Africa-Press – Lesotho. LEGEND has it that one fine day back in the 17th century, a young man witnessed an apple fall from a tree, an occurrence which was by no means miraculous. Apples fall every day and one can only assume apples have been falling from trees from as far back as the days of the Garden of Eden.
What stood out about this particular apple fall in the 17th century was that it fired up curiosity in a young man called Isaac Newton, who asked himself why objects fall straight down and not sideways.
This curiosity ultimately birthed a theory on what we have come to know as the law of gravity. Time immemorial, knowledge has been advanced through inquisition.
The depth and breadth of our inquisitiveness is what results in us becoming better informed and enhances our understanding of any subject matter. This is a universal principle and applies well beyond academic settings. Media fulfils many roles in any society – informing, educating, entertaining are probably the top-most roles that one can think of;
a) It therefore goes without saying that a society that has excellent media will be better informed and this will be reflected in the choices of that society;
b) Media plays a central and strategic role in holding both public and private sector officials accountable; and
c) Equally, a better-informed society is more vigilant and hard to mislead/misinform.
This last point is particularly important in the era of social media where unverified information can very easily go viral and be opportunely used by those with bad intentions to misinform and mislead the public. Since the advent of the Covid-19 pandemic we have seen numerous such attempts by many to spread misinformation to the detriment of the public.
Turning the spotlight on local print media
In recent weeks, I posited that one of the sectors that need urgent reform in Lesotho is the media sector, and this was following some highly questionable reporting that one could only ask how the articles escaped the attention of the respective editors.
It was not the first time that I lamented about this dire situation on my social media pages. Allow me to share with you some of these examples. ‘Vodacom registers M12 billion revenue drop’
This was a headline in the business section of one of the leading weekly English papers.
The actual story focused on Vodacom Lesotho (VCL) and its annual results for the Financial Year ending March 2021. To a significant number of readers, there was nothing untoward about this story.
However, to somebody who pays particular attention to performance of major corporations, the headline was completely false and misleading. Let me give it some perspective.
If Vodacom Group, which comprises South Africa, Tanzania, Mozambique, DRC and Lesotho was to report a R12bn revenue drop, the CEO of the Group would most likely be shown the door by the shareholders.
A R12bn revenue drop for Vodacom Group equates to about 15% of the Group Total Revenue and in its 26-year history, a drop of that magnitude would have been unprecedented.
For Vodacom Lesotho, it is not possible to have a revenue drop of 12 billion Maloti, and this is simply because, Vodacom Lesotho’s annual turnover is still well below the 2 billion Maloti mark.
It then dawned on me that the majority of the public are completely in the dark about how leading corporations perform generally, and this stems from the fact that we do not have a culture of transparency by corporations, whether private or public.
It was only until recently that the banks began providing some semblance of reporting to the public in the form of snapshots of Income Statements and Balance Sheets.
Other companies, irrespective of ownership, whether fully owned by the state or partially, and publicly owned, do not do any form of reporting to the public, which means for the most part Basotho are in complete darkness about how major corporations perform.
As a case in point, Lesotho is home to the largest textile factory in Africa, supplying mostly the US market. We do not know if this company generates 100 million, 1 billion, or 10 billion annually.
We do not know if this company is profitable. The only measure we know is that it employs thousands of Basotho, and I doubt we can say with precision the exact number it employs. Some could argue this is a private company, and has no obligation to disclose its performance to the general public.
I would argue that most of these textile factories enjoy the benefit of tax holidays and sometimes highly subsidized factory shells, it is only fair that the sponsors (public) get a sense of how they are performing.
‘LCA chairman sacked as CEO is suspended’ read the front page of one of the leading papers, exactly a week later after the M12bn revenue drop story
The actual article referenced a letter by the Minister suspending the Board Chairman of LCA and the rest was pure speculation about the fate of the CEO.
