Tuesday July 17, 2018
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Honourable Minister for Finance

Governor of the Central Bank of Swaziland

Chief Executive Officer of the Financial Services Regulatory


Guest Speaker – Mr J.P.Fourie, Head of Investor Relations at

Metier Private Equity

Industry Representative – Ms Thandile Nxumalo

Representatives of the Media

Distinguished Guests

Ladies and Gentlemen

It is my honour, on behalf of His Majesty’s Government, to welcome you all to this Capital Markets Indaba.

Exactly one year ago I stood before an almost identical audience at the first capital markets indaba. I was impressed by the initiative shown by our relatively new Financial Services Regulatory Authority (FSRA) in drawing together the experts in this highly specialised field of financial activity.

The country’s capital markets were not then, nor are they today, the only area of focus of the work of the FSRA.  But it is an important one, requiring knowledge, drive and resourcefulness, for the good reason that the capital markets of Swaziland remain under-developed. They have not yet made the natural progression from infancy to maturity.

For healthy growth the capital markets require an optimal supply of funds and willing users of those funds.  But in our primary market there is, owing to the recent regulations, a very substantial amount of funds available from financial institutions, with only limited demand, mainly from Government, for those funds.  In the secondary market, the Swaziland Stock Exchange (SSX), there is similarly a substantial amount of funds, partly from the financial institutions but also from individuals, available to buy a minimal quantity of equities and unit trusts that are available for purchase.

As seen in other countries within the African continent, capital markets have been playing a pivotal role in supporting economic growth.  At last year’s Indaba I urged all concerned, especially the FSRA and the SSX, to come up with proposals for growing the capital markets to serve investors and users of funds in a setting of strength and stability, helping to build up the confidence and critical mass in those markets.  

Today’s Capital Markets Indaba is focusing on the theme “Alternative Investment” as a way of helping to resolve the gap between available funds and the demand from potential users of funds. 

I think, perhaps as a prelude to those discussions, it will be valuable to reflect a little on what progress has been made in the respective capital markets since last year’s Indaba

Taking, first, the secondary market – our SSX – we can look forward to the promised new listing of Swazi Mobile and the availability of those shares on the Stock Exchange (SSX) in the near future. There is a continuing need to draw companies into the equities market, promoting to privately-held companies the advantages of an SSX listing of their shares, and helping to introduce new financial instruments into the market.   Such listings will help to absorb the available liquid funds, especially those of the unit trusts. 

Then there would logically be some reminder of the challenge in the primary capital market of there being a huge supply of funds and insufficient demand by users such as Government.  The corollary could then be the substance of  today’s indaba – discussing resourceful approaches to the utilisation of available liquid funds in infrastructure projects.   

Let us start by recognising that the elusive equilibrium – a balance of funds available and enough projects, whether infrastructure or otherwise, to absorb those funds – is very difficult to achieve.  That transition does not come at a stroke of the pen.  But the public agency that is the FSRA, especially in these early stages, has a significant catalytic function, playing a part in motivating the creation of vibrant and balanced primary and secondary markets.

In this regard we might consider two broad categories of project for the primary market.  Firstly there would be Government or private sector projects – or even public:private partnerships (PPPs) - feeling able to borrow because an appropriate rate of return to finance the debt servicing is clearly visible.  A toll road is a good example of that.  Then secondly there can be projects that do not have a closely identifiable rate of return but that improve the business environment, create faster economic growth and raise the debt servicing funds through the ultimate increase in tax revenue.   Roads, bridges and other infrastructure in rural areas that benefit agriculture or tourism, and give rise to increased economic activity in those sectors, are appropriate examples of such projects.  And, in addition to increasing a country’s competitiveness, such infrastructure projects enhance the living standards of the people.

We were pleased to see, earlier this year, an investment that ticked both boxes, so to speak – namely an infrastructure project that is also available for trading on the SSX.  This is the Infrastructure Bond – a clearly identifiable use of a Government borrowing and one, I might add, that carries a rate of interest way above the money market deposit rates and, for no good reason, remains under-subscribed.

While, on the one hand, Government must think creatively about the extent to which it can ratchet up, and service, the debt that would meet the desired infrastructure projects, at the same time there is a need for stakeholders such as the FSRA and the SSX to reflect creatively about changes that can make our capital markets more attractive for investors, including improved marketing of investment products.  Further bonds, like the Infrastructure Bond, could be issued when project funds are needed.  The institutions with the surplus liquid funds could consider such infrastructure projects as “alternative investments,” when they invest directly in the bonds, subject of course to the regulatory restrictions imposed in the respective legislation.  As an asset class it provides a valuable alternative to the traditional investment products.  The challenge for regulatory authorities and legislators will be to develop a stable regulatory environment, that gives investors and project developers the incentives and confidence to use capital markets.

I commend the Authority for continuing to engage the public and private sectors in meaningful discussion and shared innovative ideas.  His Majesty’s Government is committed to supporting the development of capital markets as important mechanisms in the growth of our economy. I thank the FSRA for inviting me to this event and allowing me to share some thoughts with you all. 

Thank you.



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