launch and im­ple­ment the aware­ness cam­paign on 19 Jan­uary 2016.

LT: Are there any other in­ter­ven­tions which your pro­ject is en­gaged in to­gether with the govern­ment?

Mokuku: We are also work­ing on es­tab­lish­ment of a col­lat­eral registry, which is a reg­is­ter of mov­able as­sets. This is go­ing to as­sist credit providers to check whether cer­tain as­sets have al­ready been pledged for fi­nan­cial as­sis­tance be­cause there are in­stances where you find that in­di­vid­u­als dou­ble pledge their as­sets to get loans.

So once you pledge your as­set it will go into that registry. But still one as­set can be pledged a num­ber of times de­pend­ing on its value. We have al­ready drafted a pol­icy with the CBL in re­la­tion to the col­lat­eral registry and a law that gov­erns it.

An­other in­ter­ven­tion that we did was to draft a law gov­ern­ing fi­nan­cial leas­ing. This, es­sen­tially, is leas­ing of mainly mov­able as­sets. For in­stance, if you want to con­struct a road, you may not have all the ex­ca­va­tors and other ma­chin­ery and to pro­cure such equip­ment will take you a very long time.

Banks, on the other hand, may not be able to give you a loan. So what we are try­ing to do is to come up with a leas­ing in­dus­try where you can sim­ply just lease equip­ment. What this means is that you can start a busi­ness al­most im­me­di­ately with­out own­ing equip­ment, but rent­ing it.

It’s a win-win sit­u­a­tion be­cause the leas­ing com­pany gets rentals and you, on the other hand, are able to start gen­er­at­ing rev­enue and pay­ing rentals while you also re­tain the as­sets — sim­ple. I took the CBL del­e­ga­tion to Mau­ri­tius where this in­dus­try is well de­vel­oped. I also took them to Sri Lanka where it is op­er­a­tive and they were very ex­cited about the ini­tia­tive. In Mau­ri­tius, over 75 per­cent of ve­hi­cles are leased. Peo­ple don’t own ve­hi­cles.

They pay monthly rentals, which is more or less sim­i­lar to the hire pur­chase ini­tia­tive where you hire an as­set or buy ve­hi­cle via bank fi­nance and by the time you fin­ish pay­ing the bank you prob­a­bly no longer want the as­set. So leas­ing is a so­lu­tion. We have since de­vel­oped the law and a strat­egy to that ef­fect. We are about to im­ple­ment the strat­egy this year.

We are also work­ing on the in­sol­vency law. One of the big­gest chal­lenges is that if I give credit and you be­come in­sol­vent, it be­comes dif­fi­cult for me to re­cover what you owe me. This has led to fi­nan­cial providers be­com­ing re­luc­tant to giv­ing out the credit.

Or if they give the credit, the in­ter­est rates are high be­cause there is a risk. Some peo­ple may not want to in­vest where means of re­cov­ery are not easy. So we are work­ing on that law with the of­fice of the Mas­ter of High Court. The idea is re­ally not to rush to liq­ui­date com­pa­nies when they could still be vi­able.

This is an op­por­tu­nity for cre­at­ing jobs be­cause th­ese fruits are not only be­ing pro­duced for the lo­cal mar­ket, but they are also be­ing ex­ported.

LT: Are there any chal­lenges im­ped­ing your work?

Mokuku: Leg­isla­tive pro­cesses are very slow. For any law, you need to have req­ui­site ca­pac­ity to im­ple­ment it. It’s not just a mat­ter of hav­ing the law in place. You need to have skilled peo­ple. For in­stance, you can’t talk about li­cens­ing with­out in­spec­tions, which means you have to have in­spec­tors who know what to look for.

We also don’t have clearly de­fined pro­ce­dures in govern­ment sys­tems. For in­stance, if you go to any min­istry and ask what are the pro­cesses they fol­low when for­mu­lat­ing a pol­icy, one min­istry will tell you some­thing dif­fer­ent from the other. There is no uni­for­mity in do­ing all th­ese things.

We should have hand­books and guides be­cause that way you won’t find your­self liv­ing in a sit­u­a­tion where you leave things to the dis­cre­tion of of­fi­cials. Lack of trans­parency leads to cor­rup­tion. So if there is trans­parency and pub­lic­ity so that peo­ple know what pro­ce­dures are in place; there are no grey ar­eas; there will be no space for cor­rup­tion.

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