Swaziland’s NFIS Launch,
Thursday, 17 January, 2018
Swaziland

Opening Remarks by Prime Minister Dr. Sibusiso Barnabas Dlamini

Programme Director,

Honourable Minister of Finance,

Cabinet Ministers Present,

Principal Secretaries of the Ministries,

Governor of the Central Bank of Swaziland,

CEO, FSRA,

Deputy Executive Director of AFI, Mr Nobert Mumba,

Representative of FinMark Trust,

Chairperson of the Swaziland Bankers Association,

CEOs of the Financial Industry,

Senior Government Officials

Private Sector and NGO Representatives

Members of the Media Houses

Distinguished Guests, and

Ladies and Gentlemen

1. Introduction

It is my greatest delight to be part of this important occasion this morning to launch the National Financial Inclusion Strategy (NFIS) for Swaziland covering the period 2017 – 2022. This very much symbolic for the country as His Majesty declared that the country should achieve the first world status by 2022. You will agree with me that there is a strong positive correlation between a developed financial system and economic growth. Furthermore, SADC has recently endorsed the Regional Financial Inclusion Strategy to implement the Regional SADC Industrialization Strategy, hence the event today is an indication of His Majesty’s commitment to this vision.

2. National Policy Alignment

The Swazi Nation through the National Development Strategy (NDS) Document 2006 indicated a number of strategic priorities that are relevant for financial inclusion. These include the need to satisfy the demand for credit among the indigenous entrepreneurs, to achieve the efficiency of state owned financial institutions (notably Swazi Bank) and the repatriation of pension funds to stimulate local investments.

His Majesty’s Government Programme of Action 2013 – 2018 states that the Government will intensify its activities in seeking to remove all barriers to SMME growth. These include the limited access to affordable finance, shortage of technical skills and remoteness from the domestic and global supply chains, dialogue financial sector directly to develop a less risk-averse approach to lending and the re-capitalising the Small Scale Enterprise Loan Guarantee Scheme. Support mechanisms to enhance lending based on the strength of a business plan and credibility of the borrower than the availability of collateral.

I am happy that the Strategy we are launching today is re-enforcing the implementation of these aspirations.

3. FinMark Trust

I have been informed that coming up with such a comprehensive Strategy Document for the country has been a long journey. I would like to acknowledge and appreciate FinMark Trust from South Africa for their support. In 2011 the Ministry of Finance through the Micro Finance Unit received assistance to come up with the first FinScope Swaziland National Consumer Survey 2011, which indicated that only 44 percent of the local population in the country had bank accounts. This was followed by the another FinScope survey 2014 which noted a 10 percent improvement in the country’s inclusion.

4. UNCDF

In 2014, again FinMark Trust and the UNCDF assisted the Ministry to come up with the Making Access Possible (MAP) Financial Diagnostic Study which through the extensive interaction with the various strata of the Swazi Society provided detailed information on both the demand and supply side issues of access to finance.

The analysis provided the information on how the Swazis access financial services, the perceptions towards the financial sector, the major drivers on the use of the financial services and the impediments that make it difficult to access. On the other hand, the Study segmented the Swazi adult population and analysed the financial circumstances of the individual target markets to identify the barriers to financial inclusion in Swaziland. The process provided the required evidence to come up with a strategy document that would meet the needs of the Swazi Society.

5. Alliance for Financial Inclusion

We are grateful to the Alliance for Financial Inclusion (AFI), which is represented today by the Executive Director Mr Nobert Mumba, for their support towards the country fusing the existing evidence to come up with a relevant national strategy with international performance indicators. The Ministry of Finance and the Central Bank of Swaziland are members to AFI.

We greatly appreciate the support from AFI particularly on the following:

• The Financial Strategy peer-peer learning review of the local National Financial Inclusion Strategy which was undertaken in 2016;
• The Capacity Building Programs on the Financial Inclusion Strategies, SME Finance, Digital Finance, Consumer Protection & Market Conduct, Financial Inclusion & Financial Stability and recent issues on Money Laundering & Financial Inclusion;
• Learning Exchange Visits through which the country has drawn some lessons on the implementation of the Financial Inclusion Strategies, Mobile & Agent Banking Services, Financial Co-operatives & Financial Inclusion and Digital Financial Services.

6. Financial Inclusion Task Team

I have been made aware that the Ministry established a Task Team from the relevant stakeholders to assist with the development of the Strategy. I would like to acknowledge and appreciate the financial regulators the Central Bank and the FSRA for their valuable support and participation. The financial institutions and the private sector for their sustained input into the Document, the Government Agencies as well the other development partners.

7. Maya Declaration

The country has also committed to the Maya Declaration, under AFI, to support the development of the Financial Inclusion Agenda. The following are the commitments that we made:

1. Finalize and have endorsed the National Financial Inclusion Strategy for Swaziland by 2017;
2. Develop and finalize the Financial Consumer Protection Strategy by 2017.
3. Establish the National Financial Literacy Framework by 2018
4. Conduct and finalize the FinScope Swaziland MSME National Survey 2016 by 2017.
5. Ensure balance between equitable economic growth and financial stability

Progress Achieved on the Maya Declaration

I am so much happy to indicate that in May 2017, His Majesty’s Government approved the National Financial Inclusion Strategy that we are launching this morning. The FinScope Swaziland MSME National survey 2016 on the landscape and the performance of the SME sector in the country was finalized and results launched to stakeholders in August 2017. The Central Bank of Swaziland in November 2017 held the country’s Financial Stability Conference and presented the Financial Stability Report.

