CBL on status of Maseru Securities Market

‘MASENTLE MAKARA

Maseru Securities Market (MSM) is a platform established by the central bank to encourage public companies to raise capital. In 2016 the Central Bank of Lesotho (CBL) established the Maseru Securities Market (MSM) but to date not much is known about it by many Basotho.Tabling the 2018/2019 national budget, Finance Minister Dr Moeketsi Majoro expressed concern that while Lesotho had successfully launched MSM, its potential remained unexploited.

“The Maseru Securities Market has been launched, but its potential is yet to be exploited,” he said. Majoro added: “It (MSM) can be a powerful vehicle for raising capital and also diluting government’s holding of shares in privatised companies. In the 1990s privatisation of government businesses, government retained partial shareholding in trust for Basotho. “At that time and with the absence of a securities market, equity holding became the only avenue for retaining Basotho shareholding.”

He revealed that this year, the government would finalise a plan to recapitalise the Lesotho PostBank directly through MSM by allowing Basotho to buy shares that were initially held by the government. Public Eye spoke to Mabakoena Moonyane, who works for the Domestic Market Operations Financial Markets Department at CBL, to clarify issues regarding MSM. “MSM is a platform for trading of securities (bonds/equity) in the secondary markets. It encourages public companies to issue and raise capital through issuance of equity and for the private companies to issue debt,” she said.

Asked about the companies’ response towa rds MSM, Moonyane said: “The interested companies are coming forth to buy in this initiative. So far about two are at advanced stage while the third one is about to follow too.” Although the name Maseru in MSM would suggest it is a localised platform, MSM is global since both domestic and foreign companies can list on MSM.

Moonyane said they educate people as individuals and companies through adverts on radio and television as well as through roadshows (schools, public), bilateral meetings, breakfast meetings, expo-stalls, among many other avenues. She indicated there are also brokers and investment advisors in the market who do the same. She added that MSM is helpful in inclusive economic growth, long-term capital for public companies, and investments for all levels of investors.

Though she noted that it is not CBL’s duty to monitor MSM, the central bank is doing it because there are currently no brokers qualified to do so. Since many neighbouring countries like South Africa and Botswana each have a bourse or stock exchange, Public Eye sought to find out the difference between MSM and a Stock Exchange. Moonyane said: “MSM is Lesotho stock market, although it is pronounced differently.

“Regardless of its importance for raising long-term capital for expansion of companies, addition of value to the company, for investors get dividends/interest and diversify asset holdings, so far no company has registered with MSM.” Asked if she sees it growing in the next few years, she replied: “Probably. However, the growth depends on the uptake of the issuing companies both local and foreign. Nevertheless looking at the current situation, hope is there.”

Majoro earlier this year spoke about the need to encourage listing on MSM. “A broad assessment of an equity dilution strategy will be undertaken with a view to opening up direct shareholding to our people. I would like to confirm that there is at least one company that is considering a partial listing on the MSM,” Majoro said. To list on the MSM Main Board, a company is required to be registered as a Public Limited Company (Plc.) under the Companies Act, 2011. Moonyane said qualified private companies can be listed only if they are offering bonds which are the longterm loans to the company from the public.

But if they are selling shares, they should be re-registered as a public company. Another factor is to be considered for listing a company has to be backed by at least one MSM approved and licensed sponsor. It also needs to have published financial statements in accordance with internationally accepted reporting standards for at least one year in the last two fiscal years. Apart from that a company should have reasonable profitability in the period stated.

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