Whilst I accept that newspapers still need to have catchy headlines that will drive the readers’ interest and eventually sales, newspapers are duty-bound to report factually.
There was a complete disconnect between the headline and the actual story stemming from the use of the terms sacked and fired, when in fact it was a suspension. Even at a stretch, these terms cannot be used interchangeably.
‘Vodacom appoints first Mosotho MD’
This was the headline in the business section of yet another leading paper in June 2021 following the announcement of Mr Ralebitso as the new MD of Vodacom Lesotho.
One presumes that a lot takes place before a story lands inside a newspaper that is placed on the shelves for sale, including but not limited to fact checking and research, and the green light by the subject to say the story is good.
A quick desktop research on VCL (Vodacom Lesotho), shows that its very first MD was a highly decorated Mosotho engineer by the name Andy Moqhali. He served as MD for a fairly long stint of +7 years and it was under his stewardship that a stake in Vodacom Lesotho was sold to a broad-based Basotho outfit called Sekhametsi.
These three are just recent examples of the lack of depth or the absence of due care by the editors. I am acutely aware that a more forgiving reader would ascribe in part some of these gaffes to the weekly pressure that goes with strict timelines and deadlines ahead of printing.
Please allow me to make my point using different examples, this time focusing on topics that were covered for extended periods but without the requisite depth and befitting rigor.
The LCA/VCL saga which culminated in an attempted revocation of VCL’s GSM license
The saga between the regulator and the very first Mobile Network Operator in Lesotho took a while to brew and whilst it is not over, there is a key aspect which I would like to table which highlights the lack of inquisition by our journalists.
One of the key transgressions as alleged by the Regulator was that the Audited Financial Statements by VCL could not be relied upon as they were signed off by a conflicted auditor, who was related to the Chairman of VCL.
All the leading newspapers ran this story over an extended period as the story unfolded, and for the most part, the story was reported almost verbatim from the press releases by the Regulator.
This was/is a material allegation given that the Regulator places reliance on the Audited Financial Statements to determine some of the license costs payable by VCL.
This was the golden opportunity for those covering the story to then wear their Newtonian hats and ask themselves ‘why the apples were falling straight down and not sideways’. There is an Institute of Auditors in Lesotho which is custodian to rules and code of conduct of auditors.
To give readership some balance to the story, the Institute should have been the first pit stop to obtain the full guidelines on how the noble practice of auditing views conflict of interest and how this is to be managed when it arises.
I have no recollection of the Institute being asked to give its view in order to strike balance in reporting the matter. In recent years, the Institute of Directors of Southern Africa (IODSA) also inducted the local chapter of IOD and soon after its induction, it unveiled the Mohlomi Code of Corporate Governance specific for Lesotho based entities.
Again, if we are to speak about doing a thorough homework, one would have expected the Institute of Directors to give commentary from a governance perspective to give readership a better view and a sense of what the appropriate codes of governance say in respect of board compositions especially audit committee, definition of conflict of interest and how it is managed per best practice.
Disappointingly, we did not see anything other than papers regurgitating the story as presented by LCA via its press releases, or responses as coming from VCL.
The diamond industry and the benefits to Lesotho
Another topic which journalists do not do justice to is the diamond industry in Lesotho and the cumulative benefits that accrue to Lesotho and Basotho at large.
Reporting on this all-important industry is very scant and often limited to royalties that the Lesotho Government earns from sale of the individual large diamonds, a topic that generates a lot of unhappiness amongst many Basotho.
Perhaps for context, one needs to highlight that the revival of the mining industry in Lesotho was marked by the signing of a Mining Agreement and Lease between Lesotho Government and Letšeng Diamonds in November 1999, a year after the political unrest of 1998.
The mine went into full commercial production in early 2004 and its subsequent success attracted a handful of other mining operators which were looking to emulate the success of Letšeng.
It has been 17 years since Letšeng commenced its commercial operations and without fail, Letšeng has been producing some exceptionally large, high value diamonds, every single year.
