A recent policy note by independent analyst Thabo Qhesi (July 2026) makes a point that practitioners in this space will recognise immediately: the persistence of unlicensed investment schemes in Lesotho is not a failure of public awareness, but a structural problem. High unemployment, financial exclusion, trust-based recruitment through family and community networks, and slow, low-visibility enforcement combine to make these schemes attractive despite repeated warnings from the Central Bank of Lesotho (CBL).
The note is directed at policymakers. This article approaches the same problem from the legal side: what the law in Lesotho actually says about these schemes, what enforcement looks like in practice, why the South Africa Lesotho corridor matters, and what participants, promoters, and legitimate businesses should understand about their legal position.
What makes a scheme unlawful in Lesotho?
The starting point is licensing. Under Lesotho’s financial-sector legislation, administered by the CBL, no person may carry on the business of taking deposits or offering investment products to the public without the appropriate licence. A scheme that collects money from the public with a promise of returns, however it describes itself, is in substance conducting regulated financial business. If it is not licensed, it is operating unlawfully from the moment it takes its first maloti, regardless of whether it ever collapses or whether early participants are in fact paid.
This is why the CBL’s public notices consistently use the language of “unlicensed and unregulated” rather than “fraudulent”. The regulator does not need to prove dishonesty to act; the absence of a licence is itself the contravention. Fraud, theft, and related common-law offences become relevant later, when promoters misrepresent how funds are used or when new deposits are applied to pay earlier investors, the defining mechanic of a Ponzi structure.
Two consequences follow that participants often do not appreciate. First, contracts concluded with an unlicensed scheme rest on an unlawful foundation, which complicates any civil claim to recover “profits” that were promised but never paid. Second, as the Qhesi note observes, investors in unlicensed schemes generally have no recourse to depositor-protection or regulatory compensation mechanisms if the scheme fails. The law’s protective architecture is built around licensed institutions; step outside it and you largely step outside its remedies as well.
The cross-border dimension
Many schemes marketed to Basotho savers are not confined to Lesotho. Promoters, payment flows, and marketing frequently move across the border, recruitment through mineworker and remittance networks in the Free State and Gauteng is a long-standing pattern.
That engages South African law as well. South Africa’s Banks Act prohibits unregistered deposit-taking, and the Consumer Protection Act expressly outlaws pyramid and multiplication schemes, with the Financial Sector Conduct Authority (FSCA) and the Prudential Authority holding significant investigative and enforcement powers. The policy note’s recommendation that the CBL coordinate with the FSCA reflects a practical reality we see in cross-border commercial work generally: a promoter who structures operations across the two jurisdictions is often betting that neither regulator will pursue the full picture. Coordinated enforcement, including asset freezes on both sides of the border, closes that gap.
For victims, the cross-border element cuts both ways. It can complicate recovery, because assets may sit in another jurisdiction. But it can also open additional avenues: South African insolvency and asset-preservation mechanisms, criminal complaints in either jurisdiction, and civil proceedings where promoters or their assets can be found. A firm admitted in both South Africa and Lesotho is well placed to assess which route offers realistic prospects in a given matter.
Why enforcement visibility matters legally, not just politically
The note argues that warnings unsupported by visible enforcement lose credibility. From a legal perspective there is a further point: swift enforcement is often the difference between recovery and loss. In scheme collapses, the practical question is almost never liability, it is whether anything remains to attach. Asset freezes, provisional liquidation or winding-up applications, and preservation orders are most effective when brought early, before funds are dissipated through payouts to earlier participants or moved offshore. Delay converts a legal remedy into a paper judgment.
Restitution after collapse, which the note rightly identifies as a credibility mechanism, typically runs through insolvency processes. Participants become concurrent creditors of a hopelessly insolvent estate, and liquidators may in turn pursue promoters personally and seek to recover payments made to early “winners”. Those who profited from a scheme should be aware that receiving payouts does not necessarily place funds beyond recovery.
Guidance for businesses and community institutions
Legitimate businesses can be drawn into these schemes without intending to be. Employers whose premises or payroll channels are used for recruitment, stokvels and burial societies approached to “invest” pooled funds, churches whose platforms lend credibility to a promoter, all face reputational and, in some circumstances, legal exposure. Basic due diligence is straightforward: any entity soliciting investment from the public should be able to produce its CBL licence (or, in South Africa, its FSCA/Prudential Authority authorisation), and its registration details should be verifiable with the regulator directly. If it cannot, the enquiry ends there.
The note’s proposal to embed financial literacy at remittance pay-out points, workplaces, and schools also has a compliance dimension for the institutions involved: banks, mobile-money providers, and employers who facilitate these touchpoints are well positioned, and increasingly expected, to flag suspicious collection patterns.
Conclusion
The Qhesi note is a valuable contribution because it treats scheme participation as a rational response to a constrained environment rather than mere gullibility, and directs remedies at the environment itself. The legal system’s contribution to that environment is enforcement that is fast, visible, and cross-border and legal advice, for participants and institutions alike, that is sought before money moves rather than after a collapse.
Mayet & Associates advises on financial-services regulation, cross-border commercial matters, insolvency, and asset recovery in both South Africa and Lesotho. If you have questions about the legality of an investment opportunity, or have suffered loss in a collapsed scheme, contact our Bloemfontein or Maseru offices.
This article is general commentary and does not constitute legal advice. Specific matters require advice on their own facts.