Financial sector is the back bone of every economy
For the past years I have been wondering if bank executives understand that the financial sector is the back bone of every economy.
This has been baffling me for a while now. From the looks of things they are in the game to make profits, fair enough Swaziland has three commercial banks and two development banks, but I am failing to see the difference. As an economist I find that banks in Swaziland are inefficient, they lack transparency, there is a huge lack of competition in the banking sector, they lack proper policies especially customer oriented policies and that some of the parastatals are not doing their jobs, rather they are just fulfilling the minimal to meet their requirements.
Let me start explaining my point before my audience loses its attention span. The fact that banks are inefficient is reflected by the number of financial service providers in Swaziland. Some eight years ago I heard that Swaziland had one financial services company, today I can’t even start counting the number of such service providers. The number of micro-lenders is growing daily in Swaziland.
I wonder if bank executives realise and understand that the customers who are meant to be using bank services are now using the services of these financial service providers.
Recently I saw a billboard for one financial service provider showing that they now give out housing loans, and I asked myself if any of the bank executives had seen the billboard and what are they doing about it, in the event they had.
Banks are lacking competition and most of them concentrate on making money, instead of giving back to the customer-the depositors. Most banks provide the same services, their products are not diversified. They concentrate more on loans rather than giving back to the customer. The charges they have are too high, and there are a lot of them, both for creditors and debtors. The increase in financial service providers is an indication that our banking sector needs more competition, and now they are providing that competition.
In the banking sector there is no transparency whatsoever. When one opens a bank account they are not told of the large number of charges that they face. Rather at the end of the month one finds there have been charges such as, handling fee, deposit fee, withdrawal fee, ATM fee monthly charges, internet banking charges, even charges I can’t start to think of. When opening a bank account we are not told of any of these charges, especially for those of us that are willing to shop around. Customers are charged for paying off their loans more than the stipulated amount, which is something that banks should be happy with, as it means they will get their money back faster. If customers payless they are charged as well.
As much as the bank and the customer entered into an agreement upon taking the loan, it should be noted that it is in everyone’s interest that both parties part-ways happy, not with the sheriff at someone’s doorsteps.
Some of the policies that banks have are very demanding, and the small country that we have I find that they are sometimes not in order. I do understand that banks have to make their money, protect their interest and their customers investment, but they also have to provide financial services to the nation. For example, in one of the banks when taking a housing loan, you’re told how much it will cost to build the house and you’re given their list of companies to build the house.
Why are customers not given the mortgage while the bank just expects the payment? Why do banks not just check on the development of the property, using their surveyors instead of recommending companies for one? To me this becomes a breeding ground for corruption, I’m reminded of a story where one bank executive was also in the board of the people giving out loans at the bank. The manager had a bogus company that was subcontracting on constructing houses that the manager had signed on (please write a brief thing about what Shongwe was doing).
As banks, the back bone of any economy, people in Swaziland cannot easily access loans. In times of economic crisis like these, Small and Medium Enterprises (SMEs) should be promoted; banks should be offering loans to small businesses. They can protect their investment through other means, such as surety.
Some of these policies are the ones that have driven people to use other sources of financial services. In the long run they are costing banks a lot of money they should be making in the form of profit.
I find that our pension and provident funds are doing the minimal to meet their requirements. As much as they are not organisations that were created to make money, they are organisations that are essential to the nation and should drive growth and development, through promoting employment-which should be their main goal, investing in the country should be one of their main focus, instead of investing in other countries. Their clients should be getting more than the minimum they can get in return.
Their products should be diversified, they should include loans for SMEs and big businesses, housing loans, personal loans, as well as trust funds and long term saving schemes.
These companies are already long term saving schemes, and doing more for their customers will increase their customer base in the long run, especially now when unemployment is extremely high in Swaziland, and the economy is going through trying times. Rather than just fulfilling their requirements they should change their business scope to increase their customer base by reducing unemployment, diversify their products, promote the business sector in Swaziland to increase employment opportunities.
I recently laughed when I read an article that one of the CEOs in these quasi government owned organisations was complaining that they are not paid enough, personally I thought that he wanted to say he didn’t work enough, his organisation lacked vision, his organisation was not doing anything to reduce unemployment, and that they only know real estate as their main form of investment.
The way I view things at the moment, Swaziland’s financial service providers need to change. In these times of economic hardship for the country someone has to step up to save the nation, and it has to be through investment in SMEs and job creation.
Fair enough it will be a risk, but financial service providers are in the business to speculate and take risks. To actually provide services that will be beneficial for their customers instead of trying to rob their customers.
I am saddened by the fact that these so called financial service companies are increasing at a very high rate while banks are there and are proving not to be threatened by the competition they see coming.
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