Swaziland Editorial, 2Q2017/18

PESA Editorial - Swaziland - 2Q2017/18




The Kingdom of Swaziland is a predominantly rural, landlocked monarchy with a population of less than 1.2 million citizens1 . Swaziland differs from most post-colonial African states which operate as democratic states with independent judiciaries and executives. In Swaziland, King Mswati III wields executive, legislative and judicial powers. Government intervention in the Swazi economy is extensive, as evidenced by the high number of state owned enterprises (SOEs), 29 to date2 . The government is a key actor in primary income generating sectors such as agriculture, tourism, public works and housing. Conflict of interests amongst SOEs and private players constrain the business environment from thriving free from intervention, creating uncertainty for investors. Political interference, from sources other than the king, also fuels uncertainty in the kingdom. In August 2017, some MPs accused Prime Minister Sibusiso Barnabas Dlamini of stifling the progress of urban and rural development projects which are managed by the Ministry of Public Works and Transport. Dlamini dismissed the accusations; he raised concerns that MPs who question his level of involvement in government projects have disregard for the foundations of the kingdom and its political system. Because the PM is chosen by the King and cannot be removed by MPs or the citizens of Swaziland, interference by leaders such as the PM can fuel uncertainty.

In terms of regional economic partnerships, Swaziland is part of the Southern African Customs Union (SACU), the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC) regional economic communities. In 2014, Swaziland lost its eligibility for the United States’ African Growth and Opportunity Act (AGOA) after failing to meet benchmarks relating to International Labour Organisation (ILO) standards of protection for worker’s rights 3 . As a result, Swaziland’s export growth declined from 38.3% in 2013 to 13.0% in 2014, reversing the SACU revenue recovery since 20124 . More than 15,000 textile industry workers lost their jobs following the loss of AGOA status. According to a Labour Force Survey FY2013/14, unemployment stood at 28.1% (strict definition) and 41.7% (Unemployment Rated Relaxed definition) 5 . Unemployment is likely to increase further, owing to low rates of domestic entrepreneurship and business sector diversity. More than 63.0% of the domestic population lives below the poverty line, with 29.0% living in extreme poverty according to a household income survey for FY2009/20106 .

In addition to a high incidence of poverty, Swaziland is also faced with food security challenges. Swaziland only produces about 38.6% of its total domestic demand for cereals7 . This equates to 49.2% of its total maize demand of 172,170 tonnes, 3.7% of its total wheat demand of 26,720 tonnes, and 3.9% of its total rice demand of 25,434 tonnes to feed the domestic population8 . Since agriculture is a major economic activity, more jobs and greater agricultural outputs can be earned if the government increases investments in the agricultural sector. However, threats such as natural disasters, for example, the FY2015/2016 El-Nino induced drought, can lead to acute food and water shortages which require drought relief emergency programmes to be put in place. So far, the government has made concerted efforts to finance agricultural training and funding projects through the Swaziland Agricultural Development Project (SADP).

Historically, Swaziland has been a migrant sending country, with most Swazi emigrants choosing to migrate to South Africa to look for work in South Africa’s mining, agricultural, education, health and business sectors. Even though Swaziland is classified as a popular migrant sending country the kingdom also attracts foreign nationals who come to Swaziland in search of business and employment opportunities. As a result, Swazi nationals have to compete with foreign owned businesses and non-Swazi traders. In response, the Minister of Commerce, Industry and Trade, Jabulani Mabuza, put forward a proposal In July 2017 for the Reservation of Certain Trades and Businesses for Swazi Citizens on Swazi National Land. The proposal was aimed at addressing Swazi nationals’ concerns regarding threats to the market entry potential and growth prospects of Swazi owned businesses. The bill was not adopted, owing to MPs views that it was too limiting and xenophobic. Furthermore, the proposed policy undermines COMESA, SADC and African Union (AU) frameworks for the free movement of persons, goods and traders.

