CBL urges eco­nomic re­silience

Lesotho Times - - Business - Bereng Mpaki

CEN­TRAL Bank of Le­sotho (CBL) Gov­er­nor, Dr Retšelisit­soe Mat­lanyane, has urged all sec­tors of the econ­omy to in­sti­gate re­forms that will en­sure Le­sotho’s re­silience against cur­rent and im­pend­ing chal­lenges.

Ad­dress­ing a medium-term macroe­co­nomic out­look sem­i­nar for 2015 -2018 or­gan­ised by the CBL this week, Dr Mat­lanyane in­di­cated that while global and re­gional economies were show­ing signs of re­cov­ery over the medium-term, there were emerg­ing threats that needed to be tack­led head on for the econ­omy’s well-be­ing.

The sem­i­nar was at­tended by rep­re­sen­ta­tives of the busi­ness com­mu­nity, pub­lic sec­tor, academia and de­vel­op­ment part­ners among oth­ers.

She said Bri­tain’s with­drawal from the Euro­pean Union af­ter a ref­er­en­dum held on 23 June 2016 would con­tinue to wreak havoc on global mar­kets for sev­eral years, adding that it ne­ces­si­tated the need for bol­ster­ing eco­nomic re­silience.

Brexit, which is an ab­bre­vi­a­tion of “Bri­tish exit” roiled global mar­kets, in­clud­ing cur­ren­cies, caus­ing the Bri­tish pound to fall to its low­est level in decades.

“Brexit will bring about volatil­ity in the global mar­ket for about two to 10 years, if not more. Brexit will shake the global econ­omy, and we have to deal with it,” Dr Mat­lanyane said.

“The only thing we can do is build up the re­silience, which is what has seen us through in the past. Every­body has a role to play, and sec­tors of the econ­omy should help to build the re­silience.”

She said it was about time that the pri­vate sec­tor stopped only look­ing at the govern­ment as their ma­jor client, since the govern­ment would not have enough to spend due to the eco­nomic slow­down.

“For busi­ness, you can no longer rely on govern­ment to be your ma­jor client. You have to de­velop your pro­duc­tive ca­pac­ity.”

The CBL chief also said Le­sotho needed to iden­tify un­der­ly­ing op­por­tu­ni­ties that were be­ing pre­sented by the global eco­nomic slow­down.

She said the cur­rent shift in the Chi­nese econ­omy from in­dus­try to ser­vices was an op­por­tu­nity that Le­sotho could seize by build­ing its pro­duc­tion base so that man­u­fac­tur­ing com­pa­nies in China can con­sider re­lo­cat­ing to Le­sotho.

Dr Mat­lanyane also called for value ad­di­tion in the wool and mo­hair in­dus­try in or­der im­prove the coun­try’s for­eign cur­rency earn- ings.

She said there had been sig­nif­i­cant re­forms in the fi­nan­cial sec­tor in re­cent years as part of ef­forts to bol­ster eco­nomic re­silience.

“Some of the mile­stones in­clude the set­ting up of the Maseru Se­cu­ri­ties Mar­ket, and we are happy that we are get­ting pos­i­tive re­sponses from com­pa­nies in­ter­ested in learn­ing how it func­tions.”

Other strides, the gov­er­nor said, were the in­tro­duc­tion of a credit in­for­ma­tion reg­istry, in­surance reg­u­la­tions as well as the con­sumer pro­tec­tion frame­work in the fi­nan­cial sec­tor.

CBL Direc­tor of Re­search Lehlomela Mo­hapi said global eco­nomic growth was ex­pected to pick up from 3.1 per­cent in 2015 to 3.6 per­cent in 2018. He said the up­swing would be mainly driven by emerg­ing mar­kets and de­velop- ing economies while ad­vanced economies were pro­jected to grow mod­er­ately be­tween 2016 and 2018.

