A Better Way of Saving Money

The Big Three; FNB Lesotho, Nedbank Lesotho, and Standard Bank Lesotho, are the only banks in Lesotho besides Post Bank. They exist to provide various banking solutions within the country, such as transferring money between individuals and businesses, offering loans, facilitating savings, and more. Like all banks, they charge fees, and the Big Three are no exception. The biggest concern lies in the fees people incur on their savings. While it is reasonable to speak out against the high fees imposed by these banks, the real issue is the impact such charges have on savings and investments.

Saving is the act of setting aside money for future use. There are different ways to store this money. It can be kept in a container or piggy bank, under the bed, or anywhere else in the house. A person who saves money usually ensures that it is not accessible to anyone else. This is why they may wrap a container securely or hide it in places that are difficult to reach. However, this method has risks: someone might accidentally discover the container and steal it, or find the money while cleaning the house and take it for themselves.

With the introduction of financial institutions, people could open accounts and save their money safely. Money could be stored for future use without much worry. Financial institutions include banks, insurance companies, cooperatives, and mobile money services (such as M-Pesa and EcoCash). People can save money with these institutions, though they may encounter fees or earn interest. With mobile money, users typically store their money without expecting interest or fees. In contrast, banks, insurance companies, and cooperatives offer savings with the hope of earning interest. However, these institutions often do not disclose interest rates unless a client shows interest in their savings products. Many people are curious about savings, yet they rarely learn about the specific types of savings available. As a result, the majority seem to have lost enthusiasm for saving to earn interest.

As a result, many people save money without expecting interest, yet they still encounter fees. For short-term savings, most people use mobile money services or banks, while long-term savings are often kept in insurance companies or cooperatives. The thesis behind this piece is to advocate for cooperatives because of their unique advantages.

Cooperatives are more convenient in the sense that they can only be accessed through their physical branches, which are open only during specific hours. A good example is Boliba Savings and Credit Cooperative, which operates from Monday (8:00 a.m. to 3:30 p.m.) to Saturday (8:00 a.m. to 12:00 p.m.). This limited accessibility means that clients can only withdraw money during those times. This is actually better than banks and mobile money services, which are accessible 24/7, making it easier for clients to spend their savings impulsively. In contrast, cooperatives help discourage unnecessary withdrawals while still allowing access within their working hours. Insurance companies, on the other hand, are different because they focus on long-term savings, while cooperatives provide a balance by allowing shorter-term savings with restricted but reliable access.

Mobile money services have agents everywhere, and banks have ATMs widely available, but cooperatives lack both ATMs and agents. This limitation encourages clients to be disciplined with their savings, allowing their money to accumulate without unnecessary interruptions. People are often tempted to use their savings impulsively, but cooperatives discourage this and foster patience. For example, the Phuthalichaba Savings and Credit Cooperative Society (PSCCS) requires members to save a fixed proportion of their income each month. This system enforces saving because members contribute regularly without expecting immediate access to their money. PSCCS operates in a way that is similar to insurance, while Boliba functions more like a bank.

Boliba is located at Koporasi, and its most common savings account is called Molulaqhooa. Users can register with just M150, which is credited to their account and used to cover monthly fees if the user delays in making deposits. A proof of residence is also required, most commonly a letter from the local chief, with the necessary form provided by the institution. Currently, Boliba has only one branch, which makes it difficult for some clients to withdraw their money since the branch may be far from where they live.