Documente Academic
Documente Profesional
Documente Cultură
31 March 2015
Annual Report
FSRA VISION AND CORE VALUES
VISION
The FSRA Vision is a picture of the desired future for the FSRA in 2017 and beyond, and it has been
agreed as follows:
CORE VALUES
The FSRA core values are our guiding principles that dictate behavior and actions of our people.
They guide our decisions, assisting our people to know what is right from wrong; they help the
FSRA to determine if we are on the right path and fulfilling our business goals; and they create an
unwavering and unchanging guide. Our core values have been identified as follows:
INTEGRITY
a. We deliver on what we promise
b. We conform to professional standards
c. We follow laid down policies and procedures
d. We base all our decisions on moral and legal fairness
e. We honour our agreements with stakeholders
CONFIDENTIALITY
We maintain open, honest and direct relationships with our stakeholders,
ensuring we treat all non-public information at our disposal with utmost
confidentility. We take confidentiality oath in accordance with the FSRA Act, 2010.
TEAMWORK
All our jobs at FSRA are interconnected towards servicing all our stakeholders,
hence we work together towards achieving a common goal.
TEAMWORK
ACCOUNTABILITY
We have a collective obligation to account for our activities, accept our
responsibilities and to disclose the results in a transparent manner.
TRANSPARENCY
We demonstrate our transparency through disclosure to the public to indicate
that our organisation is managed well, functions in an ethical manner and
handles its finances with efficiency and responsibility.
CONSISTENCY
We are committed to decision making that is free of contradictions. Our decision
making is guided by our laws and regulations as well as internal policies and
procedures, ensuring that we make consistent decisions for like events.
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
TABLE OF CONTENTS
03 GENERAL OVERVIEW
2 Abbreviations
3 Introduction
4 The Ministry in charge of the FSRA
5 Background and History
5 FSRA Mandate
5 The FSRA Strategy: 2014 to 2017
6 Key Strategic Focus Areas
7 Corporate Governance
9 Facts and Figures FSRA Historic Financial data
10 Facts and Figures Regulated industries
12 BUSINESS OVERVIEW
12 Financial highlights of FSRA
15 Human Capital
21 FSRA Finance and Corporate Services
24 Insurance and Retirement Funds (IRF) - operational update
30 Legal, Policy and Intervention (LPI) - operational update
34 Capital Markets Development (CMD) operational update
40 Credit and Savings Institutions (CSI) operational update
44 Swaziland Stock Exchange (SSX) operational update
90 FINANCIAL STATEMENTS
1
ABBREVIATIONS
2
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
GENERAL OVERVIEW
INTRODUCTION
The FSRA hereby submits its third Annual report covering the year
1 April 2014 to 31 March 2015. This makes this report the third compilation
public.
3
GENERAL OVERVIEW
The
Ministry
of Finance
T
he Mission of the Ministry of Finance is to promote Macro-
economic stability in Swaziland by formulating and implementing
fiscal and financial policies that optimise economic growth and
improve the welfare of its citizens. One of the major components of the
Ministrys mission is to:
Provide a sound regulatory framework for the countrys financial
sector, hence the FSRA was established to fulfil this mandate.
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
T
he FSRA came into existence following the The principal objects of the Authority are spelt out in
promul-gation of the FSRA Act 2010, as the FSRA Act, as being to foster, through regulation and
an integrated regulatory and supervisory prudential supervision of financial services providers:
authority for non-bank financial services providers. a) The stability of the Swaziland financial system;
The FSRA consolidates and transfers the supervision b) The safety and soundness of financial services
and regulation of all non-banking financial services providers;
Institutions (NBFIs) from various regulators to be c) The highest standards of conduct of business by
under one roof. financial services providers;
a) The supervision of Insurance and Retirement d) The promotion of fair competition between
Funds Industries was trasferred from the Office different financial service providers for the benefit
of the Registrar of Insurance and Retirement Funds of stakeholders;
(RIRF) to the FSRA; e) The fairness, efficiency and orderliness of the
b) The supervision of SACCOs - was transferred from Swaziland non-bank financial sector, and
the Office of the Commissioner of Cooperatives to f) The protection of the stakeholders.
the FSRA;
c) The supervision of Capital Markets and the THE FSRA STRATEGY: 2014 TO 2017
Swaziland Stock Exchange - were transferred
from the Central Bank of Swaziland to the FSRA; As the financial year under review drew to a close,
d) The supervision of Credit Only institutions - was the entire FSRA team came together again in March
transferred from the Central Bank of Swaziland to 2015, to review progress on the implementation of the
the FSRA. strategy.
During the year under review, the FSRA continued to This strategic plan has been developed by the FSRA
strengthen its establishment as an effective supervisor in order to provide a disciplined approach to the
of NBFIs in Swaziland. To achieve this effectiveness, management of the organisation over the next three
the FSRA has to manage the transition process quickly years. It has been developed to guide the organisation
and smoothly so as to be optimally positioned to tackle in the achievement of its future vision. The objectives
the technical and operational challenges that lie ahead. of the Strategic Planning Process are:
To do so, the FSRA must: a) To create a definite link between the organisations
Ensure that its institutional structures for vision and strategic focus areas;
supervision are firmly in place; b) To identify internal and external environmental
Make sure that transitional issues are completed; issues and opportunities that could influence the
Ensure that steps are taken to secure its financial organisation (similar to the traditional SWOT
and operational independance; and analysis);
Lay the basis for strengthening the legal, c) To identify key measures of success and factor them
regulatory, and operational frameworks for in a scorecard to measure and evaluate progress and
effective supervision. performance (a balanced scorecard);
d) To develop key strategic focus areas, strategic action
The FSRA is responsible for ensuring that regulated plans and supporting business plans to drive the
NBFIs comply with the relevant legislative and implementation of the strategy;
capital adequacy requirements in order to promote the e) To create context for the strategic team in terms
financial soundness of the entities thereby protecting of strategic thinking/planning competencies and
the investing community. strategy implementation;
f) To link strategy implementation to performance
management; and
g) To craft structures to drive and review the strategic
action plans.
5
GENERAL OVERVIEW
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
7
GENERAL OVERVIEW
We ensure that we evolve and follow the corporate e) The Chief executive officer of the Authority, who
governance guidelines and best practices. We shall act as secretary to the Board.
consider it our inherent responsibility to disclose
timely and accurate information regarding our During the year under review, the following Board
financials and performances as well as the leadership member were in office:
and governance of the Authority. 1. Chairman - Mr Muhawu Maziya
2. Deputy Chairman - Mr Nathie Maseko
In accordance with our Vision, the FSRA aspires to be 3. Other Members - Walter Matsebula
the SADC regions benchmark in supervision as well - Theo Mason
economic development. - Modern Samketi
- Gigi Reid
BOARD OF DIRECTORS - Dumisile Magagula
4. Secretary/CEO - Mr Sandile Dlamini
The FSRA Board of Directors (the Board) is at the core
of our corporate governance practices and oversees
how Management serves and protects the long-term
CORPORATE GOVERNANCE
interests of all our stakeholders. We believe that an CHALLENGES THAT HAVE BEEN
active, well-informed and independent Board is FACED DURING THE YEAR UNDER
necessary to ensure the highest standars of corporate REVIEW
governance.
The main challenge faced by the FSRA during the
year under review was the expiry of the Board term
THE SIZE AND COMPOSITION OF of office, with a time lag in re-appointment into office.
THE BOARD During the year under review, the Board term of office
The composition of the Board is stupulated in Section expired in September 2014 and there was no Board
7 of the FSRA Act and consists of the following: until the end of the period. This effectively means
a) A Chairperson and not more than four (4) other that for the duration the Board was not in office,
members, who shall be appointed by the Minister; programmes requiring Board Approval got stalled,
b) A representative of the Swaziland Law Society; and the office was run without proper governance.
