SOME locals abroad and former civil servants who have left the country have cost the Eswatini Development Finance Corporation (FINCORP) millions of Emalangeni in unpaid loans.
Although the corporation did not specify the amount owed by the departed civil servants, the money forms part of E39 million in debts that it has been unable to recover.
The loans were taken by civil servants, parastatal employees and Members of Parliament through First Finance.
FINCORP Chief Executive Officer Dumsani Msibi said the situation should not have escalated to this level because government was responsible for deducting loan repayments from salaries.
He noted that there was also a central deduction system designed to ensure that a civil servant does not exceed the 33% borrowing threshold.
Msibi said the challenge had emerged over the past few years as many Emaswati migrated to other countries.
He added that the problem was not unique to FINCORP, as some government departments were reportedly still paying salaries to people who were no longer working.
“They visit our offices knowing they will be leaving the following week. They do not resign. They take their salary advice slips and come back looking healthy. They borrow money to travel to Taiwan and survive for three months. They do not repay us, and we are now looking for international debt collectors. Some are willing to assist,” he said.
Msibi added that the matter had been raised with the Ministry of Finance, which was assisting the corporation on how to engage embassies of countries with which Eswatini has diplomatic relations.
He further revealed that FINCORP had also lent money to employees of parastatals, some of which deducted repayments from employees’ salaries but failed to remit the funds to the corporation.
FINCORP Chief Finance Officer Justice Simelane said the corporation had recorded numerous cases of people migrating out of the country, making debt recovery difficult.
He said many of the borrowers had relocated to Taiwan and the United Kingdom and efforts were being made to trace them.
“We have managed to locate some of them, but others remain untraceable,” he said. Simelane added that the corporation had also struggled to recover loans from some employees of the University of Eswatini (UNESWA). However, he said arrangements had since been made to ensure the outstanding loans would be recovered.
He further revealed that FINCORP had restructured its credit department by separating debt collection, loan monitoring and loan generation functions to improve efficiency.
In addition, the corporation had introduced new monitoring tools to assess borrowers’ ability to repay before loans are approved. Nhlambeni Member of Parliament Manzi Zwane questioned why credit loss allowances had not been disclosed and asked how much had been provisioned for credit losses. Meanwhile, MP Tsembeni Magongo said loan recovery remained poor despite the loans having been granted to civil servants.
She noted that the corporation was now incurring additional costs by hiring international debt collectors and questioned who would bear those expenses. The auditor general requested an age analysis of the outstanding debt and details of measures taken by the corporation to recover the funds.
Auditor General Sipho Matsebula had also reported that the corporation had a significant balance of loans amounting to E116 530 062 in First Finance as at March 31, 2024. He said these loans had moved to Stage 2 and Stage 3 during the year due to defaulted instalments.
According to Matsebula, the defaults resulted in an increase in the allowance for expected credit losses to E39 million.
