Economy of Swaziland

Last updated
Economy of eSwatini
Currency lilangeni (SZL), South African rand (ZAR)
1 April - 31 March
Trade organisations
WTO, SADC, SACU
Statistics
GDP $6.344 billion [1]
GDP rank 159th (nominal) / 157th (PPP)
GDP growth
0.4% (2015), 1.4% (2016),
1.9% (2017e), 1.1% (2018f) [2]
GDP per capita
$5,807 [1]
GDP by sector
agriculture: 8.2%, industry: 46.9%, services: 44.9% (2011 est.)
6.1% (2011 est.)
Population below poverty line
69% (2006)
Labour force
457,900 (2007)
Labour force by occupation
agriculture: 70%
Unemployment 40% (2006 est.)
Main industries
Coal mining, wood pulp, sugar, soft drink concentrates, textile and apparel
111th (2017) [3]
External
Exports $2.049 billion f.o.b. (2011 est.)
Export goods
soft drink concentrates, sugar, wood pulp, cotton yarn, refrigerators, citrus and canned fruit
Main export partners
South Africa 59.7%, EU 8.8%, US 8.8%, Mozambique 6.2% (2004)
Imports $2.076 billion f.o.b. (2011 est.)
Import goods
motor vehicles, machinery, transport equipment, foodstuffs, petroleum products, chemicals
Main import partners
South Africa 95.6%, EU 0.9%, Japan 0.9%, Singapore 0.3% (2004)
Public finances
$703.1 million (2011 est.)
Revenues $1.006 billion (2011)
Expenses $1.488 billion (2011)
Economic aidrecipient: $104 million (2001)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The economy of Swaziland is fairly diversified, with agriculture, forestry and mining accounting for about 13 percent of GDP, manufacturing (textiles and sugar-related processing) representing 37 percent of GDP and services – with government services in the lead – constituting 50 percent of GDP.

Agriculture Cultivation of plants and animals to provide useful products

Agriculture is the science and art of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people to live in cities. The history of agriculture began thousands of years ago. After gathering wild grains beginning at least 105,000 years ago, nascent farmers began to plant them around 11,500 years ago. Pigs, sheep and cattle were domesticated over 10,000 years ago. Plants were independently cultivated in at least 11 regions of the world. Industrial agriculture based on large-scale monoculture in the twentieth century came to dominate agricultural output, though about 2 billion people still depended on subsistence agriculture into the twenty-first.

Forestry economic sector

Forestry is the science and craft of creating, managing, using, conserving, and repairing forests, woodlands, and associated resources for human and environmental benefits. Forestry is practiced in plantations and natural stands. The science of forestry has elements that belong to the biological, physical, social, political and managerial sciences.

Mining The extraction of valuable minerals or other geological materials from the earth

Mining is the extraction of valuable minerals or other geological materials from the earth, usually from an ore body, lode, vein, seam, reef or placer deposit. These deposits form a mineralized package that is of economic interest to the miner.

Contents

Agriculture

Title Deed Lands (TDLs), where the bulk of high-value crops are grown (sugar, forestry, and citrus) are characterized by high levels of investment and irrigation, and high productivity. Nevertheless, the majority of the population  – about 75 percent—is employed in subsistence agriculture on Swazi Nation Land (SNL), which, in contrast, suffers from low productivity and investment. This dual nature of the Swazi economy, with high productivity in textile manufacturing and in the industrialized agricultural TDLs on the one hand, and declining productivity subsistence agriculture (on SNL) on the other, may well explain the country’s overall low growth, high inequality and unemployment.

In general, to invest is to distribute money in the expectation of some benefit in the future. For example, investment in durable goods, in real estate by the service industry, in factories for manufacturing, in product development, and in research and development. However, this article focuses specifically on investment in financial assets.