c) A representative of the Institute of Accountants;
d) The Principal Secretary of the Ministry of Finance,
or a person authorised by the Prinicipal Secretary
in writing to act on behalf of the Prinicipal
Secretary; and
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
9
FACTS AND FIGURES REGULATED INDUSTRIES
10
NON-BANKING FINANCIAL INSTITUTIONS vs TOTAL FINANCIAL SYSTEM ASSETS AS AT 31 MARCH
2015 2014 2013 2012 2011 2010 2009
GDP Estimate 54 920 402 820 53 580 880 800 36 623 820 000 33 246 670 000
NON-BANKING FINANCIAL
INSTITUTIONS (NBFIs) 49 850 496 256 45 438 610 581 28 454 068 733 26 871 311 994 15 106 499 071 14 112 296 912 12 234 368 008
Retirement Funds 22 319 605 062 20 800 083 879 17 962 047 512 15 098 460 825 13 490 704 586 12 800 606 679 11 182 907 510
Long term Insurance 2 567 705 186 2 359 953 026 1 784 482 731 1 304 745 730 1 053 866 276 812 876 461 620 184 716
Short term insurance 283 798 034 297 448 168 434 912 861 536 349 588 561 928 209 498 813 772 431 275 782
Collective Investment Schemes 19 490 744 974 16 944 995 028 5 138 728 164 7 178 848 821
SACCOs 752 624 000 1 023 807 000 916 531 000 835 931 000
Credit institutions 2 644 471 000 2 643 597 000 664 979 465 473 882 030 Data not yet collected
Building Societies 1 791 548 000 1 725 848 000 1 552 387 000 1 443 094 000
COMMERCIAL AND DEVELOPMENT
BANKS 12 770 591 000 13 437 973 000 12 885 753 000 11 097 926 000
Government owned 1 889 276 000 1 969 005 000 1 866 128 000 1 758 093 000
Data not yet collected
Subsidiaries of SA Banks 10 881 315 000 11 468 968 000 11 019 625 000 9 339 833 000
GENERAL OVERVIEW
FINANCIAL REGULATORS 9 413 945 801 9 266 119 939 7 283 197 000 5 353 147 000
Central Bank of Swaziland (CBS) 9 366 311 000 9 223 478 000 7 245 961 000 5 322 045 000
Financial Services Regulatory Authority Data not yet collected
(FSRA) 47 634 801 42 641 939 37 236 000 31 102 000
TOTAL FINANCIAL SYSTEM 72 035 033 057 68 679 825 040 48 623 018 733 43 322 384 994 15 106 499 071 14 112 296 912 12 234 368 008
Non-Bank Assets as a % of Total
Financial System 69% 67% 59% 62%
Non-Bank Assets as a % of GDP 91% 85% 78% 81%
FACTS AND FIGURES REGULATED INDUSTRIES
REGULATED INDUSTRIES REQUIRING 30% LOCAL INVESTMENTS - LOCAL VS FOREIGN ASSETS
RETIREMENT FUNDS 2015 2014 2013 2012 2011 2010 2009
Industry local investments 7 299 822 198 6 381 985 763 5 223 198 949 4 301 219 033 3 618 499 127 3 657 486 061 1 746 872 527
Industry foreign investments 15 541 843 944 14 418 098 116 12 738 848 563 10 797 241 792 9 872 205 459 9 143 120 618 9 436 034 983
Total Investments (E) 22 841 666 142 20 800 088 899 17 962 047 512 15 098 460 825 13 490 704 586 12 800 606 679 11 182 907 510
LONG TERM INSURANCE 2015 2014 2013 2012 2011 2010 2009
Industry local investments 292 429 078 314 259 040 45 543 816 289 914 869 284 863 972 262 578 450 121 355 968
Industry foreign investments 2 275 276 108 2 045 693 986 1 352 635 042 1 014 830 861 769 002 304 550 298 011 498 828 748
Total Investments (E) 2 567 705 186 2 359 953 026 1 698 178 858 1 304 745 730 1 053 866 276 812 876 461 620 184 716
SHORT TERM INSURANCE 2015 2014 2013 2012 2011 2010 2009
Industry local investments 282 258 401 183 404 071 168 636 124 167 631 558 196 190 167 193 319 692 164 403 998
Industry foreign investments 74 277 804 184 344 705 266 276 737 368 718 030 365 738 042 305 494 080 266 871 784
Total Investments (E) 356 536 205 367 748 776 434 912 861 536 349 588 561 928 209 498 813 772 431 275 782
% Local investments to total investments 31% 29% 29% 28% 27% 29% 17%
% Foreign investments to total investments 69% 71% 71% 72% 73% 71% 83%
Total Investments (%) 100% 100% 100% 100% 100% 100% 100%
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GENERAL OVERVIEW
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Sections 20 of the FSRA Act, 2010 stipulates that the 981 605 824,204
authority shall be funded by:
a) Monies appropriated by Parliament for the LEVIES
purpose;
Actual levies raised from FSRA regulated entities as at
b) The payment to the authority of fees or other
the end of 31 March 2015 totalled E26.6million (2014:
charges, as prescribed by the authority;
E21.8 million). The breakdown of levies charged to
c) The payment to the authority of supervisory
the industry is as follows:
levies imposed under section 21;
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BUSINESS OVERVIEW
2015 2014
Penalties - Brokers 3 000 81,800
Penalties - Asset Managers - 200,000
Penalties - Retirement Funds 42 000 111,593
Penalties - Agents 10 000 -
Penalties - Fund
Administrators 30 000 -
Interest Received 1 085 260 1,097,173
1 170 260 1,490,566
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
HUMAN CAPITAL
Brief Outline of Roles and Responsibilities of Regulatory Divisions
Strategic Actions
Human Resource Operational activities during the year
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BUSINESS OVERVIEW
T
he IRF Division is responsible for the
following broad functions:
Relationship Management of supervised entities
pawnbrokers, and hire purchase institutions;
Regulation and supervision of Microfinance
Credit Providers;
under the FSRA, Insurance and Retirement Funds Administration of the Money-Lending and Credit
legislations; Financing Act, 1991;
On-site and off-site monitoring and analysis of Future administration of the National Credit Act;
entities falling under their supervision; Relationship Management of supervised entities;
Ensuring sound risk management and operating On-site and off-site monitoring and analysis of
policies by supervised institutions; supervisor entities;
Ensuring compliance with regulations and Ensuring sound risk management and operating
prudential standard by supervised institutions; policies by supervised institutions; and
Administration of the Retirement Funds Act 2005 Ensuring compliance with regulations and
and its sub-legislations; and prudential standards by supervised institutions.
Administration of the Insurance Act 2005 and
its sub-legislations.
STRATEGIC ACTIONS
Capital Markets Development (CMD)
The FSRA strategic objective is to recruit, retain and
The CMD Division is responsible for the following develop happy, competent people who reflect the
broad functions: values and image of the FSRA. Our values as outlined
Overseeing and regulating capital raising earlier, entirely depend on our people. Throughout
activities of corporations and other capital market the year under review, we consistently checked
participants; ourselves against our measures of success as outlined
Reviewing and signing-off on company disclosure in our strategy, namely:
filings such as registration statements for newly
offered securities, annual and quarterly filings, Approved organisation strucuture in place
reports to shareholders, and filings related to ensuring that the structure enhances team
mergers and acquisitions; effectiveness.
Overseeing market conduct by capital market During the year under review, the FSRA Board
participants; approved a new organisational structure,
Relationship Management of supervised entities; following the recommendation that had been
On-site and off-site monitoring and analysis of received from the IMF Mission.
entities falling under their supervision; The FSRA receives technical assistance from the
Ensuring sound risk management and operating International Monetary fund (IMF). The IMF
policies by supervised institutions; Mission entitled Strengthening supervision
Ensuring compliance with regulations and of Savings and Credit Cooperatives and
prudential standards by supervised institutions; Capital Markets Institutions in Swaziland
and visited the FSRA in August 2013, and made
Administration of the Securities Act 2010. the following obervations in relation to our
organisational integration.
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
The mission observed that the replicated Transfer the signing powers of all Registrars
FSRA Departments are effectively acting along to the CEOs office, so that Licences will
departmental lines, rather than as an integrated come from the CEOs office, instead of each
team. This silo approach works against the division issuing its licenses.
ability of the FSRA to use its limited staff Change job titles of all Registrars to General
resources to its best advantage and to achieve Managers, making sure that all duties
a more efficient distribution of those resources and functions and remuneration remain
accross the FSRA. unchanged.
The IMF then recommended that we explore Create a new Division called Legal Services,
scope to re-organise roles and responsibilities and transfer all existing legal and consumer
with a view of promoting staff integration and protection persons from IRF, CSI and CM
extracting synergies where possible. into this Division.
During the period April to May 2014, the IMF Just like the Finance and Corporate
Mission returned to the country and initiated Service, this division has to service all
discussions for revamping our organisational FSRA divisions.
structure to ensure we meet the objective of
enhancing team effectiveness and address The outcome of these proposed changes was an
operational silos. Organogram which looks like this:
The major changes that IMF recommended,
and were extensively discussed by Management
were as follows:
17
18
FSRA BOARD
Manager
Manager Manager Manager Manager Manager Manager
BUSINESS OVERVIEW
SSX
Ensure job evaluation and grading is completed Pending action plans - at the end of the review
During the previous year under the review, period
a consultant was engaged to complete the job The following action plans were pending
evaluation and grading exercise. However, half- implementation commencement as at the
way through the project, it was paused in order end of the review period:
to implement the recommendations of the IMF, Conducting a skills audit and training
and review the organisational structure. needs analysis;
At the end of the year under review, this Developing and implementing a values
project was still paused as the new organisa- based code of ethics;
tional structure was still being implemented. Developing and implementing a staff
retention policy and mechanisms for
Ensure FSRA performance management protecting talent;
system is in place Improving our internal branding and
The FSRA currently has a performance corporate image;
management system in place. Succession planning; and
As a matter of policy, in order to maximise Introducing a staff welfare programme.
their potential, staff members are given
the opportunity to perform in such a way HUMAN RESOURCE OPERATIONAL
that they add value and help attain the ACTIVITIES DURING THE YEAR
organisational goals.
The key to successful perfomance manage- This report is a snapshot of the human resources
ment in our organisation lies in honest activities for fiscal year 2014-2015. The main activities
two-way communication between managers taking place in the human resources function are
and employees. as follows: recruitment and placing of staff, benefits
The communication aims at clarifying: administration, training and development, payroll,
The goals to be achieved; policies, and employee relations. The Office of the
How individual staff members are Human Resources and Corporate Services provides
contributing; and services and support to the whole of FSRA in various
What skills or behaviours need to be activities.
developed to maximise contributions.
i. Employment
Ensure the FSRA HR Policies and procedures Staffing
are finalised and approved The Human Resources department assists with
When the FSRA was established, we already all phases of the employment process. We over-
had HR Policies and Procedures that were see the processes of recruitment, interviewing,
approved during the RIRF era. testing, background checks, selection and evalu-
During the year under review, the Board ation of employees. Depending on the positions
allowed us to continue using the RIRF being filled, we also outsource the employment
policies until the FSRA reviewed policies are process by engaging consultants to coordinate
approved. the recruitment process on behalf of the FSRA.
By the end of the review period, the process
of reviewing and revamping our HR Policies Staff compliment
had started and was ongoing. The FSRA had a staff compliment of 40 (2014:
41) as at 31 March 2015. These were made up as
follows:
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BUSINESS OVERVIEW
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
21
BUSINESS OVERVIEW
T
he Finance and Corporate Services is Treasury responsible for anticipating the daily
responsible for managing the FSRAs financial cash flow requirements for FSRA, through
and administrative matters which include the cashflow forecasts or projections, and ensuring
following: Financial and management Accounting, that cash not immediately required is invested
Human Resources, Information and Communications accordingly.
Technologies, as well as all administrative / Corporate
Budget coordinates the preparation of the
Services support activities.
Authoritys annual budget, responsible for
the preparation of revenue and expenditure
FINANCIAL AND MANAGEMENT estimates and budget instructions for all the
FSRA Divisions. This department ensures that
ACCOUNTING
expenditures are within approved allocations.
a. Accounting
Audit coordinates the audits with the
The division administers the General Ledger, Authoritys auditors, providing accounts
ensuring that assets are safeguarded, that financial analyses, reconciliations, and audit schedules
statements are in conformity with generally to expedite the audit process and reduce the
accepted accounting principles, and that time needed to complete the comprehensive
cash resources are managed with responsible annual financial report. Were proud to report
stewardship. All personnel with a role in the that ever since the authority was established,
management of the FSRA fiscal operations are we have always received a clean, unqualified
expected to uphold the policies laid out in our audit report.
Accounting Manual, which is our commitment
to proper and accurate financial management and Reporting coordinates the preparation of
reporting. quarterly and annual reports to the Board and
Ministry of Finance, ensuring their accuracy
Using the off-the shelf Accounting Software, and timeliness. The department is responsible
Pastel Accounting, the department is responsible for compiling and publication of the Annual
for the following accounting activities: Report. Additionally, responsible for compiling
maintaining the revenue and receivables cycles and distributing monthly/quarterly/annual
coordinates the billing of levies and all other cost centre spending analysis to Division
fees, and the collection of receivables that Heads.
are due. As a result of the effeciency of this Administrative Support provides admin-
function, the FSRA continues to be a viable istrative support to the entire FSRA across all
authority. divisions.
maintaining the procurement and payables
cycles a process which takes you through each HUMAN RESOURCES FUNCTION
phase of the procurement process as follows: This function falls within the Finance and
requisitioning of the goods and services, Corporate Services Division. Refer to the Human
sourcing of suppliers, procurement methods, Capital section for detailed information.
solicitation and evaluation of suppliers offers,
award of contract or placing of an order and up INFORMATION AND
to payment for received goods and services. COMMUNICATION TECHNOLOGY
Fixed Assets cycles responsible for recording, This function falls under the Finance and
reporting, tracking and retiring or disposal of Corporate Services Division. The ICT infra-
capital items. structure at FSRA assists the organisation in
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
running efficiently. These services are essential iv. Computer networking At the FSRA, our
to the everyday mechanics of an organisation networking support is provided by an
and integral to effective service delivery. These outsourced service provider. Our networking
technologies include hardware, software, is a complete network encompassing a mix
networking, internet, email, website and imple- of cabled and wireless access points, multiple
mentation. printers and high speed internet connection
via a purpose-built server. The cabled
i. Service Providers At FSRA we currently do
access points were introduced when it was
not have an in-house systems administrator.
discovered that the wireless access points
We use outsourced services from Service
could no longer handle the increase in volume
providers we inherited from the office of the
of users. Internet speed was also upgraded to
Registrar of Insurance and Retirement Funds
the highest speed available.
