PART 1. INTRODUCTION. Objectives. Presents experiences of Lesotho Contribution of the central Bank of Lesotho (CBL) and the Government of Lesotho (GOL) providing an enabling environment for MFIs to operate in: Selection of Institutions
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Selection of Institutions
The observations made in this paper will be based on few microfinance institutions that were
interviewed. These are: Boliba Multi-purpose Cooperative, MAMOTH Financial Services, and
Letsema Investment Holdings.
OUTLINE OF THE PAPER
PART I - Introduction
PART II - Background - area within which MFIs operate
PART III - Legal and supervisory framework
The environment within which MFIs are expected to function.
PART IV (I) Presents the SWOT ANALYSIS OF MFIs in Lesotho
(II) The Innovative approaches by MFIs in Lesotho
(III) The contribution of CBL AND GOL in strengthening the institutional capacity of MFIs and fostering of financial intermediation.
Background within which MFIs operate
Overview of Economic conditions of Lesotho
- GOL and CBLs policies on increasing outreach
- Moneylenders’ Act
- Societies’ Act.
GOL and CBL’s strategies for conduciveness
- licence issuance
- Strengthening capacity
- Initiatives by CBL and Govt.
- Highlights on failure of MFIs
INNOVATIVE APPROACHES BY MFIS
Interest 4 – 6%
Fixed deposit 3 – 24 months at 5 – 7%
Subscription Account – 24 – 48 months at 7 – 9% (longterm)
(2) Credit – Business loan – short – medium term
Domestic – Individual/consumption 1/3 30% take home
Civil servants loans
Deferred pay (minors)
Luxury – Invest M55.00 married M35 single
Executive 65 M45
Supreme 75 M55
Elite 85 M65+ 120
(3) Loans to working clients at 15% p.m. as tabled
Invest: Death Insurance
Student Medical Portfolio – Student
Employee Medical Aid – Working personnel
Medical Aid Scheme – Standard option – Day to Day
Hospital Option – Hospital treatment
Initiative by Central Bank of Lesotho
Reducing Operational Cost
Asset and liability Management
System computerised through insurance software, Pastel and SAFRI SADAC Model
Credit contributors to Gross National Product GNP over the years
To honour loans to clients, the clients should have been members for over three months. An established policy in borrowing depends on many factors some of which are:
That a client must be employed or be a business person.
There must be a third party to guarantee payment by the borrower.
Be able to generate income
Should dispute ability to pay
Have reputation to pay debts
A printout to all is presented to the collection department for actions which in turn turn makes follow ups on top orders by undertaking by site visits and telephone calls to ensure continuity of payments
Management Information System (MIS) lifestyle.
Institutions have Inhouse software that is designed according to specification and requirements of the institution. The package has so far served Institutions well as it enables them to cope with all the requirements. Every now and then management has access to the Central Data Bank- Knowledge of what is happening in all sectors.
The use of Pastel accounting software package is able to provide Institutions with all necessary information and financial trends e.g. loans and classification thereof interest rates calculations age analysis of balances