Economy of Eswatini

From Wikipedia, the free encyclopedia

Jump to navigationJump to search
This article needs additional citations for verification. Please help improve
this article by adding citations to reliable sources. Unsourced material may be
challenged and removed.
Find sources: "Economy of
Eswatini" – news · newspapers · books · scholar · JSTOR (November 2009) (Learn how
and when to remove this template message)

Economy of Eswatini

Currency lilangeni (SZL), South African rand (ZAR)

Fiscal year 1 April - 31 March

Trade organisations AU, AfCFTA, WTO, SADC, SACU

Statistics

 $4.711 billion (nominal, 2018 est.)[1]

GDP
 $12.069 billion (PPP, 2018 est.)[1]

GDP rank 159th (nominal) / 157th (PPP)

GDP growth 3.2% (2016) 1.9% (2017)

0.5% (2018e) 1.1% (2019f)[2]

GDP per capita  $4,267 (nominal, 2018 est.)[1]

 $10,932 (PPP, 2018 est.)[1]

GDP by sector agriculture: 8.77%, industry: 33.8%, services: 53.15% (2019

est.)[3]
Inflation (CPI) 6.1% (2011 est.)
Population 69% (2006)
below poverty line
Labour force 457,900 (2007)
Labour force by agriculture: 70%
occupation

Unemployment 40% (2006 est.)

Main industries Coal mining, wood pulp, sugar, soft drink concentrates,

textile and apparel

Ease-of-doing-  121st (medium, 2020)[4]
business rank

External
 Exports $2.049 billion f.o.b. (2011 est.)
Export goods soft drink concentrates, sugar, wood pulp, cotton yarn,

refrigerators, citrus and canned fruit

Main export partners  South Africa 59.7%

 EU 8.8%

 US 8.8%

 Mozambique 6.2%

(2004)

Imports $2.076 billion f.o.b. (2011 est.)

Import goods motor vehicles, machinery, transport equipment, foodstuffs,

petroleum products, chemicals

Main import partners  South Africa 95.6%

 EU 0.9%

 Japan 0.9%

 Singapore 0.3%

(2004)

Public finances
Public debt $703.1 million (2011 est.)

Revenues $1.006 billion (2011)

Expenses $1.488 billion (2011)

Economic aid recipient: $104 million (2001)

Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The economy of Eswatini is fairly diversified. Agriculture, forestry and mining account

for about 13 percent of Eswatini's GDP whereas manufacturing (textiles and sugar-
related processing) represent 37 percent of GDP. Services – with government services
in the lead – constitute the other 50 percent of GDP.

Contents

 1Agriculture
 2Economic growth
 3Trade partners
 4Infrastructure
 5Sugar industry
 6Mining
 7Other economic statistics
 8See also
 9References
 10External links

Agriculture[edit]
Title Deed lands, where the bulk of high-value crops are grown (sugar, forestry, and
citrus) are characterized by high levels of investment and irrigation, and high
productivity. Nevertheless, the majority of the population – about 75 percent—is
employed in subsistence agriculture on Swazi Nation Land, which, in contrast, suffers
from low productivity and investment. This dual nature of the Swazi economy, with high
productivity in textile manufacturing and in the industrialized agricultural title deed lands
on the one hand, and declining productivity subsistence agriculture on Swazi Nation
Land on the other, may well explain the country's overall low growth,
high inequality and unemployment.[citation needed]

