THE CENTRAL BANK OF SWAZILAND
The bank of issue within the country's financial structure was established as the monetary authority in April 1974 under the Monetary Authority Order of that year, empowering CBS to monitor, regulate and develop Swaziland's financial infrastructure. The Authority took on the function of a central bank in 1978 when the name was changed under the Monetary Authority (Amendment) Act of 1979 and additional powers were granted through amendments to the Acts in 1982 and 1986.
Legislative amendments to the Order of 1974 provide the legal framework that enables the bank to adapt to the changing global environment and to incorporate new developments and financial supervision.
The bank issues the national currency, advises government, manages the country's official reserves and deals in foreign exchange markets, activities which involve spot trading and dealings in the forwards market. The commercial banks may manage limited sums of forex, reverting to the Central Bank if necessary. The CBS also provides central clearing facilities for the commercial banks and operates.
Under its Development Finance Division, the Bank administers the Small Scale Enterprise Loan Guarantee and Export Credit Guarantee Schemes. These provide credit guarantees to participating financial institutions that have granted finance to SMEs for viable start-ups as well as already fully operational enterprises, and also cater for those businesses that are involved in the export trade.
The Swaziland Government has a capital fund which is administered by the Central Bank and into which surpluses are deposited to cater for future projects. The bank operates the Swaziland Automated Electronic Clearing House. The Balance of Payments reporting system links authorised dealers to a database at the CBS where all foreign exchange transactions are reported. The commercial banks advise on individual allowances, which vary depending on circumstances. The CBS allows the movement outside the country of up to E500,000 per annum by individual permanent residents from personal accounts for gifts, maintenance, travel and other purposes.
THE NATIONAL CURRENCY
The Lilangeni (plural Emalangeni) was issued as the national currency in September 1974 on a par with the South African Rand (ZAR), under the Common Monetary Agreement. South African bank notes, but not coins, are legal tender in Swaziland. The currency has tended to fluctuate quite significantly but has performed weakly during the past few years. Towards the end of 2013 it was fluctuating around E9.8/$US1, E15.9/UK Sterling and E13.5/Euro. This compares with E8.78/$US; E14/Sterling and E11.3/Euro the previous year.
THE COMMON MONETARY AREA & EXCHANGE CONTROL
Swaziland is one of the four members of the CMA, a monetary arrangement with South Africa, which also includes Lesotho and Namibia. This dates back to when these countries used British Sterling as their currency and was formalised in December 1974 with the signing of the Rand Monetary Area (RMA) Agreement which became the Common Monetary Area (CMA) in 1986. The CMA provides for the free flow of funds between the member countries with no exchange controls, which facilitates easy trade with minimal transaction costs. Fairly liberal regulations apply to the rest of the world.
In order to balance risks to economic growth and price stability, the Central Bank continued to pursue an accommodative monetary policy coupled with low interest rates.27
In the face of weakened domestic, regional and global growth, inflationary pressure increased and having reduced interest by 50 basis points mid 2012, rates remained low.
Credit to the private sector showed negative growth due to reduced economic activity, reversing the trend of double digit figures during recent years. Credit to the industrial sector also reduced but increased slightly to households.
Broad money supply growth recorded 28.9%, having remained at 3.4% for two years, largely due to a recovery in net foreign assets, mainly attributed to high SACU receipts, coupled with the continued depreciation of the local currency. Quasi money supply was up by 11.4%.
Foreign exchange reserves increased to above the internationally recommended import cover of three months.
Interest rates remained largely unchanged at 5.5%. The prime lending rate was 9% with interest on deposits, depending on their type, varying between 2.43% and 5.5%.
Statutory Reserve & Liquidity
The Central Bank's reserve and liquidity requirements remained unchanged, having been revised upwards from 2.5% to 6% and from 13% to 20% respectively in July 2011. Due to its role as a development bank, however, the liquidity requirement of SwaziBank is lower and remained at 17%. The banks continued to meet and maintained excess balances.
In this respect, the banks' domestic liquid assets were up by 29% to reach E2,365.3 million and the ratio of liquid assets to domestic liabilities increased by 3.5% to 28%. At the end of March 2013 excess liquidity was E714.2 million from the E368.5 million previously recorded.
