By Bahle Gama
The Eswatini Development Corporation (FINCORP) has disbursed cumulative loans worth over E10 billion to more than 90,000 beneficiaries in 27 years since its inception in 1996.
The entity’s achievement is highlighted in FINCORP’s annual report for the 2023 financial year.
The company was established by His Majesty King Mswati III in November 1995.
It opened its doors to the public in April 1996, to provide access to credit for Small and Medium Enterprises (SMEs), particularly those at the grassroots level.
Its key mandate focuses on access to finance, job creation, and poverty alleviation. FINCORP’s portfolio diversity encompasses agribusiness, sugarcane farming, retail, manufacturing, services, logistics, public transport, construction, order finance, and general-purpose finance.
The government of Eswatini holds 80 per cent shareholding in FINCORP, while Tibiyo Taka Ngwane holds 20 per cent.
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The company’s loan portfolio reached an impressive E1.5 billion during the year under review, and it achieved the second-highest level of profitability since its inception, posting a pre-tax profit of E28.6 million, thus depicting reasonable levels of institutional and financial stability.
The company’s loan approvals increased from E1.02 billion the previous year to E1.1 billion during the year under review. According to the report, FINCORP has played a crucial role in sustaining approximately 15,000 jobs through its financed businesses.
FINCORP Group Managing Director Dumisani Msibi said reaching the E10 billion milestone is proof of the company’s commitment is empowering SMEs and driving economic growth in Eswatini.
“We are proud to play a vital role in providing financial support to businesses across various sectors,” Msibi said.
Msibi said most new loan approvals were granted to existing clients, who were expanding or refinancing their existing operations.
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The MD stated that FINCORP focused on maintaining decent portfolio quality levels, carefully assessing new applications of borrowers, and implementing rigorous risk management practices in line with the enterprise-wide risk management framework given the weak economic climate resulting from the recent economic downturn.
In his foreword, Minister of Finance Neal Rijkenberg commended FINCORP’s efforts in addressing the lack of access to credit for SMEs.
The Minister said FINCORP remains a central pillar of strength in financing SMEs across the length and breadth of the country in several economic sectors with agribusiness having a larger share.
“This is a true reflection of the significantly agricultural-oriented economy of Eswatini,” Rijkenberg said. The Minister emphasized the government’s commitment as a shareholder to ensure that the company maintains a healthy balance between debt and equity.
Furthermore, the Minister extended his gratitude to the local and external funders who have played a crucial role in supporting FINCORP’s growth. Notable partners include the African Development Bank (AfDB), the European Investment Bank (EIB), and Norsad Capital.
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Additionally, he paid tribute to local funding partners, including banks, asset managers, pension funds, and the corporate sector, for their unwavering support of FINCORP.
Rijkenberg further acknowledged the dedication and hard work of the board, management, and staff of FINCORP.
“Their commitment to fulfilling the organization’s mandate has been instrumental in driving its success and positively impacting the lives of countless individuals and businesses,” he said.
Meanwhile, FINCORP Board Chairman Meshack Kunene appealed to the company’s clients to continue honouring their obligation to repay their loans to enable the company to continue reaching out to more citizens and fulfil its mandate of ensuring extended national financial inclusion at the grassroots level.
“With this significant milestone, FINCORP reaffirms its position as a trusted financial partner, dedicated to providing innovative and sustainable solutions that foster economic growth and prosperity.
The level cumulative disbursements of E10.1 billion represent the extent of the institutions’ outreach to the masses.”
…Finances first solar power generation projects
As part of its portfolio diversification strategy, FINCORP successfully financed its first four solar power generation projects.
According to the 2023 annual report, this groundbreaking initiative is a response to the escalation of electricity costs and the persistent threat of load shedding, driven by the ongoing energy crisis in South Africa.
“By spearheading the financing of solar power generation projects, the organization is leading the way towards a greener and more resilient future for the country.”
Worth noting is that Eswatini Electricity Company (EEC) has a PPA with Eskom ending in 2025.
These projects have already demonstrated their potential to enhance the economic viability of the businesses they support.
The report states that the projects are courtesy of FINCORP Board Chairman and former EEC MD Meshack Kunene who assumed his role in August 2022, in which has come in handy in driving this transformative endeavor.
In his foreword in the report, Kunene expressed his enthusiasm for expanding such projects in collaboration with external funders, including the European Investment Bank (EIB).
He stated that the solar projects have already resulted in improved financial and economic viability of the financed business.
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“We are looking forward to rolling out similar projects in partnership with some of our external funders such as the EIB, which has prioritized clean and renewable energy generation,” said Kunene.
With a total investment of E6.6 million, FINCORP has successfully facilitated the development of solar power generation projects with a combined capacity of 200 KW.
However, due to ongoing regulatory processes being finalized with the regulator and utility company, the clients have not yet commenced supplying energy to the national grid.
The report stated that once this is concluded, it will greatly benefit the clients and the nation at large as they will supply the grid as well.
FINCORP Group Managing Director Dumisani Msibi assured the company’s stakeholders that they remain optimistic about the prospects of the business.
He said FINCORP anticipates growth and expansion driven by the company’s unwavering dedication to supporting small businesses across the length and breadth of the country.
“We commit to remaining agile, adaptive to market changes; and most importantly embracing technology in terms of service delivery; and refining our strategies to better serve our customers,” he added.
