APPETITE FOR DEVELOPMENT CREDIT UP

MBABANE – The value of new loans disbursed by Development Finance Institutions (DFI) during the second quarter of 2022/23 increased to E75.76 million from E67.07 million quarterly.

This denotes an increased appetite for development credit for the financing of various projects supporting economic development primarily from two DFIs i.e. Industrial Development Company of Eswatini (IDCE) and Eswatini Development Finance Corporation (FINCORP). IDCE’s value of new loans to the total sector new loans was 19.20 per cent while the rest 80.90 per cent were issued by FINCORP. According to the latest Financial Services Regulatory Authority (FSRA) quarterly bulletin, in the second quarter of the financial year 2022/23, a growth of 6.14 per cent in the long-term portion of loans and advances on a quarterly basis to E480.99 million from E453.18 million was observed, while a yearly growth of 8.52 per cent was observed.

However, compared to Q2 2021, a 10.44 per cent was realised from E435.51 million. The composition of loans and advances amounts to 19.9 per cent of the sectors’ balance sheet and has ranged between 17.60 and 21.21 per cent in the periods reviewed. Sector assessment depicts that the rise in loans and advances is largely influenced by advances to the agricultural sector as demand for long-term financing and working capital continue to increase due to increases in the cost of commodities and other business-related expenses including finance costs due to the rise in inflation and interest rates. The short-term portion of the loans and advances was only valued at E1.01 million.

Meanwhile, quarterly market share analysis indicates that FINCORP realised a decline from 81.80 to 78.66 per cent, while IDCE gained the market share lost by FINCORP and thus realised an increase from 17.66 to 20.67 per cent. On the other hand the Eswatini National Industrial Development Corporation (ENIDC) continued to maintain a market share of 0.59 per cent. However, on a yearly basis, market movement depicts losses of market share by IDCE by 3.31 per cent while FINCORP realised gains of 3.61 per cent. Equally, (ENIDC) saw a decline in market share by 0.29 per cent. Furthermore, consistent with IDCE quarterly asset increase, the market share composition of the sector affirmed IDCE as the market leader for three consecutive reporting periods beginning in Q4 2022 with a market share of 48.81 per cent. FINCORP’s market share has notably declined from 46.33 per cent in Q2 2022 to 43.96 per cent in the period under review. ENIDC market share was at 7.23 per cent, showing a quarterly decline from 10.40 per cent. Yearly comparison indicates a 0.03 per cent decline in assets.

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