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MBABANE – The total assets of the Eswatini National Provident Fund (ENPF) grew by eight per cent from E4.577 billion in 2021 to E4.962 billion in 2022.

This was revealed in the ENPF annual report for the year ended June 30, 2022. As at the end of the reporting year, the overall performance of the ENPF in 2022 declined when compared to the previous year, as the operating surplus for the year was E192.9 million compared to E398.1 million recorded in the previous year. ENPF Chief Executive Officer (CEO) Prince Lonkhokhela said the decline in surplus was largely attributable to concerns arising from the invasion of Russia in Ukraine and the material rise of inflation, which negatively affected investments in particular listed equities. He said their financial performance was mainly driven by investment returns, monitoring how the markets were performing, and creating the necessary investment diversification.

sufficiently diversified

“During the year under review, the fund continued to ensure that its investments were sufficiently diversified. The fund invests not only in equities and bonds but also in cash, property and private equity. These latter ‘alternative’ investments, which are all local, have done a great job in improving the stability of the fund’s investments,” he said. According to the report, ENPF’s local investments continued to outweigh foreign investments by 20 per cent. Local investments accounted for 60 per cent of the total portfolio, while foreign investments accounted for 40 per cent. The CEO said this spread in investments had contributed to the achievement of their vision because the fund, through its local investments, had been able to contribute to the socio-economic conditions in the country. Prince Lonkhokhela said the return on investment for the period ended was 3.3 per cent above average inflation for the year 2022.

administrative expenses

He said that in the operational space, the ENPF was able to reduce its administrative expenses from E134.6 million to E131.5 million during the year under review. “It is worth noting that the financial security of the fund remained healthy as benefits paid to members were 56 per cent of contributions received from the membership, thus making funds available for fresh investment,” added the CEO. He said members’ funds amounted to E4.81 billion when compared to E4.46 billion in 2021. The total number of registered members was 142 023, which was a 2.99 per cent increase over the year 2021. “The average days that claims were processed and paid during the year under review were 1.8 days, which was actually an improvement when comparing with the number of days in the prior year, where the fund took an average of 2.47 days. “In terms of compliance rate, the fund continues to lag behind its set benchmark of 92 per cent. During the year under review, the fund achieved an average compliance rate of 86.96 per cent, which was an increase from last year’s rate of 84.67 per cent,” added the CEO.

raised interest rates

When asked about the effects of the continuous rise in interest rates on their business, the CEO said, “We know that the central banks have raised interest rates and will continue to raise them aggressively. While making for erratic market conditions, they have a clear objective to mitigate inflation risk and normalise GDP growth. Companies and individuals with heavy debt will come under pressure. The fund has ensured that across all of its investments, there is minimal or no leverage (debt), therefore, immunising it against this.” He also mentioned that the markets have had some of the worst trading days in 50 years. “While market bottoms are never predictable, market data suggests that they were cheap at the end of the reporting period. This means that there will soon be pressure on these share values to rise. There might be further falls, but ultimately, this pressure will pull values up again,” mentioned Prince Lonkhokhela. “As at the financial year end, the total assets under management stood at E4.9 billion, compared to E4.57 billion in 2021, posting a year-on-year increase of 13 per cent. Operating income in 2022 was E362 million, compared to E532.6 million in 2021. This represented a year-on-year decline of 32 per cent and was largely attributable to concerns arising from the war in Eastern Europe and the material rise of inflation, which negatively affected investments, in particular listed equities,” mentioned ENPF in the report.

economic unrest

ENPF gross rental revenue decreased by two per cent from E51.9 million in 2021 to E50.9 million in 2022 on the back of an exodus that was experienced, especially in the Manzini properties, due to the economic unrest, which saw most of the businesses selling grey or imported cars relocating to our neighbouring country, Mozambique. ENPF said this was the other factor that contributed to low occupancy and the resultant lower rental income. The fact that more residential properties mushroomed in Manzini, close to the city centre, brought about steep competition, especially to Liqhaga Flats. Assets under management grew by 13 per cent from E4.58 billion in the prior year to E4.96 billion during the reporting period. ENPF said the growth in assets emanated from additional investments made during the year as well as re-invested earnings and movements in asset fair values.