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Overview

  • Eswatini is a landlocked country in Southern Africa bordering South Africa and Mozambique, with a population of 1.2 million.

    Eswatini has close economic linkages to South Africa, which it depends on for about 70% of its imports and about 65% 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. Fiscal revenues largely depend on Southern African Customs Union (SACU) revenues, which are shaped by developments in South Africa.

    The second wave of the COVID-19 (coronavirus) pandemic, which is more severe than the first wave is projected to constrain full economic recovery in 2021. The economy is projected to grow by 1.3% of gross domestic product (GDP) in 2021, a downward revision from a previously projected growth of 1.5%, reflecting COVID-19 related containment measures implemented in early 2021. The country has been under lockdown in early 2021 entailing travel restrictions, a ban on most gatherings except for funerals and restriction on business operating times. This affected both demand and supply. The number of COVID-19 cases more than doubled in two months (during the second wave during of COVID-19) compared to the first wave in 2020.  Overall, the recovery remains uncertain and hinges on the evolution of the COVID-19 pandemic, rollout of the vaccines and the pace of recovery of the global and regional economies, particularly that of South Africa.

    Annual inflation increased to 3.9% in 2020, from 2.6% in 2019, reflecting COVID-19 induced supply chain disruptions. The freeze of utility prices kept inflationary pressures lower in 2020. In 2021, inflation is projected to continue increasing, driven to rising oil and domestic administered prices. Electricity and oil prices have already been increased in January 2021. Further, the second wave of the pandemic continues to exert inflationary pressures in 2021.

    Eswatini received financial support from World Bank and International Monetary Fund in FY2020/21, that helped ease fiscal challenges. The access to these finances enabled the the government to close the financing gap and reduce domestic expenditure arrears. The fiscal deficit stood at 8.7% of GDP in 2020, as public spending increased responding to the pandemic while revenues fall as economic activity declined. The fiscal deficit is projected to narrow over the medium term, as the government implements the three-year fiscal consolidation plan in the face of an anticipated decline in SACU revenues. The current account surplus is expected to increase in 2021- exports are expected to pick up from 2021 onward, as COVID-19-related trade and supply disruptions ease. The rollout of COVID-19 vaccines will support trade.

    Development challenges

    Poverty has persisted despite the country’s lower-middle-income status. 58.9% of Emaswati lived below the national poverty line in 2017, following a decline from 63% in 2009, and 69.0% in 2001. Use of international poverty lines also supports the persistence of poverty: the $1.90/person/day (2011 purchasing power parity (PPP)) international poverty rate has hover around 30% since 2016, estimated at 29.7% in 2020. This rises to 52.7% when the 2011 PPP $3.20 per person per day poverty line for lower middle-income countries is used. Thus, poverty levels have historically been high and there has been little progress in reducing them.

    The projection is a stagnation in poverty rates in the near to medium term. This is in part due to adverse impacts of COVID-19 on livelihoods through a reduction in employment incomes and remittances, among other channels.

    Challenges to poverty reduction include weak economic growth due to the impact of COVID-19, adverse weather patterns, high prevalence of HIV/AIDS, high unemployment, and high inequality; the per adult equivalent consumption Gini index stagnated around 49.0 between 2010 and 2017.

    Last Updated: Mar 16, 2021

  • 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), which summarizes the progress of implementing the CPS, found that ongoing projects and advisory services were implemented successfully, with strong results. The World Bank Board of Directors noted these results in August 2018, extended the CPS by two years to 2020, prioritizing two program pillars: (i) Promoting growth and productivity, and (ii) Strengthening state capabilities.

    The Systematic Country Diagnostic, which identifies the most important challenges and opportunities a country faces, was finalized in 2020, and will guide the development of a new Country Partnership Framework. It identifies four priority areas to accelerate inclusion and poverty reduction:

    • Strengthening macroeconomic management
    • Diversifying the economy and creating jobs
    • Strengthening Human Capital and access to quality public services
    • Strengthening resilience to natural disasters and economic shocks

    The Completion and Learning Review of the last CPS is currently under preparation and will also feed into the new country partnership framework.

