Swaziland is a landlocked, open economy in Southern Africa. It has a population of 1.1 million. With a gross domestic product (GDP) per capita of about $3,000, Swaziland is classified as a lower middle income country. Swaziland is very closely linked to South Africa, which accounts for about 85% of imports and about 60% of exports.
Apparel trade preferences under the African Growth and Opportunity Act (AGOA) expired in January 2015. This has had a negative impact on exports and jobs, given that about one third of total apparel exports are destined to the U.S. market. On the labor market, the adverse impact has been felt particularly negatively among women. The overall impact on growth and employment has been dampened by a reallocation of production towards regional markets.
Swaziland’s economic growth is slowing since 2013, and is projected at 1.3% in 2016 down from 1.7% in 2015. The downward trend is due to continued drought and a difficult external environment, especially from South Africa, leading to a sharp decrease in 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.
The primary development challenge for the Kingdom of Swaziland 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. Between 2001/02 and 2009/10 consumption of the bottom 40% of the population grew very slowly. Poverty is strongly correlated with unemployment which is about 28.5% overall and 52.4% among the youth. Poverty is also associated with the high burden of communicable diseases. The HIV/AIDS prevalence of 31% of the population is the highest in the world and life expectancy has fallen to approximately 49 years. While the country has made significant progress towards achieving the Millennium Development Goals (MDGs), it is unlikely to reach the health related MDGs due to the high disease burden.
Growth will need to be supported by investments in human capital and an inclusive social safety net system to address the poverty challenge. The country faces a unique opportunity to capitalize on the demographic transition; improvements in containing the health epidemic can propel more young people into the labor force. For the country to utilize this growth potential, adequate investments have to be made in education and skills development. This would also require adequately supporting the poor and the vulnerable, in a manner consistent with fiscal affordability. To seize these opportunities, consistent implementation of existing policies and a transformative development program is required in order to put Swaziland on a high growth and development trajectory.
The Doing Business Report (2016) ranks Swaziland 105th out of 189 countries in the overall ease of doing business. A comparison across several of the Doing Business indicators between 2006 and 2015 suggests that the country has made some (absolute) improvements in several indicators over time—for example ‘trading across borders’ is now ranked 1st in Africa—but the overall pace of progress has been slower than in Sub-Saharan Africa. The country is ranked 128th out of 140 countries in the WEF global competitiveness index of 2015-16. In the past two decades, average investment levels in Swaziland have been lower than regional comparators.
The government published its Programme of Action (2013-2018), which aims to fast track progress towards Vision 2022. As a monitoring tool, the Swaziland Development Index (SDI) has been defined with eight focus areas; economic prosperity, agriculture & environmental sustainability, education, health, government service delivery, infrastructure, governance, and corruption. The index will be used to assess the country’s overall status, but also to set performance targets and action plans for ministries and agencies up to 2022.
Last Updated: Apr 12, 2016