Eswatini

Eswatini is a small, open economy bordered by South Africa and Mozambique, with a population of about 1.3 million and an estimated per capita GDP of $4,305 in 2025. The economy is dominated by services, which account for just over half of output, while industry, particularly manufacturing, contributes about a third.

Poverty in Eswatini remains entrenched, driven by limited formal job creation, a weak business climate, and constrained economic opportunities. Unemployment is high and rising, particularly among youth, with 56% of those aged 15 to 24 unemployed in 2023. Eswatini’s vulnerability to external and climate shocks, especially recurring droughts, further undermines rural livelihoods and slows poverty reduction efforts.

Inequality compounds these challenges, with large disparities in consumption and access to basic public services across regions and income groups. In 2025, 54% of the population lived below the Lower Middle Income Consumption poverty line of $4.20 per day (PPP 2021), a high level for a lower-middle-income country. A Gini coefficient of 54.6 reflects a persistently uneven income distribution. These outcomes highlight the need for better service delivery, more inclusive growth, and improved infrastructure to connect underserved regions.

Eswatini has made progress in health and education, but more remains to be done. Children growing up today will reach only a fraction of their productive potential, while too many adults die from HIV and other preventable diseases. However, fewer children suffer from hunger or malnutrition than in many comparable countries. In education, children are spend close to 10 years in school, but improving the quality and length of schooling could raise future earnings by over 16%.

The biggest challenge is jobs, with many  adults and young people unable to find work. With more than half the population under 25, Eswatini has an extraordinary opportunity, but without urgent action to create jobs and connect young people to the economy, that opportunity will slip away.

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Eswatini’s real GDP grew by 4% in 2025, a marked increase from 3% in 2024 and well above the ten-year average of about 2.5%. Growth was driven by robust activity in manufacturing and services. Investments in infrastructure—roads, water systems, and energy projects like the Mpakeni Dam—also contributed, though less than anticipated. GDP growth is projected to remain firm at 4% in 2026. However, significant risks persist due to global uncertainties, particularly the conflict in the Middle East, investment projects delays, and climate-related shocks.

Annual headline inflation slowed from 4% in 2024 to 3.1% in 2025, as food and energy prices and global inflationary pressures eased. Food inflation fell significantly to just 0.3% year-on-year in December, but food insecurity remains a challenge, with about a fifth of the population estimated to be food insecure. The Central Bank of Eswatini’s policy interest rate has been aligned with that of South Africa since November 2025, at 6.75%.

Fiscal pressures worsened in 2025 as the budget deficit widened sharply to an estimated 6.3% of GDP, more than double the planned 3.1%. This was due to a 21% decline in Southern African Custom Union (SACU) revenues and higher-than-expected recurrent and capital spending. A long-awaited wage review for government employees was enacted in late 2025, with its effects expected to be most evident in 2026/27, further reinforcing expenditure rigidity. Government debt rose to about 44% of GDP.

The current account surplus declined from 2.1% of GDP in 2024 to an estimated 0.5% in 2025. International reserves rose to 2.7 months of import cover in 2025, below the 3-month official threshold.

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Eswatini faces structural challenges in achieving inclusive and resilient growth. The World Bank’s 2025 Public Finance Review notes that the public sector-driven growth model is fiscally unsustainable, constraining private sector dynamism and reinforcing a cycle of low growth, high poverty, and inequality. Heavy reliance on volatile SACU transfers has weakened fiscal stability. In response, the government established the SACU Revenue Stabilization Fund and has embarked on reforms to strengthen public financial management.

Private sector growth is constrained by limited access to finance, particularly for MSMEs and women-owned firms. The World Bank’s 2025 Financial Sector Assessment shows that only 15% of MSMEs can access formal credit, with a financing gap of 49% of GDP. High collateral demands, weak insolvency frameworks, and poor credit information systems exacerbate the problem, disproportionately excluding women.