(RIRF). While at RIRF, we deliberately delayed
the establishment of this department, until as v. Internet As already mentioned above, with
users, we were sure what ICT technologies we the increase in volume of users as FSRA
require, especially on the supervisory side of established all the Divisions, the need to
business. Thus far, outsourcing has been cost upgrade the speed was realised, and the speed
effective for us. However with the coming into was increased.
force of the office of the FSRA, it is envisaged
vi. Email Communication - the email server is
that the technology needs will expand
also outsourced. With the establishment of
significantly. There is now a need to establish
the FSRA, the new FSRA email and the old
a fully-fledged in-house ICT support service.
RIRF email addresses are running parallel,
Hence we have budgeted for the recruitment
and will run like that until we are sure that all
of this resource. As at the end of the review we
our stakeholders and our contacts have now
had not yet recruited this resource.
received our FSRA email addresses.
ii. Hardware at the FSRA, our hardware
comprise of the Windows Server, desktop AUDITED FINANCIAL STATEMENTS
PCs, laptops, photocopiers and printers. The
relationships we have maintained with our Refer to the Audited Financial Statements annexed
service providers over time has ensured that to this report.
we receive support promptly whenever our
hardware needs attention. PLANNED ACTIVITIES IN THE
iii. Software system softwares have direct COMING YEAR
control and access to your computer
The following are planned activities for the
hardware, and memory locations, to make the
upcoming year:
applications software do a task. At the FSRA,
i. Recruitment of additional staff for the division
the following softwares are widely used:
in line with the budget;
Microsoft Windows, Pastel Accounting, and
ii. The establishment of the ICT department
D-Bit Payroll.
inhouse;
iii. Close monitoring of actual expenditure
We are still exploring the acquisition of a
against approved budgets;
supervisory system that can be used by all
iv. Implementation of divisional management
Regulatory Divisions in carrying out their
accounting to assist division heads to monitor
regulatory function, for licensing, on-site and
their spending on an ongoing basis;
off-site monitoring, as well as intervention.
v. Implementation of pastel accounting modules
that will enable us to achieve ii and iii above.
vi. Ensure that the reporting deadlines stipulated
in the FSRA act are met.
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BUSINESS OVERVIEW
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
25
BUSINESS OVERVIEW
n the previous report, we reported that we had sessions on anti-money laundering and macro-
consultations with the Swaziland Post and prudential supervision were held. The Authority also
Telecommunications Corporation and MTN makes quarterly contributions to the Financial Stability
Swaziland to discuss the possibility of these Unit for the preparation of the financial sector report.
entities allowing insurers to use their facilities
for the collection of premiums. The use of these ON-SITE INSPECTIONS
entities by insurers will ease premium collection
During the period under review, 4 on-site inspections
as policyholders can pay their premiums anywhere
were carried out in terms of Regulation 13 of the
there is a post office and also use mobile technology.
Insurance Regulations, 2008 and 3 on-site inspections
were carried out in terms of Section 35 of the
During the year under review the FSRA approved
Retirement Funds Act, 2005.
the use SPTCs facilities by Safrican Swaziland
and Liberty Life Swaziland and Metropolitan Life
Swaziland. Type of Entity Number of Entities
Inspected
The Authority also approved MTNs collaboration Insurance Companies 3
with Old Mutual for the distribution of the Retirement Funds 3
Likhandlela mobile insurance. Corporate Agent 1
Total 7
Product Development to enable the
inclusion of low income households in the
The inspections highlighted several areas of concern
insurance sector
but the following areas were the found to be common
Although the micro-insurance regulations have not in the inspected entities:
been passed by parliament, insurers have taken
steps in developing products that are suitable Insurance Companies
for the low income households. During the year a. Insurers whose holding companies are in
under review, the Authority received notification South Africa continue to rely heavily on
of the Likhandlela mobile insurance, a funeral their holding companies for their operational
product targeted at people in the informal sector. functions. There was minimal effort from the
The Authority was also notified of the Nedbank- Management of local insurers to develop the
Old Mutual Funeral Assistance Cover which is technical skills locally in order to facilitate the
aimed at Nedbanks low-income customers. transfer of administration functions like the
premium allocation, claims processing and
Despite the efforts made by the Authority together the finance and accounting functions of the
with the industry, the Swaziland Finscope entities registered in Swaziland;
Consumer Survey for 2014 revealed that Insurance
coverage had increased by 5 percentage points b. Lack of monitoring of intermediaries by the
since 2011 when the last survey was carried out. insurers resulting in the inflation of prices of
The survey report revealed that funeral insurance products distributed on behalf of the insurers,
continued to have the highest uptake despite and without the insurers knowledge, to the extent
the main barriers to insurance that were identified that commission retained by the intermediary
were the lack of awareness of insurance products by is higher than the legislated commission
people in the rural areas and negative perceptions rates. As a result of this, policyholders end
about providers of insurance products. up paying higher premiums for products
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
that would have cost them half the amount e.g. several retirement funds have given the
of the premium had they sourced the product signatory powers over their bank accounts to
directly from the insurer. the administrators, trustees only get quarterly
reports pertaining to the transactions of their
c. Compliance with the legislated local share- bank accounts;
holding for insurance companies is
progressing slowly as investors indicate b. Trustees have no service level agreements
that they are having difficulty in identifying in place regarding activities outsourced
suitable business partners. to investment managers and fund
administrators. This then makes it difficult
d. Fronting was also common amongst local for trustees to monitor the performance on
insurers, some insurers were fronting risks the contracted services as there are no specific
that they could afford to retain in their books; targets and timelines set for the discharge of
the contracted the services.
e. Lack of documented operating policies
and procedures and in some cases insurers c. Several retirement Funds do not have their
adopted group policies and procedures bank accounts registered in their own name
and did not customise them for the local as per the requirements of Section 18 of the
operations; Retirement Funds Act;
f. Violation of Section 49 of the Insurance Act d. Some funds had implemented changes in
by inducing group policyholders by paying their structures without the approval of the
them commission, administration fees or FSRA, e.g. participation in umbrella funds
having profit sharing arrangements with and making contributions into the Umbrella
them in order to keep them as policyholders. without being registered as participating
employers under the relevant umbrella
g. The insurers risk management policies funds.
and procedures do not take into account
AML/CFT issues and as such they have no e. Some retirement funds had inadequate credit
mechanisms in place to monitor and identify controls such that loan disbursements for
suspicious transactions. FSRA is working investment purposes in other entities were
with insurers to improve the situation. done without a proper due diligence being
carried out to determine the viability of the
Insurance Brokers entities that funds are being invested in.
a. Most brokers did not have adequate financial
resources to fund their operations, meaning f. One of the retirement funds had arrear
that there was a high risk of these brokers contributions of E5 025 683.41, this was a
misusing policyholders premiums; result of the non-remittance of employer
b. Violation of Section 63 (2) of the Insurance and employee contributions by the employer
Act, by not remitting premiums within 60 from December 2011 to July 2013. The non-
days; remittance of contributions also led to the
lapsing of the permanent health insurance
(PHI) cover as premiums were not being
Retirement Funds
paid.
a. Lack of adequate controls on the Retirement
Funds financial resources; retirement funds
g. The provision of Group Life Assurance
trustees delegate several functions to the
(GLA) by retirement funds has to be
retirement fund administrators but do not
rationalised such that contributions towards
oversee the activities of the administrators
GLA do not take up a higher percentage
in matters relating to the retirement fund
27
BUSINESS OVERVIEW
of pension contributions to the extent that for the regulated entities. The reports are not shared
contributions put towards a members with the industry as the office uses them as a guide
pension are compromised. for assessing the risks inherent in each entity
and the quality of the risk mitigating controls. In
Supervisory action to guide the concerned order to have a holistic view of the operations of a
entities to comply with legal requirements company the office uses the results of both the risk
has been recommended to the concerned assessment report and the on-site inspection report
entities. to determine the relevant supervisory action.
28
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
n the period under review registered entities regulated seventy (70) locally registered retirement funds,
under the Insurance Act, 2005 and the Retirement ten of them are Umbrella funds constituting of
Funds Act, 2005 increased from 336 to 410 entities, 127 participating employers. Registered foreign
inclusive of 127 retirement funds registered as retirement funds, registered in terms of section
participating employers under 10 Umbrella funds. As 67 of the Retirement Funds Act 2005 stood at 33,
seen in the table above, the increase is attributed to showing an increase of 11 foreign funds.
the individual agents, who had not yet renewed their
licenses in the previous review period, had now been In the financial year ending March 2015 the
renewed at the close of the current review period. number of registered retirement funds decreased
by two due to the closure of two retirement
Insurers: funds. These funds were liquidated as a result
of the closure and termination of operations of
No changes occurred in the number of registered the sponsors. Payment of benefits to members
insurers in the period under review. concerned have all been made.
29
BUSINESS OVERVIEW
30
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
31
BUSINESS OVERVIEW
32
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
supervisors from the following countries: Ghana, counter financing of terrorism, tax fraud and tax
Kenya, Namibia, Zimbabwe, Zambia, Malawi, evasion within the non-bank financial services
Mozambique, Botswana, Swaziland, Tanzania, sector; capacity building and training; consumer
Mauritius, Nigeria and South Africa. protection and education, investigating and
facilitating the prosecution of persons involved in
The seminar was graced by trainers from the financial crime and the evaluation and alignment
Financial Stability Institute (FSI), Australian of legislative frameworks with international
Prudential Regulation Authority (APRA), standards and best practice.
