Eswatini (formerly Swaziland), the landlocked nation nestled between South Africa and Mozambique, has set its sights on the future of banking — or, more precisely, the virtual future of banking. In an ambitious move, the Central Bank of Eswatini (CBE) has announced an urgent call for applications from institutions interested in obtaining licenses to operate digital banks in the country. While this push for digitalization may seem overdue to some, Eswatini is now looking to embrace a financial revolution that it hopes will carry its economy into the modern age.
In the CBE’s grand vision, Eswatini won’t just be the land of sugarcane and scenic landscapes, but also a hotspot for tech-savvy financial institutions, with banks that exist primarily through the internet rather than through bricks and mortar. For an economy that has traditionally been anchored in agriculture and manufacturing, this call for digital banks marks a pivot toward the virtual realm of financial services. But the race is now on to see which institutions will step up — and whether Eswatini is ready for a banking sector that exists almost entirely in cyberspace.
Digital Banks: A Cure for Eswatini’s Banking Headaches?
The CBE’s decision to prioritize digital banks stems from several challenges in the country’s traditional banking sector. Physical banks, with their long queues, cumbersome paperwork, and limited outreach, have failed to penetrate rural areas where many of the country’s underserved populations live. Digital banks, by contrast, are being touted as a remedy for this inefficiency, allowing citizens to access services from the palm of their hands — assuming they have access to reliable internet and smart devices, a luxury not uniformly available across Eswatini.
In its call for applications, the CBE has generously provided potential applicants with a roadmap to the future, outlining a two-tiered system of digital banking licenses. Prospective digital banks will first begin as “restricted” entities, tasked with proving their technological robustness and compliance with CBE standards. If they manage to pass this initial phase without incident, they may graduate to full-fledged digital banks, ready to handle the financial needs of Eswatini’s citizens and businesses.
“We’re not rushing into this blindly,” a Central Bank official was quick to clarify. “Digital banks will be tested rigorously before being given free rein.” One imagines there will be no shortage of hoops to jump through.
The Regulatory Fine Print: Not So Fast
The CBE’s invitation comes with a hefty dose of fine print, as one might expect. Banks applying for these digital licenses must meet strict requirements, including a minimum start-up capital of E30 million ($1.7 million) and compliance with local regulatory frameworks. Moreover, digital banks are expected to shoulder additional responsibilities beyond traditional financial services, such as robust IT management and cybersecurity protocols. In the age of online banking, Eswatini seems determined not to become a haven for cybercriminals — or at least not without a fight.
Additionally, these digital banks will be restricted to having just one physical branch in Eswatini, giving them the all-important flexibility of being, well, digital, while still keeping one toe in the physical realm. Whether this is a concession to tradition or simply an insurance policy remains unclear. What is clear, however, is that the banks must also adhere to international standards on anti-money laundering (AML) and counter-terrorist financing (CTF), because even in Eswatini, nefarious actors will need to be kept at bay.
The push for digital banking isn’t without its critics. Some local stakeholders have expressed concern that the digital transition could leave parts of the population behind, particularly those in rural communities without access to the necessary technology. Others point out that Eswatini’s banking sector, while stable, remains relatively small, raising questions about whether the country truly needs more financial institutions, let alone digital ones.
Digital Banks or Digital Paperwork?
There’s also the matter of timing. While the CBE’s call for applications is marked as “urgent,” some observers wonder whether this urgency reflects a broader trend toward digital banking seen across the African continent or merely a bureaucratic attempt to appear forward-thinking. After all, neighboring South Africa has already seen significant developments in digital finance, and countries like Kenya and Nigeria are lightyears ahead in fintech. Whether Eswatini can play catch-up, or whether this will simply add another layer of bureaucracy to the banking landscape, remains to be seen.
The Central Bank, however, remains optimistic, projecting that the arrival of digital banks will stimulate economic growth, increase financial inclusion, and modernize the country’s banking sector. “This is a new era for Eswatini,” the CBE official commented with no small amount of optimism. “We’re giving banks a chance to prove their worth and to serve our economy in a way that meets the demands of the 21st century.”
Global Players Welcome… Within Limits
Interestingly, the CBE is also keen to attract international banks to set up digital operations in Eswatini. Foreign players are welcome to participate, though they must still play by local rules. The Bank has made it clear that foreign ownership will be capped at 49%, ensuring that Eswatini maintains a degree of control over its financial institutions. How appealing these terms are to international digital banks remains an open question.
In the fine print, the CBE policy on licensing specifies that applicants will need to undergo rigorous scrutiny before obtaining a digital banking license, including a detailed review of their corporate governance structure, risk management frameworks, and cybersecurity preparedness. In other words, digital banks may be virtual, but the hurdles they’ll have to clear are very real.
The Bottom Line
Eswatini’s move to open the doors to digital banks is ambitious and may signal the beginning of a new chapter in the country’s financial services sector. But, as always, the devil will be in the details. Whether Eswatini can attract the kind of forward-thinking financial institutions that will genuinely transform the banking landscape — or whether this call for applications will end up being an exercise in digital paperwork — remains to be seen.
For now, the Central Bank’s message is clear: applications are needed, urgently. Whether the right applicants will materialize, however, is anyone’s guess.