Net Foreign Assets
A significant increase of 93.1% to E7,122.8 million was recorded from a decline of 29.7% to E3,687.8 million the previous year. This is attributed to higher SACU revenue and the devalued local currency.
Net official assets were up by 71.2% to E5,534.5 million while gross official reserves rose by 64.3% to reach E6,196.3 million, reflecting an import cover of 3.2 months against the previous 2.1 months. This trend is expected to be maintained in the short-term due to high estimated SACU returns for 2013/14. However, longer term prospects are dependent on revenue from SACU and government's commitment to the fiscal reform measures that are in place, including the passing of the Public Finance Management Bill.
Having increased the previous year to E7,754.1 million as a result of credit to the private sector and a reduction in government net balances, domestic credit claims reduced to E6,247.9 million during the review period. This is in line with reduced credit to the private sector and government's increased balances, which were up by 301.1% to E1,897/8 million.
Credit to the private sector was slightly down by 1.1%, while the industrial sector reduced by 3.3%. Borrowing by the household sector grew by 2.3%.
Annual growth in claims was up from 12.7% to 18.9%. Credit to industries went up by 33.1%, to households by 20.6% and to public enterprises by 20.5%, all attributed to attractive interest rates.
For further detailed data on Swaziland's Economic and Monetary issues, please refer to the Central Bank of Swaziland's Annual Report. Contact the Research Department on +268 2404 2000 or go to www.centralbank.org.sz
THE COMMERCIAL BANKS
First National Bank & WesBank
First National Bank has operated in Swaziland since 1995. Its headquarters are at the Swazi Plaza in Mbabane and there are four main branches plus eight agencies throughout the country.
FNB has the largest ATM network in Swaziland with 65 full ATMs countrywide, four mini ATMs in small towns, and 35 slimline ATMs. FNB also provides the VISA Electron Debit Card for its consumers and business clients, which allows the withdrawal of cash at over one million ATMs worldwide, and payment for goods and services at point-of-sale terminals globally.
The bank offers a variety of other products, including cheque, transmission and savings accounts, home and property loans, plus vehicle and asset finance, credit cards, business and corporate banking, on-line banking, eWallet, eMail statements, cellphone banking, inContact (free SMS messaging) and Speedpoint (point-of-sale terminals).
FNB is a market leader in providing innovative solutions to its customers with on-line banking, which facilitates payments and receipts and has full cross-border functionality with all South African banks. Customers also have easy access to their daily account balances, transaction history and statements, while cell phone banking allows access to their accounts anywhere at any time. Customers are also able to purchase prepaid airtime and electricity using these electronic platforms.
The award winning FNB Banking App is one-of-a-kind for both FNB and non FNB customers. With this app, one literally has a personal branch in his phone. This app provides convenient, safe and secure banking anytime, anywhere.
FNB's Business and Corporate Divisions provide working capital term funding structures for both business and commercial/corporate operations throughout Swaziland, while the Treasury Department caters for all local and foreign market transactions, offering expert international banking advice and information.
WesBank, with dealership representation in Mbabane and Manzini, is FNB's leasing arm specialising in competitive leasing services for vehicles, machinery and equipment. It is a key provider of asset-based finance, catering for corporate and individual clients and placing emphasis on quick response times and high service levels. It provides customer service facilities at most dealer outlets where financial assistance and advice are available.
FNB's commitment to corporate social investment is focused on addressing society's needs at grass roots level and is highlighted in the bank's brand promise of How can we help you?
For more information please visit any FNB branch, phone the call centre on (+268) 2518 4637 or visit www.fnbswaziland.co.sz.
Nedbank (Swaziland) Limited
Nedbank, one of Swaziland's leading commercial banks, has its headquarters at NedCentre Building, Swazi Plaza, Mbabane and operates nine branches throughout the country plus a total of 29 ATMs. With its vision of building Swaziland's most admired bank by our staff, clients, shareholders, regulators and communities, Nedbank undertakes to listen to and understand clients' needs and to deliver, which are its long-term strategy guidelines.
The bank's structure comprises corporate and business banking, retail, SME banking and central management functions in support of frontline business, through which a wide range of products and services are offered.
The wholesale and retail banking services comprise various accounts, including current, Sivuno and Sivuno Plus, Ordinary, Savings, Ngeyakho, call and student.
