BY MBONO MDLULI
MBABANE – Assets of financial non-banking institution reached an amount of E94 billion in 2023.
This was said by Minister for Finance Neal Rijkenberg when delivering his Budget Speech for 2024/25 in the House of Assembly yesterday. “Assets of the non-banking sector reached over E94 billion as at the end of 2023, and this accounts for approximately 70 per cent of the financial sector assets,” Rijkenberg said.
Meanwhile, the Minister stated that in response to some failures in the industry, the Ministry of Finance, through the Central Bank of Eswatini (CBE), instituted a Forensic Investigation into the collapse of Ecsponent.
The Financial Services Regulatory Authority (FSRA) has put in place its own remedial measures to address gaps flowing from this collapse, including inter-connections between the different financial services providers.
These, according to the Minister, will include taking enforcement action on individuals responsible including referrals which have been submitted to law enforcement for criminal elements. The need to strengthen the laws to better protect the investing public will be the Government’s priority in the immediate future.
Speaking about the banking sector, Rijkenberg said despite challenges posed by the lagging effects of the COVID-19 pandemic and geopolitical tensions, the local banking system remained sound, stable and resilient, supported by strong capital and liquidity buffers.
High interest rates positively impacted on banks’ margins, leading to improved earnings and profitability. However, the combination of high interest rates and inflationary pressures resulted in higher non-performing loans (NPLs) and impacted negatively on liquidity ratios while customer deposits decreased. The rise in Non-Performing Loans is due to the cumulative increases in interest rates over the year, which has made debt more expensive thus limiting repayment capabilities of customers.