“In par­tic­u­lar, ad­vanced economies are ex­pected to reg­is­ter an av­er­age growth rate of two per­cent in the medium-term. In emerg­ing mar­kets and de­vel­op­ing economies, growth is pro­jected to in­crease from four per­cent in 2015 to 4.8 per­cent in 2018,” Mr Mo­hapi said. “This is driven pri­mar­ily by do­mes­tic de­mand as well as grad­ual nor­mal­iza­tion of dis­tress con­di­tions in a num­ber of large emerg­ing mar­ket economies in­clud­ing Brazil and Rus­sia.”

In the do­mes­tic mar­ket, he said chal­lenges were ex­pected in the man­u­fac­tur­ing sec­tor and agri­cul­tural sec­tors.

He said Liqhobong, Mothae and Lem­phane mines were ex­pected to com­mence op­er­a­tions dur­ing the pe­riod un­der re­view, with an im­prove­ment in the weather con­di­tions ex­pected to al­low for bet­ter agri­cul­tural pro­duc­tion.

“Real gross do­mes­tic prod­uct (GDP) is ex­pected to ac­cel­er­ate steadily from 2.9 per­cent 2015 to 4.6 per­cent in 2018, mainly sup­ported by the min­ing in­dus­try as well as the ser­vices sec­tor,” said Mr Mo­hapi.

“Ad­vance in­fra­struc­ture de­vel­op­ment as­so­ci­ated with the sec­ond phase of the Le­sotho High­lands Wa­ter Project is also set to boost eco­nomic growth start­ing from 2018.”

Le­sotho Cham­ber of Com­merce Gen­eral Sec­re­tary, Fako Hakane, stressed the need for a mind­set change in the work­ing re­la­tions of the pub­lic and pri­vate sec­tors, say­ing they should op­er­ate as part­ners in eco­nomic de­vel­op­ment.

He said it was sur­pris­ing that the govern­ment did not pre­pare for the im­pend­ing re­duc­tion of South African Cus­toms Unions (SACU) rev­enues.

Fi­nance Min­is­ter Dr ‘ Mam­phono Khaketla re­vealed in Fe­bru­ary this year that SACU rev­enues to the fis­cus would de­cline from 23 per­cent to 17 per­cent of GDP in the 2016/17 fi­nan­cial year.

“We all saw it com­ing in the past few years, but the govern­ment did noth­ing to ad­dress the sit­u­a­tion,” Mr Hakane said.

Busi­ness­woman, ‘Maretha­bile Sekhiba, who op­er­ates the Scenery Guest Houses, said there was a need to en­cour­age do­mes­tic in­vest­ment to pre­vent cap­i­tal flight.

She said fi­nan­cial in­sti­tu­tions were favour­ing low risk in­vest­ments like per­sonal fi­nance as op­posed to busi­ness fi­nance thereby stymy­ing eco­nomic pro­duc­tiv­ity.

For his part, Stan­dard Le­sotho Bank Chief Ex­ec­u­tive, Mpho Vum­bukani, said while it may be easy to crit­i­cise banks for not lend­ing enough money to busi­nesses, fi­nan­cial in­sti­tu­tions had to play a bal­anc­ing act.

Mr Vum­bukani said banks had the re­spon­si­bil­ity of safe­guard­ing their clients’ de­posits which they lent to busi­nesses in a sus­tain­able man­ner. Mean­while, in a bid to pro­vide eas­ier ac­cess to eco­nomic in­for­ma­tion, the Cen­tral Bank of Le­sotho CBL has launched two new av­enues to im­prove in­for­ma­tion dis­sem­i­na­tion.

The Macroe­co­nomic Sta­tis­tics De­pos­i­tory is a por­tal where sta­tis­ti­cal eco­nomic in­for­ma­tion can be found, while the Re­search Bul­letin is a com­pi­la­tion of re­searched ar­ti­cles on eco­nomic is­sues rang­ing from 2015 to 2016.

Found on the CBL web­sites, the de­pos­i­tory is un­der the pub­li­ca­tions head­ing and con­tains data dat­ing from as far back as 1982.

The only thing we can do is build up the re­silience, which is what has seen us through in the past. Every­body has a role to play, and sec­tors of the econ­omy should help to build the re­silience

CBL Gov­er­nor Dr Retšelisit­soe Mat­lanyane.

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