International Association of Insurance Supervisors
(IAIS) and Access to Insurance Initiative (aii). b) Capacity Building By SRA
The Swaziland Revenue Authority conducted
c) Consumer Financial Literacy training for the insurance and retirement funds
The Authority continues to engage in activities personnel. The training was held at the Royal
aimed at creating awareness and educating the Villas on the 20th March 2015 and it was arranged
public about financial products and services. In as part of implementing the Memorandum
order to achieve a meaningful impact in this area, of Understanding that the Authority and the
the Authority is developing a Consumer Financial Swaziland Revenue Authority (SRA) concluded in
Literacy Strategy which is built around 4 key areas: September 2014 on exchange of information for
Promoting financial literacy through cooperation, collaboration and consultation.
education, communication and consultation
with the consuming public; The topics covered during the training were as
Enhancing protection of consumers and follows:
investors; Approval of retirement funds for tax purposes;
Strengthening collaboration with strategic Tax treatment of contributions to retirement
stakeholders of FSRA; and funds;
Effectively communicating FSRA mandate Tax treatment of benefits from retirement
and corporate image to the public. funds;
The strategy encompasses the various sector Taxation of benefits due to dependants from
of the financial services industry, including retirement funds upon death of members;
Capital Markets, Credit and Savings Institution Transfers between retirement funds; and
and Insurance and Retirement Funds. Tax treatment of insurance products.
UPDATE ON RELATIONSHIPS WITH The training was useful to all staff members as it
dealt with issues that arise daily in the execution
OTHER REGULATORS
of their responsibilities and it was a platform for
a) Memorandum of Understanding with everyone to share insights on how to improve
the SRA the tax regime for the benefit of stakeholders that
have a role to play in the insurance and retirement
FSRA signed a Memorandum of Understanding funds sphere.
with the Swaziland Revenue Authority (SRA).
The MoU provides a framework for cooperation
in information sharing, promoting and improving
the development of, compliance with and
enforcement of revenue and tax laws by non-
bank financial services providers; deterrence of
financial crime such as money laundering and
33
BUSINESS OVERVIEW
34
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
35
BUSINESS OVERVIEW
alised through the application of the Securities Act.
n June and December 2010, the Financial
Services Regulatory Authority Act and the Below is a schema showing the entities supervised by
Securities Act were passed, first to set up the the Capital Markets Development (CMD).
Capital Markets
Development (CMD)
Dealing Dealer
Members Representatives
36
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
37
BUSINESS OVERVIEW
*** Note that this table has removed funds that are held by entities that have an Investment Advisor and Collective
Investment Scheme Manager Licence***
This brings the total of Assets-Under-Management Collective Investment Scheme borrowing powers
(AUM) and Assets-Under-Advisement (AUA) to a rules;
total of E20 817 129 239. Licensing rules;
Securities exchanges regulations;
STOCKBROKERS Business conduct rules;
Central Securities Depository rules;
Two (2) Dealing Members are currently licensed as Scheme rules; and
dealers on the Swaziland Stock Exchange (SSX). These Fit and proper persons guidelines.
are:
Swaziland Stockbrokers Limited (SSL) These regulations have received input and feedback
African Alliance Swaziland Securities Limited from the International Monetary Fund through a
(AASSL) consultant who was assisting the local consultant and
the office, Industry players and the FSRA Board. The
TRUSTEES regulations have since been submitted to the Ministry
Four (4) companies are currently licensed as Trustees. of Finance in order for them to be taken through the
These are: legislative process.
Nedbank (Swaziland);
Standard Bank (Swaziland); An external consultant was contracted to review
Orchard Insurance Group; and the listings requirements for the Swaziland Stock
First National Bank Swaziland. Exchange in order to align them to the Companies Act
and the JSE listing rules.
REGULATIONS
IMF REPORT
The Capital Markets Department completed its
various rules, regulations and guidelines namely: The IMF Report tabled in the period under review
Capital adequacy standards rules; addressed numerous issues pertinent to the CMD
Collective Investment Scheme accounts and Division. One of the outcomes of this report was the
reports rules; adoption of an interim levy formula for the CMD
Collective Investment Scheme Prospectus Division regulated entities. This was set at 1.25% of
requirements rules; Fee Income.
38
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
39
BUSINESS OVERVIEW
40
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
41
BUSINESS OVERVIEW
LEGISLATION
egislation in place for the regulation and supervision of financial cooperatives is the
FSRA Act, 2010. The Ministry of Finance is currently working towards the development of a
SACCO Bill.
STATISTICS
The CSI division has the following number of licensed entities:
56 24
In total, thereafter, the CSI division had 56 licensed entities contributing to the NBFIs industry with assets to
the value of E1 052 012 483.
MARKET SHARE
This is a summary of key figures as at 31 March 2015 in respect of financial cooperatives contribution to the
NBFIs industry expressed in US dollars:
Indicator Figures
Number of Institutions 56
Number of branches None
Total Assets (E) E 982 601 347
Total outstanding loans (E) E 661 712 995
Total deposits (E) E 800 585 835
Number of depositors 38 674
42
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
43
BUSINESS OVERVIEW
4446
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Corporate Bonds
Disclaimer: The content of this publication is intended for general information sharing purposes only and is not intended for financial or other advice. While
every precaution has been taken to ensure accuracy of the data and information, the Swaziland Stock Exchange shall not be liable to any person for inaccurate
information or opinions contained in this publication. For more information on this publication, contact the research personnel at Tel: +268 2406 8114.
45
BUSINESS OVERVIEW
EQUITY TURNOVER
A total turnover of E102, 810 was recorded from 298.01 points recorded end of December 2014),
6,600 shares traded in 3 deals in the 1st Quarter of reflecting a 0.56% increase.
2015, compared to the previous quarters turnover
of E17 410 882 from 7,611,373 shares traded in CAPITAL GAIN COMPARISON ON
8 deals. The 1st Quarter deals were on the SEL EQUITY PRICES
shares (2 trades), and Nedbank shares (1 trade).
Below are the listed companies and their respective
share prices (cents per share), compared on an
SSX ALL SHARE INDEX TREND
end of quarter basis:
The SSX All-Share Price Index increased to
299.67 points as at the end of March 2015 (against
COMPANY NAME SHARE PRICE DEC 14 SHARE PRICE MARCH 15 (%) GAINS MKT CAP (E)
Nedbank 650 670 3.08% 159,869,424
RSSC 1300 1300 0% 1,252,502,160
SEL 2400 2450 2.08% 453,250,000
Swaprop 545 545 0% 126,712,500
SwaziSpa 600 600 0% 41,966,964
Greystone 140 140 0% 119,000,000
SBC 392 392 0% 378,240,800
2 531 541 848
Source: SSX Trading Statistics, 2015
Market indicators
Name of Index Dec 2014 Jan 2015 Feb 2015 Mar 2015
SSX All Share Price Index 298.01 299.10 299.67 299.67
46
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
SSX All Share Index 2015 SSX Market Cap (SZL). 2015
299,50
2 530 000 000
299,00
2 525 000 000
298,50
GOVERNMENT DEBT
During the period under review, Government through the Central Bank of Swaziland (CBS) maintained a
number of bonds with different maturities, ranging from 3, 5 and 7 years.
47
BUSINESS OVERVIEW
The total outstanding bonds as at 31 March, 2015 are as outlined in Table below:
Bond Code ISIN Tenor Coupon Redemption Date Nominal Value (SZL)
SG009 SZG000441082 5 years 7.00% 30-Nov-15 219 384 000
SG011 SZG000441090 7 years 8.25% 31-Jan-18 146 330 000
SG013 SZG000441116 5 years 8.50% 20-Jun-16 78 855 000
SG016 SZG000441140 5 years 8.25% 31-Aug-18 150 000 000
SG017 SZG000441157 7 years 8.50% 31-Oct-20 250 000 000
SG018 SZG000441162 10 years 9.25% 31-Jan-24 200 000 000
SG019 SZG000441174 3 years 7.75% 30-Jun-17 160 110 000
SG020 SZG000441181 5 years 8.25% 20-Oct-19 82 000 000
TOTAL (SZL) E1 286 679 000
TOTAL (US$) $118 347 958
48
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Date Commentary
19-Jan-15 Inyatsi Construction issued a E20,000,000 bond Local Code -ICL201 ISIN Code
-SZD000551473
16-Feb-15 Inyatsi Construction issued a E5,000,000 bond Local Code -ICL202 ISIN Code
-SZD000551481
24-Feb-15 FINCORP issued a E20,000,000 bond Local Code -FIN09 ISIN Code
-SZD000551499
05-Mar-15 The SSX attended the 47th Committee of the SADC Stock Exchanges (CoSSE)
meeting held in Zambezi Sun, Livingstone, Zambia.
49
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
50
52
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
INTRODUCTION
This section looks at the financial performance of both the Short Term Insurance and Long Term Insurance
industries, and also analysing the trends for a five year period.
51
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
52
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Fee Income 2 10 989 414 10 543 148 10 219 166 9 850 204 7 276 763
Investment Income 3 188 194 433 237 892 735 218 698 239 89 448 116 132 252 534
Net Income (A) 642 879 284 934 401 489 566 684 364 370 649 512 400 352 129
Net Insurance Benefits and Claims 4 (478 223 312) (741 013 633) (391 795 390) (262 381 065) (314 591 369)
Expenses for the acquisition of
insurance and investments contracts 5 (22 959 883) (21 846 587) (19 607 987) (14 559 093) (14 002 679)
(Commission)
Expenses for marketing and 5 (4 549 000) (3 604 000) (2 736 000) (1 024 000) (426 000)
administration
Other operating expenses 6 (95 198 154) (79 604 941) (71 670 787) (54 306 630) (62 404 020)
Total expenses (B) (600 930 349) (846 069 161) (485 810 164) (332 270 788) (391 424 068)
(Loss)/Profit before tax (A - B) 41 948 935 88 332 328 80 874 200 38 378 724 8 928 061
Taxation (12 368 935) (32 344 908) (24 262 260) (11 513 617) (2 678 418
Net Profit for the year 29 580 564 55 987 420 56 611 940 26 865 107 6 249 643
The key highlight of the Industry Income Statement a new investment product during the previous year,
above is the fact that the industry remained which targeted funds from retirement funds. These
profitable during the year, even though profitability inflows were initially recognised as income during
fell drastically by 47%, from E56.0 million in 2014 the year ended 31 March 2014. For this review
to E29.6 million in 2015. The main reason for this period, no new inflows were recorded, hence the
drop is the fact that one of the Insurers introduced drop in revenue.
