ESWATINI SEES SURGE IN CREDIT APPLICATIONS AS DEMAND SOARS

MBABANE – The demand for credit in Eswatini has risen sharply, with a notable increase in loan applications this January compared to previous years.
This is according to the Eswatini Credit Providers Association (ECPA) Chairperson Thulani Dlamini. Dlamini attributed the surge to start-of-year financial commitments such as school fees, household expenses and loan consolidations. “January is traditionally a high-demand period, and while loan applications have increased this year, some credit providers have reported a consistently high demand over the past six months,” he noted.

ECPA, which represents licensed credit providers such as Amandla Financial Services, First Finance Company, Letshego Financial Services and Select Limited, plays a key role in fostering responsible lending. The association emphasised that economic challenges, including stagnant salaries for civil servants and parastatal employees, have influenced borrowing trends and repayment capacity. Personal loans remain the most sought-after credit facility, as they offer flexibility to borrowers.

The primary reasons for borrowing include:

•  Education expenses: Many households rely on loans to cover school fees and tuition.

• Land and home improvements: Clients use credit to purchase land, renovate, or upgrade homes.

• Loan consolidation: Borrowers are restructuring their debt to manage repayments better.

• Vehicle financing and repairs: Credit remains a key enabler for car purchases and maintenance.

• Short-term household needs: The demand for payday loans and other small credits is rising due to economic difficulties.

Demand

Despite the growing demand, ECPA assured the public that its members assess affordability before approving loans to prevent over-indebtedness. “Interest rates are influenced by economic factors, but our members remain committed to offering responsible and competitive lending solutions,” Dlamini said.While some credit providers have seen an increase in defaults, ECPA members offer debt restructuring options to help struggling borrowers. The association also emphasised financial literacy as a tool to promote responsible borrowing.

Unlicensed

The rise of unlicensed lenders has raised concerns within the microfinance industry. Dlamini urged borrowers to only seek credit from licensed institutions and to verify lenders with the Financial Services Regulatory Authority (FSRA) to avoid financial exploitation. Looking ahead, Dlamini predicts a continued increase in loan demand, driven by economic hardships. He highlighted the role of digital lending and regulatory improvements in shaping the industry’s future.“ECPA will continue advocating for a strong and stable microfinance sector that benefits both consumers and lenders,” he concluded.

Committed

With the credit landscape evolving, ECPA remains committed to ensuring ethical lending practices and financial stability for Eswatini’s consumers. It is worth noting that the recent economic developments (RED) report from the Central Bank of Eswatini (CBE) revealed that in November 2024, credit extended to households and non-profit institutions serving households (NPISH) edged up by 0.7 per cent month-on-month and 5.0 per cent year-on-year, to close the month under review at E8.7 billion. The rise was on account of motor vehicle and housing finance, which improved by 5.0 per cent to E1.2 billion and 0.5 per cent to E4.3 billion, respectively. In contrast, other personal (unsecured) loans receded by 0.6 per cent to E3.2 billion at the end of November 2024. When analysed by size, credit to businesses reflected growth in both SMEs as well as large enterprises.

Result

As a result, credit to SMEs grew by 1.5 per cent to E3.2 billion, accounting for 31.2 per cent of total credit to businesses, while credit to large enterprises rose by a lesser margin of 0.2 per cent to E7.1 billion accounting for 68.8 per cent of total credit to businesses.  Credit extended to households and NPISH closed the month under review at E8.6 billion, representing a month-on-month and year-on-year growth of 0.3 per cent and 4.2 per cent, respectively. The expansion was also registered in other personal (unsecured) and housing loans, which rose by 6.5 per cent to E3.4 billion and 0.05 per cent to E4.3 billion, respectively. Motor vehicle loans, on the other hand, contracted by 15.8 per cent to close at E1.0 billion at the end of October 2024.

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