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Standard Lesotho Bank rescues small businesses.
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Public Eye Friday October 02, 2020
Business News Interview
Standard Lesotho Bank rescues small businesses B
anking institutions across the globe have no choice b u t to re m a i n hy p e r vigilant and rewrite the pandemic playbook as circumstances with COVID-19 evolve; and while it is reassuring to see some aggressive fiscal and monetary policy responses around the world already, clarity on how these actions will stabilize markets and accelerate the path to normalcy is yet to emerge. As part of the Standard Lesotho Bank (SLB) initiatives to bring to life the new brand positioning of ‘IT CAN BE’, and to commemorate its 25th anniversary the bank has launched the Entrepreneurship Support Competition, which is a competition for capital grants to help Basotho businesses to survive the Coronavirus, and in light of this Public Eye Business Reporter, MATHATISI SEBUSI (PE) met the SLB publicist MANYATHELA KHELELI (MK) to find out how the bank grapples with sound financial services to its clients to navigate through these economically arduous times.
PE: What immediate steps has Standard Lesotho Bank taken to manage financial stability in response to the COVID-19 crisis to reduce the risks of systemic failure in banking systems? MK: The Bank has aligned its dividend policy stance and execution thereof with the CBL directive that instructed the banks not to pay the dividend to their shareholders. This effectively implied that SLB retained all the profits it generated in 2019 in the business in order to strengthen its financial position, hence it was able to absorb any severe shocks that could arise due to the pandemic. The Bank also provided debt relief measures to clients who were impacted by Covid-19 in accordance with the CBL guidelines and it’s responsive credit risk management to the crisis. This was deliberately intended to alleviate the financial stress on our clients in servicing their repayment obligations than to offer new credit facilities that could not be backed by viable business expansion opportunities as the economy at some point totally shut down. As a result, there was minimal growth in loans and advances book. In addition, there were monthly/daily transactional fees and charges that were waived for certain client segments for certain services. PE: And have these become policy measures to ensure lowering
SLB publicist Manyathela Kheleli
the base rate – which has positive effects on aggregate demand and household abilities to service debts? MK: In actual fact, the CBL monetary policy response to Covid-19 entailed the reduction of interest policy (CBL) rate which guided the Bank to follow suit and lower its prime-lending rate in accordance with the CBL rate movements. And indeed, the effects of such interest rate m ove m e n ts we re re l a t ive ly reduced cost of credit to our clients such that they could afford continuing to service their debts, effectively providing further relief to their repayment obligations. PE: Do these have effect in the lowering of bank cash reserve ratios and debt moratorium – how does it benefit your clients? MK: There are no implications on cash reserving requirements, those remain unchanged. However, per the CBL directive on debt provisioning requirements, the clients’ credit ratings were not supposed to be impacted negatively as that could lead to rising of credit provisions which could potentially elevate n o n - p e r fo r m i n g l oa n s a n d subsequently lead to higher impairment charges for the Bank. PE: Now, talking of stability in the bank, how is the Standard Lesotho Bank approaching the likely threat of a sharp increase in non-performing loans, from the already high levels of 11 percent (in
Africa) in 2019? MK: The Bank came with a Debt Relief framework which includes debt restructuring, m o ra to r i u m s a n d pay m e n t holidays. PE: Borrowers across sectors and scales of business are definitely being affected negatively by the Coronavirus as declines in income and revenue mean that they are unable to meet their obligations, how do you help them stay afloat? MK: We have Customer Assist Office who look at the income and expenditure of a client and cashflows, in order to assist them with the appropriate debt relief programmes as highlighted above. For phase 1 of the debt relief programme alone, Standard Lesotho Bank provided debt relief amounting to M593 million predominantly in the sectors like mining, construction, hospitality, textile and retail. PE: Today the Standard Lesotho Bank talks about the Entrepreneur Support Competition. What is this and what is it meant to achieve? MK: This is a competition that brings a message of hope for Basotho and the economy of the country in general. As a Bank that takes pride in the fact that we support entrepreneurship, of which we are starkly aware that it is the silver bullet that can spur
economic growth, we came up with this competition to create a platform that can provide a stimulus to capacitate businesses that have been adversely affected by Covid-19. This message of hope is espoused in our new tagline, ‘IT CAN BE’, launched in June this year. Wi t h t h i s ta gl i n e, we committed to finding new ways to make Basotho’s dreams possible and we are saying no matter what the challenges the pandemic has unleashed on us, we can still do something for our people to keep the dreams of a thriving business alive. At another level, we are celebrating the silver jubilee of our business in Lesotho, and this is another way of thanking Basotho for their unyielding support in the last 25 years. PE: Can you give the rationale that informed this innovation competition? M K : A s ex p l a i n e d , t h e rationale is that for the economy to be revived, we need an economic stimulus, if the government cannot afford that or needs to be helped, that responsibility rests in the private sector, and we are there as a Bank to play our part, so this is how we conceptualized it. PE: Who is eligible, and how does one apply?
MK: The competition is open to all Basotho nationals including non Standard Lesotho Bank account holders who are in the following sectors of business; l Retail l Manufacturing l Agriculture l Service industry l Food supply but not order catering l Infrastructure PE: Explain the requirements in detail, especially the issue regarding agribusiness and f inancial projections? MK: The competition invites companies, sole proprietors, partnerships and co-operatives that employ a minimum of three people, with a turnover between M300,000 and M2 million. The prizes are not a loan, but a grant. On agribusiness, which is also a special sector of focus identified by the government in the National Strategic Development Plan II, we have even relaxed the conditions as they do not need to provide licenses or registration documents because we are aware that most farming businesses are not registered. PE: How is the competition aligned to the bank’s mission and how are you set to achieve those objectives? MK: In line with the priorities of the government and also aligned to our business strategy, we are unapologetically, a bank that supports business and we look at entrepreneurship as a requisite stimulus for economic growth. When there is support for business, it means money changes more hands hence more banking, which is what we want and what drives our business. PE: Tell us what this gesture from the Standard Lesotho Bank should mean to a Mosotho business owner? MK: I strongly believe that this gesture gives a message that says to every business owner, you are not alone. Times are tough, but you have a shoulder to lean on with Standard Lesotho Bank. Lets all work together to pick up our ailing economy and we will eventually succeed when we have the right support from the right partner. PE: How would you as a bank encourage citizens to remain resilient in the midst COVID-19? MK: At the outset, it is important to heed the advice from our Government and health authorities to observe Covid-19 protocols, such as wearing our masks, washing hands and sanitizing regularly because health is the best wealth. Second, we then need to explore all means possible to resuscitate our economy, and the first step towards attaining this is food security, being more accommodating and truly helping one another to survive. We need each other as a nation and the world to overcome this pandemic and get our economy functional.