53
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
EQUITY
Ordinary shares 46 362 000 46 872 000 46 362 000 45 462 000 45 362 000
Share premium and Shareholders' 103 874 587 103 874 587 81 886 352 76 986 352 75 785 370
funding
Other reserves - 5 346 737 - - -
Retained earnings 251 775 053 230 517 324 191 272 611 121 728 449 103 768 905
402 011 640 386 610 648 319 520 963 244 176 801 224 916 275
LIABILITIES
Insurance contracts/policy holders' 1 135 569 808 1 008 303 084 905 967 116 746 673 110 664 274 952
liabilities
Investment contract liabilities 1 060 758 142 929 995 883 480 890 722 218 326 044 163 294 578
Trade and other payables 86 832 019 122 537 841 76 368 930 68 140 097 63 402 866
Deferred income tax - 278 423 136 000 - -
Taxation 9 761 155 2 283 000 1 599 000 428 000 -
Total liabilities 2 292 921 124 2 063 398 231 1 464 961 768 1 033 567 251 890 972 396
Total equity and liabilities 2 694 932 764 2 450 008 879 1 784 482 731 1 277 744 052 1 115 888 671
A key highlight of the balance sheet is the fact year to year. This is also accompanied by an increase
that the trend analysis shows that the long term in Net Assets.
insurance sector saw an increase in total assets from
54
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
1% 1%
2% 0.4% 0.3%
2%
SRIC - 37% OLD MUTUAL - 59%
27% 21%
33% OLD MUTUAL - 33% SRIC - 21%
METROPOLITAN - 15% 10% METROPOLITAN - 10%
12% 15% 59%
LIBERTY LIFE - 12% 7% LIBERTY LIFE - 7%
MOMENTUM - 2% MOMENTUM - 2%
SAFRICAN - 1% SAFRICAN - 1%
DUPS DIRECT - 0.4% DUPS DIRECT - 0.3%
The table and pie chats above reflect the following SAFRICAN maintained its market share at 1%
shifts in market shares of the players as follows: from 2014 to 2015.
SRIC saw an increase in market share from DUPS Direct was a new player in 2014, hence
21% in 2014 to 37% in 2015. they have a small 0.4% market share in
Old mutual saw a market share decrease from 2015.
59% in 2014 to 33% in 2015.
Metropolitan saw a market share increase The market share is swinging back
from 10% in 2014 to 15% in 2015.
and forth between players The
Liberty saw a major market share increase
landscape of the long term insurance sector
from 7% in 2014 to 12% in 2015.
continues to shift from year to year, swinging
Momentums market share remained the
back and forth between the players. Before
same at 2% from 2014 to 2015.
55
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
ANALYSIS OF PROFITABILITY 15% in 2014. For this year 2015, the ratio has
returned to 27%, which is a normal trend from
RATIOS
the previous years. This is a favourable trend
because it means the industry spent less costs
1. Incurred expense ratio this ratio
in earning more premium.
measures underwriting and administrative
expenses as a percentage of net earned
In calculating this ratio, we have added
premium. The trend for this ratio has been
commission plus expenses for marketing
ranging between 22% and 29% for the previous
plus all other operating expenses, as a
years, since 2010. However, 2014 saw a major
percentage of net premium income.
decrease in the ratio from 27% in 2013 to
56
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
57
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
2% 2%
16% 12%
53% 50%
29% 36%
Swaziland Stock Exchange - 2% Bonds - 16% Swaziland Stock Exchange - 2% Bonds - 12%
Cash and Money Makert Property - 29% Cash and Money Makert Property - 36%
Instruments - 53% Instruments - 50%
58
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
2015 - LONG TERM INSURANCE - FOREIGN INVESTMENTS 2014 - LONG TERM INSURANCE - FOREIGN INVESTMENTS
14% 10%
11%
17%
2%
69% 76%
-
2009 2010 2011 2012 2013 2014 2015
Years
59
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
Reinsurance Premiums Ceded to (37 779 300) (28 657 249) (28 049 794) (17 172 163) (22 913 931)
Reinsurers
Total fee income 10 960 190 10 543 148 10 219 166 9 850 204 7 276 763
(477 566 521) (741 013 633) (391 795 390) (262 381 065) (314 591 369)
60
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
b) Marketing expenses
Marketing expenses (1 399 000) (1 470 000) ( 965 000) ( 111 000) (426 000)
Bancassurance (3 150 000) (2 134 000) (1 771 000) ( 913 000) -
(4 549 000) (3 604 000) (2 736 000) (1 024 000) (426 000)
Total Commission and Marketing expenses (27 508 883) (25 450 587) (22 343 987) (15 583 093) (14 428 679)
61
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
62
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
63
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
Insurance Premiums revenue 1 509 052 030 456 951 262 375 893 633 355 920 320 332 276 038
(Insurance premiums ceded to reinsurers) 1 (198 519 738) (180 014 817) (128 396 090) (123 225 755) (105 594 463)
Net Insurance premiums revenue 310 532 292 276 936 445 247 497 543 232 694 565 226 681 575
Fee Income 2 14 377 223 11 495 602 10 622 053 5 912 874 4 248 818
Investment Income 3 22 964 829 30 239 306 45 626 909 23 942 936 45 465 438
Net Income (A) 347 874 344 318 671 353 303 746 505 262 550 375 276 395 831
Insurance claims and loss adjustment 4 126 931 484 186 462 696 140 031 728 122 328 752 122 274 408
expenses
Less: (Insurance claims and loss adjustment 4 (21 934 361) (95 867 505) (38 404 385) (23 519 662) (4 428 063)
expenses recovered from reinsurers)
Net insurance claims 104 997 123 90 595 191 101 627 343 98 809 090 117 846 345
Expenses for the acquisition of insurance 5 17 899 725 23 813 518 21 557 410 19 671 365 14 163 464
contracts (Commission)
Expenses for marketing 5 955 343 1 118 235 1 258 817 814 228 421 721
Other operating expenses 6 75 476 232 77 189 180 62 431 667 51 781 221 46 720 953
Total expenses (B) 199 328 423 192 716 124 186 875 237 171 075 904 179 152 483
Results from Operating activities (A - B) 148 545 921 125 955 229 116 871 268 91 474 471 97 243 348
Less: Finance Costs - (1 411) - - (81 829)
Profit/(Loss) before tax 148 545 921 125 953 818 116 871 268 91 474 471 97 161 519
Less: (Income tax expense) - (30 456 151 (33 892 668) (26 552 706) (33 517 153)
Net Profit for the year 148 545 921 95 497 667 82 978 600 64 921 765 63 644 366
64
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Total assets 622 710 259 648 825 670 642 389 503 722 608 610 590 775 285
EQUITY
CAPITAL AND RESERVES
Ordinary shares 7 242 805 6 867 805 6 867 805 6 526 400 5 950 000
Share premium 11 160 217 8 535 217 8 363 420 5 668 130 2 929 420
Other reserves 4 200 088 18 780 320 25 946 987 22 946 987 16 465 477
Retained earnings 234 357 372 237 128 491 241 981 117 311 560 054 290 201 507
Total Capital and Reserves 256 960 482 271 311 833 283 159 329 346 701 571 315 546 404
LIABILITIES
Insurance contracts/policy holders' 305 984 477 325 481 533 306 259 125 323 821 736 214 807 870
liabilities
Amounts owing to related parties - - 89 547 457 736 3 341 371
Reinsurance liabilities 10 478 422 18 830 076 690 948 4 567 434 690 948
Borrowings - - 175 010 238 117 595 953
Trade and other payables 45 521 465 31 023 819 50 829 954 46 175 441 55 611 323
Provision for other liabilities and charges 3 132 747 2 114 711 1 116 211 605 821 177 432
Current tax payable 632 666 63 698 69 379 40 754 3 984
Total liabilities 365 749 777 377 513 837 359 230 174 375 907 039 275 228 881
Total equity and liabilities 622 710 259 648 825 670 642 389 503 722 608 610 590 775 285
65
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
The table above shows that even though SRIC is still financial prudence. As already highlighted under
enjoying a lions share of the market, their market the long term section, the three ratio categories
share is gradually decreasing as the other players are matter to the extent that they address the
growing. As at 31 March 2015, SRIC lost 3% market concerns of customers, investors and regulators.
share, meanwhile Lidwala Insurance gained 4%.
Orchards market share dropped to 2%. A profitable industry assures further investment
from current and new investors. Good industry
KEY INDUSTRY RATIOS FOR SHORT- growth might signify that consumers consider
insurance valuable, whereas solvency and liquidity
TERM INSURANCE the ratios table below
are paramount concerns for the FSRA, as the
is divided into three categories, namely ratios
regulator.
measuring profitability, industry growth and
66
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
67
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
LOCAL INVESTMENTS
Year end
TYPE OF INVESTMENT 31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Swaziland Stock Exchange 5 113 620 5 076 120 4 126 120 4 338 620 1 330 000
Bonds - - - - -
Property 40 000 000 26 640 602 34 654 421 32 437 620 29 420 001
Cash and money market instruments 237 144 781 151 687 349 129 855 583 130 855 318 165 440 166
Total Local Investments 282 258 401 183 404 071 168 636 124 167 631 558 196 190 167
FOREIGN INVESTMENTS
Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Johannesburg Stock Exchange 16 253 999 40 231 210 72 282 931 117 691 546 199 350 714
Offshore equities - - 64 671 826 72 506 365 21 499 682
Bond exchange of South Africa 12 109 560 29 863 969 23 166 564 25 530 058 68 126 488
Offshore bonds - - - - 8 464 564
Cash and Money Market instruments 45 914 245 114 249 529 106 155 416 152 990 061 68 296 594
Total Foreign Investments 74 277 804 184 344 705 266 276 737 368 718 030 365 738 042
Total Investments 356 536 205 367 748 776 434 912 861 536 349 588 561 928 209
68
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Net insurance premium revenue 310 532 292 276 936 445 247 497 543 232 694 565 226 681 575
Total fee income 14 377 223 11 495 602 10 622 053 5 912 874 4 248 818
69
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
Net insurance claims 104 997 123 90 595 191 101 627 343 98 809 090 117 846 345
b) Marketing expenses
Marketing expenses 955 343 1 118 235 1 258 817 814 228 421 721
955 343 1 118 235 1 258 817 814 228 421 721
Total marketing and administrative 18 855 068 24 931 753 22 816 227 20 485 593 14 585 185
expenses
70
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Total other expenses 75 476 232 77 189 180 62 431 667 51 781 221 46 720 953
71
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
72
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
RETIREMENT FUNDS
INDUSTRY FINANCIAL PERFORMANCE
T
he registration of new funds as well renewal sets of audited financial statements were used to
of registered funds continued during the aggregate industry financial data.
year under review. However, the collection
of financial data through quarterly returns The following sections outline how the retirement
continued to lag behind due to slow submissions funds industry performed during the year to 31
as well as the need to revamp our returns form March 2015. Comparative data for the year 2014 is
also analysed in comparison to 2015. We will also
to ensure collection of comprehensive data. In
track the trends for the past 5 years to see how the
an attempt to obtain meaningful and current
industry has been performing.