The high prevalence of HIV/AIDS is a major socio-economic problem in Swaziland. Swaziland has one of the highest national HIV incidences in the world9 . According to a Swaziland HIV Incidence Measurement Survey (SHIMS), overall HIV incidence in the country dropped from about 46.0% to almost 26.0% between 2011 and 201610 . However, the increasing rate of unemployment has led to among other factors, an increase in the numbers of sex workers. Sex work is linked to risky sexual behaviour which may lead to the increase of new HIV infection rates and a higher prevalence of HIV/AIDS. Poor management of the country’s Central Medical Stores (CMS) has led to drug shortages in the past 6 months, therefore the Ministry of Health needs to partner with the Ministry of Finance to clear the current debt of ZAR 236 million (approx. USD 17.2 million) to drug companies as well as ensure the acquisition of required medication to improve the quality of health standards.

The government of Swaziland is guided by a National Development Strategy which is aimed at developing Swaziland in line with the kingdom’s aspiration to gain first world status by the year 202211 . Expanding investment opportunities for both foreign and local businesses is therefore a priority, especially since Swaziland was ranked 111 among 190 economies in the overall ease of doing business in 201612 . In his budget speech, Minister of Finance, Martin Dlamini, indicated that, Special Economic Zones (SEZs) would be created in order to offer a 20 year tax holiday for both local and foreign investors13 . The SEZs will be of great benefit to the economy as they will ensure ease of doing business in the kingdom. Furthermore, the SEZs are set to ensure that the minimum employment quota for Swazi citizens is set at two thirds, ensuring employment of locals and skills training14 . The SEZs and other investor friendly policies can therefore enable the government of Swaziland to promote human resource development and the economic empowerment of locals.

Moreover, the government could empower local citizens by addressing constraints disadvantaging locals. Researchers have identified that the competitive advantage of foreign owned businesses culminates from differences in ownership dynamics, capital investment, stock procurement strategies and links to distribution networks15 . The government and local stakeholders such as Swazi banks, the Small Enterprises Development Company (SEDCO), Swazi business owners and traders can therefore devise new solutions for the benefit of Swazi nationals and the local economy based on these findings. Such stakeholders can sponsor and organise activities such as business skills training workshops in order to build the entrepreneurship capacity of Swazi nationals. Seminars and expos held in collaboration with prominent foreign owned businesses would also help to bridge the competitive advantage gap which has been identified.

Retaining AGOA status should be a major objective going forward. Having lost AGOA status owing to human rights based shortcomings, the government recently passed the Suppression of Terrorism Amendment Act. The new legislation serves as an incentive for foreign direct investment and the USA may readmit Swaziland thereby reviving multi-million SZL lucrative industries which suffered huge losses following Swaziland’s dismissal from AGOA.

Following the 37th Ordinary SADC Summit of Heads of State and Government which was held between 9 and 20 August in 2017, in Pretoria, under the theme: “Partnering with the Private Sector in Developing Industry and Regional Value-Chains” it is important for Swaziland to reflect upon its economic plans and find ways of promoting greater levels of economic partnership with both, Swazi and non-Swazi partners. The incoming SADC Chairperson, South African President Jacob Zuma, emphasised the need to foster the development of regional value chains in agro-processing thus Swaziland can play a major role in this regard16 .

In terms of regional effects, Swaziland’s poor economic performance may undermine economic development in the SADC region because if one country is lagging behind, neighbouring countries have to bear the brunt of its poor economic performance through financial donations and hosting of economic migrants. Furthermore, because Swaziland benefits highly from remittances which are sent by Swazi migrant workers in South Africa, recent job losses in South Africa’s mining and manufacturing industries may reduce the amount of remittances received. Since retrenched and returning migrants may not be able to find employment back home in Swaziland, poverty and unemployment rates in the kingdom may continue to rise. Swaziland therefore needs a more comprehensive industrial policy which is in line with its developmental aspirations and economic challenges. In the absence of such a policy all developmental goals will remain aspirational.



1 Kingdom of Swaziland Central Statistical Office

2 AfricanEconomicOutlook.org

3 United States Trade Representative

4 Central Bank of Swaziland

5 Kingdom of Swaziland Central Statistical Office, ibid.

6 AfricanEconomicOutlook.org, ibid.

7-8 Food and Agriculture Organisation of the United Nations & World Food Programme

9-10 Columbia University

11 Swaziland National Association of Teachers

12 World Bank Group

13 Collaborative Africa Budget Reform Initiative

14 Times of Swaziland, 25 July 2017

15 Times of Swaziland, 2 July 2017

16 Southern African Development Community




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