SWAZILAND - University of Malta · regulatory regime for the Swaziland non-bank financial services...

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Swaziland

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Presentation on the Financial Sector in

Swaziland

• Introduction – Swaziland

• Major Economic Factors

• The Structure of the Financial sector

• The Legal Framework

• Challenges

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Introduction

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Introduction

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King Mswati III

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King Mswati III

Born 19 April 1968 (1968-

04-19) (age 42)

Reign 25 April 1986 –

presentwives 14 wives concurrently

children 24 children

Father King Sobhuza II

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The Flag

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Other Monarchies

• Bahrain · Belgium · Bhutan · Brunei ·

Cambodia · Commonwealth realms ·

Denmark · Japan · Jordan · Kuwait ·

Lesotho · Liechtenstein · Luxembourg ·

Malaysia · Monaco · Morocco ·

Netherlands · Norway · Oman · Qatar ·

Saudi Arabia · Spain · Swaziland ·

Sweden · Thailand · Tonga

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Major Economic Indicators

Nominal GDP €' Million 2,872

Agric./GDP (%) - factor cost 8.38%

Manuf./GDP (%) - factor cost 27.48%

Population ('000) 1,046

Average inflation 4.5%

Exchange rate* (E/US Dollar) 7.33

Prime lending 9%

Discount rate 5.5%

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Major Economic Indicators

• Graphical Presentation of some of the indicators from 2003 to 2010

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Nominal and Real GDP

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Population

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Inflation

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Unemployment Rate

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Exchange Rate

The Structure of the Financial Sector

Ministry of Enterprise

Ministry of Finance

Ministry of Agriculture

Cooperatives

Other Micro/MacroFinance Org

CentralBank

CommercialBanks

Building SocietyFSA

Registrar of Ins. & Ret

Insurance

Pension F.

Credit Institutions

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The Structure of the Financial Sector

�Central Bank of Swaziland

� Monetary policy

� Regulating and supervising financial sector

� Issue and redeem currency

� Hold and manage foreign exchange reserves

� Development of efficient national payment

system

� Conducting research on monetary, economic

matters

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The Structure of the Financial Sector

�Registrar of Insurance and Pension Funds

� Insurance Companies

� Brokers and Agents

� Pension Funds

�Commissioner of Savings and Credit Co-

operatives

� Co-operative development

� Savings and Credit Co-operatives

The Structure of the Financial Sector

�Commercial Banks (3)

� Standard Bank Swaziland Limited

� First National Bank of Swaziland

� NedBank Swaziland Limited

�Swaziland Savings and (1) Development Bank

� Building Society (1)– Swaziland Building Society

� owned by the members

Owned by parent

Companies in

South Africa

Wholly owned by the

Swazi Government

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The Structure of the Financial Sector

�The Commercial Banks have:

� 31 Branches and 12 Agencies across Swaziland

� E5.9 billion Total loans issued

� E8.2 billion Total Deposits

� E10.7 billion Total Assets

� One Building Society with 5 branches

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Loans and Deposits

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The Structure of the Financial Sector

�Contractual Savings Institutions

�Swaziland National Provident Fund

• Compulsory life assurance for private sector

• From The SNPF Act, 1962

• Controls E300 million Total Assets

�Public Service Pension Fund

• For Civil servants since 1993

�Other smaller Pension and Provident Funds

• Estimated above 200 across the country

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The Structure of the Financial Sector

�Insurance Business � Two Insurance companies (SRIC) and Metropolitan

Insurance Company

� New Insurance Act, 2006 de-monopolizes the Insurance industry.

�Cooperatives� 50 registered co-ops with membership over 40,000.

� Total Savings over E400 million

� Total Loans issued over E300 million

� Accept deposits as savings, subject to certain conditions

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The Structure of the Financial Sector

�Other Financial institutions

� Inhlanyelo Development Fund

• Training and Consulting

• Loans

� Swaziland Development Finance Corporation

• finance and promote the development of Swazi-owned

Enterprises

• Over E300 million Assets

� Micro-lenders

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The Structure of the Financial Sector

�Swaziland Stock Exchange

�5 listed companies trading in equities

�Market capitalisation of close to E2 billion

�Relatively inactive

�Capital Markets

�3 Asset Management Companies

�Funds under management over E4.0 billion

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The Legal Framework

�Central Bank of Swaziland

�Financial Institutions Act, 2005

�Deposit taking institutions – Banks

�Building Societies Act, 1962

�Building Society

�Stock Exchange, Asset Management Companies

� Act, Legal Notices, Circulars and Guidelines

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The Legal Framework

�Registrar of Insurance and Pension Funds

�Insurance Act, 2005

� Insurance Agents, Insurance Brokers, Insurer

�Retirements Funds Act, 2005

� Retirement Fund, Trustee of a Retirement

Fund

�Act, Legal Notices, Regulations and Guidelines

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The Legal Framework

• Commissioner of Savings & Credit Co-ops

�Savings & Credit Co-operatives Act, 1962

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The Legal Framework

� The Financial Services Regulatory Authority Act

� The object of this Act is to establish an integrated

regulatory regime for the Swaziland non-bank

financial services industry including insurance,

retirement funds, savings and credit co-operatives,

building societies, capital markets and similar

institutions with sufficient powers to regulate and

supervise the sector effectively, including extensive

powers to issue byelaws, rules, codes etc;.

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Challenges

�Regulatory Framework and their Gaps

�Regulatory Structure and Gaps

�Legislative reforms

�Capacity and Training

�Pyramid schemes, ponzis (2.7 euros)

�Unregulated entities

�Financial exclusion

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Developments

�Securities Bill already submitted to parliament

�Financial Services Regulatory Authority Act

was operationalised in June 2010 and already

a Board of Directors has been appointed

�Central Bank of Swaziland playing a lead role

in all reforms

�Implementation of Risk Based Supervision –

Risk Based Supervision Guidelines issued

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THANK YOU

Questions – see me during coffee break

walterd@centralbank.org.sz