Economic growth[edit]
Economic growth in Eswatini has lagged behind that of its neighbors. Real GDP growth
since 2001 has averaged 2.8 percent, nearly 2 percentage points lower than growth in
other Southern African Customs Union (SACU) member countries. Low agricultural
productivity in the Swazi nation lands, repeated droughts, the effect of HIV/AIDS, and
an overly large[clarification needed] and inefficient government sector are likely contributing factors.
Eswatini's public finances deteriorated in the late 1990s following sizeable [clarification
needed]
 surpluses a decade earlier. A combination of declining revenues and increased
spending led to significant[clarification needed] budget deficits. The considerable[clarification needed] spending
has not led to more economic growth and has not benefitted the poor to the same
extent as regional comparators, although the poverty headcount has shifted slightly
during the first decade of the 2000s (SHIES 2010). Much of the increased spending has
gone to current expenditures related to wages, transfers, and subsidies. The wage bill
today[when?] constitutes over 15 percent of GDP and 55 percent of total public spending;
these are some of the highest levels on the African continent. The recent [when?] rapid
growth in SACU revenues has, however, reversed the fiscal situation, and a
sizeable[clarification needed] surplus was recorded in 2006/07 and 2012/13. SACU revenues
today[when?] account for over 50 percent of total government revenues. On the positive
side, the external debt burden has declined markedly [clarification needed] over the last 20 years,
[when?]
 and domestic debt is almost negligible; external debt as a percent of GDP was less
than 20 percent in 2006.

Trade partners[edit]
The Swazi economy is very closely linked to the economy of South Africa, from which it
receives over 90 percent of its imports and to which it sends about 70 percent of its
exports. Eswatini has great resources making a good trading partner. Eswatini's other
key trading partners are the United States and the EU, from whom the country has
received trade preferences for apparel exports (under the African Growth and
Opportunity Act – AGOA – to the US) and for sugar (to the EU). Under these
agreements, both apparel and sugar exports did well, with rapid growth and a strong
inflow of foreign direct investment. Textile exports grew by over 200 percent between
2000 and 2005 and sugar exports increasing by more than 50 percent over the same
period. The continued vibrancy of the export sector is threatened by the removal of
trade preferences for textiles, the accession to similar preferences for East Asian
countries, and the phasing out of preferential prices for sugar to the EU market.
Eswatini will thus have to face the challenge of remaining competitive in a changing
global environment. A crucial factor in addressing this challenge is the investment
climate. The recently concluded Investment Climate Assessment provides some
positive findings in this regard, namely that Eswatini firms are among the most
productive in Sub-Saharan Africa, although they are less productive than firms in the
most productive middle-income countries in other regions. They compare more
favorably with firms from lower middle income countries, but are hampered by
inadequate governance arrangements and infrastructure. [citation needed]
Eswatini, Lesotho, Botswana, Namibia, and the Republic of South Africa form
the Southern African Customs Union (SACU), where import duties apply uniformly to
member countries. Eswatini, Lesotho, Namibia, and South Africa also are members of
the Common Monetary Area (CMA) in which repatriation and unrestricted funds are
permitted. Eswatini issues its own currency, the lilangeni (plural: emalangeni), which is
at par with the South African rand.

Infrastructure[edit]
Eswatini enjoys well-developed road links with South Africa. Eswatini Railways operates
its railroads that run east to west and north to south. The older east–west link, called
the Goba line, makes it possible to export bulk goods from Eswatini through the Port
of Maputo in Mozambique. Until recently, most of Eswatini's imports were shipped
through this port. Conflict in Mozambique in the 1980s diverted many Swazi exports to
ports in South Africa. A north–south rail link, completed in 1986, provides a connection
between the Eastern Transvaal (now Mpumalanga) rail network and the South African
ports of Richards Bay and Durban. From the mid-1980s foreign investment in the
manufacturing sector boosted economic growth rates significantly. Since mid-1985, the
depreciated value of the currency has 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.[citation needed]

