Microfinance services for MSMEs improves their productivity while fostering economic growth as MSMEs generate 50-60% of value added and contribute to 33% of GDP in emerging markets (16), including in Eswatini where such businesses play a key role.

Microfinance services allows MSMEs expand their businesses and create employment opportunities for more than 90,000 people in Eswatini (9).

Microfinance services increase access to credit and financial inclusion for low-income households who are excluded from formal financing channels due to high collateral and eligibility requirements of commercial banks.

Microfinance services for MSMEs may lead to potentially high credit default risks due to lack of recorded credit history, which in turn may result in higher interest rates, negatively impacting both the financial institutions and the end consumers.

If financial implications of microfinance services are not understood, or required regulations are not in place, services may result in inability to pay back loans, especially for low-income households, which may lead to a debt-cycle negatively impacting their socio-economic position.

Tailored financial products may disrupt the current financial system and may decrease demand for loans issues by commercial banks, which may impact on their performance in the short term.

If microfinance services do not reach businesses and households excluded from the current financial service offering, for example due to lack of financial literacy, the expected impact may be limited.

If MSMEs and households use the provided financing for consumptive, rather than productive purposes, the long-term socio-economic impact of the microfinance services may be limited.

Strengthen economic productivity and resilience of MSMEs and low-income households with access to affordable and reliable financing.

National Development Plan, 2019-2022: Among the six strategic axes, the national outcome of enhanced and dynamic private sector includes the development of the microfinancing sector under the strategy to improve access to financing (23).

Industrial Development Policy, 2015-2022: Includes strategies on creating an enabling environment to support the development of MSMEs and enhancing MSMEs access to finance, which are seen as an important conduit for industrial diversification (9, 23).

Revised Micro, Small and Medium Enterprise (MSME) Policy of Eswatini, 2018: Includes the development of an effective, efficient and competitive microfinance sector to cater for the financial needs of micro businesses and facilitate graduation to mainstream finance among its main policy objectives (22).

Small and Medium-Sized Enterprise (SME) Roadmap, 2018-2022: Stemming from the MSME policy, the roadmap guides and supports the development of the small business sector in Eswatini. Its main focuses are economic diversification, SME growth and innovation (9).

Financial incentives: The Central Bank manages the Export Credit Guarantee Scheme and the Small-Scale Enterprise Loan Guarantee Scheme to cover lack of collateral and risks associated with SMEs, which are offered to commercial banks and non-bank financial institutions (8).

Other incentives The Informal Traders Revolving Fund offers short-term loans to informal traders capitalized at E 4 million (USD 266,000) benefiting 200 businesses in the Manzini region. The E 45 million (USD 2.6 million) MSME Revolving Fund has approved 281 business loans (26).

Central Bank Order, 1974: Mandates the Central Bank of Eswatini to promote, regulate and supervise the national payment system and to supervise banks, credit institutions and other financial institutions, including microfinance services (13).

Financial Services Regulatory Authority (FSRA) Act No. 2, 2010: Serves as the legislative framework for the operations of the FSRA and the regulation and supervision of Non-Bank Financial Institutions (NBFIs), including credit and savings institutions (11).

Savings and Credit Co-Operative (SACCO) Bill, 2018: Provides licensing and regulations for SACCOs, and regulate areas including governance, financial safety and compliance for such credit unions (13).

Consumer Credit Act, 2016: Regulates the provision of credit and consumer protection, including determining who can be provided with credit and prohibition of certain practices (13).

Citizens Economic Empowerment Bill, in progress: Aims to promote economic empowerment of the people through equal opportunities for all, including gender equality and rural-urban parity, improved access to resource and assets, and ease of doing business (9).

Amandla Financial Services, Small Enterprises Development Company (SEDCO), Eswatini Bank, Nedbank, Standard Bank, Savings and Credit Co-Operatives (SACCOs) such as Asikhutulisane Yetfu Sonkhe, Saphumula Impumelelo and Imphilo Lenhle.

Ministry of Finance, Ministry of Commerce, Industry and Trade, Central Bank of Eswatini, Financial Service Regulatory Authority, Center for Financial Inclusion, Financial Services Regulatory Authority, Micro Finance Unit, Eswatini Standards Authority (SWASA).

African Development Bank (AfDB), Economic Commission for Africa (ECA), European Investment Bank (EIB), Association of African Development Finance Institutions, World Trade Organization (WTO).

Proparco, Agence Française de Développement (AFD).