By Phiwa Sikhondze
Credit extended to Eswatini’s private sector reached E20.1 billion in August 2024, marking a 1.0% month-on-month and 7.8% year-on-year increase, driven primarily by business sector growth.
According to the Central Bank of Eswatini’s latest Monthly Statistical Release (August – September 2024), this expansion signals optimism in the country’s economic recovery.
The report attributes the rise in private sector credit to growth in credit extended to various sectors of the domestic economy, particularly businesses. However, credit to households and nonprofit institutions serving households (NPISH) declined during the same period.
Credit to the business sector saw a notable increase of 11.6% year-on-year, reaching E10.4 billion by August 2024. The construction sector led the charge with a 22.7% increase, followed by manufacturing (5.0%), distribution & tourism (4.0%), and agriculture & forestry (3.6%).
Conversely, mining and quarrying experienced a sharp decline of 68.9%, while transport & communication (-1.1%), community, social & personal services (-1.5%), and real estate (-1.0%) also saw contractions in credit.
Despite the overall growth, small and medium enterprises (SMEs) struggled, with credit to SMEs decreasing by 0.1% month-on-month to E3.2 billion, while large enterprises saw a 3.0% rise to E7.2 billion.
On the other hand, credit extended to other sectors of the domestic economy rose by 8.7% month-on-month, totaling E1.1 billion in August 2024. This was fueled by a 20.5% increase in credit to local government and a 17.3% rise in credit to other financial corporations. However, credit to parastatals declined by 4.3%.
Households and NPISH credit decreased by 1.1% month-on-month, closing at E8.5 billion by the end of August. This drop was mainly driven by a 3.0% decline in other personal (unsecured) loans to E3.1 billion and a slight 0.3% reduction in housing loans to E4.3 billion. Motor vehicle loans, however, grew by 1.6% to E1.1 billion, reflecting steady demand in this segment.
Additionally, the Monthly Report notes that gross official reserves amounted to E8.3 billion by the end of September 2024, reflecting a 17.8% month-on-month decline. The drop in reserves was mainly caused by net Rand outflows from trades with local commercial banks and government drawdowns for fiscal obligations.
The CBE notes that the decline has resulted in a reduction of the country’s import cover from 2.7 months in August to 2.2 months by the end of September.
“However, year-on-year, reserves grew by 9.1%, demonstrating recovery from earlier months. When expressed in Special Drawing Rights (SDR), the reserves totaled SDR356.6 million, showing a 16.1% month-on-month decrease but a 16.6% increase year-on-year.”