Photo Credit: CENTRAL BANK OF SWAZILAND
By Avite Mbabazi
The Central Bank of Eswatini (CBE) has launched the 6th issue of the Financial Stability (FSR) Report.
The publication of the FSR provides a platform to communicate with stakeholders about pertinent issues and assessments pertaining to identified vulnerabilities in the financial system.
This year’s report has been published against the backdrop of major global crises such as the ongoing Ukraine-Russia conflict and the lingering effects of the covid-19 pandemic which have resulted in tighter financial conditions throughout the world.
On the local front, Eswatini’s corporate sector said to constitute of large corporates and MSMEs has not been spared from these tighter financial conditions.
According to the CBE, profits for the corporate sector amounted to E3.6 billion at the end of June 2022 reflecting a year-on-year decline of 52.4 % from E7.7 billion recorded in June 2021.
Notably, this translates to large corporates’ profits declining by 57.1 % over the year ended in June 2022 to E3.0 billion from E6.9 billion in 2021.
On the other hand, year-on-year MSME profits, declined by 9.2 % to E670.5 million at the end of June 2022, from E738.6 million in June 2021. The decline in profits was observed across all sectors except for agriculture, forestry, fishing, construction and other service activities notes the CBE.
Meanwhile due to what the CBE dubs an accommodative monetary policy in 2021, large corporates in particular have shouldered a rampant amount of debt. Corporate debt is said to have increased to E10.6 billion in the year ended June 2022 from E8.8 billion at the end of June 2021, reflecting a growth of 20.8 %.
Conversely, MSMEs remain out of favor with the local financial sector as demonstrated by the fact that the credit extended to MSMEs remains low in the local financial sector leading to unchanged debt levels. MSME debt amounted to E13.0 billion at the end of June 2022, a year on year decline of only 0.1% from last year.