SWAZILAND
Economy
Overview
Surrounded by South Africa, except for a short border with Mozambique, Swaziland is heavily dependent on South Africa for nearly all its imports and to which it sends more than half of its exports. The economy is based on agriculture - subsistence agriculture occupies more than 60% of the population - and the agro-industry. Export earnings, which amount to around 70% of GDP, come primarily from agro-industries, sugar and wood pulp. Mining has decreased in importance in recent years with the depletion of deposits.
Industrialisation in the country showed unprecedented growth in the 1980s. This has slowed due to decreased foreign investment, drought, unrest and vulnerability to international trends. Owing to the openness of the economy and the importance of agricultural-based exports, GDP is strongly influenced by climatic conditions and world market prices.
Although Swaziland is a middle-income country with a per capita GDP of US$1,340, adult per capita consumption for the poorest 40 per cent of its population is equivalent to US$230. HIV prevalence, high unemployment and the continuing spread of poverty pose major challenges to economic growth and stability.
Labour market and unemployment
There is a declining trend in public sector employment; unemployment remains high.
Agriculture forestry and fishing
Agriculture's share of GDP has fallen from about one-third at independence to just over 10% in 1998/99. Two forms of land tenure and production are found in Swaziland - Swazi Nation Land (SNL) and Title Deed Land (TDL). Commercial farming, on the 40 per cent of the land owned by individual (mainly non-Swazi) freeholders, is centred on sugar (grown under irrigation), wood pulp (timber plantations cover 6 per cent of the total land area), citrus (grown on large estates), pineapples, tobacco and cotton. Sugar is Swaziland's highest export earner and accounts for 51 per cent of total agricultural production, 24 per cent of GDP, 13 per cent of total exports and 57 per cent of foreign exchange earnings. Main food crops are maize, beans, groundnuts and sorghum.
Dependent on rain-fed cultivation, SNL (60 per cent of the land) is highly vulnerable to drought. It produces the maize crop and accounts for 80% of cotton growers, and 81% of the livestock.
Mining
Mining and quarrying have declined in relative and absolute terms since 1980 when the country's only iron ore mine closed. There is some coal mining.
Manufacturing and Industry
Commercial agro-processing accounted for about 80% of manufacturing production prior to the mid-1980's. The manufacturing sector has since diversified.
Tourism
Tourism is an important revenue earner for Swaziland, which has eight nature reserves and spectacular mountain scenery. The country anticipates benefiting from the Lubombo Spatial Initiative, a multimillion-dollar project comprising new roads, lodges and hotels. The initiative involves eastern Swaziland, the southern part of Mozambique's Maputo province and the north-east part of the KwaZulu Natal province of South Africa. The long-awaited Tourism Bill was presented to parliament in early 2000.
Government finance and fiscal policy
Since independence Swaziland has followed prudent, though technocratic, macroeconomic policies. Policies are subject to strong political influences, conservative elements resisting and delaying economic reforms. Privatisation, for example, has been extremely slow to date. The reform programme adopted in 1995/96 is aimed at attracting foreign investment and diversifying revenue sources. Autonomy in monetary and fiscal policy is restricted by the country's close association with South Africa and the Common Monetary Area, and by the openness and small size of the economy. The government now needs to accelerate the pace of structural reforms in order to help sustain broad-based economic expansion in an increasingly liberalised and competitive regional setting. Economic liberalization is central to government policy.
Legislation regarding foreign investment - Although the Central Bank of Swaziland was given a measure of independence in the area of exchange control under the Trilateral Monetary Agreement of 1986, the kingdom has not adopted an independent exchange strategy from that of South Africa. Dividends are freely remitted, subject to a withholding tax.
The Swazi government pursues free market policies, though a large part of the economy is in the hands of the Tibiyo and Tisuka trusts. The results of the current political reform initiatives will undoubtedly have an impact on their continued operation.
Regional and International economic grouping/alliances
- African Union
- Multilateral Monetary Agreement (MMA)
- Southern African Customs Union (SACU )
- Southern African Development Community (SADC)
- Common Market for Eastern and Southern Africa (Comesa)
- The EU-ACP Convention
