CBE moves to revive export credit guarantee scheme ::

The Central Bank of Eswatini (CBE) is moving to resurrect its export credit guarantee scheme—a dormant financial instrument designed to de-risk cross-border trade and unlock capital for exporters. This strategic revival signals Eswatini's intent to strengthen its position within the Southern African Development Community (SADC) and combat declining export competitiveness amid regional currency volatility and global trade pressures.

**What is an export credit guarantee scheme, and why does Eswatini need one?**

An export credit guarantee scheme protects banks and exporters from payment default risk when selling goods and services abroad. By guaranteeing a portion of credit exposure, central banks reduce lender hesitation—enabling smaller enterprises to access working capital at lower rates. Eswatini, a nation of 1.2 million with a manufacturing base centered on sugar, textiles, and apparel, has long struggled with credit access constraints. Regional competitors like South Africa and Namibia operate sophisticated export finance mechanisms; Eswatini's dormancy has disadvantaged its traders in competitive tenders.

The CBE's move addresses a critical gap. Eswatini's export sector—already pressured by the rand's weakness, competition from Asian manufacturers, and tariff uncertainty under SADC trade agreements—lacks institutional guardrails. Reviving this scheme signals the central bank recognizes that export growth cannot rely on currency depreciation alone; it requires financial infrastructure.

**How will the scheme operate, and who benefits?**

While the CBE has not yet published operational details, export credit guarantees typically cover 50–80% of credit risk, allowing banks to extend larger loans to exporters at prime or near-prime rates. Small and medium-sized enterprises (SMEs)—which dominate Eswatini's sugar and textile clusters—stand to benefit most. Exporters can use guarantees to:

- Secure pre-shipment financing for raw materials and production
- Extend payment terms to international buyers (critical in bulk commodity sales)
- Reduce collateral requirements, freeing working capital for growth

The CBE may also target sectoral priorities: agro-processing, light manufacturing, and services exports—areas where Eswatini holds latent competitive advantage but lacks scale.

**What are the broader regional and macroeconomic implications?**

Eswatini's economy contracted 0.5% in 2023, with exports under pressure from South African import competition and subdued global demand. A functioning export credit scheme could contribute 0.3–0.5% annual GDP growth by enabling higher trade volumes and higher-margin value-added goods. Within SADC, Eswatini competes fiercely for textile and sugar market share; improved export financing narrows the cost gap versus larger regional players.

However, success hinges on implementation. The scheme's funding—likely drawn from CBE reserves or development bank partnerships—must be adequate to meet demand. Poor credit assessment could create moral hazard, burdening public finances. Coordination with regional central banks (particularly South Africa's SARB, given the rand's outsized influence) will be essential.

The revival also reflects Eswatini's broader push to diversify revenue streams beyond the South Africa Customs Union (SACU) revenue-sharing agreement, which finances nearly 30% of government spending. Stronger exports reduce fiscal dependency and build currency stability.

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