By Phephile Motau
Eswatini Bank has exhibited its passion for the development of micro, small and medium, enterprises (MSMEs).The bank on October 11, hosted an MSME Business Forum where business owners were capacitated on ways in which to take their enterprises forward. The forum, which had the Eswatini Bank Managing Director Undlunkulu Nozizwe Mulela as the keynote speaker also informed the MESMEs owners of the opportunities and funds which were available for them in the bank and in other industry players including the government.
Business owners also got a chance to listen to presentations from other stakeholders including Eswatini Revenue Services (ERS), the Ministry of Commerce, Industry and Trade, Small Enterprises Development Company (SEDCO) and the Centre for Financial Inclusion (CFI).
Speaking on why the bank prioritised MSMEs development, Mulela said MSMEs in developing economies are viewed as engines of economic development.
“Owing to their private ownership, entrepreneurial spirit, flexibility, adaptability as well as their potential to react to challenges and changing environments, MSMEs contribute to sustainable growth and employment generation in a significant manner,” she said.
She added that MSMEs were of strategic importance to national economies as they often directly benefitted the poor and vulnerable, particularly women and youth, thereby directly reducing poverty, increasing income, and positively impacting household investments in education and health over time.
Mulela said the government of Eswatini had shown great interest in supporting entrepreneurship and MSMEs through a number of initiatives such as Credit Schemes monitored by the Eswatini Bank and the Central Bank of Eswatini. She said EswatiniBank was currently managing the E45 million MSME Revolving Fund, which has assisted over 1 400 both informal and formal businesses, with a total of E51 million having been disbursed since the inception of the fund.
Mulela said there was no simpler way to create new job positions, eradicate poverty, increase GDP and raise the standard of living of the population than supporting entrepreneurship and supporting people who dare to start their own businesses.
“Every surviving and successful business means new jobs and growth of GDP,” the MD said.
She said while MSMEs had the potential to contribute a lot more to economic development and poverty reduction, currently, in Eswatini, this was not happening. Mulela said the main problem facing MSMEs was a lack of preparedness to access finance rather than the availability of finance itself.
“EswatiniBank, whose main mandate is to develop all EmaSwati through financial services and credit extension, has an MESME Unit driving the funding in all four regions of the country in the last three years alone, the unit has disbursed funds exceeding E179 million to MESMEs across the country,” she said.
Mulela added that the total disbursed loans in 2022 doubled because of the E45 million Resolving Fund. She said the beneficiaries of this Fund were mainly the informal sector which has always struggled in accessing finance.
Mulela said the bank continued to ensure customer-centricity through training and forums like these while maximising the Small-Scale Loan Guarantee Scheme, Export Credit Guarantee Scheme and the MSME Revolving Fund for strengthened collaboration with key stakeholders including Junior Achievement (JA), Centre for Financial Inclusion (CFD), the Construction Industry Council (CIC) and SEDCO. This has had countless positives, such as job creation, economic growth stimulation and poverty reduction through the use of technology.
She said their SMME Unit was working on expanding our footprint in the MSME sector of Eswatini.
“This initiative involves partnering directly with MSMEs in the country and introducing personalised services to our customers. Mulela said they had other initiatives in the pipeline that include enlarging our footprint across the country by opening a new branch at Buhleni and offering services that met worldwide standards.
“Through these expansions, we want to make our services available to all MSMEs, especially to those living in the outskirts of towns,” she said.
Mulela said a close working relationship between MSMEs and the bank was essential to the growth of their customers and the continued success of the country’s economy.
“ Following the many challenges that MSMEs have faced in the past two years leading to the near collapse of the economy, we saw unemployment, increasing drastically in the past three years, the sectors that have been leading in economic growth are production, information and communication. Therefore, to grow the country’s economy, we are encouraged to give preference to such businesses,” she said.
The SMME sector of Eswatini:
- There are 70 000 SMMEs in Eswatini, employing 90 000 people
- Contribute 50 per cent to the country’s Gross Domestic Product
- Of the 70 000, 75 per cent owned by independent entrepreneurs have not contributed to job creation
- 74 per cent are in rural areas which is about the same proportion as female-headed SMMEs
- 75 per cent operate in the informal sector, with 25 per cent operating in the formal sector
*Sourced from Dr Vinaye research on “A Financing Model for MSMEs in Eswatini.”