Each find is always followed by much fanfare and international media coverage. I remember one of the earlier finds in 2006, the Lesotho Promise which sold for $12,4m in Antwerp.
The controversial debate that followed was why is the Government only receiving about $1m in Royalties? Fifteen years later we are still seized with the same debate and it remains as controversial as ever.
I remember laughing at a tweet from 2018 that was recycled in 2021 and emotions still ran high. The tweet from one @ali_naka read as follows “Lesotho getting $3 million from the $40 million sale of a single diamond and you call that INVESTMENT? Idiots!”.
The question we need to ask ourselves as Basotho is where are our modern day ‘Isaac Newtons’ whose curiosity will lead us to gaining more knowledge about the subject matter? Why have our journalists not stepped up to play an educative role in this instance?
Based on publicly available information, Letšeng Diamonds is a private company owned 70% by Gem Diamonds Limited, a London listed company, and 30% by Government of Lesotho.
Shareholders typically get their return in the form of dividends, and the shareholding percentage will determine what each shareholder receives. As we know, shareholders are the last people on the queue to be paid, after suppliers, employees, debt holders and the taxman.
Other than dividends, Gem as a shareholder can probably extract value in the form of management fees that they can charge for the managerial oversight and technical expertise they bring to the table.
On the other hand, the Government of Lesotho has multiple streams from which they benefit from the mine:
Royalty (8%) – This is turnover based and for every US dollar realised, Government receives 8 US cents irrespective whether the sale is profitable or not.
PAYE for all salaries paid to mining staff. Withholding taxes on the management fees levied by Gem Diamonds
Corporate tax levied on profits generated by the company
Further withholding tax on dividends earned by the foreign shareholder.
Annual lease rental payable for the mining area. All this information is publicly available in the Integrated Reporting done by Gem Diamonds which is a publicly listed entity on the London Securities Exchange.
If our ‘Isaac Newtons’ are to follow the cash that accrues to both shareholders, it will become very clear that the aggregate cash that flows to Government is somewhere between 45% and 55% despite its shareholding of 30%.
This is before one needs to rationalise and debate issues of who bears the risk and who does not. This was at least the structure that was in place for the first 15 years. The $3m out of $40m that @ali_naka was quoting relates to the Royalty of 8% only.
But because he/she is blind to all other aspects of the arrangement, he/she ends up with a myopic view that is not helpful to Basotho in understanding whether the current agreements are equitable and just.
Can the agreements be bettered or improved? Absolutely. I am sure there are aspects that can be optimized. But as a society we can only make such a call if we had a thorough understanding of the Agreements as it were.
Conclusion
There is without a doubt, a dire need to raise the bar when it comes to reporting business or otherwise, and to achieve this we need to have all stakeholders coming to the party.
The media fraternity, business and academia in particular will need to invest in the development and capacity of media. I am almost certain that not all Economics and Accounting graduates are absorbed by the labour market, and their skills could be put to good use to markedly improve our business reporting.
Media houses will need to co-opt these kinds of skills and perhaps have short media courses to sharpen their writing skills and reporting acumen. They (Economists and Accountants) can at least talk the language of business and will be familiar with the subject matter/s, and they could interrogate the topical issues for the benefit of the public.
Today we have a buzzing industry in the form of medicinal cannabis cultivation. We all just know this is like the new gold in Lesotho, but as the public we know very little apart from the fact that licenses were at some point lucrative currency.
We need to get to a point where we become informed about the different opportunities in the cannabis value chain, whether it’s the sub-letting of communal land for benefit of communities, or whether there is opportunity to aggregate produce and beneficiate so that we create a new sub industry with scale.
We can only know these if our Basotho ‘Isaac Newtons’ occupy public space and provide insightful coverage on subjects such as these. Once the bar is raised, even the quality of engagements on matters of national importance will improve!
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