Irrigation artificial application of water to the land or soil

sultan anas maked dams for free

Population All the organisms of a given species that live in the specified region

In biology, a population is the number of all the organisms of the same group or species, which live in a particular geographical area, and have the capability of interbreeding. The area of a sexual population is the area where inter-breeding is potentially possible between any pair within the area, and where the probability of interbreeding is greater than the probability of cross-breeding with individuals from other areas.

Economic growth

Economic growth in Swaziland has lagged behind that of its neighbors. Real GDP growth since 2001 has averaged 2.8 percent, nearly 2 percentage points lower than growth in other Southern African Customs Union (SACU) member countries. Low agricultural productivity in the SNLs, repeated droughts, the effect of HIV/AIDS, and an overly large[ clarification needed ] and inefficient government sector are likely contributing factors. Swaziland’s public finances deteriorated in the late 1990s following sizeable[ clarification needed ] surpluses a decade earlier. A combination of declining revenues and increased spending led to significant[ clarification needed ] budget deficits. The considerable[ clarification needed ] spending has not led to more economic growth and has not benefitted the poor to the same extent as regional comparitors, although the poverty headcount has shifted slightly during the first decade of the 2000s (SHIES 2010). Much of the increased spending has gone to current expenditures related to wages, transfers, and subsidies. The wage bill today[ when? ] constitutes over 15 percent of GDP and 55 percent of total public spending; these are some of the highest levels on the African continent. The recent[ when? ] rapid growth in SACU revenues has, however, reversed the fiscal situation, and a sizeable[ clarification needed ] surplus was recorded in 2006/07 and 2012/13. SACU revenues today[ when? ] account for over 50 percent of total government revenues. On the positive side, the external debt burden has declined markedly[ clarification needed ] over the last 20 years,[ when? ] and domestic debt is almost negligible; external debt as a percent of GDP was less than 20 percent in 2006.

Southern African Customs Union Customs union, established in 1910, among five countries of Southern Africa: Botswana, Lesotho, Namibia, South Africa and Swaziland

The Southern African Customs Union (SACU) is a customs union among five countries of Southern Africa: Botswana, Lesotho, Namibia, South Africa and Eswatini. Its headquarters are in the Namibian capital, Windhoek. It was established in 1910.

HIV/AIDS Spectrum of conditions caused by HIV infection

Human immunodeficiency virus infection and acquired immune deficiency syndrome (HIV/AIDS) is a spectrum of conditions caused by infection with the human immunodeficiency virus (HIV). Following initial infection, a person may not notice any symptoms or may experience a brief period of influenza-like illness. Typically, this is followed by a prolonged period with no symptoms. As the infection progresses, it interferes more with the immune system, increasing the risk of developing common infections such as tuberculosis, as well as other opportunistic infections, and tumors that rarely affect people who have uncompromised immune systems. These late symptoms of infection are referred to as acquired immunodeficiency syndrome (AIDS). This stage is often also associated with unintended weight loss.

Trade partners

The Swazi economy is very closely linked to the economy of South Africa, from which it receives over 90 percent of its imports and to which it sends about 70 percent of its exports. Swaziland has great resources making a good trading partner. Swaziland’s other key trading partners are the United States and the EU, from whom the country has received trade preferences for apparel exports (under the African Growth and Opportunity Act  – AGOA – to the US) and for sugar (to the EU). Under these agreements, both apparel and sugar exports did well, with rapid growth and a strong inflow of foreign direct investment. Textile exports grew by over 200 percent between 2000 and 2005 and sugar exports increasing by more than 50 percent over the same period. The continued vibrancy of the export sector is threatened by the removal of trade preferences for textiles, the accession to similar preferences for East Asian countries, and the phasing out of preferential prices for sugar to the EU market. Swaziland will thus have to face the challenge of remaining competitive in a changing global environment. A crucial factor in addressing this challenge is the investment climate. The recently concluded Investment Climate Assessment provides some positive findings in this regard, namely that Swaziland firms are among the most productive in Sub-Saharan Africa, although they are less productive than firms in the most productive middle-income countries in other regions. They compare more favorably with firms from lower middle income countries, but are hampered by inadequate governance arrangements and infrastructure.