financial data on retirement funds, the latest
73
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued
EXPENSES
Premiums paid 16% 5 (56 727 731) (52 140 223) ( 49 714 016) ( 44 671 040) ( 41 502 538)
Professional fees paid 37% 6 (129 970 089) (100 257 739) (90 066 844) (68 291 811) (69 810 201)
Provision for impairment - - 117 504 466 (383 252 942) (452 940 666)
Regulatory levies and 4% (15 620 651) (13 148 413) (11 205 269) ( 9 536 673) (7 012 793)
service fees
Administration expenses 42% 7 (147 404 085) (120 086 726) (103 691 353) (89 501 544) (83 927 144)
Total expenses 100% 349 722 556 (285 633 101) (137 173 016) (595 254 010) (655 193 342)
Net Income for the period 3 094 513 488 3 739 994 380 3 768 910 645 1 916 556 870 1 934 602 612
ACCUMULATED FUNDS
At the beginning of the 20 691 184 657 18 060 452 224 15 197 108 830 13 901 537 444 12 810 067 182
period
Net Income for the period 3 094 513 488 3 739 994 380 3 768 910 645 1 916 556 870 1 934 602 612
Net accumulated Fund 23 785 698 144 21 800 446 604 18 966 019 475 15 818 094 314 14 744 669 794
before benefits
Benefits paid 4 (1 150 158 756) (1 109 261 947) (905 567 250) (843 132 350) 643 776 704
Accumulated funds at the 22 635 539 388 20 691 184 657 18 060 452 225 13 901 537 444 12 810 067 182
end of the period
74
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Current assets
Account receivable 8 40 049 249 46 466 865 34 029 781 22 784 041 27 730 255
Arrear contributions 102 009 584 89 769 983 102 897 023 48 687 058 497 085 542
Total assets 23 124 534 863 21 067 533 400 18 364 224 400 15 432 858 982 14 138 984 190
FUNDS
Accumulated funds/Liability for 22 635 539 388 20 691 184 657 18 060 452 225 15 197 108 830 13 901 537 444
future benefits & surpluses
Current liabilities
Benefits payable 10 408 448 143 301 497 579 247 144 084 193 052 615 187 784 736
Accounts payable 11 80 547 332 74 851 164 56 628 091 42 697 537 49 662 010
Total funds and liabilities 23 124 534 863 21 067 533 400 18 364 224 400 15 432 858 982 14 138 984 190
75
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued
LOCAL INVESTMENTS: 7 299 822 198 6 381 985 763 5 223 198 949 4 301 219 033 3 618 499 127
Swaziland Stock Exchange: equities 483 987 786 535 584 715 449 178 626 387 803 971 318 753 122
Unlisted Shares 1 230 755 505 639 940 059 350 776 974 282 483 532 74 003 570
Bonds Funds own portfolio 246 339 997 244 104 995 924 643 609 924 345 792 487 089 076
STANLIB Bonds 173 145 962 173 194 059 - - -
Old Mutual Bonds 48 652 727 48 652 727 - - -
Loans and Advances Funds own 464 351 052 691 667 119 40 745 339 41 796 052 -
portfolio
Inhlonhla Swaziland Loans Portfolio 609 885 334 446 308 166 - - -
STANLIB Loans Portfolio 108 626 538 78 573 425 - - -
Old Mutual Swaziland Loans Portfolio 39 064 360 30 883 512 - - -
African Alliance Loans Portfolio 133 806 250 20 495 616 - - -
Property 878 229 102 835 895 493 1 388 439 895 1 161 586 001 345 484 632
INSURED FUNDS 166 251 611 165 395 847 215 220 045 108 971 078 79 672 006
Cash and money market instruments 2 716 725 974 2 471 290 030 1 854 194 461 1 394 232 607 2 313 496 721
FOREIGN INVESTMENTS BY 15 541 843 944 14 418 098 116 12 738 848 563 10 797 241 792 9 872 205 460
INVESTMENT CLASS:
Johannesburg Stock Exchange Equities 8 327 735 187 7 798 406 377 7 771 128 417 6 638 683 107 5 922 188 581
Offshore equities 3 461 023 601 3 167 813 168 2 073 874 355 1 756 635 129 1 496 886 689
Bond exchange of South Africa 1 679 017 757 1 387 029 483 1 459 101 832 1 088 018 959 1 088 018 959
Offshore bonds 2 950 965 2 682 695 83 647 644 69 150 730 160 369 950
Cash and Money Market instruments 1 121 149 787 1 343 399 952 1 158 550 817 1 081 988 887 1 006 129 479
Offshore Cash - - 36 784 248 29 627 345 26 524 191
Orbis Mutual Funds - - - - 13 834 542
Commodities 35 061 086 33 537 076 16 739 796 15 217 996 -
Equity Linked Derivatives 130 783 949 124 776 194 ( 59 366 087) (59 646 244) -
Property 784 121 612 560 453 171 198 387 541 177 565 883 158 253 069
TOTAL INVESTMENTS 22 841 666 142 20 800 083 879 17 962 047 512 15 098 460 825 13 490 704 587
76
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
25,0
20,0
15,0
10,0
5,0
0
2011 2012 2013 2014 2015
YEAR ENDED
Local Investments Foreign Investments Total Investments
77
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued
INDUSTRY INVESTMENTS
Local Investments by asset class
LOCAL INVESTMENTS:
Swaziland Stock Exchange: equities 483 987 786 535 584 715 449 178 626 387 803 971 318 753 122
Unlisted Shares 1 230 755 505 639 940 059 350 776 974 282 483 532 74 003 570
Bonds Own Portfolio 246 339 997 244 104 995 70 649 407 66 023 407 81 752 407
STANLIB Bonds 173 145 962 173 194 059 - - -
Old Mutual Bonds 48 652 727 48 652 727 - -
Loans and Advances Funds own 464 351 052 691 667 119 853 994 202 900 118 437 405 336 669
portfolio
Inhlonhla Swaziland Loans Portfolio 609 885 334 446 308 166 - - -
STANLIB Swaziland Loans Portfolio 108 626 538 78 573 425 - - -
Old Mutual Swaziland Loans 39 064 360 30 883 512 - - -
Portfolio
African Alliance Loans Portfolio 133 806 250 20 495 616 - - -
Property 878 229 102 835 895 494 1 388 439 895 1 161 586 001 345 484 632
INSURED FUNDS 166 251 611 165 395 847 215 220 045 108 971 078 79 672 006
Cash and money market instruments: 2 716 725 974 2 471 290 029 1 854 194 461 1 394 232 607 2 313 496 721
TOTAL 7 299 822 198 6 381 985 763 5 223 198 949 4 301 219 033 3 618 499 127
% INCREASE 14% 15% 21% 19% (1%)
78
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
2% 7% 3% 9%
17% 11%
35%
37%
3% 4%
2% 3%
1%
1%
6%
11%
8% 7%
14%
1%
12% 2% 1% 1% 0.3%
Cash and Money Market Instruments - 37% Cash and Money Market Instruments - 35%
Unlisted Shares - 17% Property - 14%
Property - 12% Unlisted Shares - 11%
Inhlonhla Swziland - Loans Portfolio - 8% Loans and Advance - Own Portfolio - 11%
Swaziland Stock Exchange - 7% Swaziland Stock Exchange - 9%
Loans and Advance - Own Portfolio - 6% Inhlonhla Swziland - Loans Portfolio - 7%
Bonds - Own Portfolio - 3% Bonds - Own Portfolio - 4%
African Alliance Loans - Portfolio - 2% Insured Assets - 3%
Insured Assets - 2% OLD Mutual Bonds - 1%
OLD Mutual Bonds - 1% STANLIB Swaziland - Loans Portfolio - 1%
STANLIB Swaziland - Loans Portfolio - 1% African Alliance Loans - Portfolio - 0.3%
SSX - Worth noting when looking at the trends of Property investments in this asset class have
the local asset classes, we can see that there is no increased slightly by 5% in the year under review,
significant improvement in the proportion invested from E835 million in 2014 to E878 in 2015. Looking
in the Swaziland Stock Exchange. We see a 2% at this trend from 2009 to 2013, there had been a
decrease from 9% in 2014 to 7% in 2015. The FSRA significant growth in property investments. The
has embarked on a strategic action plan for making significant growth was seen between 2011 and 2012
the SSX more visible to our regulated industries so when property investments increased by 236%.
that we can see a shift in this trend. Between 2012 and 2013, the investments grew by
20%. In 2014 we saw a major decline of 39%.
Unlisted Shares this asset class saw another
significant growth to 17% in 2015 (2014:11% Loans and advances As you can see from the
growth). This is very encouraging as retirement pie chart, this asset class has now been expanded, to
funds participate more in local entities. identify the Asset Managers who have participated
in loans and advances, as well as direct lending
Bonds As you can see from the pie chart, this asset done by retirement funds. When looking at the
class has now been expanded, to identify the Asset overall balance in loans this year, this asset class
Managers who have participated in local bonds, increased slightly by 7% from E1.3 billion in 2014
as well as bonds held directly by retirement funds. to E1.4 billion in 2015. This major increase is due to
When looking at the overall balance in bonds this a significant drive by retirement funds to participate
year, this asset class remained almost the same from more in local business projects, either via Investment
E466 million in 2014 to E468 million in 2015. managers or directly.
79
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued
FSRA applauds this development, and we will keep Cash and Money market instruments cash
monitoring the performance of these loans, to ensure holdings by the end of 2015 had increased by 10%
pensioners do not lose out from failed projects. from E2.5 billion in 2014 to E2.7 billion in 2015. The
Authority is still monitoring this asset closely, as we
Insured funds this class forms an insignificant 2% are worried that money held in cash quickly return to
(2014: 3%) of the total local assets. This asset class South Africa through the Commercial Banks.
has increased slightly from E165 million in 2014 to
E166 million in 2015.
