Overview

  • Eswatini is a landlocked country in Southern Africa bordering South Africa and Mozambique. It has a population of 1.2 million. With a gross domestic product (GDP) per capita of about $3,000, Eswatini is classified as a lower middle-income country. Eswatini is very closely linked to South Africa on which it depends for about 85% of its imports and about 60% of exports.

    Growth slowed down to 0.4 in 2015, slightly improved to 1.4 in 2016 and 1.9 in 2017 and is projected at 1.3 and 2% in 2018 and 2019 respectively. The slowdown is due to continued drought and a difficult external environment, especially from South Africa, leading to a sharp decrease in South African Customs Union (SACU) revenues. Such a decrease in revenue, combined with increased public spending, is generating higher fiscal deficits and a growing public debt. Under the current policy stance, the public debt to GDP ratio could increase from 17.4% in 2015 to 24% in 2018, increasing risks of fiscal unsustainability.

    Eswatini was admitted back into Africa Growth Opportunity Agreement (AGOA) in December 2017 after three years of suspension. Full benefits from AGOA are expected in the medium term as it might take time to resuscitate the textile firms that closed after loss of trade benefits from AGOA in 2015. The restoration of AGOA might see the trade balance between United States and Eswatini turning positive in 2018 in favor of Eswatini after being negative for the past three years. 

    Development challenges

    The primary development challenge for the Kingdom of Eswatini is to address the high rate of poverty and inequality in the country. An estimated 63% of the population lives below the poverty line, and about 29% lives below the extreme poverty line. Inequality is very high with a Gini coefficient of 49.5. The HIV/AIDS prevalence of 31% of the population is among the highest in the world and life expectancy has fallen to approximately 49 years. 

    As a consequence of severe drought, up to a quarter of the population remains food- and water- insecure and deeply vulnerable, and many households are still reliant on welfare or social safety nets. The regions with the highest prevalence of food insecurity are Lubombo and Shiswelweni, the areas most affected by the drought. Conditions are expected to improve in 2017/18 due to improvements in agricultural production (crops and livestock) and somewhat lower prices for food. Improvements can be seen at the national level, but persistent drier conditions in parts of the low-producing regions, heavy rains in February, and an outbreak of army worms are likely to constrain yields.

    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.

    The actual implementation of Vision 2022 has not progressed as initially planned and nor has reporting on the SDI. It is challenged by the allocation of resources and SDI reporting undermined by limited capacity to monitor and report on progress. At a resource level, much financing has gone into infrastructure projects. El Nino-induced drought has also meant that the government has had to finance immediate relief to counteract the negative impact of drought. These developments have undermined the availability of public resources for poverty reduction programs, and thus any progress made toward achieving Vision 2022 is slow.

    Last Updated: Apr 20, 2018

  • 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 CPS prioritized two program pillars: (i) Promoting growth and job creation -  aimed at supporting the government create an enabling environment for private sector investment and competitiveness, MSME growth and job creation with a strong focus on the agribusiness and tourism sectors; and (ii) Strengthening state capabilities to design implement and monitor policies to reduce poverty and inequality. Due to changing country priorities; Government requested the Bank to reprogram the CPS and focus on infrastructure investments to improve access to water and electricity.  In consultation with Government, the Bank has initiated preparation of the Performance and Learning Review (PLR) of the CPS to assess progress in implementation and draw on lessons learnt to inform further programs. 

    Last Updated: Apr 20, 2018

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

    • Health, HIV/AIDS and TB and lLocal gGovernment projects have progressed,  and projects will be closing during the Country Partnership Strategy 2015-2018 (CPS) fully implemented.
    • The Financial Sector Development Implementation Plan (FSDIP) was prepared under the leadership of the Central Bank finalized in 2016 and subsequently launched by the Prime Minister in Q1 2017.
    • Implementation of the Financial Sector Development Implementation Plan (FSDIP) has commenced with a focus on stability supported through an IMF program and WBG program on financial inclusion both financed by Financial Sector Reform and Strengthening Initiative (FIRST).
    • The HHealth HIV/AIDS, TB P project contributed in 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 Pprojected 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, IFC and MIGA did not make any inroads during the CPS period. 

    Last Updated: Apr 19, 2018

  • The International Finance Corporation (IFC)  previously invested $47.78 million for eight projects. Eswatini has been a member of Multilaterial Investment Guarantee Agency (MIGA) since 1990 with one active project (Motraco-Mazambique Transmission company with an exposure limit of $69.4 million.)

    Beyond the WBG partnerships, there is collaboration with United Nations agencies, USAID, European Union, Japan International Cooperation Agency (JICA), and African Development Bank (AfDB) on various program areas of common interest. 

    Last Updated: Apr 20, 2018

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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