Infrastructure deficits remain binding. The 2024 World Bank Enterprise Survey highlights electricity, land access, and informal practices as top business concerns. While 88% of households have electricity, coverage is uneven (60% in Lubombo, 63% in Shiselweni) and, in lagging regions, unreliable electricity has limited agro-processing and manufacturing investment, which in turn has constrained diversification and job creation.

Energy security adds another challenge: Eswatini imports 70% of its electricity from South Africa. The updated Generation Master Plan aims to boost domestic capacity to 1 GW by 2050. Achieving this requires substantial investment, especially from the private sector, and deliberate policy coordination.

Human capital outcomes lag despite relatively high social spending. Education absorbs 5% of GDP and primary access is near universal, but secondary enrollment is low, and the system aligns poorly with labor market needs. Stronger alignment of social spending with outcomes is essential to translate reforms into inclusive development.

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Eswatini’s five-year CPF FY2024-2028 aims to support Eswatini’s shift to a more private sector-led model that promotes inclusive, sustainable, and resilient growth. It focuses on two outcomes: increased private sector employment and improved human capital development.

It is aligned with Eswatini's National Development Plan (2023-2027) and the Program of Action (PoA) of the current government, both of which seek to improve governance and fiscal discipline and to foster inclusive private-sector growth that provides sustainable livelihoods for all, especially women and youth, as well as improvements in service delivery.

As part of the World Bank Human Capital Project, the Bank is supporting Eswatini's efforts to boost inclusive growth and end extreme poverty through investment in people. Eswatini's Human Capital Index score of 134, above the Sub-Saharan Africa average of 127 but below the Lower Middle Income country average of 153, reflects investments in health, education, and workforce participation, yet signals room for improvement against the maximum score of 325. Each 10-point increase, achievable through targeted policy reforms, translates to 10% higher future earnings. The Bank's support includes two human capital investment projects totaling $59 million, complemented by a $15 million water and sanitation (WASH) investment underpinning health and nutrition outcomes.

Since July 1, 2024, Eswatini has been classified as a "blend country," making it eligible to financing from both IDA and IBRD. Both windows provide concessional financing—low-interest loans designed to support poverty reduction, inclusive growth, and sustainable development—with IDA offering more favorable terms and IBRD providing financing that remains well below commercial market rates. This dual eligibility allows Eswatini to benefit from both highly concessional resources and more flexible financing instruments depending on the nature of its development priorities and fiscal capacity.

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Partners include the United Nations Development System (UNDS), United Kingdom, United States, European Union, and African Development Bank (AfDB). The World Bank in Eswatini engages with other development partners through the Eswatini International Development Partners Platform (IDPP) which was established to foster enhanced information sharing and coordination of the development activities of Eswatini’s international development partners.

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Video Story: From Paper to Pixels

The Strengthening Early Childhood Development and Basic Education Systems to Support Human Capital Development in Eswatini Project has piloted the use of technology to teach mathematics and science in 20 rural schools in Eswatini. 131 teachers completed the basic teaching methodology course and reached 2,136 learners with improved instruction methods. To improve early childhood education, 340 grade 0 classrooms have been equipped with learning materials.

The Network Reinforcement and Access Project (NRAP) has connected 6,331 households to the grid, bringing the number of people with grid electricity access from 127,892 to 153,216. Building on the NRAP, the government obtained financing of $100 million ($10 million grant, $39 million IDA concessional funding, and $51 million IBRD loan) through the ASCENT-Eswatini Project to achieve universal access to electricity. The project will increase domestic generation capacity and reduce dependence on South Africa.

The Water Supply and Sanitation Access Project ($53 million) has completed three reservoirs and a pump station. A National WASH Masterplan has been developed, providing a strategy for the country to achieve universal service coverage in the medium to long term, and revision of the national water legislation is underway. In addition to developing drought management plans for 14 urban areas, the National Disaster Management Agency launched a regional Center of Excellence in Drought Risk Management. The sanitation component of the project has reached 12,085 households, 40 schools, 7 clinics and 132 early childhood education and care points and aims to reach 38,000 people with social and behavior change campaign (SBCC).

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