Economy of South Africa national economy

The economy of South Africa is the second largest in Africa, after Nigeria. It is one of most industrialized countries in Africa. South Africa is an upper-middle-income economy by the World Bank – one of only four such countries in Africa. Since 1996, at the end of over twelve years of international sanctions, South Africa's Gross Domestic Product almost tripled to peak at $400 billion in 2011, but has since declined to roughly $295 billion in both 2016 and 2017. In the same period, foreign exchange reserves increased from $3 billion to nearly $50 billion creating a diversified economy with a growing and sizable middle class, within two decades of ending apartheid. South African state owned enterprises play a significant role in the country's economy with the government owning a share in around 700 SOEs involved in a wide array of important industries. In 2016 the top five challenges to doing business in the country were inefficient government bureaucracy, restrictive labour regulations, a shortage of skilled workers, political instability, and corruption, whilst the country's strong banking sector was rated as a strongly positive feature of the economy. The nation is amongst the G-20, and is the only African member of the group.

African Growth and Opportunity Act

The African Growth and Opportunity Act, or AGOA is a piece of legislation that was approved by the U.S. Congress in May 2000. The purpose of this legislation is to assist the economies of sub-Saharan Africa and to improve economic relations between the United States and the region. After completing its initial 15-year period of validity, the AGOA legislation was extended on 29 June 2015 by a further 10 years, to 2025.

Swaziland, Lesotho, Botswana, Namibia, and the Republic of South Africa form the Southern African Customs Union (SACU), where import duties apply uniformly to member countries. Swaziland, Lesotho, Namibia, and South Africa also are members of the Common Monetary Area (CMA) in which repatriation and unrestricted funds are permitted. Swaziland issues its own currency, the lilangeni (plural: emalangeni), which is at par with the South African rand.

Common Monetary Area Monetary union. The Rand Monetary Area, established in 1974, was transformed into the Common Monetary Area in 1986. Members are Lesotho, Namibia, South Africa and Swaziland.

The Common Monetary Area (CMA) links South Africa, Namibia, Lesotho and Swaziland into a monetary union. It is allied to the Southern African Customs Union (SACU).

Repatriation process of returning assets to original owners

Repatriation is the process of returning an asset, an item of symbolic value or a person – voluntarily or forcibly – to its owner or their place of origin or citizenship. The term may refer to non-human entities, such as converting a foreign currency into the currency of one's own country, as well as to the process of returning military personnel to their place of origin following a war. It also applies to diplomatic envoys, international officials as well as expatriates and migrants in time of international crisis. For refugees, asylum seekers and illegal migrants, repatriation can mean either voluntary return or deportation.

The rand is the official currency of South Africa. The Rand is subdivided into 100 cents. The ISO 4217 code is ZAR, from Afrikaans Zuid-Afrikaanse Rand. The Rand is legal tender in the Common Monetary Area between South Africa, Swaziland (Eswatini), Lesotho and Namibia, although the last three countries do have their own currencies pegged at par with the rand.

Infrastructure

Swaziland enjoys well-developed road links with South Africa. Swazi Rail operates its railroads that run east to west and north to south. The older east-west link, called the Goba line, makes it possible to export bulk goods from Swaziland through the Port of Maputo in Mozambique. Until recently, most of Swaziland's imports were shipped through this port. Conflict in Mozambique in the 1980s diverted many Swazi exports to ports in South Africa. A north-south rail link, completed in 1986, provides a connection between the Eastern Transvaal (now Mpumalanga) rail network and the South African ports of Richards Bay and Durban. From the mid-1980s foreign investment in the manufacturing sector boosted economic growth rates significantly. Since mid-1985, the depreciated value of the currency has increased the competitiveness of Swazi exports and moderated the growth of imports, generating trade surpluses. During the 1990s, the country often ran small trade deficits.[ citation needed ]

Goba Place in Oromia, Ethiopia

Goba is a town and separate woreda in south-central Ethiopia. Located in the Bale Zone of the Oromia Region approximately 446 km southeast of Addis Ababa, this city has a latitude and longitude of 7°0′N39°59′E and an elevation of 2,743 meters above sea level.

