By Phiwa Sikhondze
The Eswatini non-banking financial sector continues to prove its significance in the country’s economic development.
According to the Financial Services Regulatory Authority (FSRA) Quarterly Statistical Bulletin Quarter 1, 2023, the non-banking financial sector in Eswatini has increased its assets by 0.64%, reaching E94.85 billion as of 31 March 2023.
The FSRA Quarterly Statistical Bulletin is compiled to provide consolidated statistics and analysis relating to the quarterly performance of the non-banking financial Institutions and the trends observed by the Authority in the sector’s performance.
The report is based on the regulatory returns submitted to the FSRA by the licensed entities and on the supervisory and enforcement work conducted the FSRA. The quality and depth of analysis depends on the accuracy and quality of the data submitted by the entities.
FSRA in its report notes that the retirement funds sector continues to be the anchor of the financial system and the non-bank financial sector, as their assets accounted for 32.49% of the financial sector assets, 45.67% of the non-bank financial sector assets and 70.29% of the assets held by the local asset managers.
The insurance sector on the other hand showed signs of stability in terms of claims resulting from risk products, but savings and investment products were adversely affected by inflationary pressures. The decline in savings was also observed in the building societies. The local capital markets sector also showed limited growth, affected mainly by the declining value of assets under management.
The quarterly bulletin notes that the local capital markets sector also showed limited growth. It attributes the limited growth mainly to the declining value of assets under management which have shown a steady decline since Q3 2022, while the assets under advisory have on the contrary been growing.
The report further reveals that the retail credit sector witnessed a steady increase in consumer spending. The FSRA attributed the increase to social influence arising out of shopping events and mass promotion or marketing events such as Black Friday, Cyber Monday and the festive season.
“Consumer spending on retail outlets has been on a steady increase resulting in credit advances in this sector rising to E338 million as of Q4 2022. As of Q1 2023 the value of advances declined by 6% to E320 million. Using Q4 2022 figures we realize an over E20 million increase on a quarterly basis from a figure of E318 million recorded and reported on per the FSRA Statistical Bulletin. Yearly, the changes have been significant with an improvement in credit advances of E97 million,” the report notes.
The FSRA concluded that the non-bank financial sector remained profitable during this period, when measured in terms of return on equity and return on assets, but some credit institutions such as SACCOs and building societies continue to maintain a portfolio of risk above 5% and non-performing loans above 10%.