Loan Guarantee Fund Shifts Focus to State-Owned Enterprises Capacity

By: Nkosiyabusa Nsibande

The Loan Guarantee Fund is increasingly being positioned as an instrument for strengthening the institutional capacity of Eswatini’s state-owned enterprises, with the Public Enterprise Unit (PEU) arguing that financing support must be matched by stronger management systems if public enterprises are to convert capital into sustainable institutional and economic value.

The issue was raised by PEU Director Busangani Mkhaliphi during the certification ceremony for 70 professionals who completed an Advanced Project Management programme facilitated by MSQ Iminsimbi Solutions at Hilton Garden Inn on Friday. Mkhaliphi said the fund, while established primarily to provide guarantees to state-owned entities, was also designed to build capacity across the governance and management structures of those organizations.

“The fund was established to assist state-owned entities, and that is why the contribution comes from you,” Mkhaliphi said. He added that the fund’s mandate extended beyond guarantees to include capacity building for boards of directors, executive management, and middle management, the level represented by the newly certified project-management professionals.

The institutional argument is significant because public-sector financing does not automatically translate into productive investment. The effectiveness of guarantees, loans, and other forms of development finance ultimately depends on whether the enterprises receiving or accessing that capital have the managerial systems required to plan projects, control costs, manage implementation risks, and deliver measurable commercial or public-service outcomes.

Mkhaliphi also disclosed a structural challenge facing the fund: the number of state-owned entities contributing to it has declined over the years, although he said the fund itself has continued to grow. “Over the years, we have seen a decline in the number of entities that are contributing to the fund. Nonetheless, the fund has continued to grow,” he said, attributing part of that growth to the diversion of South African funds to other financial institutions.

The remarks point to an issue that warrants closer scrutiny of the fund’s financial architecture: whether growth in the fund’s value is being driven primarily by fresh contributions from participating entities, investment income, reallocations, or other financial flows. With fewer contributors, the sustainability of the funding model becomes increasingly dependent on the performance and structure of the assets already held by the fund.

The fund’s capacity-building function has also been undergoing a more formalized approach. According to Mkhaliphi, training had previously been organised largely through invitations, while the latest program introduced an application and selection process intended to extract greater value from the fund’s investment in human capital.

“For us to realize the value of investment in human resources itself, we came through the process,” he said, explaining that the program had been professionalized through a different mode of selection. Candidates were required to apply, with participants subsequently selected for the program rather than simply being invited to attend.

The change reflects a broader shift from treating professional training as an employee benefit towards viewing it as an institutional investment. For public enterprises, where project failures can translate into delayed infrastructure, cost overruns, underutilized assets, or additional pressure on public finances, strengthening project-management capability can have direct implications for the quality of capital deployment.

Mkhaliphi said the selection of MSQ Iminsimbi Solutions as the training facilitator was itself subjected to a competitive process. “It’s not like we just pick up a consulting company for this job, but we followed through a rigorous process, and interview and then selected the company to carry out the assignment,” he said.

The emphasis on procurement and selection is relevant to the wider governance question surrounding public enterprises, where expenditure on consultancy, training, and professional services needs to demonstrate value beyond the immediate delivery of a program. Here, the PEU’s stated expectation is that the knowledge acquired by the 70 graduates will be transferred throughout their respective organizations rather than remaining concentrated among the individuals who attended the course.

“The most important thing is not that you stay with the skills,” Mkhaliphi said, stressing that the graduates were expected to transfer their knowledge to employees below them. He warned against allowing critical institutional knowledge to remain concentrated in one individual, arguing that organizations should build broader internal capacity. “Please ensure that those that are below you are well capacitated so that it’s not like information is only situated with one person in the entity,” he said. “By so doing we are not doing justice, not only to yourself, but to the entity as a whole.”

That principle has financial consequences. When technical knowledge, project history, and operational expertise are concentrated in a small number of employees, the departure, or reassignment of those individuals can create institutional gaps that affect project continuity and increase the cost of rebuilding expertise. For state-owned enterprises managing public assets and development projects, institutional memory therefore becomes part of the broader governance and risk-management equation.

The project-management program also comes against a backdrop in which public enterprises are pressured to improve their contribution to economic activity while making more disciplined use of available resources. The value of professional development will ultimately be measured less by the number of certificates issued than by whether the skills translate into stronger project preparation, execution, procurement, financial controls, and delivery across the participating entities.

Mkhaliphi said the program was intended to produce that institutional effect, with graduates expected to return to their organizations and influence how work is undertaken. “I hope then the professionals here who will be awarded the certificate have been sharpened,” he said, before urging them to use the acquired skills to make changes within their organizations.

The certification ceremony, therefore, represents more than completing a training program. It marks an attempt to connect the financial infrastructure supporting state-owned enterprises with the management capability required to use that infrastructure effectively. For the Loan Guarantee Fund, the emerging model suggests that guarantees and financial support are only one part of the equation; the other is ensuring that the institutions receiving that support have the skills and systems to convert it into productive outcomes.

The next test will be whether the 70 newly certified professionals can demonstrate that return on investment within their respective parastatals. If the program embeds project-management capability beyond the individual graduates, the fund’s contribution will extend beyond financing access to strengthening the institutional machinery through which public capital is planned, deployed, and monitored.