Business

EZULWINI – The Eswatini Stock Exchange (ESE) has set the stage for a new era in local capital markets with the introduction of Exchange Traded Funds (ETFs).

Speaking during a strategic workshop hosted at the Happy Valley Hotel last Friday, ESE Board Chairperson Dr Melvin Khomo declared that the potential for ETFs in Eswatini was “significant – from enabling small investors to access broader markets, to offering institutional investors new portfolio tools and providing issuers with a flexible platform for innovation and growth.’

According to Dr Khomo, the introduction of ETFs represents more than just a new financial product. It is a strategic turning point for Eswatini’s capital markets – one that promises to broaden participation, attract foreign investment and deepen regional integration.

He emphasised that ETFs could be the cornerstone of building ‘a modern, diversified and regionally competitive exchange that can attract both domestic and international capital.’

Dr Khomo highlighted the inclusivity ETFs bring:

• For retail investors, ETFs offer affordable access to diversified portfolios that would otherwise be out of reach.
• For institutional investors, ETFs provide new instruments for risk management and portfolio diversification.
• For issuers, ETFs create flexible opportunities to structure innovative investment products.

The Board Chair further noted that the ESE’s recent alignment with the African Securities Exchanges Association (ASEA) harmonised framework positioned Eswatini for regional collaboration and cross-listings.

“This milestone positions us strongly for cross-listings and regional collaboration, enhancing our visibility across African markets and positioning Eswatini as an investment destination. Our alignment with international and regional standards is more than symbolic it is a practical move to ensure that we provide a trusted and interconnected platform for issuers and investors,” said Dr Khomo. He also confirmed that the ESE Board is currently working closely with the Financial Services and other stakeholders on the demutualisation of the Eswatini Stock Exchange Regulatory Authority (FSRA) and other stakeholders on the demutualisation of the ESE. “Demutualisation will unlock opportunities for strategic partnerships, technology upgrades and broader market participation,” Dr Khomo explained.

During her presentation, Nerina Visser, a leading ETF strategist and investment consultant, broke down the workings of ETFs for the audience of regulators, potential issuers and investors.

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Building liquidity, investor confidence

EZULWINI - Another recurring theme at the workshop was the importance of liquidity.

Nerina Visser explained that ETFs differ from regular shares in that liquidity is not only a function of trading volume, but also of the ability to create and redeem units in the primary market.

Seed capital from anchor investors, such as pension funds, could help kickstart liquidity. At the same time, educational campaigns would be essential to raise awareness among retail investors and financial intermediaries.

Visser also suggested the creation of bond ETFs, which could help unlock dormant capital held in long-term government bonds. “By packaging bonds into ETFs, we can transform illiquid instruments into tradeable securities, benefitting both the State and investors,” she said.

The workshop concluded with a strong call for collaboration among all stakeholders – regulators, government, issuers and investors – to ensure that the ETF ecosystem takes root in Eswatini.

*Full article available in our paper.

Eswatini Stock Exchange Senior Legal, Risk, Compliance Officer and Company Secretary Bongile Kunene (R) and Board Chairperson Dr Melvin Khomo. (Pics: Nhlanganiso Mkhonta)

Eswatini Stock Exchange Market and Product Development Officer Sihle Tsabedze.

Business Eswatini CEO Nathi Dlamini making his submissions during the workshop last Friday.

Nerina Visser, a leading ETF Strategist and Investment Consultant delivering her presentation.