    Last Updated: Mar 16, 2021

  • The Eswatini portfolio is comprised of five new projects totaling $151 million. Delivery on technical and analytical work and implementation of ongoing projects includes:

    COVID-19 Emergency Response Project

    Approved in April 2020, the $6 million COVID-19 Emergency Response Project has to date helped Eswatini procure critical supplies of personal protective equipment, provided support to rapid response teams for door-to-door contact tracing, procured supplies for laboratory testing of COVID-19. and is also upgrading facilities to improve hospital capacity to manage severe cases. This includes 99% from a targeted 95% of suspected cases reported that are tested according to national guidelines, 950,000 of one million targeted individuals reached with tailored information, and all of the targeted 14 public hospitals with COVID-19 triage capacity. Highlights of project achievements include:

    • More than 5,600 healthcare workers trained on COVID-19 infection prevention and control
    • The establishment of a COVID-19 testing laboratory in country, which has since conducted over 22,000 tests against a targeted 10,000
    • The establishment of a monitoring and evaluation system to track COVID-19 preparedness and response plan
    • The  establishment of a Grievance Redress Mechanism that tracks and reports COVID-19 related complaints at the Central Command Center for the pandemic.

    Economic Recovery Development Policy Loan

    In addition, a $40 million Economic Recovery Development Policy Loan (DPL) to support the Government of Eswatini to implement its program of reforms for economic recovery and ongoing efforts to mitigate the impact of the COVID-19 pandemic was approved by the World Bank Board of Executive Directors in November 2020.

    To support lives and livelihoods, this operation will help minimize the spread of the virus by supporting health measures to improve preparedness and strengthen mechanisms for the early detection and effective management of the COVID-19 disease. It will also support measures to provide financial relief to employees who have suffered a loss of earnings as a result of being temporarily laid off without pay. The operation will also support measures to enhance access to liquidity for firms through the COVID-19 Small and Medium Enterprise Relief Fund.

    Health System Strengthening for Human Capital Development Project

    Approved in June 2020, this $20 million project to help strengthen Eswatini’s  health system is aimed at improving the coverage and quality of key reproductive, maternal, neonatal, child and adolescent health (RMNCAH), nutrition and Noncommunicable Disease (NCD) services. The project has four components, including improving health service delivery to increase the coverage and quality of health services to build the country’s human capital, and supporting the strengthening of the Ministry of Health’s stewardship capacity to manage essential health and nutrition services.

    This project also complements the ongoing Eswatini COVID-19 Emergency Response Project. While the emergency operation focuses on short-term needs to support capacity in prevention, detection, and response to the threat posed by COVID-19, this operation aims to strengthen the foundations of the health system and its preparedness to respond to the population’s health needs, including through strengthened health facilities that can provide high-quality care to patients, digital platforms for real-time management of service provision, and reinforced governance to efficiently and effectively respond to dynamic changes.

    Water Supply and Sanitation Access Project

    This $45 million project will benefit 38,233 people located in the three target Tinkhundla (Zombodze, Hosea, and Shiselweni I). An estimated 18,478 people will benefit through new potable water supply and 8,000 people through new sanitation services. Improved potable water supply and sanitation services will be provided to four health clinics and 32 schools in the targeted areas reaching an estimated 2,000 people and 5,600 people, respectively.

    Last Updated: Mar 16, 2021

  • Partners include United Nations agencies, European Union, and African Development Bank (AfDB), International Monetary Fund (IMF). 

    Last Updated: Mar 16, 2021

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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
Sr. External Affairs Officer
South Africa
+27-12-742-3107
zratshitanga@worldbank.org
For project-related issues and complaints
+1-202-458-7654
swazilandalert@worldbank.org