I am delighted that AFI has recently (January 2018) offered a grant for the Ministry and the Central Bank of Swaziland to conduct a Learning Exchange with the Bank of Ghana on the Consumer Protection and Market Conduct Issues. I am sure that the lessons learnt will assist us to re-align and improve on the financial consumer protection issues.

8. Financial Inclusion Definition

Financial Inclusion plays a pivotal role in combatting poverty and contributing to inclusive economic growth. Our National Financial Inclusion Strategy defines Financial Inclusion as the delivery of financial services and products in a way that is available, accessible and affordable to all the segments of our society. The Strategy does not only limit to credit but seeks to ensure that people have access and the use the entire spectra of financial services which include the Payments & Remittances, Savings and Insurance. Furthermore, this is not just about the number of people with bank accounts, but the appropriateness and quality of a suite of financial services that will enhance the sustainability of our households and the entrepreneurs.

Financial Inclusion Vision

The vision of the Strategy is to improve the quality of financial inclusion through demonstrating the socio-economic impact on the people. This is to increase the depth of financial inclusion, growing the percent of adults with access to two or more formal financial products from 43 percent in 2014 to 75 percent, and reducing the excluded from 27 percent in 2014 to 15 percent in 2022 through growing mobile money and remittance, deepening the bank reach, getting the credit basics right, ensuring risk management products are available, and enabling alternative channels to serve the poor.

Partnerships

I have to indicate that the successful implementation of the Strategy we are launching today is depends on a smart and effective partnerships between the public sector, the regulators, the financial institutions, including banks, and the Mobile Network Operators (MNOs) to come up with an enable regulatory environment, as well as the design of sustainable innovative financial delivery mechanisms. These have to ensure that all the willing segments of the Swazi population can have access to affordable, appropriate and quality financial services and products on a sustainable basis.

9. Current Financial Inclusion Developments

Our Financial Inclusion Strategy recognizes that are clearly mutual benefits to be gained from a growing the economy through deepening the financial sector. I am happy that already significant progress has been achieved in the appreciation of the Financial Inclusion Agenda.

Access and Finance Availability

The financial sector has geared up to respond to the financial inclusion agenda. His Majesty’s Government appreciates the developments achieved in the following:

• The review & reduction of banking charges that were major barrier to most Swazis;
• The provision of lower-tiered KYC requirements for relevant segments of our society;
• The no-frills financial inclusion bank accounts for the low-income groups;
• Emergence and rapid growth of mobile phone based financial delivery mechanisms such as the mobile money, the e-wallet and the instant money transfers;
• The pilot to transfer and receive money through the retail chains and the postal services; and,
• Embedding of micro-insurance products, such as the funeral policy on other financial services to enhance coverage.

Financial Sector Implementation Plan

In April 2017, His Majesty’s Government launched the operation of the Financial Sector Implementation Plan (FSDIP) to deepen the financial sector. The primary objective is to ensure a stable, modernized, diversified as well as an all-inclusive financial system to better impact on economic growth. The National Financial Inclusion Strategy therefore provides a framework and scope to forge effective partnerships to ensure that the operation of the financial sector in the country has a better meaning and perception from all the segments of the Swazi Nation.

Financial Inclusion Co-ordination Agency

The implementation of the National Financial Inclusion Strategy will touch on a number of stakeholders. The key pillars or focus areas for the Strategy are Rural Finance, Micro Finance, SME Finance, Agriculture Finance and the Women & Youth Finance. Rural residents are twice more likely to be excluded than the urban counterpart. Despite the demand for micro finance, the sector currently covers about 3 percent of the adult population. The FinScope Swaziland MSME National Survey established that there are 59, 283 MSME owners and 68, 536 businesses. Only 6 percent of these have access to formal credit. 66 percent of the households were involved in agriculture according to the FinScope Swaziland 2014. The MAP Swaziland Diagnostic Study indicated that 72 percent of the women were self-employed as these tend to be more entrepreneurial whilst men go out to look for jobs.

To ensure the effective implementation of the Strategy and the monitoring of the impact of Financial Inclusion to poverty alleviation, His Majesty’s Government has transformed the Micro Finance Unit (MFU) under the Ministry of Finance to become the Centre for Financial Inclusion (CFI) for Swaziland. The CFI will co-ordinate with all the key actors within the financial inclusion space to enhance reach to financial services for the key segments of the Swazi population. This will entail support for the development of an enabling environment for the financial sector, the balance between the financial inclusion & stability, utilization of the financial inclusion products and the monitoring of the impact to poverty alleviation. A National Financial Inclusion Council comprising the key actors within the space, will be established to provide policy guidance and monitor the impact of the implementation of this Strategy.

10. Conclusion

In conclusion, it is therefore my pleasure to today launch the National Financial Inclusion Strategy for the country, and to also unveil to you the Centre for Financial Inclusion to support and co-ordinate the implementation of this Strategy. I am optimistic that the implementation of this Strategy will go a long way in complementing and supporting other development initiatives for poverty alleviation as access to finance is always a challenge.