Bankers Association of Lesotho Held a Press Conference on Cross-Border Transaction Changes in CMA Countries

The Bankers Association of Lesotho (BAL), comprising of FNB Lesotho, Lesotho PostBank, Nedbank and Standard Lesotho Bank hosted its second press conference to address forthcoming changes in cross-border transactions within the Common Monetary Area (CMA), which includes Lesotho, South Africa, Namibia, and eSwatini. These changes will take effect on 14 September 2024. BAL was supported by representation form the Central Bank of Lesotho at the press conference.

In his opening remarks, the Director of Payments and Settlements at the Central Bank of Lesotho, Mr. Mothetsi Sekoati indicated that the decision has been made by the Common Monetary Area Cross-Border Payments Oversight Committee (CPOC) and central banks in the CMA countries to discontinue the CMA Electronic Funds Transfers (EFT) low value payments and collections interim solution. This is the discontinuation of a method currently used by banks within CMA to facilitate clients’ transactions and not discontinuation of the clients’ ability to make inter-CMA countries payment transactions. Mr. Sekoati emphasised that the major drivers of this decision are based on risk and compliance issues that need to be mitigated, especially around the identification of the sources and full details of the origins of such money flows.    

The BAL technical lead in the project, Mr. Samuel Koatla highlighted that the press conference was  a follow-up to the one previously held to further enlighten Basotho on the changes that will happen in September, which are going to change the way that money has been flowing amongst CMA countries. “For a significant period, transactions between these four countries lacked regulation, making tracking difficult. The new measures aim to address this challenge.” He added.

Effective 14th September 2024, cross-border EFT credit payments to and from account holders in South Africa, Namibia, Lesotho and Eswatini will still be possible on various bank platforms with additional mandatory information such as payer’s gender , address, beneficiary address and Balance of Payment (BOP) category of the payment.

As of  9th September 2024, the processing of EFT cross-border collections will no longer be possible among the CMA Countries.  That means the EFT debit transactions for a foreign bank must be facilitated through a local bank. Foreign entities with presence in Lesotho have an option of collecting through their Lesotho counterparts. The Lesotho counterpart may thereafter facilitate the transfer of funds to its foreign counterpart.

Foreign entities especially insurance companies with no presence in Lesotho have been advised to open bank accounts with domestic financial institutions to collect all debit orders in line with the Lesotho EFT Automated Clearing House (ACH) rules.

Mr. Koatla assured Basotho nationals working in South Africa, Eswatini and Namibia that they will still receive their salaries in their accounts held with their local banks in Lesotho, affirming that there is no need for them to open an account with a foreign bank. Mr. Koatla also disclosed that the changes will inevitably affect charges to the customers. “Fees will change slightly, but BAL has made guarantees to ensure that the burden to the customers will be reasonable and fair.” He asserted.

On behalf of the Chairperson of BAL, Mr. Anton Nicolaisen concluded the conference by  emphasising that these changes are designed to eliminate market confusion and are driven by all CMA countries, not just Lesotho. He assured that all financial institutions are working diligently to ensure a seamless transition for Basotho. Each bank will communicate with its clients to ensure clarity and understanding. Nicolaisen urged all Basotho to raise any concerns and engage with BAL, the Central Bank of Lesotho (CBL), or their individual bank.