During engagements with the FSRA, it was noted that the EswatiniMed scheme is considered financially sound and not on the brink of collapse. The FSRA clarifies that the entity’s primary challenges stem from governance fractures and liquidity pressures rather than fundamental insolvency.
Speaking at a two-day media engagement at the Nkonyeni Residential Golf Estate, FSRA General Manager for Prudential Supervision, Mbongiseni Nkambule, emphasized that it would take more than a decade for an entity of this scale to suddenly fail.
“EswatiniMed is not broke,” said Nkambule, addressing liquidity concerns by explaining that a significant portion of capital had been invested in Ezulwini Private Hospital (EPH). While he acknowledged that this investment falls outside the fund’s primary operations and that EswatiniMed has not yet repaid the funds invested. Therefore, this means the EswatiniMed funds are currently tied up, contributing to liquidity pressure rather than any lack of overall financial health and soundness.
He explained that the real issue were governance challenges where the EswatiniMed Board had split into two opposing factions, making effective dialogue and the implementation of board resolutions nearly impossible. This leadership paralysis eventually necessitated the initiation of Curatorship under Section 71 of the FSRA Act to restore governance and install a properly constituted leadership structure designed to protect the fund’s long-term health and soundness.
The FSRA described its intervention as a measured response to stabilize the fund given this governance challenge and the numerous litigations involving EswatiniMed in the Courts around this matter.
Currently, the regulator reports a transformative shift in its relationship with EswatiniMed, noting that the fund is now fully cooperating with requirements. New reporting requirements have been introduced to strengthen financial oversight, alongside existing obligations, such as the annual submission of audited financial statements, which continue to be complied with.
According to CEO Ncamiso Ntshalintshali, the FSRA has placed EswatiniMed under close supervision as it navigates the complexities of its operational structure and awaits a more robust legislative framework. Medical aid schemes in Eswatini currently operate in a unique space that lacks comprehensive primary legislation governing other financial services, a gap the Ministry of Finance is proactively addressing through a draft bill under review.
Ntshalintshali highlighted that a primary challenge is the fundamental difference between traditional health insurance and the solidarity model used by funds like EswatiniMed. Unlike standard insurance, which is driven by individual risk, the solidarity model relies on a collective pool in which healthier members support those with greater medical needs.
The FSRA is currently engaging with management to ensure its supervisory approach is tailored to these specific intricacies without compromising the fund’s stability or its mission to protect members’ interests under the law rather than regulatory preference alone.