Eswatini Governor urges support to improve MSME access to financing

Costs and banking processes must be reduced for micro, small and medium enterprises (MSMEs) to support future expansion in the sector, Central Bank of Eswatini Governor Majozi Sithole said on 12 November.

Speaking at the Eswatini SME Finance Forum 2019 in Ezulwini, Governor Sithole noted that while MSMEs play a vital role in reducing poverty, greater stakeholder collaboration and financial awareness was needed to build capacity, improve stability and reduce non-performing loans.

MSME’s, he added, create 32 percent of jobs and contribute as much as 45 percent to gross domestic product in Eswatini.

Minister for Commerce Industry and Trade Senator Manqoba Khumalo highlighted some of the constraints felt in the sector. He said that only 10 percent of Eswatini’s 60,000 MSMEs have taken out loans from formal financial service providers, adding that leveraging technology and alternative financing could provide solutions.

High costs and a lack of awareness, he added, had led to low uptake rates for risk management tools among MSMEs.

Aiming to reverse such trends, he added that the government was working to provide financing assistance to MSMEs through credit guarantees schemes and measures to help boost credit worthiness.

Ivan Ssettimba, Head of AFI’s Africa Regional Office, also spoke about significant credit gaps among SMEs that are hindering business expansion, particularly in the emerging economies, as well as AFI’s work in promoting tangible access, usage and quality financial services.

On the event’s second day, he delivered a presentation on secured transaction frameworks while AFI’s head of Inclusive Green Finance Johanna Nyman spoke about the role of financial systems and responding to the climate emergency.

Meanwhile, AFI SME Finance Policy Manager Nik Kamarun took part in a panel discussion on initiatives to promote SME finance, where he outlined best practices and government interventions to improve access to finance as well as a holistic ecosystem for SME financing development.

He also moderated a discussion on new technologies and innovation to accelerate convergence of the real and financial sectors in SME finance, during which he presented the results of a recent survey on alternative financing by AFI’s SME Finance Working Group (SMEFWG).

Central Bank of Eswatini is a member of SMEFWG. Since joining the network in 2014, it has been taken part in numerous capacity building events, including a joint learning program in Ghana and public-private dialogue events in Guinea and Jordan. Eswatini’s Ministry of Finance is also member of AFI, having joined in 2013, and has made seven Maya Declaration commitments. Of these, two specifically target SME development including by conducting value chain and ecosystems assessments.

AFI’s Africa Regional Office in Côte d’Ivoire, established in February 2019, ensures greater proximity to members in Sub-Saharan Africa and Middle East & North Africa and responds to their needs efficiently, especially through in-country implementation support.