Johannesburg Stock Exchange Equities 8 327 735 187 7 798 406 377 7 771 128 417 6 638 683 107 5 922 188 581
Offshore Equities 3 461 023 601 3 167 813 168 2 073 874 355 1 756 635 129 1 496 886 689
Bond exchange of South Africa 1 679 017 757 1 387 029 483 1 459 101 832 1 088 018 959 1 088 018 959
Offshore bonds 2 950 965 2 682 695 83 647 644 69 150 730 160 369 950
Cash and Money Market instruments 1 121 149 787 1 343 399 952 1 158 550 817 1 081 988 887 1 006 129 479
Offshore Cash - - 36 784 248 29 627 345 26 524 191
Orbis Mutual Funds - - - - 13 834 542
Commodities 35 061 086 33 537 076 16 739 796 15 217 996 -
Equity Linked Derivatives 130 783 949 124 776 194 (59 366 087) (59 646 244) -
Property 784 121 612 560 453 171 198 387 541 177 565 883 158 253 069
TOTAL 15 541 843 944 14 418 098 116 12 738 848 563 10 797 241 792 9 872 205 460
% Movement 8% 13% 17% 9% 7%
2015 - FOREIGN INVESTMENT BY ASSET CLASS 2014 - FOREIGN INVESTMENT BY ASSET CLASS
0.23% 0.23%
1% 5% 1% 4% 0.02%
0.02% 7% 9%
11% 10%
54% 54%
22% 22%
South African Bonds - 11% Commodities - 0.23% South African Bonds - 10% Commodities - 0.23%
Cash and Money Market Offshore Bonds - 0.02% Cash and Money Market Offshore Bonds - 0.02%
Instruments - 7% Instruments - 9%
80
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
The pie charts above shows that the pattern of asset was invested in both South African Bonds at 11%
allocation almost remained the same when looking (2014: 10%) as well as South African Cash and
at 2015 and 2014. As usual the JSE Equities took Money Market which took 7% (2014: 9%) of the pie.
the bigger pie of 54% (2014: 54%). Followed by Overall, assets invested outside Swaziland increased
investments in offshore equities which took the by 8% (2014: 13%).
pie of 22% (2014: 22%). The next significant pie
81
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued
82
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
NOTE 1 - CONTRIBUTIONS
Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Contributions
Member contributions - regular 402 826 015 385 148 754 365 700 528 358 680 796 306 617 185
Employer contributions 1 007 116 636 858 569 747 722 436 391 690 489 933 598 529 682
Employer Ex Gratia Contributions 12 064 776 6 209 387 561 000 - 2 293 667
Member additional voluntary 4 312 894 (163 165 236) 125 482 207 71 670 542 11 827
contributions
Transfers-In 10 053 798 5 730 616 188 147 4 897 100 14 245 663
Total 1 436 374 119 1 092 493 268 1 214 368 273 1 125 738 371 921 698 024
83
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued
84
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
85
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued
Receivables from employers 337 848 444 566 371 032 821 586 165 884 880 666 497 085 542
Less: Provision for impairment (237 815 330) (478 252 236) (718 689 142) (836 193 608) (452 940 666)
Receivables from employees 1 976 470 1 651 187
Total 102 009 584 89 769 983 102 897 023 48 687 058 44 144 876
86
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Swaziland Stock Exchange 483 987 786 535 584 715 449 178 626 387 803 971 318 753 122
SWAPROP 53 656 330 53 617 400 35 133 809 37 683 125 23 697 795
SEL 354 752 650 333 033 100 352 181 700 297 557 835 281 771 647
RSSC 1 690 000 1 690 000 2 473 742 3 018 096 1 303 680
Nedbank Share 10 759 750 10 444 750 9 931 000 3 293 309 1 980 000
Newera Partners 24 833 312 55 992 547 13 403 055 13 000 000 10 000 000
Greyston Partners 38 295 744 80 806 918 36 055 320 33 251 606 -
Unlisted Shares 1 230 755 505 639 940 059 350 776 974 282 483 532 74 003 570
Old Mutual Swaziland Shares 7 988 235 7 988 235 19 623 272 18 823 272 2 703 570
SBS - permanent shares 146 309 853 147 611 991 149 367 429 123 373 987 -
SIDC Shares 124 000 000 124 000 000 124 000 000 82 500 000 71 300 000
Happy Valley Enterprises 123 484 392 104 506 561 21 303 136 21 303 136 -
Motel Enterprises - - 36 483 137 36 483 137 -
The New Mall equity 15 823 272 15 823 272
Emprop Limited equity 53 000 000 73 000 000
SRIC 32 500 000 32 500 000
RMS Manzini investments 2 000 28 890 000
Libuyile Equity 64 383 052 60 000 000
Old Mutual Agri- Fund 45 620 000 45 620 000
Swaziland National Housing Board 14 967 691 -
Montigny Group of Companies 602 677 010 -
Bonds Own Portfolio 246 339 997 244 104 995 70 649 407 66 023 407 81 752 407
Newera Bond 3 833 312 3 680 767 - - 18 000 000
Bond SG016 31/08/2018 50 259 712 50 259 712 - - -
Bond SG017 31/10/2020 93 300 820 92 712 516 - - -
Bond SG018 31/01/2024 98 946 153 97 452 000 - - -
Inyatsi Bond - - 15 000 000 15 000 000 15 000 000
Swaziland 0 - 3 years - - 11 485 649 6 859 649 6 859 649
Swaziland 3 - 5 years - - 35 805 503 35 805 503 35 805 503
Swaziland 5 - 7 years - - 6 087 255 6 087 255 6 087 255
Swaziland Government Bond - - 2 271 000 2 271 000 -
87
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued
Loans and Advances Own Portfolio 464 351 052 691 667 119 853 994 202 900 118 437 405 336 669
Swaziland Sugar Association 252 816 429 252 714 846 287 473 218 283 443 313 249 372 027
Swaziland Electricity Company 91 913 425 107 094 244 158 552 121 136 250 000 150 000 000
Swazi Bank 81 629 246 122 104 932 172 845 754 203 287 672 -
Central Bank of Swaziland - 3 year note - 202 810 822 202 620 109 202 838 400 -
STD Swazi - - - 39 445 275 5 964 642
The New Mall loan 6 942 275 6 942 275 - - -
Roots Construction - - 10 000 000 - -
C&M Sales (Pty) Ltd - - 1 815 441 1 815 441 -
FINCORP - - 8 671 230 11 226 765 -
Manzini City Council - - 11 533 531 19 987 978 -
Members loans - - 2 298 239 3 639 034 -
Less: Impairments - - (1 815 441) (1 815 441) -
Select Management Services 20 176 147 - - - -
Swaziland National Housing Board 10 873 530 - - - -
Loans portfolio Inhlonhla Swaziland 609 885 334 446 308 166 - - -
Swazi Observer Loan 2 885 643 3 396 144 - - -
Saphumula SACCO loan 1 886 337 4 132 189 - - -
Moshav Properties loan 2 580 007 2 876 833 - - -
Swazi Plaza Properties 63 012 921 69 475 188 - - -
Emprop Limited 129 980 859 105 737 715 - - -
Standard Bank Custodian Accountant 17 658 178 14 084 829 - - -
First Finance Loan 141 646 535 145 953 934 - - -
Amandla Financial Services 71 131 299 30 533 654 - - -
Libuyile (Pty) Ltd Loan 70 252 752 70 117 680 - - -
Montigny Group of Swaziland Companies 108 850 803 - - - -
Property 878 229 102 835 895 493 1 388 439 895 1 161 586 001 345 484 632
Investment Property 878 229 102 835 895 493 741 301 720 455 171 826 345 484 632
Equity to property developers - - 309 167 000 376 160 000 -
Loans to property developers - - 337 971 175 330 254 175 -
88
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Cash and money market instruments: 2 716 725 974 2 471 290 029 1 854 194 461 1 394 232 607 2 313 496 722
STANLIB Money Market 1 381 647 121 1 279 244 770 688 857 141 779 253 318 1 073 697 840
African Alliance Money Market 456 434 999 304 888 447 567 067 155 342 014 476 400 575 872
Swaziland Building Society 57 365 791 54 700 318 53 925 447 51 785 690 113 204 082
First National Bank 50 892 513 271 982 925 178 726 903 86 144 347 307 248 322
Nedbank Swaziland 62 164 507 38 310 223 40 780 598 37 553 993 73 737 192
Standard Bank Swaziland 69 784 016 151 819 083 111 420 116 86 641 210 95 880 148
Swazi Bank 102 067 461 2 558 471 209 394 000 7 008 048 245 993 897
Central Bank of Swaziland deposits 14 308 486 10 664 272 4 023 101 3 831 525 3 159 369
Old Mutual money market 522 061 080 357 121 520 - - -
Insured assets 166 250 611 165 395 847 215 220 045 108 971 078 79 672 006
Total Local Investments 7 299 821 198 6 381 985 763 5 223 198 949 4 301 219 033 3 618 499 127
89
REGULATED INDUSTRIES -
FINANCIAL STATISTICS
ANNUAL
Financial
Statements
For The Year Ended 31 March 2015
GENERAL
INFORMATION
86
90
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
INDEX
Contents Page
91
ANNUAL FINANCIAL STATEMENTS
Auditors Responsibility
Our responsibility is to express an opinion on these annual financial statements based on our audit. We conducted
our audit in accordance with International Standards on Auditing. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance whether the annual financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual
financial statements. The procedures selected depend on the auditors judgement, including the assessment of the
risks of material misstatement of the annual financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the
annual financial statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
board, as well as evaluating the overall presentation of the annual financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the annual financial statements present fairly, in all material respects, the financial position of
Financial Services Regulatory Authority (FSRA) as at 31 March 2015, and of its financial performance and its cash
flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner
required by the Financial Services Regulatory Authority Act, 2010.
92
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
The Board is required by the Financial Services Regulatory Authority Act, 2010, to maintain adequate accounting
records and is responsible for the content and integrity of the annual financial statements and related financial
information included in this report. It is their responsibility to ensure that the annual financial statements fairly
present the state of affairs of FSRA as at the end of the financial year and the results of its operations and cash flows
for the period then ended, in conformity with International Financial Reporting Standards. The external auditors
are engaged to express an independent opinion on the annual financial statements.
The annual financial statements are prepared in accordance with International Financial Reporting Standards and
are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent
judgments and estimates.
The Board acknowledges its ultimate responsibility for the system of internal financial control established by FSRA
and place considerable importance on maintaining a strong control environment. To enable FSRA to meet these
responsibilities, the Board sets standards for internal control aimed at reducing the risk of error or loss in a cost
effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework,
effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These
controls are monitored throughout FSRA and all employees are required to maintain the highest ethical standards
in ensuring FSRAs business is conducted in a manner that in all reasonable circumstances is above reproach. The
focus of risk management in FSRA is on identifying, assessing, managing and monitoring all known forms of risk
across FSRA. While operating risk cannot be fully eliminated, FSRA endeavours to minimise it by ensuring that
appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined
procedures and constraints.
The Board is of the opinion, based on the information and explanations given by management, that the system of
internal control provides reasonable assurance that the financial records may be relied on for the preparation of the
annual financial statements. However, any system of internal financial control can provide only reasonable, and not
absolute, assurance against material misstatement or loss.
The Board has reviewed FSRAs cash flow forecast for the year to March 31, 2016 and, in light of this review and
the current financial position, they are satisfied that FSRA has or has access to adequate resources to continue in
operational existence for the foreseeable future.
The external auditors are responsible for independently reviewing statements and reporting on FSRAs anual
financial statements. The annual financial statements have been examined by FSRAs external auditors and their
report is on page 92.
___________________________________________ _________________________________________
Board Chairman CEO and Board Secretary
___________________________________________ _________________________________________
Date Date
93
ANNUAL FINANCIAL STATEMENTS
The Board of the Authority has pleasure in presenting their report on the activities of the Financial Services
Regulatory Authority (FSRA) for the year ended 31 March 2015.
1. General review
The FSRA was established by the Government of Swaziland in terms of the FSRA Act, 2010. The FSRA was
established to foster, through the regulation and prudential supervision of financial services providers:
3. Subsequent events
The following persons served as board members during the period until the end of their term of office on
30 September 2014:
4. The Board
The following persons served as board members during the period:
5. Auditors
Auditors for the Authority for the year under review are Kobla Quashie & Associates, P.O. Box 710 Manzini.
