VCL, banks under fire

Mohloai Mpesi

VCL Financial Services and the local commercial banks will have to go to the Central Bank of Lesotho (CBL) to answer criticism that their business practices are restrictive and unscrupulous.

VCL Financial Services will have to explain why it should be allowed to continue prohibiting citizens from making direct deposits into someone else M-Pesa account.

Commercial banks, on the other hand, will have to give reasons why they cannot be penalised when their ATMs remain out of cash for a certain number of hours in a month.

The war against VCL Financial Services and the commercial banks was waged by two local activists, Mokotjo Maseli and Kananelo Boloetse.

Maseli and Boloetse wrote a letter of complaint against the institutions to the CBL earlier this month, on December 7.

Their letter portrays some of these financial service providers’ business practices as the disaster, the wrecking ball, the chaos that consumes the air leading to the suffocation of customers.

They, in their letter, sought to show the CBL what is at stake if it gives the institutions it regulates a broad gate and plenty of elbow room to do as they please.

The duo asked the CBL to, as a matter of urgency, instruct VCL Financial Services to allow citizens to make direct deposits into someone else’s M-Pesa account.

Maseli and Boloetse also want CBL to impose monetary penalties on commercial banks in case their ATMs remain out of cash for a certain number of hours in a month.

“This will ensure that the banks strengthen their systems to monitor the availability of cash in ATMs and ensure timely replenishment to avoid cash-outs which hugely inconvenience customers,” the duo said in a letter to CBL dated December 7.

CBL’s public relations manager, Ephraim Moremoholo, could not comment on the matter when Newsday contacted him this week.

“It is of great concern that VCL Financial Services does not allow citizens to make direct deposits into someone else’s M-Pesa account,” Maseli and Boloetse complained to CBL.

“If anyone wishes to give money to a person who uses M-Pesa, they will first need to have a M-Pesa account, deposit the cash into their own account and then send it to the intended recipient,” they added.

They said this was despite that M-Pesa is mobile money, “an important instrument to improve the degree of financial inclusion, especially for the unbanked”.

They explained that financial inclusion is a state in which everyone can access a range of quality financial services at affordable prices in a convenient manner.

“The keyword here is everyone but VCL Financial Services does not allow those who do not have M-Pesa accounts to give money to their relatives or friends who use the service,” they said.

Vodacom Lesotho (VCL)’s external affairs manager, Katleho Pefole, told this publication this week the company had not received any formal letter from either Maseli and Boloetse or CBL.

VCL Financial Services is an independent company licensed by CBL as a financial services provider wholly owned by VCL.

“The decision to separate the businesses followed the CBL’s recommendation – a move welcomed by Vodacom Lesotho – to separate the M-Pesa business from the GSM business to enhance its oversight functions in the financial services regulatory environment,” Vodacom told a local weekly last year.

“Vodacom’s M-Pesa activities fall under the auspices of CBL, whose mandate includes relevant authorization requirements related to mobile money,” it added.

Pefole sometimes speaks on behalf of VCL Financial Services, which is why he was contacted for comment by this publication this week.

For example, in July this year, he released a media advisory on behalf of the company.

“Media representatives are invited to a press conference at which the Management of VCL Financial Services will announce the launch of its latest digital offering known as Nkalime M-Pesa, a service that allows Basotho to request for quick micro loans through M-Pesa,” he said in a media advisory on July 13.

In their letter to CBL, Maseli and Boloetse VCL Financial Services’ “unscrupulous corporate tactics” (not allowing direct deposits into someone else’s M-Pesa account) seek to undo the major inroads that the government of Lesotho through its implementing agencies has achieved in ensuring that all people who live in the country have access to a wide range of quality, affordable and accessible financial services, provided in a fair and transparent manner through formal or regulated entities.

“By denying people the chance to make direct deposits into someone else’s account, VCL Financial Services is restricting mobile money from reaching its full, intended potential,” they said.

“We, therefore, humbly ask the CBL to bring VCL Financial Services into line with other financial services providers by issuing a directive, as a matter of urgency, and in accordance with section 71 (1) of the Financial Institutions Act of 2012, that it should allow citizens to deposit money directly into someone else’s M-Pesa account,” they added.

The duo also took aim at the local commercial banks accusing them of charging exorbitant fees when their customers withdraw money from third-party ATMs.

“Earlier this year, the CBL informed members of the public that as the Commissioner of Financial Institutions, it had issued the Pricing Directives for banks operating in Lesotho, pursuant to Section 71 of the Financial Institutions Act, 2012,” they said.

They said the directives were implemented on April 1, 2022.

“All commercial banks were directed to cut banking charges that varied from those associated with opening an account, cash withdrawal fees, penalty fees, and bank statements fees to point of sale fees and credit fees.

“CBL said the directives were meant to improve inclusivity, enhanced intermediation, and competitive pricing of banking products and services.

“While we welcome this development and applaud the CBL for protecting customers, we would like to find out from you Governor why the directives did not include fees for withdrawing cash at a third-party ATM,” they said.

ventured into a highly thriving and profitable business, mobile money, in the financial services industry.

Vodacom Lesotho, registered as a telecommunications enterprise, ventured into the highly thriving and profitable business of mobile money when it launched its mobile phone-based money transfer and payments service, M-Pesa, in July 2013.