Loan facilities cover micro, premier, Leap personal, urban, rural and vehicle leasing or loans. Business or commercial loans, equipment leasing and overdrafts are offered to SMEs.
Nedbank is a market leader in providing a secure Internet banking platform which allows customers access to banking at their convenience.
The bank also measures and tracks staff perceptions, organisational performance, culture and values in order to create "a great place to work" attitude, as well as making it "a great place to bank".
With the strategic focus areas of leadership in sustainability and transformation and community involvement, the bank takes pride in giving back to the community through various channels that it has identified and aligned with through Corporate Social Investment (CSI) programmes. This also involves the staff, who strive to make a sustainable difference to individuals and communities. The CSI programmes are broadly divided into the six focus areas/portfolios of Economic Development, HIV/AIDS Initiatives, Community Development, Education, Sports and Arts and the Environment.
Nedbank continues to lead as a corporate citizen to ensure that it remains Swaziland's leading green and caring bank, thereby building a sustainable and highly relevant business in Swaziland.
For more information please visit any Nedbank branch, www.nedbank.co.sz or call 2408 1251.
"The bank with a heart" is a Development Finance Institution (DFI) wholly owned by the Government of Swaziland, and has a wide network distribution of 12 branches and auto teller machines (ATMs). The Gables in Ezulwini also operates on Sundays.
The Bank, which plays a significant developmental role in the economy, is involved in financing all sectors, such as industrial, commercial, agriculture, small micro and medium enterprises (SMMEs), health, tourism, transport and mining.
SwaziBank offers numerous banking solutions, including savings, investment and corporate accounts, Premier Banking, foreign exchange, and loan facilities for housing, vehicle finance and business.
There is a Corporate Social Investment (CSI) policy which guides the bank as it ploughs back into the community in which it operates. The flagship of the CSI initiatives is the annual SwaziBank Cup soccer knockout tournament which was incepted in 2004. When this tournament began it had a sponsorship of E500,000, and today it has grown into a national event with sponsorship of E1.65 million in 2013. The Bank also sponsors the annual Schools Choral Music Competition as part of its CSI programme. This sponsorship started with E50,000 in 2005 and grew to E260,000 in 2013.
In 2013, SwaziBank, as part of its social responsibility programme, also contributed financially towards organisations that promote such initiatives as youth entrepreneurship and caregivers for the terminally ill.
SwaziBank continuously endeavours to develop banking products in order to meet its 'customers' needs at all times. www.swazibank.co.sz
OTHER FINANCIAL INSTITUTIONS
Swaziland Building Society
Having "Created Wealth for the Swazi Nation through Housing Finance" for over 50 years, the SBS is the country's major provider of long-term mortgage lending and loan finance for the purchase of vacant land, completed property and the construction of affordable housing. The Society has unsurpassed knowledge of the local mortgage bond market and keeps up with client demand, including below prime mortgage loans for residential property, repayment holidays, and bond re-advances and rescheduling.
SBS also offers commercial mortgage loans to assist the business community obtain and develop commercial property. This is linked to the Bond Re-Advance facility that enables businesses to secure loans within 24 hours to finance working capital requirements against bonded property.
Products for individuals include Sipatji Advances for salaried clients; Insurance Policy Loans for holders of eligible policies issued by the Swaziland Royal Insurance Corporation (SRIC); and the Guaranteed Car Loan Scheme for staff of reputable employers. Other products include short-term loans against investments and deposits, and tailor-made housing schemes under Homeplan that enable borrowers to build on Swazi Nation Land by utilising pension funds as collateral.
Some of mortgage portfolio features include extended repayment terms and a loan rescheduling option to assist in times of financial hardship and high interest rates. Other products include investments, savings such as Gold Accounts, payroll and transmission accounts, prime-linked deposits, special call accounts and group savings schemes. Investments and deposits are accepted at highly competitive interest rates in recognition of investor demand.
Collection accounts allow the Society to act as an agent for entities such as schools, cooperatives and municipalities. Through the SBS/Swazimed Medical Plan, clients may join the medical aid scheme as individuals.
The Swaziland Building Society is committed to financing developers and end users under the Urban Development Projects and offers finance at rates as low as 1% below prime, making repayments more affordable.
