Africa-Press – Eswatini. WE have grown so accustomed to news of failing financial institutions, either collapsing with millions belonging to emaSwati, or extracting capital out of the country to neighbouring countries. In an ideal setup the regulatory body is in charge of ensuring that investor funds are kept safe, the interests of investors protected and the overall financial sector in Eswatini ought to be a stable one. This ought to be at least the case with regulated and registered financial institutions.
I worry though that we have a regulatory authority in the country yet emaSwati continue to lose their hard earned savings, pensions and investments. The rate at which emaSwati are losing funds points one to a situation of an acute regulatory failure and something needs to be done, drastic measures have to be put in place.
Signs of failure in regulation
The media is abuzz with emaSwati who have lost monies to some supposedly regulated entities. Boggling to the mind is all this happens right under the watchful eyes of a regulator. Peeping beyond the corporate veil in some of the entities you find similar faces posing as directors, one takes note that some occupy seats in these entities. An entity takes flight with millions of Emalangeni belonging to multitudes of emaSwati and the very directors return with a new company, providing similar services.
The regulator has continually granted these companies licences to operate. It is imperative that we put in place measures to minimise loses on emaSwati. The regulatory authority needs to take up a self-diagnostic study or the relevant ministry can conduct a diagnostic study into the operations of the regulator. The study should aim to understand the sources of failure in regulation. The government and the central bank should take lead into establishing a potent financial regulatory authority. I must caution that in the eyes of the public, failure of the regulatory authority is akin to government failure and robust action must be taken to protect the interests of emaSwati.
Regulation requirements
The issue of regulation in the financial sector needs to be taken seriously and the relevant financial institutions will need to improve their game ensuring that emaSwati are protected. The country cannot be seen to be a safe haven for entities with cruel intentions towards emaSwati. It is further disheartening that this fraud occurs within the confines of the law, it become entirely legal and the authority charged with protecting emaSwati seems to lack the ability to detect some of these ill-intentions towards emaSwati.
Regulating investment advisors and asset managers requires that the regulator be able to regulate their day to day operations. It boggles the mind that these entities are able to move money across boarders without knowledge of the regulator. One also ponders if the regulator does not require the investment firms to keep some form of reserves? Also, what happened to the 33 per cent local investment of all funds mobilised in Eswatini? One understands that some investments may not perform well in markets, it is the duty of the regulator in that instance to ensure that investment firms do not make risky investments with mobilised funds.
Investors everyday become victims to unregulated investment firms. Furthermore, the base rule when advising a person in choosing an investment firm or advisor, we often always request that they should choose an investment firm that is registered. This is to ensure that the country minimises loses due to unscrupulous investment firms and advisors.
Importance of regulation
Regulation helps keep capital flowing freely throughout the market. Also helps protect the interests of consumers and investors by shielding them from too much risk and fraud at the hands of unscrupulous professionals. A well regulated financial sector is critical to economic growth, a properly functioning financial sector is crucial for resource mobilisation towards financing capital accumulation and investments that will improve overall welfare of emaSwati. A well-functioning financial sector is also crucial for attracting FDI into the country.
The financial sector the backbone of any economy and financial regulation is a critical enabler to economic growth. It baffles the mind when one learns that in the cases of malpractice that are before our courts, the regulator seems to be implicated or they are also called as defendants in the court cases. The ideal situation is the regulator ought to be the authority bringing entities for prosecution as part of the mandate of the regulator being to protect emaSwati against fraudulent activities in the financial sector.
Expedite prosecution
In the best interest of emaSwati to close on these cases expediently since emaSwati have lost money and closure , if redress can be found it is important that emaSwati livelihoods and standards of living are at stake. The future of the nation is at stake, we need to protect emaSwati, pensions and savings and the future of this nation. Regulation of the financial service is imperative for the development of the nation and for the financial independence of Eswatini. This is a call to the regulator, the central bank and the government of Eswatini to improve, please improve financial regulation.
Source: times
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