THIS week, Maseru Metro held a meeting with the Lesotho Post Bank financial planners to discuss how best Basotho could spend their money during these trying and hard times when food and fuel prices are skyrocketing. Bus fares have spiked, and so have paraffin prices, posing a serious threat to the lives of the Basotho nation. Here are excerpts:
June 22, 2022
4 min read
Open a business to earn passive income – Lesotho Post Bank advises
Lesotho PostBank MD, Molefi Leqhaoe
- Bus fares have spiked, and so have paraffin prices
- The supply of oil in the international market is low
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Maseru Metro: What is your advice to consumers during this difficult time?
PostBank: This time calls for a behavioural change in the manner in which people should spend their money. Basotho have to know where we are today because of the on-going Russia/Ukraine devastating war. Russia produces crude oil in large quantities and so sanctions on its raw materials have had a debilitating impact on most countries including Lesotho. Now the supply of oil in the international market is low. Oil is an input that is essential in almost every production process.
Now the demand for oil is high and the supply is low. Because of this, the price will have to shoot up. It is for this reason that prices for all crude oil products have gone up. Amid the crisis, we advise Basotho to employ a couple of behavioural changes when spending their monies.
For example, India has entered into a future contract where Russia has agreed to trade with India for a certain period of time without increasing prices. The two countries have agreed to lock prices. This is a good initiative taken by the Indian government to protect its people.
But Lesotho does not have big companies that could have contracted agreements with Russia.
Maseru Metro: What advice could you give to Basotho?
PostBank: This is a wake- up call for Basotho. This has sent a strong message to Basotho to shun dependency syndrome. Basotho have to produce what they can afford here at home so that they do not rely solely on other countries. They should desist from being involved in non- productive debt such as having clothing accounts. Now they should focus specifically on what they need most.
Also, family members should avoid using different cars when they travel. They should use just one car when they take trips to save fuel. They should only buy food that they need to survive. Cooking a lot of food at a time also helps to save fuel.
Another way to stay afloat during these hard times is to buy food in bulk because prices of goods marginally go down with extra unit. Buying non-perishable goods could help save people from sinking into debt.
People should also compare prices at the shops when they go out shopping. Any difference in prices could help them save money.
For those who use electricity at home, they should save on switching off lights when it’s not needed. This time, people have to do everything to see to it that they cut costs.
Maseru Metro: How could Basotho turn this crisis into opportunity?
PostBank: Basotho should not wholly look at this as a crisis. They should see what opportunities could be extracted from this experience. For example, at the time when the Covid-19 pandemic hit, some companies benefited a lot through the production of Personal Protective Equipment (PPE). The same should happen now. Basotho should see what they could do. They should not sit down and watch themselves wallowing in poverty.
Now the Central Bank of Lesotho (CBL) has increased the repo rate for the commercial banks. This means that the commercial banks will give loans to the clients with high interest rates. Doing this also helps to attract investors to see that Loti is still strong. It gives the investors the confidence to come and invest in Lesotho.
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But it is a sad reality for the clients because they will be charged high interest when they apply for the loans at the banks. This is the opportune time for Basotho to start-up businesses so they could have some passive income. Relying solely on income is impossible given the dire economic situation around the world and in Lesotho in particular.
The debilitating economic situation has sent a signal to Basotho that they should have multiple streams of income so that they stay cushioned during this crunch time. It is the right time for Basotho to do away with just one source of income.
Maseru Metro: Do you have programmes as a bank where you sensitise people on how they could save money during this time.
PostBank: Yes we do, so far we have radio programmes where we warn people that they could survive the crisis. We are yet to have out-reach programmes for the people. We want to help to build relationships with their finances so that they could be solution oriented. Basotho should be in a position to protect themselves from the unknown. No one knew that we would have Covid nor the Russian/ Ukraine war.
Businesses are now in a down-swing owing to the on-going war and there will be a time when they are on an upward swing. This should be a lesson for businesses on how to stay resilient when things are bad.