Training is a major focus in terms of personal development and improvement of delivery, and apart from the pension scheme, there is a savings plan to encourage staff and inculcate a culture of saving.The Society has ATMs at all its branches in Mbabane, Manzini, Nhlangano and Siteki, and at the strategic points of Pigg's Peak, Ezulwini, Matsapha and Big Bend.
During the year, a mini-branch was constructed and opened at Matsapha and a three-year strategic plan, which defines the SBS objectives, was formulated. This includes expanding the ATM network and branch representation. A risk management platform and policy was also formulated and a strategic risk register compiled.
Social responsibility includes sports sponsorships, particularly the Tennis Association, and financial contributions to the Breast Cancer Network. A Staff Wellness Policy encourages personnel to manage their health to live long and productive lives.
During the financial year ended March 2013, SBS's assets grew by 7.9% to E1.471 billion due mainly to 8.5% in surplus funds. After-tax profit was E41,616 million, representing a small drop of 6.9%. See also advert outside back cover www.sbs.co.sz
FIRST FINANCE COMPANY
First Finance Company is an authorised financial services provider, duly licensed by the Central Bank of Swaziland, offering general purpose finance to salaried employees of the civil service, parastatals and selected private organisations. Its vision is "First will be recognised as consistently improving the standard of living of clients across the country".
The company was officially launched in January 2010 and has been well received by the market. Over the last three years business has grown significantly and due to the demand for its services, a branch has been opened in Manzini to meet the dynamic financial needs of its clients. These are met by short, medium and long-term loan products.
The services of First Finance Company are relevant to both consumers and to entrepreneurs. In March 2012 it launched yet another product: Invoice Discounting, which appeals to small and medium enterprises. First Finance Company accepts discounted invoices, which are less than 90 days old, from reputable companies and makes cash instantly available to meet immediate business needs, such as paying wages and purchasing stock.
First Finance Company is determined to improve the livelihoods of its clients through the provision of a wide range of general purpose financial services in the most prudent, ethical and responsible manner. As a socially responsible credit provider it offers advisory services to its clients and prides itself in offering innovative and timely financial services to customers, processing transactions with minimal paperwork and with a commitment to demonstrating absolute transparency and openness in credit dealings. Feedback received from the market indicates that the financial services offered by First Finance Company are generally considered to be among the most attractive among the non-banking financial institutions in Swaziland.
Staff training is the most focal area in terms of personal development and improvement of service delivery to the clientele. Please refer to the advert for all contact details. www.firstfinance.co.sz
INSURANCE & BROKERS
Since the opening up of the Insurance Sector in Swaziland in 2008 when the SRIC monopoly fell away, several new players have entered the market, giving clients at all levels, from corporate to individual, a wider range of options in both long and short term insurance.
Swaziland Royal Insurance Corporation
SRIC was established in 1973 by the Order-in-Council of King Sobhuza II with the objective to provide adequate and proper insurance business of all classes, including short and long term insurance, in accordance with the conditions appropriate to the normal and proper conduct of insurance business.
The Corporation began writing business on 1st January 1974 and has lived up to its founding principle, acting fairly and impartially to all persons, and providing adequate and proper insurance business. It is a solid and reputable insurer, contributing to a stable domestic insurance environment that has benefited the Swaziland economy, as evidenced by the significant claims it has paid over the years.
SRIC's main business activity is the provision of short-term insurance, life assurance to individuals and pension administration. In the now open market environment, it aims to strengthen its position as the country's preferred insurer.
The shareholding comprises the Swaziland Government – 41%; Munich Reinsurance Company of Africa Ltd and Cougar Investment Holdings Ltd - both 16%; Zurich Insurance Company SA Ltd – 5.2%; Old Mutual Life Assurance – 5%; Inba Holdings Limited – 6.5% and South African Eagle Insurance Limited – 3.38%. During 2012, Swiss Re sold its interest to the Public Service Pension Fund and a local business consortium, who now own 6.5%. A number of these shareholders provide reinsurance support.
An effective intermediary service enables good outreach for SRIC's products and there are at least four major brokers in Swaziland with an efficient network of agents, particularly for life
Prior to SRIC’s establishment, several foreign
insurers operated in Swaziland. Government
then entered into a joint venture with the
various companies and while SRIC operated
alone, the association with and shareholding
of these companies ensured the continued
transfer of skills and upholding of modern
An effective intermediary service enables good
outreach for SRIC’s products. There are at
least four major brokers in Swaziland and an
efficient network of agents, particularly for
life insurance. This ensures that the transfer
of risk to the insurer is readily
accessible. There have been serious disasters
over the years that could have challenged
weaker companies. The corporation met all
its obligations thereby testifying to its solid
backing. The ongoing training of staff
ensures skilful and knowledgeable personnel,
while service delivery is key to SRIC’s
With the advent of competition through new
legislation, service delivery will be the
determining factor for continued
profitability. Product development will also
be very relevant to SRIC’s continued
insurance. This ensures that the transfer of risk to the insurer is readily accessible. About 85% of the business is transacted through brokers.
The ongoing training of staff ensures skilful and knowledgeable personnel, while service delivery is key to operations.
SRIC has an unbroken record of profit since 2004 and in 2012/13 the profit before tax was E116 million compared with E95.9 million, an increase of E21.3%. Short-term business achieved an underwriting of E67.8 million (E68.5 million the previous year).
Long term business (life) profit for the year was E73.1 million (against E32.2 million) before dividend payments. The excess of assets over liabilities for the year was E62.1million compared with E13.8 million due to high
Impilo Yami Insurance Brokers
As a registered, licensed broker under the Insurance Act, Impilo Yami offers integrated long and short-term insurance products to both the business sector and private individuals in Swaziland. The company was established in 1992 and has grown to become the largest Swazi-owned brokerage in the country, employing 20 staff members, several of who are qualified specialists in the various categories of insurance broking.
The corporate philosophy is to provide cost-effective, professional services with commitment to excellence and efficiency. This has paid off with income, which is mainly based on commissions, more than doubling over the past decade and the company is implementing its future growth plan.
This includes diversifying to incorporate a financial service wing and investing in education and further training of the staff, most of whom are highly qualified in the various fields relating to finance and insurance.
There is also a drive to increase corporate business, thereby contributing to both the insurance industry and the local economy. www.impiloyami.co.sz
Motor Vehicle Accident Fund.
The Sincephetelo MVA Fund was established by an Act of Parliament under the Motor Vehicle Accidents Act No. 13 of 1991 (Amended in 2011) as the instrument by which the Government of Swaziland compensates road accident victims who have suffered bodily injuries or loss of support following the death of breadwinners.
Between 1973 and 1986, compensation to road victims was operated by the Insurance Industry under third party premiums but due to the horrendous and escalating accident rate, the Insurance Industry was compelled to increase third party premiums by high percentages. The Government of Swaziland became concerned that most people could not afford this cover and road victims could be left without compensation. Hence the establishment of the MVA Fund as a fuel levy fund.
The fuel levy fund has the same concept as third party insurance in that there are three people (parties) involved in this type of compensation. The MVA Fund is the first party who enters into a contract with the driver/owner of the motor vehicle who is the second party. The second party will pay the first party through the fuel levy and the MVA Fund will then indemnify the second party against claims of third parties (road victims) who are injured or killed through the fault of the second party.
Compensation under the fuel levy system is therefore a legal right deriving from the law of delict and founded on the juristic notion that if X commits a wrong against Y, which results in Y suffering damages (either by an act or by omission), then X is obliged by law to restore Y to his original position, or in other words, to compensate him. www.mva.org.sz.
