Mbabane – The Ministry of Commerce, Industry and Trade is tightening regulations to curb fronting and money laundering in business registration through a review of the Companies Act, which is currently at the Bill stage and open for consultation.
Speaking during the inaugural micro, small and midium enterprises (MSMEs) workshop, MSME director, Meluleki Dlamini, said the ministry was addressing growing concerns about emaSwati being used as fronts for businesses actually owned by foreign nationals.
Dlamini explained that the new law seeks to close loopholes that allow individuals to register companies under local names while the real owners operate behind the scenes. He said this practice not only undermines local entrepreneurs but also facilitates money laundering, as some of these businesses exist merely as fronts for illegal financial activities.
His remarks followed complaints from small business owners who said foreign nationals, particularly from the Asian community, were using emaSwati to register businesses and penetrate sectors reserved for locals, such as grocery and retail shops in rural areas. They said the arrangement leaves locals with little benefit while foreign investors reap the profits, creating unfair competition against indigenous entrepreneurs who lack similar financial power and control over value chains.
Musa Vilakati, Director of Ekhaya Funerals, cited an example from his industry, where a company had rapidly expanded across the country under the name of a local who, he claimed, was merely a front. Vilakati urged the ministry to empower the Eswatini Revenue Authority and the Central Bank of Eswatini to trace the financial origins of individuals who suddenly establish multimillion-emalangeni businesses without a clear source of funding.
“Money leaves a paper trail; it does not just come from nowhere,” Vilakati said, adding that unexplained investments worth E8 million or E20 million should raise red flags for authorities.
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