Financing a business in the Kingdom of Eswatini
An entrepreneur in Eswatini can approach a commercial bank, FINCORP or a SACCO; the SSELGS guarantee of the Central Bank of Eswatini covers part of the bank's risk, helping SMEs without land title offer acceptable security.
The Swazi SME landscape
Micro, small and medium enterprises dominate trade, services and agro-processing around Manzini, Matsapha and Mbabane. Few of them obtain bank credit, because they lack land collateral and financial statements kept on a regular basis.
How the SSELGS works
The Small Scale Enterprise Loan Guarantee Scheme covers 85% of the loan for an existing business and 95% for a start-up, according to the Alliance for Financial Inclusion. By September 2016, about 1,191 loans had been guaranteed for 100.5 million emalangeni.
What commercial banks require
FNB, Standard Bank, Nedbank and Eswatini Bank analyse turnover, account flows and the owner's experience. They often ask for a personal surety, a public guarantee or a pledge over equipment when the business owns no titled land.
FINCORP for productive projects
FINCORP finances agriculture, sugar cane growing and businesses, with a gross portfolio of 468 million emalangeni in March 2015. Its status as a development institution makes it an alternative to banks for certain productive projects.
Formalities to start up and borrow
A business registers with the Registrar of Companies, obtains a trading licence from the Ministry of Commerce, Industry and Trade, and gets a tax number from the Eswatini Revenue Service. These documents are a precondition for any formal financing.
A business plan costed in emalangeni
The banker expects a business plan costed in emalangeni, with sales forecasts, import costs from South Africa and a repayment timetable. Contracts signed with major buyers, such as sugar mills or government departments, strengthen the application.
Young entrepreneurs and a dedicated fund
The Youth Enterprise Revolving Fund targets young project holders, offering modest amounts together with mentoring. For very limited start-up needs, microcredit in Eswatini often remains the natural first step before applying for a bank loan.
Agro-industry and processing
Processing fruit, dairy products or timber attracts mixed financing from commercial banks and FINCORP. For the farming activity itself, the dedicated schemes and lenders are presented under the farmer loan in Eswatini.
Subcontracting and public procurement
Businesses holding public contracts or subcontracting agreements can sometimes obtain financing backed by the order. Government payment delays, which can be long, nevertheless call for keeping a sufficient cash buffer at all times.
The central bank's Fintech Sandbox
The Central Bank of Eswatini has opened a Fintech Sandbox where innovative financial services can be tested under supervision. Digital payment and lending solutions aimed at small businesses can be trialled there before their commercial launch.
Botswana's SME agencies compared
Botswana has its own public SME financing agencies, presented under the business loan in Botswana. In Eswatini, the SSELGS guarantee and FINCORP are the two main public levers, supplemented by the Youth Enterprise Revolving Fund.
Repayment and bank monitoring
Once the loan is granted, the bank often requires annual financial statements and continued flows through the business account. Prolonged arrears can trigger a call on the SSELGS guarantee, but the entrepreneur still owes the lender.
Steps to finance an SME in Eswatini
- Register the business with the Registrar of Companies and obtain the trading licence matching the activity.
- Open a business account at FNB, Standard Bank, Nedbank or Eswatini Bank and run all takings through it.
- Write a business plan costed in emalangeni with cash flow forecasts for the full loan term.
- Present the project to a bank and ask whether it qualifies for the central bank's SSELGS guarantee.
- Compare with FINCORP or the youth fund if the amount or profile suits them.
- Sign the contract, provide the security requested and submit financial statements on the agreed dates.
Costs and security for a Swazi SME loan
| Item | Benchmark | Varies with |
|---|---|---|
| Bank rate | Prime + margin (indicative) | Risk, security, trading history |
| SSELGS cover | 85% existing, 95% start-up | Data published in 2018 |
| Arrangement fees | Set by the bank | Amount and complexity |
| Personal surety | Often requested | Business structure |
| Annual accounts | Accountant's fees | Size of the business |
Loan application file for a business in Eswatini
- Certificate of registration from the Registrar of Companies
- Valid trading licence
- Eswatini Revenue Service tax number
- Business plan and cash flow forecasts
- Business account statements for six to twelve months
- Identity documents of the directors
- Quotes for the equipment to be financed
Why Swazi business loans get refused
- Mixing business takings and personal spending in the same account, which prevents the bank from assessing real cash flows.
- Presenting a business plan that ignores payment delays from public clients or large buyers.
- Not knowing about the SSELGS guarantee and giving up on credit for lack of titled land to offer as security.
- Paying a commission to a middleman who promises guaranteed access to a public fund for young entrepreneurs.
- Letting the trading licence expire during the loan, which is often a breach of the contract.
Lenders to contact
- Nedbank Eswatini: Eswatini subsidiary of the Nedbank group, a commercial bank offering banking services and financing solutions to individuals and businesses.
- Standard Bank Eswatini: Eswatini commercial bank offering urban and rural home loans as well as unsecured personal loans to individual customers.
Financing your business in the kingdom: your questions
How do I access the SSELGS guarantee in Eswatini?
The entrepreneur does not apply directly to the central bank: the commercial bank submits the loan to the scheme. You should therefore ask your adviser whether the project qualifies and which additional documents are needed.
Does FINCORP finance business start-ups?
FINCORP finances MSMEs and agricultural projects, and assesses applications on their economic viability. A start-up must demonstrate a market, skills and an own contribution; precise terms are available from its branches.
Can a Swazi business with no land borrow?
Yes, through public guarantees, pledges over equipment, receivables or the owner's surety. That is precisely the aim of the SSELGS, since many entrepreneurs live on Swazi Nation Land that cannot be mortgaged.
Which sectors do Swazi banks finance most?
Retail trade and services take most of the guaranteed loans, according to SSELGS data. Agriculture accounted for only about 1.7%, which explains the complementary role of FINCORP and the schemes specific to the sugar industry.