By Phiwa Sikhondze
The Financial Services Regulatory Authority (FSRA) has released its Quarterly Statistical Bulletin for Q3 2023, revealing that the non-banking financial institutions (NBFI) sector in Eswatini has reported a modest increase in assets by 1.76%, from E98.94 billion to E100.69 billion in the third quarter of the year 2023.
The growth is primarily attributed to the performance of collective investment schemes, reinsurers, and retail outlets, which saw increases of 7.63%, 11.04%, and 8.67%, respectively.
The FSRA Quarterly Statistical Bulletin is compiled to provide consolidated statistics and analysis relating to the quarterly performance of non-banking Financial Institutions and the trends observed by the Authority in the sector’s performance.
This Report is based on the regulatory returns submitted to the FSRA by the licensed entities and on the supervisory and enforcement work conducted by the FSRA. The quality and depth of analysis depend on the accuracy and quality of the data submitted by the entities.
The Report notes that not all sub-sectors experienced growth. According to the bulletin, while growth in the other sub-sectors ranged from 0.25% to 3.63%, Savings and Credit Cooperative Organizations (SACCOs) and long-term insurers saw declines of 0.66% and 0.34%, respectively.
Another notable change relates to the continued increase in the local asset portfolios held by different sub-sectors. The local portfolios also saw an increase, with retirement funds holding 48.36% of their assets locally, exceeding the 30% requirement.
Short-term and long-term insurers held 53.09% and 34.66% of their assets locally, respectively, while collective investment schemes held 64.82% of their assets in domestic assets.
Despite the overall profitability of the sector, SACCOs experienced a decline, with their portfolio at risk standing at 9.47%. Development Finance Institutions (DFIs) reported 31.07% of their loan book in arrears for over 120 days. Building Societies, on the other hand, showed a decrease in non-performing loans by 1.45 percentage points during the quarter.
The bulletin also notes a low level of competitiveness within the NBFI sector, with the Herfindahl Hirschman Index indicating a high level of concentration. Market share positions remain static, with smaller or newer entities struggling to gain market presence and larger entities holding a joint market share exceeding 80%.
This mixed performance underscores the resilience of Eswatini’s NBFI sector while also highlighting areas that require attention to ensure sustained growth and competitiveness.