Recent Developments & Prospects

Macroeconomic Policy

Fiscal Policy

Monetary Policy

Economic Cooperation, Regional Integration & Trade

Debt Policy

Economic & Political Governance

Private Sector

Financial Sector

Public Sector Management, Institutions & Reform

Natural Resource Management & Environment

Political Context

Social Context & Human Development

Building Human Resources

Poverty Reduction, Social Protection & Labour

Gender Equality

Thematic analysis: Structural transformation and natural resources

Authors: Peninah Kariuki, Fatou Leigh

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  • Economic growth is estimated to have slowed down in 2014 to 2.5% and inflationary pressures increased, with prospects in 2015 and 2016 remaining lacklustre as performance of the export sector could decline if access to preferential trading agreements is lost.
  • On the political front, relative calm continues to prevail after the September 2013 elections, but the country’s ranking in participation and human rights remains low.
  • There are remarkable divergences in the availability of social and economic amenities among the urban and rural areas, underscoring the need for the government to ensure that opportunities to promote inclusive growth are put in place for the benefit of all Swazis.

Economic performance in Swaziland, as indicated by real gross domestic product (GDP) growth, slowed half of a percentage point from 3.0% in 2013 to 2.5% in 2014. The much-needed recovery from the 2011 fiscal crisis has not materialised. Slack prospects in South Africa and persistent local structural constraints are hindering economic recovery. The secondary sector was the most adversely affected, particularly the predominant manufacturing sub-sector. The decline in growth in the secondary sector was somewhat counteracted by growth in the primary sector. Agriculture is estimated to have improved by 4.0%, reflecting enhanced productivity accruing from key interventions. Although growth in the tertiary sector slowed down, an increase in investment in government capital programmes tempered the outcome. Short-term prospects remain subdued with economic growth expected to remain low at around 2.5% per annum through to 2016. Growth prospects are predicated on the export sector, in particular the extension of the African Growth and Opportunity Act (AGOA) and the ratification of the Economic Partnership Agreement (EPA) with the European Union (EU) signed in August 2014.

Despite Swaziland’s classification as a low middle-income country, economic issues that are mainly associated with low-income countries – such as a weak business climate and low foreign direct investment (FDI) inflows – prevail. The high rate of HIV/AIDS and an uneven distribution of resources remain major social concerns. The Gini co-efficient of 0.51 is one of the highest in the world, indicating wide disparities in household income. The incidence of poverty is also high, with 63% of the population living below the poverty line. Other challenges include a high unemployment rate of 17.8%, and a low Human Development Index (HDI) ranking with a score of 0.53 mainly due to the high HIV/AIDS prevalence. While Swaziland has made some improvements in the past three decades in the fight against the pandemic, the HIV prevalence of 26% among 15-49-year-olds is the highest in the world. This has contributed to plummeting life expectancy to 40.9 years as well as high numbers of orphaned and vulnerable children.

Swaziland is small and sparsely populated, except in certain pockets in the regions of Manzini and Hhohho, the economic and commercial zones. The country has non-discriminatory and friendly policies for foreigners and a small foreign population of less than 2%, but high unemployment, especially among youth, is slowly generating resentment, particularly towards foreign small-business owners. Though the government is addressing youth unemployment through empowerment programmes such as implementing a Youth Enterprise Fund and introducing entrepreneurship education in the secondary school curriculum, these measures are nascent and not yet implemented ubiquitously or evenly across all regions of the nation. Government efforts in education led to enrolment parity across all regions and should be replicated in other sectors as well, as there are divergences in the availability of social and
economic services among the regions. The government should continue investments in all regions and initiate opportunities in marginalised regions, like Shelsilweni, to promote inclusive and sustainable growth for the benefit of all Swazis.

Table 1: Macroeconomic indicators

Real GDP growth32.52.62.4
Real GDP per capita growth1.511.21
CPI inflation5.
Budget balance % GDP0.9-0.3-0.6-1.3
Current account balance % GDP5.32.41.7-0.5

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.