NUL commercial bank on the cards

’MASENTLE MAKARA

ROMA – The National University of Lesotho (NUL) through its students, lecturers and staff is planning to establish both a development bank and a commercial bank through a savings and credit co-operative.

Masters in Economics student Tebello Tjapela, one of the brains behind the idea, told Public Eye in an interview that the desire to secure funding for youth-led start-ups gave birth to the idea.

There are numerous innovations in Lesotho, and Basotho have brilliant ideas that can develop the private sector and reduce unemployment, he said.

“But the financial sector is not helping start-ups which need financial assistance. We only have commercial banks which are largely profit-driven and not necessarily development inclined.” Tjapela said.

“Lesotho faces high unemployment, therefore the NUL Research and Innovation Hub is one of the institutions that seeks to address this challenge by appreciating and promoting students’ innovations. So during this process, there is what is called the entrepreneurship ecosystem and within that ecosystem there are different stakeholders contributing to the success and sustainability of entrepreneurship.”

The NUL Research and Innovation arm hatched the idea of establishing both a development bank and a commercial bank.

“I was assigned to do some research to find out how possible it is for the university through students, lecturers and staff to own a bank. I therefore had to go to relevant institutions including the Central Bank to find out about the necessary requirements for a development bank.

“We realised we cannot get the required capital of up to M10 million to start a bank.

“Therefore, we realised we needed to sit down and find a model or a concept that would lead us to establishing a bank. We then decided to first establish a savings and credit co-operative to promote a culture of saving.”

Tjapela said: “As an economics learner I believe you have to consume what is left after saving, not save what is left after consuming but most people are too dependent on their monthly income and they do not save, which becomes a problem in times of crisis or emergencies.

“After graduation, many have ideas of projects they want to start but since they are unemployed, they fail to fulfill their dreams. But, through some savings they can set aside in this co-operative they can manage to push projects or even pay back NMDS (National Manpower Development Secretariat) and continue with their studies.”

He noted there could be a lot of benefits if Lesotho became a nation that saves because “a lot of us here are students, and you come here hoping that after graduation you will get a job but that is no longer the case.

“Unfortunately, many students only realise there won’t be any jobs after graduation but they could have prepared for this while still students.”

In an interview with this paper on Wednesday this week, Lebohang Khali, Principal Co-operative Officer from the Ministry of Small Business, Co-operatives and Marketing said NUL is capable of establishing a development bank because of its dense students population.

“NUL can own a bank, but for now the concern should be about how they can mobilise students so as to partake in this co-operative. We need to show them the importance of this for it needs their commitment.”

Khali said the NUL co-operative is not going to operate like other co-operatives: “At this level, we want them to decide how they run it. Ours is just to facilitate the co-operative and guide them on their strategic plan for the establishment of both a development bank and a commercial bank. We believe they are capable of coming up with research and ideas that will benefit the whole country.”

Khali said soon institutions like the National Manpower Development Secretariat may not be able to function the way they do therefore students should start developing an attitude to save money in order to survive the worsening high unemployment rate.

“This is not going to be difficult for NUL to achieve. There are some school co-operatives already generating over M5 million… Cooperatives are doing better than banks and I believe with caution they can have a massive impact on our economy”.

Addressing a meeting held at NUL’s Netherlands Hall last Friday, Tjapela explained that by saving as little as M100 from first year until the year of completion, students could build a lot of cash reserves “by investing in your own co-operative where you will dictate what happens. Since it belongs to you, you are the ones who are going to build the policy that guides this co-operative.”

He added, there are four commercial banks in the country, three of which are foreign banks with about 97% market share in the financial market of this country.

“So it crossed my mind as to what exactly we need to start a bank. As students and lecturers, just putting our minds together is what the NUL-HUB has already done for us.”

Already a draft constitution of the co-operative has been sent to the Department of Cooperatives in the Ministry of Small Business Development, Cooperatives and Marketing for review and approval and as soon as it sails through the cooperative will officially start operating.

“Supposing 50% of the students decide to join this co-operative and supposing each of them decides to save M100 per month. If the 5000 of them pay, it will be M500,000.00 per month, which will add up to M6 million in a year,” said Tjapela.

Each member will be expected to pay M50.00 and buy shares of M100 as well and then members are supposed to pay a minimum of M50 monthly.

All members are required to have bank accounts to allow transparency as all the transactions will be done at banks through stop orders.

The co-operative will also stem dependence on loan sharks since membership will qualify one to borrow from the co-operative.

“I have realised that there is a culture of saving but it is only informal. For example, women working in textile factories are earning small wages but because of the saving culture they are doing great things through their stockvels,” he added.