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 is classified as a lower middle-income country and 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 declined to 1.9% in 2017 from 3.2% in 2016, reflecting slow recovery in agriculture and mounting fiscal challenges. Real gross domestic product (GDP) growth is projected to contract by -0.6% in 2018 mainly due to worsening fiscal challenges and government’s fiscal consolidation efforts. Declining government revenue (partly due to declining Southern African Customs Union (SACU) receipts) and high expenditures resulted in high fiscal deficit and cash flow challenges. The government financed the fiscal deficit through accumulation of domestic arrears and drawing down on international reserves. As a result, domestic arrears increased to about 6% of GDP during first half of 2018 from 2% in December 2017. Under the current policy stance, the public debt could increase from 18.8% of GDP in 2016 to more than 35% by 2020, increasing risks of macroeconomic instability.
The trade balance might turn into negative territory in 2018, the first time since 2011, partly due to declining exports. Sluggish growth of the South African economy, the removal of the European Union sugar quota regime and the protectionist stance by major trading partners (for example United States) negatively affect exports. Further, though Eswatini was admitted back into Africa Growth Opportunity Agreement (AGOA) in December 2017 after three years of suspension, full benefits are taking time to materialize, partly due to failure to resuscitate the textile firms that closed since 2015.
Poverty, inequality and unemployment are the primary development challenges which have remained stubborn and difficult to address. These challenges remain at the top of the government’s policy agenda. Based on the international poverty lines of $1.9 and $3.2 a day, it is estimated that 38% of the Swazi population lives in extreme poverty and a total of 60.3% is poor overall. In general, children, the elderly, the unemployed as well as female-headed and single-headed households are disproportionately represented among the poor. Income inequality is also high, with an estimated Gini coefficient of 0.51 in 2009/10. High levels of poverty and inequality are linked to high unemployment rate at 23% in 2018. The labor market suffers from low labor force participation rates, with female participation at 42.6% in 2017. The high unemployment rate is exacerbated by skills mismatches.
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 will be in place in October / November and Vision 2022 is expected to continue framing Government business.
Last Updated: Oct 12, 2018