MBABANE – The Central Bank of Eswatini’s latest Monthly Statistical Release reveals a mixed economic landscape for April and May 2025, as credit to the private sector saw a slight decline while liquidity levels in the banking sector improved.
Private sector credit stood at E21.3 billion by the end of April, reflecting a 0.7 per cent drop from the previous month. This was mainly due to reduced lending to households, nonprofit institutions, and other sectors. Year-on-year, however, credit rose by 10.4 per cent.
The drop in household credit was led by unsecured personal loans, which contracted by 3.6 per cent to E3.3 billion, and housing loans, which slipped by 0.6 per cent to E4.2 billion. Conversely, vehicle loans nudged up by 0.8 per cent to E1.2 billion.
Credit to other sectors of the economy declined across the board. Financial corporations recorded a 13.4 per cent fall to E446.7 million, parastatals dropped 4.6 per cent to E456.2 million, and local government borrowing decreased 1.7 per cent to E71.6 million. Altogether, lending to these sectors reached E974.4 million, down 8.6 per cent from March and 6.5 per cent compared to the same time last year.
Meanwhile, business credit continued to grow, reaching E11.6 billion in April. This marked a 0.8 per cent increase month-on-month and a notable 20 per cent increase over the year. The boost was fuelled by higher lending to agriculture (6.9 per cent), community and personal services (2.2 per cent), construction (0.6 per cent), transport and communications (0.4 per cent), and real estate (0.1 per cent).
However, not all business sectors shared in the gains. Distribution and tourism suffered a sharp 10.2 per cent drop in credit uptake, followed by manufacturing at -4.3 per cent and mining at -4.0 per cent.
A deeper look into the business credit composition shows both large enterprises and SMEs recorded growth. Credit to SMEs rose by 2.4 per cent to E3.7 billion, while large enterprises saw a marginal 0.1 per cent increase to E7.9 billion. Large businesses continued to dominate, accounting for 68.1 per cent of all business loans.
The month also saw a major swing in government banking activity. Net claims on government dropped significantly from E2.3 billion in March to E1.1 billion in April. This shift followed the government’s repayment of advances from the Central Bank, financed through revenue from the Southern African Customs Union. Total government claims fell 14.8 per cent to E7.8 billion, while deposits also dipped by 3.1 per cent to close at E6.7 billion.
On the monetary side, broad money supply (M2) contracted by 0.2 per cent from March to E23.7 billion in April, despite a 1.8 per cent year-on-year growth. The monthly decline was linked to reductions in both quasi and narrow money (M1). Time deposits fell by 0.6 per cent, though savings deposits grew by 2.1 per cent.
M1 posted a slight 0.1 per cent month-on-month decline to E9.5 billion, driven by a 2.3 per cent drop in physical cash in circulation, which settled at E817.3 million. However, demand deposits saw a slight increase of 0.1 per cent to E8.7 billion.
Despite tightening credit and a dip in money supply, Eswatini’s banking sector recorded improved liquidity. Domestic liquid assets rose by 0.9 per cent to E7.5 billion in April. This was largely due to higher balances held at the Central Bank and other local financial institutions.
Gross official reserves, however, took a hit. As of May 2025, reserves dropped by 10.1 per cent to E9.4 billion compared to April, with a 1.0 per cent year-on-year decrease. Import cover dipped from 2.4 months in April to 2.1 months in May.
In tandem, the Central Bank adjusted its key policy rates. The discount rate fell to 6.75 per cent, while commercial banks’ prime lending rate also eased to 10.25 per cent by the end of May 2025.
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