Eswatini moves to deepen financial markets

The Kingdom of Eswatini has announced a new set of reforms aimed at deepening its financial markets and improving regulatory transparency. The Ministry of Finance and the Central Bank jointly unveiled measures to strengthen pension-fund supervision, expand capital-market listings, and align financial-reporting standards with regional norms under the Southern African Development Community (SADC) framework.

According to the Times of Eswatini, the government has approved amendments to the Financial Services Regulatory Authority Act to allow broader oversight of collective-investment schemes and insurance-linked savings products. The move is designed to channel long-term domestic savings into productive investment rather than offshore placements, a recurring weakness in Eswatini’s macro structure where the pension sector holds assets exceeding 50 % of GDP yet invests mostly abroad.

Officials indicated that a sovereign-bond issuance calendar will be introduced in early 2026 to provide predictable benchmarks for local investors. Eswatini’s public debt currently stands near 45 % of GDP, while yields on five-year notes hover around 9.2 %, reflecting moderate inflation of 4.8 % and credible fiscal consolidation. The country’s current account remains in surplus, buoyed by steady Southern African Customs Union (SACU) receipts and rising sugar exports.

The Central Bank signalled readiness to launch a real-time gross-settlement (RTGS) upgrade to link with regional payment systems operated by the SADC Payment Integration Initiative. Once operational, the system will enable cross-border settlements within hours, supporting private-sector trade flows and reducing liquidity fragmentation.

Economists view these moves as laying the groundwork for a functioning secondary-market ecosystem. With regional peers such as Botswana and Namibia already trading government bonds on electronic platforms, Eswatini’s step could lift investor participation and lower borrowing costs by 50–70 basis points over time. Capital-market turnover remains minimal—below E300 million annually—but the proposed reforms could triple that by 2027 if pension-fund allocations shift even marginally toward domestic instruments.

Regional sentiment is broadly supportive. The MSCI Frontier Africa index has gained 6 % year-to-date, and regional liquidity conditions remain stable despite global yield volatility measured by the US10Y benchmark. Eswatini’s initiative reflects a growing effort by smaller SADC economies to build transparent and investable markets capable of attracting long-term capital.