Overview

  • Eswatini is a landlocked country in Southern Africa bordering South Africa and Mozambique, with a population of 1.2 million. Poverty levels stagnated at high levels in the last five years, with 39.7% of the population estimated to have been living under the international $1.90 poverty line in 2016 and 2017.

    Eswatini has close economic linkages to South Africa on which it depends for about 85% of its imports and about 60% of exports. Eswatini is a member of the Common Monetary Area (CMA), with Lesotho, Namibia, and South Africa. Under the CMA, the Eswatini lilangeni (the domestic currency) is pegged at par to the South African rand, which is also legal tender in the country.

    Economic growth is estimated to have slowed to 0.5% in 2018 from 1.9% in 2017, constrained by fiscal challenges. Domestic arrears negatively affected private sector business particularly those that rely on government payments such as construction activities.  Despite the freeze on civil service wages, election related expenditure led to slight recovery of wholesale and retail trade sector and supported modest consumption spending.

    During the second half of 2018 the government instituted fiscal consolidation measures leading to marginal decline of the budget deficit. Suspension of most capital projects, a civil service wage freeze in 2018, and other fiscal consolidation measures introduced on November 22, 2018 facilitated this marginal decline. Despite these efforts, the government continued to finance fiscal deficit through accumulation of domestic arrears and partly by international reserves. Public debt increased by more than three percentage points of gross domestic product (GDP) year-on-year, reaching 23.8% of GDP in December 2018. Gross official reserves dropped to the lowest level in five years, reaching 2.8 months of import cover in December 2018 (below the three-month international benchmark). However, international reserves fluctuated throughout the year, increasing only when the country received Southern African Custom Union quarterly revenue inflows. The current account surplus narrowed, driven by lower growth of exports.

    Inflation slowed in 2018, averaging 4.8% down from 6.2% in 2017, driven by lower food prices. Lower inflation rates enabled the Central Bank to maintain an accommodative monetary policy in 2018 and early 2019. The Central Bank of Eswatini kept the repo rate unchanged at 6.75%, for the sixth consecutive time in January 2019.

    Economic growth is projected to recover slightly in 2019, supported by recovery in industrial production and a modest regional economic outlook particularly the South African economy. Growth of the South African economy is expected to boost exports and regaining of the Africa Growth and Opportunity Act market is boosting textiles exports. However, fiscal challenges, especially high domestic arrears, are expected to weigh down recovery in construction and public administration sectors. Further, implementation of fiscal consolidation measures particularly suspension of almost all government capital projects continues to affect the construction sector while the wage freeze continues to constrain demand.

    Development challenges

    Poverty has persisted despite the country’s lower-middle-income status. Nationally, 58.9% of Swazis lived below the national poverty line in 2017. This follows a decline from 63% in 2009, and 69.0% in 2001. International poverty rates: 39.7% of Swazis lived below the 2011 PPP $1.90 per person per day, and this rises to 62.1% when the 2011 PPP $3.20 per person per day poverty line for lower middle-income countries is used.

    Challenges to poverty reduction include slowing economic growth; adverse weather patterns, high prevalence of HIV/AIDS, high inequality, and high unemployment. Inequality is high: the per adult equivalent consumption Gini index stagnated at around 49.0 between 2010 and 2017.

    The government published its Programme of Action (2013–2018), which aims to fast track progress towards Vision 2022. As a monitoring tool, the Eswatini Development Index (SDI) was defined with eight focus areas: economic prosperity, agriculture and environmental sustainability, education, health, government service delivery, infrastructure, governance and corruption.

    National elections were held in September 2018, SADC and AU Observer missions declared elections peaceful. A new Cabinet was announced in November and Vision 2022 continues to frame government business. 

    Last Updated: Mar 28, 2019

  • The Country Partnership Strategy 2015-2018 (CPS) aimed to support the country’s efforts to reduce poverty and inequality, and to promote shared prosperity in a sustainable way. The Performance and Learning Review (PLR) was noted by the World Bank Board of Directions in August 2018. The PLR extended the CPS by two years to 2020, prioritizing two program pillars: (i) Promoting growth and productivity, and (ii) Strengthening state capabilities.

    The PLR found that ongoing projects and advisory services have been implemented successfully, with strong results. Several improvements have been registered in the health sector, including tuberculosis (TB) treatment success rate, increased safety net support to orphans and vulnerable children, and an increased number of health units providing the five basic services. Similarly, the Local Government Project has made notable progress in strengthening municipal and rural local government capacity for the delivery of local services and infrastructure.  

    Last Updated: Mar 28, 2019

  • Delivery on technical and analytical work and implementation of ongoing projects:

    • The Financial Sector Development Implementation Plan (FSDIP) was prepared under the leadership of the Central Bank, finalized in 2016 and subsequently launched. It has started with a focus on stability, supported through the International Monetary Fund program and World Bank Group program on financial inclusion. The joint program is financed by the Financial Sector Reform and Strengthening Initiative.
    • The Health HIV/AIDS, TB Project, which closed in September 2018, contributed to improving access to quality of services, focused on primary health care, maternal health, and HIV/AIDS and TB, and increase the access of Orphans and Vulnerable Children (OVC) to the social safety net. The project also renovated and equipped selected health facilities including strengthening the referral and transport system. 
    • The Local Government Project, which will close in June 2019, contributed in institutional strengthening of local governments by enhancing financial management capacity as well as delivery of local services and infrastructure. Both projects have met, and in some cases exceeded, their targets. Due to small size of the economy, International Finance Corporation and the Multilateral Investment Guarantee Agency did not make any inroads during the Country Partnership Strategy period. 

    New projects are under preparation in water, energy and health. 

    Last Updated: Mar 28, 2019

  • Partners include United Nations agencies, USAID, European Union, Japan International Cooperation Agency (JICA), and African Development Bank (AfDB).  

    Last Updated: Mar 28, 2019

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LENDING

Eswatini: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

Main Office Contact
442 Rodericks Street
Lynnwood Road
Tshwane 0081
+27-12-742-3100
For general information and inquiries
Zandi Ratshitanga
Communications Officer
South Africa
+27-12-742-3107
zratshitanga@worldbank.org
For project-related issues and complaints
+1-202-458-7654
swazilandalert@worldbank.org