Maputo City and Province in Mozambique

Maputo, officially named Lourenço Marques until 1976, is the capital and most populous city of Mozambique. Located near the southern end of the country, it is positioned within 120 km of the Eswatini and South Africa borders. The city has a population of 1,101,170 distributed over a land area of 347 km2. The Maputo metropolitan area includes the neighbouring city of Matola, and has a total population of 2,717,437. Maputo is a port city, with an economy centered around commerce. It is also noted for its vibrant cultural scene and distinctive, eclectic architecture.

Sugar industry

Swaziland is the fourth largest producer of sugar in Africa and is 25th in production in the world. [4] This demonstrates the immense focus of the industry in order to continue to grow their economy. Swaziland’s GDP was $8.621 billion (US dollars) in 2014 base on purchasing power parity and of that 7.2% of that is from the agriculture sector and of that sector, sugarcane and sugar products have the largest impact on GDP. According to the World CIA Factbook, wood pulp and sugarcane were the largest exports of Swaziland until the wood pulp producer closed in January 2010. [5] This left the sugarcane industry as the sole main export. The largest company that produces sugar in Swaziland is the Royal Swaziland Sugar Corporation (RSSC) and it produces a little under two-thirds of total sugar in the country and produces over 3,000 jobs for the people of Swaziland. The RSSC is composed of two main sugar mill producers, Mhlume and Simunye, which produce a combined 430,000 tons of cane per season. The second largest sugarcane company is Ubombo Sugar Limited which has grown from producing 5,600 tons in 1958 to approximately 230,000 tons of sugar annually. The third largest sugarcane producer is the Tambankulu Estate (largest independent sugar estate)and it produces 62,000 tons of sugar annually on 3,816 hectares of land. [6]

The largest export partners of Swaziland and the larger Southern African Development Community (SADC) is the European Union. The SADC is a group of many southern African countries who have banned together in order to try to improve their individual socioeconomic status. In 2014-2015 the sugar production of Swaziland was 680,881 metric tons and of this about 355,000 metric tons of sugar was shipped to the European Union, larger than any other export partner. Another trade partner for Swaziland was the United States where they shipped 34,000 metric tons of sugar in the 2014-2015 year under the Tariff Rate Quota. These numbers are up from past years and continue to rise. The expected output based on the 2015-2016 post forecast predictions are that Swaziland will produce 705,000 metric tons, a new record for the country that can be attributed to an increase in land being available for sugar cultivation. Of this predicted figure about 390,000 metric tons will go to the European Union as part of a new Economic Partnership Agreement (EPA). This new agreement between the EU and SADC means that members like Swaziland can sell there sugar on a duty-free and quota- free basis. [4]

The quotas that the EU and the United States fill is similar to the Sugar Protocol which began in 1975. The goal of the Sugar Protocol was for the EU to purchase and import specific quantities from countries in Africa, the Caribbean and the Pacific. These prices and quantities guaranteed production and were well above the world price, which translated into substantial profits for these mostly impoverished countries. [7] This agreement reached an end in 2009 because the EU could no longer support the pre-determined demands. The Sugar Protocol came to an immediate end and was replaced with separate Economic Partnerships with the varying countries and regions. Even though the demands will be just as high as under the Sugar Protocol, the prices will drop significantly. [8] In the case of Swaziland, they have received good reassurance that their product will still be bought by the EU. [4]

Mining

Currently, Swaziland’s mineral sector is governed under a policy drawn up prior to Swaziland’s independence. In response to the sector’s recent decline, a new mining policy is being drafted by consultants, paid for by a grant from China, and legislation to facilitate small-scale mining has also been proposed. [9]

