CREDIT TO BUSINESSES UP 9.6%

MBABANE - Enterprises can invest more and create jobs following their increased access to credit.

According to the latest Monthly Statistical Release from the Central Bank of Eswatini (CBE),covering the last two months of this year, credit extended to businesses grew by 0.2 per cent month-on-month (m-m) and 9.6 per cent year-on-year(y-y) to settle at E6.9 billion at the end of February. Accounting for the increase in credit to businesses were subsectors that included real estate (2.6 per cent); community, social and personal services (1.5); distribution and tourism (0.79), as well as manufacturing (0.77 per cent). This was on the back of declines in subsectors that include agriculture and forestry (-7.7 per cent): mining and quarrying (-1.1); construction (0.6); as well as transport and communication (-0.3 per cent). Experts say when consumers and businesses can borrow money, economic transactions can take place efficiently and the economy can grow. Credit allows companies to gain access to tools they need to produce the items bought by consumers. “When credit grows, consumers can borrow and spend more, and enterprises can borrow and invest more.

Consumption

"A rise of consumption and investments creates jobs and leads to a growth of both income and profit. Furthermore, the expansion of credit influences the price of assets,” shared an expert.
There was also an increase in credit extended to the private sector during the period under review. It amounted to E15.8 billion at the end of February this year, depicting an improvement of 0.5 per cent m-m and 1.7 per cent Y-Y. Growth in private sector credit was driven by all credit categories, namely credit to other sectors of the domestic economy, households and non-profit institutions serving households (NPISH), as well as businesses. Credit to other sectors recorded an expansion of 1.4 per cent over the month under review and a contraction of 41.1 per cent at the end of February 2022.

The M-M improvement was observed in credit to other financial corporations and public nonfinancial corporations, which rose by 1.54 per cent and 1.52 per cent, respectively.
In contrast, credit to local government, decreased by 1.3 per cent M-M. Credit extended to households and NPISH stood at E7.7 billion at the end of February  this year, increasing by 0.5 per cent M-M and 6.5 per cent Y-Y. Growth in credit to households was observed in other personal (unsecured) loans and motor vehicle loans which rose by 7.3 per cent to E3.2 billion and 1.1 per cent to E935.5 million, respectively. Housing loans on the other hand, declined by 4.9 per cent over the month under review to settle at E3.6 billion.

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