MBABANE – The Financial Services Regulatory Authority (FSRA) has flagged persistent governance gaps across Eswatini’s non-banking financial institutions (NBFIs) as a major risk threatening sector stability and growth.
Presenting at a media engagement held at Nkonyeni Golf Estate from Monday afternoon until yesterday, FSRA General Manager for Prudential Supervision Mbongiseni Nkambule said weak governance frameworks remain one of the most pressing challenges undermining the sector’s performance.
Nkambule explained that these governance shortcomings, characterised by ineffective Boards, related-party exposures and weak oversight, continue to erode institutional resilience and contribute to the slow growth of savings and credit co-operatives (SACCOs) across the country. “Persistent governance gaps across sectors are a key risk and emerging issue. These weaknesses reduce oversight effectiveness and heighten operational and financial risks within financial services providers,” he said.
The FSRA outlined several cross-sector risks affecting the NBFI landscape, warning that these issues are interconnected and, if left unaddressed, could destabilise the broader financial system. Among the key risks identified was weak risk management practices. Nkambule noted that many financial services providers (FSPs) do not prioritise risk management adequately, exposing institutions to fraud, compliance failures and financial losses. Closely linked to this is rising credit risk, particularly within SACCOs and capital markets. The regulator observed elevated levels of non-performing loans and inadequate credit controls, calling for stronger provisioning and more disciplined lending frameworks.
Solvency and liquidity pressures were also highlighted as ongoing concerns. Institutions with weak governance and control environments are particularly vulnerable, with some struggling to meet financial obligations due to poor asset quality and weak financial management.
Adding to these challenges is the emergence of climate-related risks. Nkambule said climate change is increasingly affecting financial institutions through higher insurance claims, declining asset values and growing solvency pressures across SACCOs, insurers and retirement funds. “This is no longer a distant risk. Climate-related exposures are already impacting financial institutions and amplifying traditional risks such as credit, liquidity and market risks,” he said. To address these threats, the FSRA plans to introduce cross-sector guidance and strengthen its supervisory framework through tools such as climate stress testing and scenario analysis.
The presentation also unpacked sector-specific challenges, beginning with retirement funds, where governance and trustee accountability remain a major concern.
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FSRA General Manager for Prudential Supervision Mbongiseni Nkambule. (Courtesy pic)