SMEs seeking loans to pay outstanding tax debts – BRICS Information Sharing & Exchanging Platform

THE Swaziland Development Finance Corporation (FINCORP) is flooded with loan requests from small and medium enterprises (SMEs) to pay long outstanding taxes demanded by the Swaziland Revenue Authority (SRA).
Group Managing Director Dumsani Msibi said some local SMEs had generally found it difficult to adapt to the SRA’s more efficient tax collection systems and therefore ended up owing large sums of money they could not pay, and eventually closed shop.
He said FINCORP was flooded with loan requests from SMEs to pay long outstanding taxes demanded by SRA, which unfortunately was not something that a financial institution would want to finance.
He said he was not in any way suggesting that the SRA should not collect taxes but was stating the reality on the ground.
Adding, Msibi said the increased demand for domestic credit as opposed to entrepreneurial investment was also on an exponential rise.
Also, he said the corporation was pursuing some cases through the South African courts so as to recover funds from SMEs. He said not all SMEs who approached them for funding did so with genuine intentions.
Msibi said at times they financed trucks and tractors that suddenly disappeared across the borders to South Africa and Mozambique followed by the debtors who also disappeared into unknown territories.
“As we speak, we have a couple of cases that we are pursuing through the South African courts in an effort to recover our funds. Such incidents tend to make the accessibility of credit going into the future even more difficult due to increased sector risk profiling,” he added.
Adding, the MD said the retention of skilled staff had been a big challenge in recent times, especially when salary increments for parastatals were frozen for three consecutive years.
He said skilled personnel were lost to other similar players in the industry.

…Govt urged to obtain credit rating for SD

MINISTER of Finance Martin Dlamini has been urged to obtain a ‘credit rating’ for Swaziland.
Swaziland Development Finance Corporation (FINCORP) Group Managing Director Dumsani Msibi said this was for meaningful and effective financial intermediation to take place, adding that other countries around the globe had this.
He said it was important in that it allowed financial intermediaries like FINCORP to raise funding internationally at an optimal cost of borrowing. Msibi said such a move would also enhance business dealings for local companies in the international arena.
credibility
The MD said it gave credibility to the country, local companies and its people. Adding, he said it was a fact that women were better loan payers than men and that financial institutions looked at project proposals using ‘risk lenses’.
“You cannot undertake a risk and credit appraisal not wearing those lenses, they give you objectivity.
“By the way, when you finance a start up, you are effectively under writing risk. Our clients have played a major role by servicing their loans as expected.
“We are, however, alive to the fact that there are still very high expectations from our stakeholders as we go forward,” he said during the launch of FINCORP annual report 2013 and the 17 years celebration. The report is also available on the company’s website.
Msibi said due to the recent global economic meltdown which led to a domestic fiscal challenge, loan impairments had been on the rise.
He said this was because clients became victims of the emerging adverse economic conditions largely attributed to external economic fundamentals.
subventions
The MD said FINCORP did not receive subvention from government on an annual basis. He said they welcomed the idea of privatisation as it would have unlocked a huge potential to grow state owned companies by bringing on board carefully selected local and international investors who would add value.
Msibi said in the last three years, FINCORP had received three expressions of interest from local and international private sector players to acquire a shareholding in the company. “Investors are generally attracted to the FINCORP brand and I want to appeal to the minister of finance’s office to revisit this matter or at least make it clear on whether it is still on the table or not.
“Please rest assured that even after the privatisation we would still carry out the enterprise development mandate bestowed on us by government because that is what has made us attractive thus far,” he said.

Over E600m loaned to Swazis

ABOUT E682 million has been loaned to Swazi citizens by the Swaziland Development Finance Corporation (FINCORP).
Group Managing Director Dumsani Msibi said the corporation’s loan portfolio had grown to unprecedented levels reaching the half a billion emalangeni target set five years ago, now at E581 million.
figure
“Today as we speak, the figure has increased to a total of E682 million which is in the hands of Swazi citizens who are developing themselves in one way or the other. We have found that the entrepreneurs that we have financed collectively generate annual turnover in excess of E800 million, which is a contribution to gross domestic product (GDP),” he said.
Msibi said early this year, they took a bold step and listed a E300 million medium term note (bond) on the Swaziland Stock Exchange (SSX).
funding
The MD said this was done through their broker African Alliance Swaziland, in an effort to raise funding, adding that the response from both individuals and institutional investors had been quite satisfactory and reassuring.

