Increasing financial inclusion and expanding access to credit remains a key priority in the effort of the government to achieve broad base inclusive economic growth.
This, the acting Principal Secretary in the Ministry of Development Planning, Mrs. Teboho Malisebo Mokela said when officially opening the roundtable dialogue on household indebtedness, on behalf of the Minister of Finance and Development Planning, at the event held at Central Bank of Lesotho (CBL), Maseru on Wednesday.
Mrs. Mokela said it is a great honour for her to officially officiate the first roundtable of its kind on household indebtedness under the theme ‘building stakeholder consensus on effective strategies to deal with over indebtedness’, saying they are gathered today as credit providers, employers, labour unions and the CBL to reflect on how to reverse the trend on high indebtedness among salaried workers.
Mrs. Mokela said they are here to identify and agree on what measurable strategies or interventions stakeholders can implement to ensure that employees commit to making sound financial decisions.
She expressed gratitude that key role players on this issue have accepted their invitation and will be participating in a roundtable dialogue on household indebtedness.
She further noted that the Ministry of Finance and Development Planning is a major stakeholder through the Treasurer Department, saying as a country they have over the years implemented the money month campaign which for this year will be launched in April.
Mrs. Mokela said the money month campaign is aimed at empowering Basotho on personal finance management issues, saying a roundtable focuses on household indebtedness goes well with the money month campaign.
She expressed her gratitude for the support and commitment that CBL has been showing in ensuring that these campaigns become successful.
Moreover, she said the government of Lesotho is in the process of developing a follow-up on national inclusive finance strategies and the second financial sector development strategies, adding that these documents will ensure that all stakeholders keep the momentum in implementing reforms that shape the financial sector in the way that will benefit Basotho.
She said the government of Lesotho realise that increasing inclusion and expanding access to credit may have unintended consequences for the consumer of the financial services particularly consumers can be subjected to unfair market conduct.
She therefore, the government of Lesotho acted the financial consumer Act of 2022 to empower CBL with a mandate to establish a robust regime for financial consumer protection.
She said was pleased the implementation of the Act is begging to provide the required diagnoses of the long-standing challenges facing society.
In conclusion, she said consumer indebtedness among salaried workers has been a feature for most households in Lesotho, saying this is evidence that through the increasing number of employees who take home far less than the recommended threshold of 30 percent of the individual gross income.
She noted that a take-home salary of less than 30 percent is a decline in the standard of living.
The CBL Governor, Dr Maluke Letete said there are a number of factors that have gotten the country where it is, singling out the rate at which salaries revenue have been increasing and could not keep phase with inflation.
Dr Letete said the country came out of the COVID-19 pandemic in a very difficult situation where the index inflation was very high and with that inflation, the country had to increase continuous the rate of interest to fight the inflation.
He said in the process of doing so, a lot of households began to be more indebted, noting that it was not their fault that inflation was rising but at the same time they had borrowed to the extent the household budgets could no longer accommodate their debts.
He said this was not a new problem, but it has been persistent for a number of years in the country, particularly at the household level.
He said there was a challenge in terms of disclosures because people would have borrowed from different banks and this was caused by a lack of credit disclosures.
Dr Letete said they need to find long-lasting solutions not only for them but also for the coming generation.
Roundtable dialogue on household indebtedness, the money month and consumer debt campaigns are undertaken within the broad context of the national financial inclusion agenda.
Distributed by APO Group on behalf of Government of Lesotho.