The country’s main source of foreign exchange is the Bulembu asbestos mine, however production has hit a steep decline. Diamond, iron ore and gold have also been found in the past, however a lack of investment and development policy has seen the region’s potential falter. [9]

Although fewer than 1,000 Swazis are directly employed in the mining sector, many workers from Swaziland processed timber from the country's extensive pine populations for mines in South Africa, and around 10,000–15,000 Swazis were employed in South African mines. Their contributions to Swaziland's economy through wage repatriation have been diminished, though, by the collapse of the international gold market and layoffs in South Africa. [10]

Other economic statistics

The following table shows the main economic indicators in 1980–2017. [11]

Jahr198019851990199520002005200620072008200920102011201220132014201520162017
GDP in $
(PPP)
0.90 Bln.1.50 Bln.2.95 Bln.3.84 Bln.4.83 Bln.6.52 Bln.7.06 Bln.7.54 Bln.7.90 Bln.8.32 Bln.8.72 Bln.9.07 Bln.9.56 Bln.10.18 Bln.10.74 Bln.10.97 Bln.11.11 Bln.11.34 Bln.
GDP per capita in $
(PPP)
1,6532,3593,7934,4215,0336,5377,0007,3877,6587,9788,2688,5028,8539,3179,7129,8079,8149,884
GDP growth
(real)
−3.8 %3.8 %8.9 %4.0 %2.6 %5.5 %5.2 %3.9 %2.8 %4.5 %3.5 %2.0 %3.5 %3.5 %3.6 %1.0 %0.0 %0.2 %
Inflation
(in Percent
18.2 %20.5 %13.1 %12.3 %12.2 %1.8 %5.2 %8.1 %12.7 %7.4 %4.5 %6.1 %8.9 %5.6 %5.7 %5.0 %8.0 %6.3 %
Government debt
(Percentage of GDP)
.........12 %17 %13 %14 %15 %14 %10 %14 %14 %15 %15 %14 %18 %25 %29 %

Household income or consumption by percentage share:
lowest 10%: 1.6%
highest 10%: 40.7% (2001)

Industrial production growth rate: 1% (2001 est.)

Electricity – production: 470 GWh (2008), 420 GWh (1998)

Electricity – consumption: 1,207 GWh (2008), 962.9 GWh (2001), 1.078 GWh (1998)

Electricity – exports: 0 kWh (2009, 2001, 1998)

Electricity – imports: 768 GWh (2009), 639 GWh (2001), 687 GWh (1998)
note: imports about 60% of its electricity from South Africa (2009)

Currency: 1 lilangeni (E) = 100 cents

Exchange rates: emalangeni (E) per US$1 – 7.3 (2011), 7.32 (2010), 8.42 (2009), 7.75 (2008), 7.4 (2007), 10.5407 (2002), 8.6092 (2001), 6.9398 (2000), 6.1087 (1999), 5.4807 (1998), 4.6032 (1997), 4.2706 (1996), 3.6266 (1995); note – the Lilangeni is at par with the South African rand

See also

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References

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  2. "World Bank forecasts for Swaziland, June 2018 (p. 154)" (PDF). World Bank . Retrieved 6 September 2018.
  3. "Ease of Doing Business in Swaziland". Doingbusiness.org. Retrieved 2017-01-24.
  4. 1 2 3 Swaziland Sugar Annual Report 2014-2015
  5. World CIA Factbook, "Swaziland: Economy"
  6. Mbendi Information Service, ["Sugarcane Farming in Swaziland"
  7. Delegation of the European Union: 'Sugar Protocol'
  8. http://www.bbc.co.uk/caribbean/news/story/2007/09/070928_sugarprotocol.shtml BBC Caribbean: 'Sugar Protocol Scrapped']
  9. 1 2 Mbendi Information Services, "Mining in Swaziland - Overview", Mbendi Information Services
  10. Encyclopedia of the Nations, "Swaziland - Mining", Encyclopedia of the Nations'
  11. "Report for Selected Countries and Subjects" . Retrieved 2018-09-11.