Swaziland: Economy

Swaziland ranks as a lower middle income country, but it is estimated that 69% of the population lives in poverty. Most of the high-level economic activity is in the hands of non-Africans, but ethnic Swazis are becoming more active. Small entrepreneurs are moving into middle management positions. Although more than 70% of Swazis live in rural areas, nearly every homestead has a wage earner. The past several years have seen wavering economic growth as the small economy is strongly affected by climactic conditions and external factors. In 2010, the kingdom plunged into a fiscal crisis after alterations in the Southern African Customs Union revenue-sharing formula, the receipts from which accounted for more than half of the country’s fiscal revenue. Coupled with mismanagement of public funds and overspending, the decline in SACU receipts led to a near collapse of public finances and caused the government to draw down its foreign-exchange reserves and to seek external financing.

Nearly 60% of Swazi territory is held by the Crown in trust of the Swazi nation. The balance is privately owned, much of it by foreigners. The question of land use and ownership remains a very sensitive one. For Swazis living on rural homesteads, the principal occupation is either subsistence farming or livestock herding. Culturally, cattle are important symbols of wealth and status, but they are being used increasingly for milk, meat, and profit. Overgrazing, soil depletion, drought, and floods are persistent problems.

Swaziland enjoys well-developed road links with South Africa. It also has railroads running east to west and north to south. The older east-west link, called the Goba line, makes it possible to export bulk goods from Swaziland through the Port of Maputo in Mozambique. Most of Swaziland's imports were shipped through this port. Conflict in Mozambique in the 1980s diverted many Swazi exports to ports in South Africa. Swaziland mainly uses the port today for exports of sugar, citrus, and forest products, with future usage of the port expected to increase. A north-south rail link, completed in 1986, provides a connection between the Eastern Transvaal rail network and the South African ports of Richard's Bay and Durban.

The sugar industry, based solely on irrigated cane, is Swaziland's leading export earner and private-sector employer. Soft drink concentrate (a U.S. investment) is another large export earner, followed by wood pulp and lumber from cultivated pine forests. Pineapple and citrus fruit are other important agricultural exports.

Swaziland mines coal and diamonds for export. There also is a quarry industry for domestic consumption. In 2010, mining contributed about 1.8% of Swaziland's GDP, and predictions for the industry are mixed as coal mining is expected to increase but quarried stone production is expected to decrease.

A number of industrial firms have located at the industrial estate at Matsapha near Manzini. In addition to processed agricultural and forestry products, the industrial sector at Matsapha also produces garments, textiles, and a variety of light manufactured products. The Swaziland Industrial Development Company (SIDC) and the Swaziland Investment Promotion Authority (SIPA) have assisted in bringing many of these industries to the country. Government programs encourage Swazi entrepreneurs to run small and medium-sized firms. Tourism also is important, attracting more than 450,000 visitors annually, mostly from Europe and South Africa.

From the mid-1980s, foreign investment in the manufacturing sector boosted economic growth rates significantly. Beginning in mid-1985, the depreciated value of the currency increased the competitiveness of Swazi exports and moderated the growth of imports, generating trade surpluses. During the 1990s, the country often ran small trade deficits. South Africa and the European Union are major customers for Swazi exports.

Swaziland became eligible for the African Growth and Opportunity Act (AGOA) in 2000 and qualified for the apparel provision in 2001. AGOA created over 30,000 jobs, mostly for women, in Swaziland's apparel industry. However, the industry suffered in 2005-2006, due to both increased global competition as a result of the end of the Agreement on Textiles and Clothing (ATC) on January 1, 2005, and the strong Rand (Swaziland's currency is linked to the South African Rand at par), which reduced exports. There are an estimated 16,000 people employed in the apparel industry.

Swaziland, Lesotho, Botswana, Namibia, and the Republic of South Africa form the Southern African Customs Union, where import duties apply uniformly to member countries. Swaziland, Lesotho, Namibia, and South Africa also are members of the Common Monetary Area (CMA) in which repatriation and unrestricted funds are permitted. Swaziland issues its own currency, the lilangeni (plural: emalangeni).

Sources: