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The IMF welcomed the SRA's launch as a means to further strengthen Swaziland's financial system, improve its regulatory environment and promote growth led by the private sector. Included in the Authority's mandate is responsibility for recognising and regulating those money-lending institutions and capital markets that fall within the category of non-bankable financial industry. The Central Bank of Swaziland (CBS) had long said that in order to maintain the kingdom's financial stability and not expose the sector to systemic risk, an urgent need existed to strengthen prudential regulation and effective supervision of unregulated sub-sectors such as the Savings and Credit Cooperatives (SACCOS). The establishment of these – along with new medical aid schemes and building societies - will thus henceforth be determined by the SRA.A GROWING TRADITION This review period saw the number of registered cooperative societies increase by 15 to 188, more than two thirds of which are agricultural as opposed to savings and credit. The Minister of Commerce, Industry and Trade, Jabulile Mashwama, revealed at the 88th International Cooperatives Day celebrations in mid-2010 that SACCOS had during the financial year contributed seven percent towards total deposits in the country with savings in excess of E520-million. Shares rose to approximately E25- million, but loans-in-circulation fell by 20 percent to about E395-million in line with the CBS's observation of an overall slow recovery in postrecession demand for credit. Also a speaker at the event, Prime Minister Dlamini said that a target during 2010 was for SACCOS to achieve improved standards of accounting and corporate governance, adding that forensic audit services within government were available upon request. He also called for more rigorous marketing of the benefits of cooperative societies to the country's youth – particularly in light of the Youth Empowerment Fund's recent mobilisation – as young entrepreneurs could thereby overcome smallness of size and enjoy economies of scale not available to individuals. Government holds that the country's school curriculum should introduce children to the movement's philosophy and thereby inculcate its spirit. SACCOS assist a higher percentage of Swazi nationals than their commercial bank counterparts with regard to house-building and home improvements, school and tertiary education, farm inputs and non-collateral-based business loans. Benefits are proven and tangible, according to the official viewpoint, and government has in place noteworthy infrastructure for the development of the movement. This ranges from a college responsible for ensuring that member societies enjoy adequate access to staff education and training, to a Commissioner whose officers are attached to all four geographic regions to provide assistance where needed. BANKING PERFORMANCE According to the CBS, commercial banks' reserve and liquidity requirements remained unchanged during this review period and were adequately met, indicating adherence to its prudential regulations.
With 12 points of representation and 45 ATMs throughout the country, Standard Bank has a large retail customer base. The goal is to expand its presence in Swaziland and to provide secure, simple and affordable banking to an increasing number of communities by continually developing the electronic service delivery channels. Standard Bank plays an important role in contributing to the economic, business and social development of the country and supports a number of charities, sporting bodies and development schemes. Swaziland Development & Savings Bank, known as SwaziBank, is a development finance institution which was established in 1965 by the late King Sobhuza II to finance development projects, mainly smallholder farming and low-cost housing. It was mandated by its shareholder, the government of Swaziland, to be simultaneously a development bank and a commercial entity and has consequently been involved in financing all sectors of the economy - industry, commerce, agriculture, SMEs, health, tourism and more. SwaziBank has become a major player in the financial sector and continues to generate profits despite a high-risk mandate. When re-launched in 2001 under new – and current - Managing Director Stanley Matsebula, the bank had an asset base of E300-million, which stood at E1.541-billion as of 31 March 2010. The interim period also saw its customer base grow from 19 000 to 130 000, deposits increase from E143-million to more than E1-billion and total lending surge from E82-million to E1.4-billion. At a glittering ceremony in November 2010 it was formally announced that SwaziBank had acquired a 33 percent shareholding in Metropolitan Life Swaziland at a cost of E10-million. Three years in the making, the partnership was described by both parties as a means to create prosperity for the people of Swaziland through the provision of affordable products that create financial growth and security. The deal enables SwaziBank to offer Metropolitan's products to its corporate clients and business networks, thereby fulfilling its mandate to provide a broadest possible spectrum of financial services and ensuring its viability into the future.Metropolitan declared that it intends to invest all profits generated by its Swaziland operation locally, especially in the property sector: SwaziBank said that Metropolitan's world-class experience would through partnership-synergies further enhance the SwaziBank brand for the benefit of current and future clients. SwaziBank has nine branches across the country - Mbabane (main and commercial), Matsapha, Manzini, Pigg's Peak, Simunye, Matata, Nhlangano and Siteki - with ATMs for easy cash transactions. The bank offers numerous products such as Savings Accounts, Investment Accounts, Corporate Accounts, VIP Accounts, Housing Loans, Vehicle Finance, Business Loans and Foreign Exchange. As a truly Swazi financial institution the bank is a socially responsible corporate citizen that ploughs back to the nation, investing millions of Emalangeni annually in its social responsibility programme. It sponsors the prestigious, annual SwaziBank Cup knock-out tournament: the amount has increased from E500 000 in 2004 to E1.5-million in both 2009 and 2010. SwaziBank also sponsors the annual Schools Choral Music Competition, with the amount increasing from E50 000 in 2005 to E140 000 in 2010. The bank's social responsibility programme does not end there. It also contributes towards noble initiatives aimed at improving the lives of the nation, giving generously to the construction of schools and churches, as well the facilitation of important workshops and conferences, entertainment events and the like. Managing Director Stanley Matsebula also participates as guest speaker at local schools, where he delivers motivational talks and donates money on behalf of the bank. He has received personal awards for his contribution towards steering the institution to greater heights since his appointment in December 2000:
Awards conferred on SwaziBank:
Nedbank Swaziland is a leading financial institution locally and part of the international Nedbank Group. It established its presence in Swaziland following Nedcor's acquisition of Standard Chartered Bank's local majority shareholding in January 1997. The bank focuses on using the right people and processes to deliver customized solutions to clients while managing risk as an enabler. It constantly strives to build sustainable relationships with all stakeholders while applying best corporate governance principles. Through Corporate, Business, Retail and SME banking functions Nedbank offers a wide range of products and services such as lending, deposittaking, transactional banking, asset-based finance, investment, treasury and global trade services. The gateway Current Account is a convenient, safe and a cashless mechanism for the payment of goods and services. Years invested in intensive research and development of the Netbank Internet Banking channel resulted in a highly secure, flexible, convenient and holistic Online Banking system which has become one of the leading solutions in its transactional banking range. The latest features include:
In an effort to continuously improve service, Nedbank conducts annual client surveys. The service focus areas measured are Knowledge and Competence, Communication, Turnaround Times, Pro-activeness and Visibility. The Nedbank Employee Wellbeing Programme offers a holistic solution that focuses on all aspects of individual functioning. The institution continually provides all necessary support and assistance to personnel, including emotional and personal difficulties, alcohol and drug abuse, HIV/AIDS, violence and trauma, bereavement and loss. Nedbank is committed to proactively addressing HIV/AIDS in a positive, supportive and nondiscriminatory manner with the support and cooperation of all employees. The Management Development Programme aims to build a world-class organization with the capacity to execute the Group's strategy in a way that lives up to its values. Nedbank recognizes there are different value-drivers for each employee and thus offers a total-rewards model as a component of its employee-value proposition. In 2009 the bank introduced the Sinakekelwe Employee Share-Ownership Scheme to empower and uplift permanent staff. It consists of a broad-based scheme, a management scheme and a long-term incentive scheme. The overall objective is to attract and retain employees and align their interests with those of stakeholders. Nedbank adopted Enterprise Governance as an integrated system to address issues of Risk, Compliance and Corporate Governance. The bank is committed to the Code of Corporate Practice and Conduct contained in the King II report. The Compliance Function provides necessary assurance of adherence to laws, regulations and codes of practice relating to the operations of the bank. Nedbank strives to inculcate corporate culture through continuous staff training. It is imperative that risk be managed in order to attain sustainability and profitability, hence a comprehensive risk management strategy, methodology and enterprisewide risk management system based on corporate governance best-practice principles. Nedbank Swaziland sponsors projects under the pillars of economic development, HIV/AIDS initiatives, community development, education, sports and arts. These include the Business Woman of the Year Award, Technoserve, Students in Free Enterprise, the Swaziland AIDS Support Organization, Hospice at Home and Hope House. A significant part of the sponsorship budget is allocated to community projects which are fully carried out by the staff of individual branches. First National Bank (FNB) has operated in Swaziland since 1995. Its headquarters are in the Sales House Building at the Swazi Plaza in Mbabane and there are currently four main branches and six agencies in the following areas:
FNB has the largest ATM network in Swaziland, with 43 full points countrywide and 12 mini ATMs located in small towns. It also provides the VISA Electron Debit Card for its consumer and business customers. This facility enables the withdrawal of cash at over one million ATMs worldwide and payment for goods and services at point-of-sale terminals globally, wherever the VISA Electron logo is displayed. The bank offers a wide 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 services, Online Banking, inContact (free SMS messaging) and Speedpoint (point-of-sale terminals). FNB is a market leader in offering innovative solutions through the following products:
The Business and Corporate Divisions provide working capital term funding structures for both business and commercial/corporate operations throughout Swaziland. The Treasury Department 100 caters for all local and foreign market transactions and offers expert international banking advice and information. Wesbank has dealership representation in Mbabane and Manzini and is the leasing arm of FNB, specialising in competitive leasing services for vehicles, machinery and equipment. It is a key provider of asset-based finance catering for both corporate and individual clients, 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 grassroot level and is keenly highlighted in the bank's brand promise of 'How can we help you?' FOR THE TRAVELLER Visitors to Swaziland and residents returning from abroad wishing to make travel-related transactions such as cashing travellers cheques and converting currency are not restricted to commercial banks and their hours of business. In a bid to address old limitations which were not conducive to tourism promotion, the CBS introduced Authorised Dealers With Limited Authority during the previous review period and this paved the way for Bureaux de Change to operate throughout the kingdom and outside of normal banking hours. ACCELERATORS Having transferred its administration of the Public Enterprise Loan Guarantee Scheme to Standard Bank Swaziland, the CBS manages two growthdriving initiatives. The Small Scale Enterprise Loan Guarantee Scheme (SSELGS) was promulgated by government decree in 1990 to reduce the risk faced by financial institutions when lending to approved emerging businesses, thereby encouraging said institutions to be more amenable to issuing new loans. In the wake of a hiatus and following consultations between the CBS, finance ministry, commerce ministry and private sector financial institutions, the CBS announced on 1 December 2010 the relaunch of a revamped SSELGS with revised terms and conditions. An applicant's total annual turnover may henceforth not exceed E8-million and the maximum credit sought per application has been increased more than threefold to E500 000. The minimum amount loaned will vary with each participating bank but kept as low as possible to enable the scheme to reach the majority of entrepreneurs. The Export Credit Guarantee Scheme (ECGS) was re-launched simultaneously, but with its terms and conditions unchanged. It has since being instituted in 1991 facilitated the approval and disbursement of loans with a total value in excess of E210-million and with corresponding guarantees of more than E160-million. The industry/business sub-sectors that have been assisted include manufacturing and industrial products, textiles and garments, plastics and chemicals, timber and wood products, mining and attendant activities, agriculture and related products plus handicrafts. JOB CREATION The encouragement of entrepreneurial drive remains pivotal, as evinced by the initiatives of Swaziland's prime SMME financier. In this review period The Swaziland Development Finance Corporation (FINCORP) proudly celebrated 15 years of addressing the problem of poverty and rural unemployment and was honoured by the Association of African DFIs as the fifth best compliant institution in Africa. FINCORP is a registered private company with two shareholders, namely the Swaziland government and Tibiyo Taka Ngwane. The primary goal of the Corporation which has a countrywide outreach is to create jobs through the support of Small and Medium Enterprises (SME). As a relatively young organization, FINCORP has achieved considerable success in assisting large numbers of SMEs while maintaining high repayment rates and financial sustainability. FINCORP grassroots national economic development initiatives encompass a broad spectrum of micro-, small- and medium-size enterprises, aiming for an optimal balance in order to make a meaningful impact. The institution has to date provided financial support valued at over E1-billion to more than 50 000 clients. Total assets have grown from E44-million in 1996 to E330-million, depicting an average growth of 25 percent year on year. In order to ensure that its programmes reach the poor, FINCORP's operations have an added focus in rural areas and marginalised sections of society. Financial services currently offered include credit for Trade Finance, Retail Services, Agribusiness, Order Finance, Asset Lease Finance and Contract Finance. In pursuit of its mandate the organization has over the years undergone various policy and operational changes with the aim of adequately meeting the shifting requirements of its target clientele. This continued and concerted demand-driven approach to best maintaining customer loyalty has always been entrenched in FINCORP's policies. Growth moved up a level in 2010 when a new subsidiary wholly owned by FINCORP - FIRST FINANCE COMPANY - was established to offer General Purpose Finance in particular FINCORP's performance has been