Sanlam Investment Management Swaziland
Sanlam Investment Management Swaziland (SIM Swaziland) offers a broad range of investment portfolios for institutional investors, including corporate entities, retirement funds, long and short-term insurers, and individuals. SIM Swaziland is a part of the Sanlam Group of companies with technical assistance from Sanlam Investment Management which has over E596 billion under management. Key traditional investment products in Swaziland are the Balanced Mandate Funds which give investors access to a range of asset classes. There are also inflation benchmarked Absolute Return Funds. SIM Swaziland prides itself of being the first company in Swaziland to register an infrastructure fund. Yekucala Infrastructure Fund engages in a broad range of projects working with sector specialists. These projects have huge socio-economic benefits for the Swazi economy. A major contributor to performance is highly experienced personnel with access to an extensive regional and global network, comprehensive research base and analysis. SIM Swaziland combines global best practice in asset management backed by local knowledge, skills and expertise. Email email@example.com, www.sanlam.co.za
Metropolitan Life Swaziland
Metropolitan, founded in South Africa in 1898, is the largest long-term financial services group focusing on the lower to middle income market. The vision is to create prosperity by providing affordable products that create financial growth and security. Metropolitan is a fully fledged financial services group providing life assurance, employee benefits, asset management, property and collective investment management and medical aid administration. The brand is well known in South Africa and has a proven track record of offering accessible, affordable financial solutions to its clients. The group brand slogan of together we can underpins the company’s belief that it cannot deliver on its vision alone and requires collaboration and partnerships at both grassroots and corporate level. Metropolitan Life Swaziland is a whollyowned subsidiary of Metropolitan Holdings. It was established in March 2008 and aims to provide affordable financial solutions to the local corporate and retail sector. Metropolitan has invested substantial capital in setting up the business in the Kingdom and has created employment for ten Swazi citizens. It is seeking influential local partners to take a meaningful shareholding in the business, a strategy that will both secure local knowledge to assist in growing the business and, align the local company with the group’s objectives of empowering the communities in which business is conducted. Prior to the enactment of the Insurance and Retirement Act 2005, only one insurance company was able to operate in the country. The consequence of this previously closed market was low penetration of life insurance products and services but now there are excellent growth opportunities for Metropolitan Life Swaziland. The stable political and economic situation in the country and the dependable legal framework created by the Insurance and Retirement Fund Act 2005 contribute to a favourable operating environment.
Registrar of Insurance & Retirement
The main function of the RIRF is to supervise and exercise control over the activities of insurers and retirement funds. A sound regulatory and supervisory system is essential in order to maintain an efficient, safe, fair and stable insurance industry and to promote growth and competition in the sector. This is particularly relevant since the falling way of the monopoly status previously held by the Swaziland Royal Insurance Corporation, enabling more players to enter the local market.
The following information is a guide only and should not be relied upon as a substitute for detailed professional advice.
The present Income Tax Act came into effect on 1 July 2003. It rules that any benefits received by employees, including housing, cars, education and utilities, are taxed. Initially, this tax applied to 20% of the value of the benefits and gradually increased to 100% for certain categories of benefits over a five-year period. Amendments to the Income Tax Act are designed to bring commercial activities on Swazi nation land into the tax net, put in place a branch profit tax of 37.5% for branches of foreign companies operating in Swaziland. The tax free level for retrenchments and terminal benefits is E60,000.
This category is set at a flat rate of 30%, in line with other SADC states. There is a 15% withholding tax for royalties and nonresident management fees, and a withholding tax of 10% on interest paid to residents. New concerns that are establishing categories of business not previously in existence in Swaziland may apply for a Development Order to qualify them for tax at 10% flat rate. NGOs are exempt from tax. Allowances for the depreciation of machinery, vehicles and equipment apply and percentages vary depending on the nature of the item. Provisional tax is payable by companies and this is subject to various rulings.
Annual incomes of up to E36,000 are tax exempt with deductions starting at 20% for up to E60,000 pa. (In effect, tax payers receive a rebate of E7200 with an extra rebate of E2000 for people aged over 60 years). Income earned between E60,000 and E80,000 is taxed at 20%, thereafter up to E100,000 is taxed at 25% and any amount over E100,000 is taxed at 33%. Expenses deemed to be incurred in the course of generating an income may be tax deductible, provided they are of a recurrent and not a capital nature. Married women must submit separate tax returns from their husbands and provisional tax applies to individuals such as the selfemployed and those who are not regularly employed.
Arrangements for payment of provisional tax may be granted to companies and selfemployed individuals. The Swaziland tax year runs from 1 July to 30 June. Individuals and companies are given 30 days and four months respectively to complete tax returns. The Income Tax and Customs and Excise Departments are in the process of being merged to form the Revenue Authority. The Authority is expected to phase out General Sales Tax and introduce Value Added Tax within two years of its establishment.
General Sales Tax
This is payable on most goods and services and is charged on imported items, with the exception of food, at the point of entry. The flat rate is 14% but luxury goods, such as tobacco products and alcoholic drinks are taxed at 25%. The Sales Tax Amendment Bill seeks to replace sales tax with VAT as noted above. This move is expected to close loopholes and generate additional income by taxing more services.
These include graded tax - which may be phased out, transfers, stamps, customs and excise duties, and municipal rates.