Small businesses shunning credit guarantee scheme
EmaSwati are not taking advantage of the Export Credit Guarantee Scheme (ECGS).
This was revealed by the Director of MSME Mluleki Dlamini from the Ministry of Commerce Industry and Trade. Dlamini was speaking during the SMME Business Forum hosted by EswatiniBank on October 11.
He said this scheme has not been used over the years and he was looking forward to having the first guarantee under export.
“I have been trying, pushing extremely hard. Our businesses most of them are local market-oriented, which does not make them grow at the rate other businesses are growing.
If you target the export market, money comes in dollars, we need to consider that. The scheme is there and ready to use.
Speaking on the same scheme, Eswatini Bank’s Manager of Agri-business Mazibuse Khumalo said they have come into an agreement with ESWADE for farmers financed for high-value crops.
“We have financed these farmers, and hope that they will tap into the export guarantee scheme,” he said.
Khumalo added that currently, the scheme was not utilised at all, and they did not have even one customer, yet it is open for everyone who can be accredited to export.
He said the scheme had maximum credit of E3.3million and it secured an order up to 90 per cent and the customer is expected to provide 10 per cent. He added that the interest rates were very favourable and all SMMEs could access it.
Meanwhile, Dlamini also spoke to the businesspeople about other financing opportunities provided by the government. He said one of these was the E45 million MSME Revolving Fund which was established for businesses which suffered losses due to Covid-19.
He said now it was continuing and was now a scheme which could be accessed by everyone.
He said it was housed at Eswatini Bank with a maximum loan of E100 000 payable over 36 months at 5.5 per cent interest which even start-up businesses can apply for. Dlamini said they had been trying to move the ceiling from E100 000, but unfortunately, businesses suffered losses due to the civil unrest and some loans had to be written off. He said there was a proposition to increase the maximum loan amount to E300 000, and this could be possible if those who have borrowed could continue to service their loans.
Dlamini said they also had the Informal Traders Revolving Fund (ITRF) housed at FINCORP and benefits informal traders with loans of up to E5 000 payable over six months at one per cent interest. He said these were some of the initiatives that government uses to assist entrepreneurs.
“The plan was to have the informal traders moving into the E45 million, but we have not seen them progressing to that level. Hopefully, in the future we will have them,” he said.
He also spoke of the Youth Enterprise Revolving Fund (YERF) for youth between 15 – 34 years and which is managed by the Youth Enterprise Fund with a maximum loan of E150 000.
Dlamini said there was also the Small-Scale Enterprise Loan Guarantee Scheme (SSELGS). He explained that this was not a loan, a guarantee facility once you have a loan that has already been granted by a bank.
This is a collateral scheme managed by the Central Bank of Eswatini. Businesses can be provided collateral at 95 per cent and 85 per cent for start-ups and existing businesses, respectively.
“Now we have non-bank financial institutions that are part of it, they have just signed an agreement with their own conditions. In the first quarter report, we have seen loans coming from Fincorp and NIDCs. This has widened the scope and field in terms of getting loans,” he said.
Over 153m disbursed to farmers
EswatiniBank last year disbursed over E153 million as loans to farmers.
This was revealed by Mazibuse Khumalo, the bank’s Agri-business Manager.
He said these were disbursed mainly to those in rural areas in sugar cane, vegetables and other crops. Khumalo said the bank had tried to develop products that are friendly to all looking at the escalating inflation and these include the developed low-cost account to cushion the inflation.
He added that EswatiniBank financed all commercially viable businesses in agriculture.
“We finance individuals above 18 years of age, companies, cooperatives, and trusts,” he said.
Khumalo added that the bank had also positioned itself for those progressing from SMMEs to corporate businesses.
He further shared the available opportunities in the agricultural sector by saying in 2021, the country imported food equivalent to E1.5 billion of which more than E175 million was spent on vegetables, E231 million on white maize, beans at over E65 million and potatoes at 23.1 million.