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Swaziland Developments in the

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					Developments in the Financial
    Markets of Swaziland



         Masotja Vilakati
    General Manager – Finance & Financial Markets




                Windhoek, Namibia
                   27 February 2012
 Developments in the Financial
     Markets of Swaziland
• Presentation Outline
  –   New Instruments and Factors
  –   Investor & Public Awareness Initiatives
  –   Reserves – Factors, Markets, Instruments & Policy
  –   Code of Conduct
  –   Systems
  –   Participants in Forex Market
  –   New Laws & Regulations for Financial Markets
  –   IFRS
  –   Conclusion
  Developments in the Financial
      Markets of Swaziland
• New Instruments
  – Money Markets
     •   Government T/Bills; 91 & 182 days
     •   Government T/Bills; 273 & 364 days
     •   Central Bank Bills; 28 & 56 days
     •   Overnight Lending Facility


  – Capital Markets (7 bonds outstanding)
     •   Government Bonds; 3, 5 & 7 years
     •   Government Bonds; 3 & 5 years (index linked)
     •   Privately Placed Bonds; 2 & 3 years
     •   35% increase in Bonds from 2010
   Developments in the Financial
       Markets of Swaziland
• Factors contributing to developments

   – Enactment of a 30% local asset requirement under the Retirement
     Funds Act (2006)

   – Increase of government Domestic Debt limit thru passing of
     appropriate legislation

   – Enactment of the Securities Act (2009) that serves to promote and
     facilitate the development of an orderly and fair Capital Market in the
     country

   – General excess liquidity in the market due to shortage of such
     instruments in the domestic market, and

   – Government deficit financing requirements mainly due to reduction of
     SACU revenue.
  Developments in the Financial
      Markets of Swaziland
• Investor & Public Awareness

   – Advert in local media

   – CBS Website (including results)

   – Presentations and invitations to various prospective investors
     (groups and individually)

   – TV programs to discuss issuance of government domestic debt

   – Discussions of issuance at local radio stations

   – Regular meetings with Dealers
  Developments in the Financial
      Markets of Swaziland
• Reserves levels
  –   2010 (Dec)     -     2.9 months of imports
  –   2011 (Dec)     -     2.3 months of imports


• Decline due to
  –   Reduction in government revenue resulting
      into a budget deficit (13%)
  –   Withdrawal of government balances to
      finance the deficit
  Developments in the Financial
      Markets of Swaziland
• Internally managed
  – 80% of the funds


• External Managers
  –   +/- 20% of Reserves
  –   Bond mandate
  –   RAMP (World Bank) – USD
  –   RSA Asset Manager - ZAR
  Developments in the Financial
      Markets of Swaziland
• Markets
  – ZAR (60%)
  – USD (25%)
  – EUR (15%)


• Instruments
  – Deposits
  – Structured products
  – Bonds
  Developments in the Financial
      Markets of Swaziland
• Code of Conduct
  – As part of the Procedures
  – Currently as a practice than a rule
  – Still to implement with Banks and have Dealers sign
    adhere to

• Systems
  –   Telephone
  –   Reuters
  –   Bloomberg
  –   SWIFT
  –   Globus (Banking System)
  Developments in the Financial
      Markets of Swaziland
• Forex Participants
  – Commercial Banks (ZAR Sales & Purchases)
     • 2010 – ZAR 4.75 billion Net Sales
     • 2011 – ZAR 3.61 billion Net Sales
  – Government


• New Legislation
  – Financial Services Regulatory Authority (FSRA) - 2010
  – Securities Act – 2009
  – Retirement Funds Act - 2006
  Developments in the Financial
      Markets of Swaziland
• IFRS
  – IFRS compliant
  – Central Bank Law compliant

• Regulatory Framework
  – Securities Act; passed in 2009 to provide the legal basis for
    securities

  – FSRA Act; passed in 2010 to regulate amongst others pension
    funds, insurances, building societies, asset managers, etc

  – Retirement Funds Act in 2006 that amongst others compels
    retirement funds to 30% local asset requirement
                    CONCLUSION
• Trading is in Treasury Bills, Government Bonds and Foreign
  Exchange

• Banks lead the trading at Primary Auction as bonds are issued
  using Primary Dealers

• Market confidence at its lowest at the moment thus success in
  private placements, especially in the absence of a published
  sovereign rating

• Secondary Market trading is still very slow mainly due to the
  market not active and banks not properly quoting two way
  prices

• Secondary Market overseen by the Swaziland Stock Exchange
  (SSX)
THANK YOU!!!

SIYABONGA!!!

				
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