Africa-Press – Eswatini. In comparison with the first quarter of 2021, FSRA’s total income decreased by 65 per cent from E2.6 billion to E937 million in the first quarter of 2022.
The Financial Services Regulatory Authority (FSRA) said this was mainly due to the 35 per cent decline in investment income as result of the unrealised fair value losses on financial assets and rental income, which declined by 34 per cent. In respect of contributions, a year-on-year increase of 6.9 per cent was observed. On the expenditure side, a 17 per cent increase was observed, and this was mainly due to an 11 per cent increase in lump sum payments and six per cent increase in periodic payments. They said the growth in benefits paid during the first quarter of 2022 reflected the continued economic pressures on entities and individuals, which contributed to the cancellation of retirement fund benefits for employees.
Increase in periodic payments were mainly driven by the payment of periodic retirement fund benefits which could be the result of cost-of-living adjustments through pension increases for pensioners. The figure below illustrates the sector’s income and expenditure. Compared with the same date 2021, membership increased by 10 per cent and this had been the case throughout the year. “Although the retirement fund coverage is still considered low and concentrated among the formal sector employees, this increase is a step in the right direction for improving the coverage policy objective of retirement funds,” said FSRA.
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Participation in the retirement fund savings continues to be dominated by males, with more of them in the active phase of the retirement savings (accumulation phase) and more females in the pension phase (withdrawal phase) as they earn the surviving spouses’ pension. The regulator said the gender gap however increased by three per cent which is against the policy for increasing female participation in financial services. The performance of Non-Bank Financial Institutions (NBFI) is imperative to the business sector as it increase business revenues.
In Eswatini, NBFI institutions are regulated and managed by FSRA, whose purpose is to also supervise financial services to protect stakeholders and foster a stable financial system in the country.
FSRA recently released their quarterly statistical bulletin, where they reported that a two per cent decline in assets was observed in the NBFI sector assets, as they declined form E95.3 billion as of December 31, 2021, to E93.1 billion during the quarter under review. They said this was due to the overall asset decline in retirement funds, assets which were over a quarter of the non-banking financial sector assets. The decline in retirement funds assets also led to the decline in assets held by domestic asset managers. “As of March 31, 2022, the total value of assets under advisory and management in the capital markets sector were valued at E31.9 billion; this is a one per cent decline when compared with the E32.4 billion recorded at the end of Q4 2021,” said FSRA in the report. They alluded that the decline was attributed to the sluggish economic conditions and withdrawal of funds following the closure of one collective investment scheme. FSRA said the number of collective investment schemes declined from six schemes to five schemes following the closure of the Sanlam Collective Investment Scheme thus; there were 26 licensed entities.
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Under credit and savings institutions, a 0.6 per cent decline in assets was observed when compared to Q4 2021. FSRA said this was mainly due to the asset declines across the various sub-sectors except for Savings and Credit Cooperatives Societies (SACCOs) assets which increased by 0.03 per cent. The regulator said SACCOs (Non-Performing Loans) NPL also showed a decline of eight per cent when compared to the other quarters and Building Societies also showed a decreasing trend in the NPLs across the quarters and showed a three per cent decline on a quarter-on quarter basis. A three per cent year-on-year increase in Gross Written Premiums (GWP) for Long Term Loans (LTIs) was observed and a similar increase was also observed in sub-sector’s assets.
FSRA said an improvement in net claims on policies was observed when compared to Q1 2021, this rebound was due to the significant declines in funeral claims and credit life claims. The LTI remained solvent with a net equity position of E536.6 million. A 25 per cent year-on-year increase in the Short Term Loans (STI) gross written premiums was observed.
An improvement in GWP was also observed across all classes of business except for motor and workmen’s compensation which declined. As of March 31, 2022, net claims on STI policies showed a 171 per cent increase when compared to the same quarter of 2021. FRSA said a decline in claims incurred for all the STI classes of business was observed except for liability insurance and workmen’s compensation that experienced significant net claims incurred increases above 100 per cent and property claims increase of 26 per cent.
A seven per cent decline in STI assets was observed during the period under review; however the subsector’s net equity position remained positive. A year-on-year increase of 7.3 per cent was observed in the value of retirement fund assets, however a slight quarter on quarter decline of 1.7 per cent was observed. In comparison with the first quarter of 2021, total income decreased by 65 per cent from E2.6 billion to E937 million in the first quarter of 2022.
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