acknowledged nationally and internationally by a number of professional agencies: most recently it received a prize for Excellence in SME Development from the World Association of Small and Medium Enterprises (WASME) and the Award of Excellence for Outstanding Contribution to Enterprise Development from the Euro Market Research Centre. FINCORP has established strategic linkages with international organizations such as the African Development Bank, NORSAD Fund, OPEC Fund, IDC South Africa and ICDF Taiwan. FINCORP continues to uphold its statement of purpose, 'To economically empower Swazi entrepreneurs through the provision of accessible and sustainable financial services.' The underlying principle is in the motto, 'Helping Swazi Entrepreneurs to Help Themselves.' ASSET MANAGEMENT Authorised management companies and collective investment schemes under management abide equally by strict codes of transparency and accountability. Old Mutual Swaziland, established 2008, is the fully-fledged business through which the Old Mutual Group services the local market. This ongoing investment in Old Mutual Swaziland - with full support of its wider Group structures - signifies Old Mutual's long-term commitment to sustainable economic growth, unemployment reduction and skills development, as well as providing finance for a range of infrastructure projects. Old Mutual Swaziland is committed to playing a meaningful role in economic development and partnering its clients in the creation of wealth and the attainment of financial independence by investing and growing their savings. Retail mass-market products include Investments, Value and Funeral plans, while Group Assurance products encompass Funeral, Group Life, Lump- Sum Disability and Permanent Health Insurance. The Absolute Growth Portfolio (AGP) Swaziland is a Group Investment product that explicitly targets returns in excess of inflation over rolling three-year periods while significantly reducing the volatility associated with market-linked investments. AGP Swaziland provides an 80 percent guarantee on capital, contributions and positive declared returns. These guarantees apply on benefit payment and other specified events and are backed by Old Mutual's shareholders capital. STANLIB Swaziland manages retirement funds for all sizes and types of organizations within the kingdom as well as investment portfolios for individuals. It has a presence in seven other African countries. Liberty Life Swaziland was launched mid-2008 and offers products including Credit and Group Life as well as Funeral Benefits, aimed at government and corporate markets for their employees. There are plans to expand into property, healthcare and general insurance. Liberty and STANLIB tap into parent company Standard Bank's vast experience in Africa and other emerging markets. More resources are being committed to Swaziland with skills transferred to local people, enabling them to meaningfully contribute to economic growth. INSURANCE A year after the end-November 2009 deadline that a minimum 30 percent of insurance and retirement funds' total assets be invested within the country, the Registrar of Insurance and Retirement Funds (RIRF) disclosed that 28 percent had been achieved. The two primary contributors to this repatriation of undisclosed amounts of money from South Africa's financial markets were short-term insurers, 43 percent, and long-term investments, 38 percent. The recall was deemed necessary in order to assist in creating a domestic pool of funds for development projects within the kingdom. Prior to this legislation more than 90 percent was invested outside the country. RIRF head, Sandile Dlamini, said when revealing the two percent shortfall that the repatriated funds were crucial in helping Swaziland to catch up to SADC countries – South Africa in particular – in terms of economic development and to move the kingdom forward. He said that this demanded the best possible utilisation of the newly available money, adding that management skills in the insurance and retirement funds industry were to be reviewed. The Public Service Pension Fund used the deadline anniversary to announce that its gross assets had grown by 25.6 percent to E9.9-billion, a marked turnaround from the previous review period's 3.4 percent decline. Its funding level improved by 6.3 percent to 81.5 percent, while the organization had hoped to replicate 2008's 95 percent. The fund invested E2.8-billion of its total assets in the domestic market. The long-established Swaziland Royal Insurance Corporation (SRIC) said in its annual report that notwithstanding the low consumer confidence which had resulted from the global economic meltdown and the fragile recovery from the resulting recession, the Corporation delivered strong performance in a challenging year. It recorded an underwriting profit of E29.22-million on its non-life (short-term) insurance business and a surplus of E33-million from operating activities on its life insurance business, the latter having recorded a loss of E12- million during the previous review period. The Corporation entered 2010 well capitalized with strong surpluses (free assets) over required capital. Excess capital for the non-life insurance business stood at E168.7-million as opposed to the recommended margin of E85.9-million and was 40 percent of net written premium. The previous review period had witnessed excess capital of E135.4- million and a recommended margin of E78.1-million. Regarding its life insurance business the Corporation was also well capitalized as