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Banks lend households, businesses E18.3 billion

Central Bank of Eswatini Governor Phil Mnisi during the introduction of the new local bank notes.

By Silindzelwe Nxumalo

THE Central Bank of Eswatini (CBE) has reported that credit extended to the private sector reached E18.3 billion at the end of July 2023, higher by 0.8 per cent month-on-month and 9.7 per cent year-on-year.

According to the CBE monthly statistical release for July/August, it was explained that accounting for the increase was credit to other sectors of the domestic economy and businesses.

The report stated that credit to households and non-profit institutions serving households (NPISH) on the other hand, contracted. According to the report credit extended to other sectors accelerated by 2.3 per cent month-on-month and 25.1 per cent year-on-year to close the month under review at E1.1 billion.

It was said that the improvement was supported by credit to other financial corporations, which grew by 15.4 per cent to reach E742.5million. “Credit to public nonfinancial corporations and local government, on the other hand, fell by 21.9 per cent to E253.8 million and 6.3 per cent to E60.5 million, respectively. Credit extended to businesses closed the review month at E9.2 billion, representing an increase of 1.5 per cent relative to June 2023 and 16.2 per cent year-on-year,” read the report.

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The CBE also reported that the expansion in credit to businesses was on account of the
following subsectors: distribution and tourism (10.9 per cent), manufacturing (8.5 per cent), transport and communication (0.9 per cent), real estate (0.7 per cent), and community, social and personal services (0.3 per cent). “Credit to the following subsectors, however, declined; construction (-16.3 per cent), mining and quarrying (-7.3 per cent) as well as agriculture and forestry (-2.4 per cent).

The CBE further reported that a further breakdown of credit to businesses showed that credit extended to small and medium enterprises (SMEs) rose by 2.4 per cent month-on-month and 21.2 per cent year-on-year to reach E2.8 billion at the end of July 2023. The bank explained that the improvement was registered in credit to real estate, manufacturing, transport, and communication as well as community, social and personal services.

Central Bank of Eswatini

They stated that credit extended to large enterprises grew by 1.2 per cent month-on-month and 14.1 per cent year-on-year to settle at E6.4billion at the end of July 2023.
“The expansion was explained by growth in credit to the distribution & tourism, and manufacturing sectors,” read the report.

CBE further mentioned that the credit extended to households and NPISH closed the month under review at E8.1 billion, reflecting a contraction of 0.3 per cent month-on-month and growth of 1.7 per cent year-on-year. The bank explained that the month-on-month reduction was driven by other personal (unsecured) and motor vehicle loans, which preceded by 1.0 per cent to E3.0 billion and 0.7 per cent to E1.0 billion, respectively.

The report stated that mortgage loans, on the contrary, improved by 0.3 per cent to close the month under review at E4.1 billion. Moreover, the report reported that net claims on government with the banking sector closed the month under review at E2.0 billion, reflecting a decline of 43.4 per cent month-on-month and growth of 2.6 per cent year-on year.

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The bank mentioned that the month-on-month contraction was on account of the government partly repaying the advance from the Central Bank; in line with the inflow of SACU receipts. “As a result, claims on government decreased by 15.0 per cent to E6.3 billion,” read the report. The CBE which is under the leadership of Governor Phil Mnisi added that the government deposits accelerated by 11.0 per cent to close the month under review at E4.3 billion.

They said the broad money supply (M2) settled at E21.4 billion at the end of July 2023, reflecting a month-on-month and year-on-year growth of 5.0 per cent and 4.8 per cent, respectively. According to the report the growth was supported by the rise in net foreign assets and private-sector credit and both components, quasi-money supply and narrow money supply (M1) registered increases.

“Quasi money supply registered an improvement of 5.7 per cent month-on-month and 5.0 per cent year-on-year to reach E12.9 billion at the end of July 2023. The expansion in quasi money was observed in both time and savings deposits, which rose by 6.4 per cent to E10.9 billion and 1.8 per cent to E2.0 billion, respectively,” read part of the report.

Furthermore, the CBE reported that M1 amounted to E8.5 billion at the end of July 2023, depicting a month-on-month and year-on-year improvement of 4.0 per cent and 4.4 per cent, respectively. They explained that the increase was recorded in transferable (demand) deposits, which accelerated by 4.8 per cent to E7.8 billion. Emalangeni outside depository corporations, on the other hand, contracted by 3.4 per cent to E760.9 million.

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