MBABANE – Household spending may be curtailed in the medium to long term as more people and private businesses are taking loans in banks and financial institutions.
This follows one of the findings by the Ministry of Economic Planning and Development to the effect that there is an increase in households and private loans.
The First Quarter Performance Report of the Ministry of Economic Planning and Development states that total private sector credit grew by 3.3 per cent, from E22.408 billion in the last quarter of 2025 to E23.151 billion in the first quarter of 2026. It also states that credit extended to households showed a marginal uptick, rising from E9.439 billion in loans taken in 2025 Q4 to E9.471 billion in 2026 Q1. This was on account of increased uptake of ‘motor vehicle’ loans and ‘other personal’ (unsecured) loans, which grew by 4.5 per cent and 1.5 per cent respectively, countered by a 1.9 per cent contraction in mortgages.
This performance was a result of growth in credit to businesses and households, which rose by 6.9 per cent and 0.4 per cent, respectively, offsetting a continued decline in credit to ‘other sectors’1, which fell by 9.7 per cent in the quarter.
“Total accumulated loans to businesses were recorded at E12.668 billion in the first quarter of 2026, an increase from E11.851 billion in the fourth quarter of 2025. Strong credit uptake was observed in ‘manufacturing’, as well as ‘construction’, whereby credit extension expanded by 30.5 per cent and 22.3 per cent, respectively.”
Sectors that also took up more loans in the review period include ‘agriculture’ (6.5 per cent), ‘community, social and personal services’(2.2 per cent), ‘transport & communication’ (1.3 per cent), ‘real estate’ (0.9 per cent) and ‘other sectors’2 (7.8 per cent).
“The growth was, however, moderated by a contractionary performance in ‘mining and quarrying’ and ‘distribution and tourism’, whereby credit extension fell by 9.9 per cent and 6.7 per cent, respectively. When disaggregated by enterprise size, large enterprises, which account for 66.8 per cent of credit to businesses, started the year with a decline in loan uptake before picking up in the last 2 months of the quarter.
Meanwhile, small and medium enterprises (SMEs) maintained an upward trajectory throughout the quarter under review.
“In the quarter under review, housing loans contracted in February and March, declining by 0.3 per cent and 2.0 per cent, respectively,” the report states.
Economists warn that when the rate of household loans is high, it creates a short-term economic boost but introduces severe medium-to-long-term risks. It leads to a cycle of accelerated spending followed by severe financial strain and potential economic slowdown.
Economist and University of Eswatini lecturer Sanele Sibiya says the recent growth in private sector credit points to improving business confidence in the economy, but rising household borrowing amid a high cost-of-living environment remains a cause for concern.
Sibiya said while credit growth is often viewed as a measure of economic activity, it is important to examine the factors driving the increase rather than focusing solely on the figures.
“We do not necessarily view credit growth as either a major concern or an overwhelmingly positive development on its own. What is important is understanding the balance and the drivers behind that growth,” he said.
According to Sibiya, the private sector credit which is currently growing at around 3.3 per cent is a positive indicator for the economy. “When businesses are borrowing, it usually indicates reinvestment and economic activity. Businesses do not typically borrow money unless they see opportunities for productive investment,” he explained.
He said growth in private sector credit suggests a degree of optimism about future economic prospects, although high interest rates and expectations of further increases limit stronger expansion.
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