BANK DEMANDS E4.8m FROM UNESWA

MBABANE – The University of Eswatini (UNESWA), already reeling from a severe financial crisis as revealed by a government-commissioned task team, now faces a legal battle with Standard Bank, which is demanding approximately E4.8 million in outstanding loan repayments.

This lawsuit adds another layer of complexity to the institution’s already precarious financial situation, which has been plagued by mismanagement and governance failures. According to court papers filed by Standard Bank, UNESWA entered into a loan agreement on March 14, 2024, requesting an overdraft facility of E28 million.

The agreement stipulated that interest would be charged at prime plus three per cent per annum, compounded monthly, with the prime lending rate at 14 per cent at the time of disbursement. UNESWA was to pay interest monthly in arrears, with the first payment due on March 31, 2024. Standard Bank claims it fulfilled its obligation by disbursing the E28 million, but UNESWA has allegedly failed to meet its repayment obligations. “In material breach of the obligation arising from the finance facility agreement, having paid a portion of the sum of E28 million in acknowledgment of its debt has failed to pay the above sum in full and in terms of the contractual agreement,” the bank stated in its court papers.

The bank further revealed that the outstanding balance now stands at E4 882 883.73. Despite lawful demand, UNESWA has allegedly refused to pay the sum, prompting the bank to seek a court order for payment with interest at a rate of 3 per cent per annum.

The matter is currently pending in court, with Maphalala from SV Mdladla and Associates representing Standard Bank. This legal challenge comes at a time when UNESWA is grappling with severe financial mismanagement, as detailed in a preliminary report by a government-commissioned task team.

The report, presented by Minister for Education Owen Nxumalo, paints a grim picture of an institution struggling with an oversized council, ineffective leadership; and a ‘culture of impunity and poor governance’. The task team’s report, released in December 2024, revealed that over 90 per cent of UNESWA’s budget is consumed by staff wages, leaving little for operational needs.

The institution has failed to remit pensions and medical aid contributions, and third-stream income projects, such as Chakaza Holdings, have been mismanaged. The report also highlighted irregular salary advances under the guise of medical assistance, often without verification or structured repayment plans.

Government subventions, which account for approximately 40 per cent of UNESWA’s revenue, have been irregular and insufficient. Tuition fees have remained stagnant since 2016, and attempts at revenue diversification have failed. The report recommended immediate intervention, including a forensic audit, a restructuring of the university’s governance framework and the appointment of an external financial management team.

The task team’s seven key findings underscore the depth of the crisis:
Governance and leadership: An oversized council, unilateral decision-making and a lack of accountability.

Financial management: 90 per cent of the budget consumed by salaries, non-remittance of contributions and failed income projects.

Academic programme performance: Mismatched curriculum, declining research, and poor student support. Student Welfare: Delayed allowances, overcrowded housing, and inadequate mental health support.

Staff welfare: Delayed salaries, high workloads and lack of professional development.

Infrastructure and facilities: Deteriorating campus infrastructure and underutilised assets.

External relations: Strained relationships with government and industry, and declining public perception.

The report also highlighted the plight of students, with delays in allowance payments, inadequate housing and insufficient academic support contributing to unrest and discontent. The task team has recommended sweeping reforms, including restructuring the university council, implementing a performance management system, and modernising the curriculum.

Government is expected to review the task team’s recommendations in the coming months, while UNESWA faces the immediate challenge of addressing Standard Bank’s lawsuit. The university’s future hangs in the balance, with stakeholders watching closely to see if the proposed reforms will be implemented and if the institution can overcome its mounting financial woes.

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