of 1 January 2010, with excess assets over liabilities of E128.3-million, compared with the previous year's E95.3-million, and thus considerably higher than the Capital Adequacy Requirement (CAR) of E45.2-million. The Corporation's policy is to hold free assets of at least twice the OCAR (E90.4-million) and pay up to a maximum of 50 percent as dividend of the surplus assets over and above twice OCAR. For the year under review E18.9-million was paid as dividend from the life insurance business. Aiming to deliver solid and consistent performance for shareholders and policyholders, SRIC said it would continue to drive its business strategy with the tried and trusted emphases to which it remained committed - customer service, effective underwriting considerations, good risk management, optimal capital utilization, cost containment and efficiencies. Lidwala Insurance Company is a specialist in the provision of Alternative Risk Transfer (ART) solutions and has since fourth-quarter 2009 been operating as the second registered short term insurer in Swaziland, thereby giving the insuring public its first opportunity to weigh alternative options and make an informed choice. Lidwala is authorised to underwrite all classes of short term insurance business – e.g. fire, engineering, motor, property, liabilities, marine and bonds - and these are anchored around the innovate Cell Concept (self-insurance) product that targets medium to large businesses in the public and private sectors which might find it uneconomical to insure via the conventional market because of high premiums. Such clients generally have sufficient 'risk retention' appetite to manage the cost of insurance by insuring only the potentially catastrophic component of the risk. The other category would be those with specialised risks that are difficult to insure conventionally because of stringent policy terms, conditions or exceptions. Such clients would opt for some form of customised insurance product to meet their specific requirements and might need to set up a fund to manage these losses. Examples of such risks are environmental liabilities, riot risks and professional indemnities for medical practitioners, security firms etc. At the crux of the Cell Concept arrangement is the ability of Lidwala to assist the client in determining and structuring a self-insurance fund through a combination of physical surveys where necessary - to determine the Maximum Possible Loss, the assessment of the client's loss trends for the past three years, the client's risk profile, risk retention appetite and an assessment of the client's financials to determine the level to which the self-funded losses could be absorbed. The advantages of setting up an insurance fund with Lidwala:
Lidwala adheres to its service charter which is regularly amended to meet clients' demands. The company's core standards include preparation of quotations within 24 hours, issuing of policy documents within five working days and appointment of assessors within 24 hours of receipt of all relevant documents for claims. Claims settlement normally takes 5- 7 working days, provided all relevant documents to support the discharge of liability have been submitted. Lidwala's recent acquisition of the Footprint insurance software programme will go a long way towards further enhancing service delivery and turnaround of documentation in the form of policy issuance, claims management, risk management and quality finance reports. Ongoing development of this system will soon lead to more interactive features such as tracking the progress of lodged claims via a secure Internet portal. The Swaziland National Provident Fund (SNPF), established 1974, provides benefits to employed persons when they retire or become incapacitated. All employers in Swaziland are required by law to be contributing members of the fund and must pay towards every eligible staff member. An employee's share is one half of the stipulated amount and deducted from wages. The statutory contribution is presently E1 000 or less for any calendar month, making the maximum contribution per employee E100 per month. The fund is administered by an independent board appointed by the Minister of Finance to represent the Swazi National Council, employers, workers and government departments. This review period saw SNPF acquire a 15 percent ownership stake in Old Mutual Life Assurance Company Swaziland, a subsidiary of the Emerging Markets Business Unit of Johannesburg Stock Exchange-listed Old Mutual. TAXATION Corporate tax is set at a flat rate of 30 percent, while a 15 percent withholding tax applies to royalties and non-resident management fees, and interest paid to residents is subject to a 10 percent withholding tax. GST currently stands at 14 percent with the exception of luxury goods at 25 percent. Two additions to the tax base were included in the 2010/11 budget a three percent minimum tax per annum for low-income earners and an unspecified Capital Gains Tax on the disposal of business assets. The Casino Levy and Lottery/ Gaming Tax were more than doubled to 15 percent while the other so-called 'sin taxes' on various tobacco products and alcoholic beverages were subjected to a wide range of increases in GST. When government announced in late December 2010 that VAT would officially replace GST on 1 April 2012, it expressed a determination to further revisit the rates of taxes, levies and duties relating to cigarettes, alcohol, gambling and fuel well before that date.
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