December 2018 (4)
THIS PAPER estimates and evaluates the measures of core inflation in Lesotho for the sample period March 2009 to December 2017 using the CPI data. Using five exclusion-based measures and one limited influence estimator, the results reveal that the 30%-trimmed mean tracks trend inflation very well relative to other measures and using the one-month ahead forecasts only 30% trimmed mean core inflation indicator has significant predictive power for the future headline inflation. Nonetheless, as the forecasting horizon increases some measures have significant predictive content for the future headline inflation but the 30%-trimmed mean surpasses all of the calculated core inflation indicators. It is therefore adopted as the ideal measure of core inflation for Lesotho
LESOTHO HAS achieved solid economic growth and a seemingly positive shift in the output structure. Nonetheless, these have not translated into corresponding improvements in employment and poverty outcomes. The literature identifies a number of factors that explain this phenomenon. The empirical analysis and case studies included in this paper reveal that economic growth should be supplemented with employment generating economic structural transformation to have a meaningful poverty reducing impact. Effective economic transformation can be achieved when there is an effective institutional structure in place to support implementation of strategic development policies. Development of effective institutions could be the solution to Lesotho’s sluggish implementation of strategic development policies. Lesotho needs to define the kind of institutions that have to be developed to address all impediments to effective implementation of policies that have the potential to transform the economy, generate employment and address poverty.
FINANCIAL INTERMEDIATION is the role that is traditionally dominated by the banking sector, with little or no space for the non-banks financial institutions. However, this is not the case in developing countries, either due to topology or relative development of the financial system. The purpose of this study is to evaluate the role and impact of the non-bank financial intermediaries in discharging their roles in Lesotho. These institutions have penetrated the country into the rural mountainous areas, and they offer healthy financial system by invoking competition with the banking sector, while also attending to the gap that is left unattended by the former. As a result, Lesotho ranks high on financial inclusion given that majority of services are offered by the informal and auxiliary establishments in the financial sector. However, the authorities have to consolidate on prudential supervision in order to minimise risk that may result from the aggressive offering from the NBFIs in all its various formations.
The Effects of Regional Cross Listing on Firm Value and Financial Performance: Drawing Lessons for LesothoWritten by Moeti Damane
THIS RESEARCH determines the effects of regional cross listing on firm value and financial performance and draws policy lessons for Lesotho. Using event study methodology, financial ratio analysis and a regional case study of two Sub-Saharan African firms that cross listed on the Johannesburg Stock Exchange in 2015 and 2016, the results of the study reveal that cross listing leads to increased firm liquidity coupled with positive and statistically significant abnormal returns. These findings confirm the legal bonding theory, the signalling theory, the investor recognition theory and the liquidity theory. It is recommended that the empirical findings of this study be used by authorities to draw locally incorporated firms’ attention to the potential benefits of cross listing. This should be done in conjunction with initiatives that identify and unlock any bottlenecks that act as deterrents for company listing on the Maseru Securities Market.