94
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Assets
Non-Current Assets
Property, plant and equipment 3 3,231,188 3,458,760
Financial Assets 4 18,437,989 21,536,538
21,669,177 24,995,298
Current Assets
Trade and other receivables 5 10,782,026 5,830,216
Cash and cash equivalents 6 15,183,598 11,816,425
25,965,624 17,646,641
Total Assets 47,634,801 42,641,939
Equity
Retained income 43,081,144 39,327,482
Current Liabilities
Trade and other payables 7 2,542,676 1,667,562
Provision 8 723,300 533,399
Trust/Guarantee fund 9 1,287,681 1,113,496
4,553,657 3,314,457
Total Equity and Liabilities
47,634,801 42,641,939
95
ANNUAL FINANCIAL STATEMENTS
96
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
97
ANNUAL FINANCIAL STATEMENTS
98
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Accounting Policies
Background Information
The Financial Services Regulatory Authority (FSRA) is a body corporate established by the Financial Services
Regulatory Authority Act, 2010.
FSRA is a regulatory and supervisory body established to regulate and supervise the providers of non-bank
financial services in the Kingdom of Swaziland with the aim of bringing stability, safety and soundness of the
Swaziland financial services system and its providers as well as protecting the average Swazi from exploitation by
the industry players.
The FSRA office is a parent of the former Office of the Registrar of Insurance and Retirement Funds (RIRF) and
currently holds the following divisions: Insurance and Retirements Funds (IRF) Division; Capital Markets (CM)
Division; and Credit and Savings Institutions (CSI) Division; Finance and Corporate Services and the CEOs
Office. The FSRA Act also establishes the Office of the Ombudsman of Financial Services and Appeals Tribunal.
The Levies Account of the Authority as per Sections 21 and 22 of the FSRA Act, 2010;
The Registrars Guarantee Account as per Sections 41 and 42 of the Insurance Act 7/2005 The Insurance and
Retirement Trust Fund as per Sections 43 and 44 of the Insurance Act 7/2005.
The following are the principal accounting policies adopted in the preparation of these financial statements as set
out below. These policies have been consistently applied in all material respects with those of the previous year,
unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS). The financial statements have been prepared under the historical cost convention, as modified by the
revaluation of available-for-sale financial assets, financial assets and financial liabilities (including derivative
instruments) at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgment in the process of applying FSRA accounting
policies. Although these estimates are based on management best knowledge of current events and actions, actual
results ultimately may differ from those estimates.
The board has consitently applied a number of new and revised IFRSs issued by the International Accounting
Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January
2013.
Amendments to IFRS 7 Disclosures Offsetting Financial Assets and Financial Liabilities
The amendments to IFRS 7 require entities to disclose information about rights of offset and related arrangements
(such as collateral posting requirements) for financial instruments under an enforceable master netting agreement
or similar arrangement.
99
ANNUAL FINANCIAL STATEMENTS
As the board does not have any offsetting arrangements in place, the application of the amendments has had no
material impact on the disclosures or on the amounts recognised in the financial statements.
IFRS 13 Fair Value Measurement
IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value
measurements. The scope of IFRS 13 is broad; the fair value measurement requirements of IFRS 13 apply to both
financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value
measurements and disclosures about fair value measurements, except for share-based payment transactions that
are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17
Leases, and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value
for the purposes of measuring inventories or value in use for impairment assessment purposes).
IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction in the principal (or most advantageous) market at the measurement date under current
market conditions. Fair value under IFRS 13 is an exit price regardless of whether that price is directly observable
or estimated using another valuation technique. Also, IFRS 13 includes extensive disclosure requirements.
IFRS 13 requires prospective application from 1 January 2013. In addition, specific transitional provisions
were given to entities such that they need not apply the disclosure requirements set out in the Standard in
comparative information provided for periods before the initial application of the Standard. In accordance with
these transitional provisions, the institute has not made any new disclosures required by IFRS 13 for the 2012
comparative period. Other than the additional disclosures, the application of IFRS 13 has not had any material
impact on the amounts recognised in the financial statements.
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
All recognised financial assets that are within the scope of IAS 39 Financial Instruments:
Recognition and Measurement are required to be subsequently measured at amortised cost or fair value.
Specifically, debt investments that are heldwithin a business model whose objective is to collect the
contractual cash flows, and that have contractual cash flows that are solely payments of principal and
interest on the principal outstanding are generally measured at amortised cost at the end of subsequent
accounting periods. All other debt investments and equity investments are measured at their fair value at
the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable
election to present subsequent changes in the fair value of an equity investment (that is not held for
trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.
With regard to the measurement of financial liabilities designated as at fair value through profit or loss,
IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to
changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition
of the effects of changes in the liabilitys credit risk in other comprehensive income would create or enlarge
an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liabilitys credit
risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the
fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss.
The Authority does not anticipate that the application of these amendments to IAS 32 will have a significant
impact on the authoritys financial statements as the authority does not have any financial assets and financial
liabilities that qualify for offset.
it is probable that future economic benefits associated with the item will flow to FSRA; and
the cost of the item can be measured reliably.
Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs
incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying
amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.
Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their
estimated residual value.
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ANNUAL FINANCIAL STATEMENTS
The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is
located is also included in the cost of property, plant and equipment.
Item Rate
Furniture and fixtures 10%
Motor vehicles 20%
Office equipment 10%
IT equipment 33.33%
The residual value and the useful life of each asset are reviewed at each financial period-end.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost
of the item shall be depreciated separately.
The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount
of another asset.
The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit
or loss when the item is derecognised. The gain or loss arising from the derecognition of an item of property,
plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying
amount of the item.
Levies
All registered entities are required to pay annual levies to maintan their licences in terms of the FSRA Act, 2010.
Levies are raised in terms of the regulations published in the Government Gazette and are recognised for on an
accrual basis.
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Investments
FSRA classifies its investments in the following categories: financial assets at fair value through profit or loss,
loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification
depends on the purpose for which the investments were acquired. Management determines the classification of
its investments at initial recognition and re-evaluates this designation at every reporting date.
(a) Financial assets at fair value through profit or loss
This category has two sub- categories: financial assets held for trading, and those designated at fair value through
profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of
selling in the short term or if so designated by management. Derivatives are also categorised as held for trading
unless they are designated as hedges. Assets in this category are classified as current assets if they are either held
for trading or are expected to be realised within 12 months of the balance sheet date.
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ANNUAL FINANCIAL STATEMENTS
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
105
ANNUAL FINANCIAL STATEMENTS
Risk management is carried out under policies approved by the board. The board identifies, evaluates and
hedges financial risks in cooperation with the offices operations. The registrar provides written principles for
overall risks management, as well as for specific areas such as interest rate risk, credit risk,and investing excess
liquidity.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient liquid resources cash and marketable
securities, the availability of funding from an adequate amount of committed credit facilities and the ability to
settle debts as they become due and ability to close out market positions. The FSRA remains confident that the
available cash resources will be sufficient to meet its funding requirements.
FSRA liquid resources consist of cash and cash equivalents. The FSRA maintains adequate resources by
monitoring rolling cash flow forecasts of the cash and cash equivalents on the basis of expected cash flow.
The table below analyses all cash flows from financial liabilities into the bucket in which they are contractually
due to be paid:
Credit risk
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as
credit exposures to corporate, government and individual customers, including outstanding receivables and
committed transactions.
Cash flow and fair value interest rate risk
FSRAs income and operating cash flows are affected, but not to a significant extent, by changes in the market
interest rates.
Expense risk
There is a risk that FSRA may experience a loss due to actual expense being higher than those assumed in
its budgets. This may be due to inefficiences, higher than expected inflation, etc. FSRA performs expense
investigation on a monthly basis and sets its forecasts to be in line with actual expenses, with allowance for
inflation.
Fair value estimation
The nominal value less impairment provision of trade payables and receivables are assumed to approximate their
fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate receivable to FSRA for similar financial instruments.
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
107
ANNUAL FINANCIAL STATEMENTS
2014
Trade and other receivables 3 614 387 2 215 828 - - 5 830 214
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
2015 2014
2. Operating surplus
Operating surplus for the year is stated after accounting for the following:
Auditors remuneration
- Auditors fees 136,800 105 000
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ANNUAL FINANCIAL STATEMENTS
2015 2014
4. Financial Assets
This represents the following investment:
Swaziland Building Society - Permanent shares 2 000 000 2 000 000
Stanlib/Liberty Life Swaziland - Money Market instruments 16,437,989 19,536,538
18,437,989 21,536,538
8. Provision
Reconciliation of provision - 2015
Opening Additions Total
Balance
Provision for gratuity 533,399 189,901 723,300
The gratuity provision represents managements best estimate of the FSRAs liability under one period in
particular the CEOs provision for gratuity .
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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
2015 2014
9. Trust/Guarantee fund
Trust/Guarantee fund 1,287,681 1,113,496
10. Employee costs
The average number of employees during the year was 43 (2014 - 44)
Salaries 20,393,366 18,809,561
11. Cash generated from operations
Surplus 3,753,662 5,645,096
Adjustments for:
Depreciation and amortisation 694,460 662,259
Movements in provisions 189,901 12,333
Changes in working capital:
Trade and other receivables (4,951,810) (740,323)
Trade and other payables 875,114 726,570
561,327 6,305,935
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ANNUAL FINANCIAL STATEMENTS
Revenue
Government subvention 8,015,000 12,000,000
Registration and renewal fees 981,605 824,204
Interest received 1,080,959 1,097,173
Levies fee 26,636,543 21,770,076
Sundry income 89,301 393,393
36,803,408 36,084,846
Operating expenses
Advertising 49,192 321,091
Auditors remuneration 136,800 105,000
Bank charges 120,336 109,634
Cleaning 85,213 73,648
Computer expenses 66,354 91,982
Consulting and professional fees 695,270 182,201
Consumer education expenses 773,246 415,953
Depreciation, amortisation and impairments 694,460 662,259
Employee costs 20,583,267 18,809,561
Staff uniform 279,739 107,442
Legal expenses 597,014 432,621
Board fees and expenses 268,799 226,688
Insurance 194,778 25,452
Internet expenses 36,144 33,032
Lease rentals on operating lease 2,508,588 2,128,033
Printing and stationery 538,432 447,574
General office expenses 7,328 5,890
Postage 6,695 16,590
Repairs and maintenance 130,224 51,364
Staff welfare 181,841 155,700
Subscriptions 198,586 420,057
Telephone and fax 656,647 965,588
Travel and training 4,056,939 4,485,476
Utilities 183,854 166,914
33,049,746 30,439,750
Surplus for the year
3,753,662 5,645,096
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