FINCORP 11th best
performing DFI in Africa

THE Swaziland Development Finance Corporation (FINCORP) is the 11th best performing Developing Finance Institution (DFI) in Africa.
Group Managing Director Dumsani Msibi said FINCORP early this month obtained on its rating ‘A’ to ‘A plus’ under the Prudential Standards, Guidelines and Rating Systems (PSGRS) administered by the Association of African Development Finance Institutions (AADFI) under the auspices of the African Development Bank.
He said the corporation’s rating was announced early this month in Mombasa, Kenya. “This rating process looks at key elements such as governance, operations management, risk management, financial reporting and financial results.
“I therefore want to take this opportunity to pay tribute to the entire workforce of 72 employees for this achievement which is a result of their unequalled dedication and commitment,” he said.
Msibi said FINCORP also created indirect jobs for the economy as the company grew, adding that as new branches were rolled-out and new product offerings ushered in, the staff numbers were also increasing.

…records highest profit ever this year

THIS year, the Swaziland Development Finance Corporation (FINCORP) recorded the highest ever level of profitability before tax since inception, at E14.9 million.
This is during the year ended March 2013. FINCORP Group Managing Director Dumsani Msibi said the institution has also paid statutory tax to the Swaziland Revenue Authority (SRA), adding that total assets for the group grew by 17% from E542 million to E633 million.
He said total revenue grew by 27% from E84 million to E107 million and cumulative loan approvals since inception have reached the E2.4 billion mark to more than 80 000 beneficiaries. Msibi was speaking during the launch of the 2013 annual report and 17 years celebration held at the Royal Villas on Thursday night.
“FINCORP’s mandate as pronounced by shareholders is to finance and promote the development of Swazi-owned enterprises by providing credit access to credit, to create jobs and alleviate poverty at grassroots level. The corporation also facilitates access to business advisory services, training, monitoring, technical transfers and development of other products and services for SMEs,” he said.
The MD said therefore their impact would be measured by the extent to which they had made credit accessible to local small and medium enterprises (SMEs), by the total number of jobs created through funded enterprises. He said their impact on poverty alleviation, FINCORP’s ability to broaden offering and the nurturing of SMEs through business mentoring and counseling.
profitability
Msibi said profitability still remained a very important means of institutional sustainability so it could not be completely ignored and was also a measure of the efficient use of resources.
The MD said they had recently ushered a new strategic plan which was code named vision 2017 and aimed at growing the loan book to E1 billion by 2017 and the corporation believed this would translate to increased outreach, job creation and meaningful poverty alleviation.
He said in line with the strategy they had adopted a new mission to reflect the recently broadened product offering and the desire to remain a sustainable organisation. Msibi said FINCORP would empower its clients by providing broad-based financial services to enable their growth and success through fostering supportive client relationships.
The MD said another new development was that they would soon be operating under a new dispensation following that Financial Services Regulatory Authority (FSRA) had commenced the regulation and supervision of non-bank financial institutions.
company
“Three years ago we formed a subsidiary company, First Finance in an effort to broaden our product offering and also strengthening institutional sustainability.
Beyond just its main offering of general purpose finance, other products have been rolled out such as invoice discounting and rural housing finance and furthermore the subsidiary is contributing significantly towards our institutional and financial sustainability.
“FINCORP is on a growth trajectory and therefore it becomes necessary that we take our stakeholders on board as we embark on the new path,” he said.

E2.4 billion in loans approved by FINCORP

THE Swaziland Development Finance Corporation (FINCORP) has cumulatively approved loans in excess of E2.4 billion to over 80 000 Swazi nationals in the form of business and general purpose loans.
Minister of Finance Martin Dlamini said the company was launched in November 1995 by His Majesty King Mswati III at the Royal Swazi Convention Centre and opened its doors to the public in April 1996.
“Indeed when government in collaboration with Tibiyo TakaNgwane formed the institution in November 1995, there was a good reason. On top of the agenda the main objective was to increase access to credit to Swazi citizens at grassroots level thus enhancing financial inclusion in Swaziland.
“As a ministry we will forever be grateful to Their Majesties for forging bilateral relations with The Republic of China on Taiwan because one of the outcomes of that partnership was the seed capital amounting to E36 million offered to the Kingdom of Swaziland by Taiwan,” he said during the launch of FINCORP 2013 Annual Report and 17 years celebrations held at the Royal Villas.
Dlamini said in a true spirit of Public Private Partnership (PPP), Tibiyo TakaNgwane also came on board with a seed capital of E8 million hence the then Enterprise Trust Fund popularly known as E44 million Fund was formed.
The minister said in 2003, the organisation changed its legal status from being a Trust to being a Corporation subsequently assuming a new name Swaziland Development Finance Corporation (FINCORP).
He said from a seed capital of E44 million in 1996, the organisation had grown its assets to just above E634 Million as of March 2013 and assets have reached the E700 million mark.
Dlamini said of much greater importance was the fact that over 90% of the assets as demonstrated by the assets to loans ratio represented loans that are in the hands of Swazi citizens totaling E581.2 million.
The minister said FINCORP has been profitable since inception, adding that the company has cumulatively mobilised lines of credit in excess of E680 million to on-lend to Swazi citizens and these lines of credit had so far been serviced satisfactorily.