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 $4,300 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 52.2% of those aged 15 to 24 unemployed in 2025. 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 Gini coefficient of 51.2 reflects uneven income distribution.

Children growing up today will reach only a fraction of their productive potential, with an HCI+ score of 134 out of 325, above the Sub-Saharan Africa average of 126 but well below the lower-middle-income country average of 153.

On health, only 60% of fifteen-year-olds are expected to survive to age 60, reflecting the heavy toll of HIV and other preventable diseases. On education, just 4.5 learning-adjusted years of school are achieved out of 6.4 expected.

The largest shortfall is in employment: Eswatini's HCI+ employment pillar score of 9 is far below the regional average of 29, and closing this gap could raise future incomes by around 22.8%.

The biggest challenge is jobs, with many adults and young people unable to find work. With 50% of the population under 25, Eswatini has an 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 4.8% in 2025, a marked increase from 3% in 2024 and well above the ten-year average of 2.5%. Growth was largely driven by robust activity in services. Infrastructure development—including in roads, water systems, and energy projects like the Mpakeni Dam—also contributed, but aggregate investment declined. GDP growth is expected to ease to 3.8% in 2026 and 3.7% in 2027. 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. Inflation moderated further to 2.5% in July 2026, as food price deflation partly offset a sharp increase in fuel prices. However, food insecurity remains a challenge, with about a fifth of the population estimated to be food insecure. Given the lilangeni’s parity peg to the South African rand, the Central Bank of Eswatini has kept its policy rate broadly aligned with that of the South African Reserve Bank.

Fiscal pressures intensified in 2025, with the budget deficit widening sharply to an estimated 5% of GDP, compared with the budgeted 3.1%. This was due to a decline in Southern African Customs Union (SACU) revenues and higher-than-expected recurrent spending. The long-awaited public sector salary review,  implemented in late 2025, raised the wages and compensation bill to nearly 34% of total public expenditure, further entrenching expenditure rigidity. Government debt rose to about 44% of GDP, while the associated interest burden increased to 3% of GDP and is budgeted to exceed health spending in 2026.

The current account surplus increased from 2.0% of GDP in 2024 to 2.6% 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 to Support Human Capital Project is improving learning. 70,132 learners were reached, including 19,000 benefitting from well-resourced early childhood classrooms and 43,433 learners being assessed with tools that help teachers tailor instruction. It supports the country’s first nationally representative child development and early grade learning assessments. Technology-enabled mathematics and science instruction reached 7,699 learners in 20 junior secondary schools. 131 teachers were trained in learner-centered methods and a 17.9% increase in teacher content mastery was recorded. 5,078 learners were reached with grant improvement interventions and boys’ and girls’ clubs.

The Network Reinforcement and Access Project (NRAP) connected 6,331 households to the grid, boosting grid electricity access from 127,892 people to 153,216. The government obtained financing of $100 million through the ASCENT 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 reached 7,015 of the 11,880 targeted people with improved water supply, with work to reach the remaining underway. Designs and bidding documents of six projects coming out of the National WASH Masterplan have been developed, giving the government a headstart on future water supply and sanitation interventions to fast-track universal service.

The Disaster Risk Management Authority has operationalized the drought monitor, adopted the Drought Policy, and trained 59 Citizen Scientists and 300 community volunteers on knowledge preservation for the Drought Center of Excellence. 24,015 out of the targeted 38,000 people were reached with a sanitation social and behavior change campaign. Access to improved sanitation has been provided to 16,865 people out of the targeted 31,000. Sanitation facilities were completed in 35 schools, 4 clinics and 3 informal settlements.

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