Sugar industry[edit]
Eswatini is the fourth largest producer of sugar in Africa and is 25th in production in the
world.[5] This demonstrates the immense focus of the industry in order to continue to
grow their economy. Eswatini's GDP was $8.621 billion (US dollars) in 2014 based on
purchasing power parity and of that 7.2% of that is from the agriculture sector and of
that sector, sugarcane and sugar products have the largest impact on GDP. According
to the World CIA Factbook, wood pulp and sugarcane were the largest exports of
Eswatini until the wood pulp producer closed in January 2010. [6] This left the sugarcane
industry as the sole main export. The largest company that produces sugar in Eswatini
is the Royal Eswatini Sugar Corporation (RES Corporation) and it produces a little
under two-thirds of total sugar in the country and produces over 3,000 jobs for the
people of Eswatini. The RES Corporation is composed of two main sugar mill
producers, Mhlume and Simunye, which produce a combined 430,000 tons of cane per
season. The second largest sugarcane company is Ubombo Sugar Limited which has
grown from producing 5,600 tons in 1958 to approximately 230,000 tons of sugar
annually. The third largest sugarcane producer is the Tambankulu Estate (largest
independent sugar estate) and it produces 62,000 tons of sugar annually on 3,816
hectares of land.[7]
The largest export partners of Eswatini and the larger Southern African Development
Community (SADC) is the European Union. The SADC is a group of many southern
African countries who have banded together in order to try to improve their individual
socioeconomic status. In 2014-2015 the sugar production of Eswatini was 680,881
metric tons and of this about 355,000 metric tons of sugar was shipped to the European
Union, larger than any other export partner. Another trade partner for Eswatini was
the United States where they shipped 34,000 metric tons of sugar in the 2014-2015
year under the Tariff Rate Quota. These numbers are up from past years and continue
to rise. The expected output based on the 2015-2016 post forecast predictions are that
Eswatini will produce 705,000 metric tons, a new record for the country that can be
attributed to an increase in land being available for sugar cultivation. Of this predicted
figure about 390,000 metric tons will go to the European Union as part of a new
Economic Partnership Agreement (EPA). This new agreement between the EU and
SADC means that members like Eswatini can sell their sugar on a duty-free and quota-
free basis.[5]
The quotas that the EU and the United States fill is similar to the Sugar Protocol which
began in 1975. The goal of the Sugar Protocol was for the EU to purchase and import
specific quantities from countries in Africa, the Caribbean and the Pacific. These prices
and quantities guaranteed production and were well above the world price, which
translated into substantial profits for these mostly impoverished countries. [8] This
agreement reached an end in 2009 because the EU could no longer support the pre-
determined demands. The Sugar Protocol came to an immediate end and was replaced
with separate Economic Partnerships with the varying countries and regions. Even
though the demands will be just as high as under the Sugar Protocol, the prices will
drop significantly.[9] In the case of Eswatini, they have received good reassurance that
their product will still be bought by the EU.[5]

Mining[edit]
Main article: Mining industry of Eswatini
Currently, Eswatini's mineral sector is governed under a policy drawn up prior to
Eswatini's independence. In response to the sector's recent decline, a new mining
policy is being drafted by consultants, paid for by a grant from China, and legislation to
facilitate small-scale mining has also been proposed. [10]
The country's main source of foreign exchange is the Bulembu asbestos mine, however
production has hit a steep decline. Diamond, iron ore and gold have also been found in
the past, however a lack of investment and development policy has seen the region's
potential falter.[10]
Although fewer than 1,000 Swazis are directly employed in the mining sector, many
workers from Eswatini processed timber from the country's extensive pine populations
for mines in South Africa, and around 10,000–15,000 Swazis were employed in South
African mines. Their contributions to Eswatini's economy through wage repatriation
have been diminished, though, by the collapse of the international gold market and
layoffs in South Africa.[11]

Other economic statistics[edit]

The following table shows the main economic indicators in 1980–2017. [12]

198 198 199 199 200 20 20 20 200 20 20 20 20 20 20 20 20 20

Jahr
0 5 0 5 0 05 06 07 8 09 10 11 12 13 14 15 16 17

0.9 1.5 2.9 3.8 4.8 6.5 7.0 7.5 7.9 8.3 8.7 9.0 9.5 10. 10. 10. 11. 11.
GDP 0 0 5 4 3 2 6 4 0 2 2 7 6 18 74 97 11 34
in $ Bln Bln Bln Bln Bln Bl Bl Bl Bln Bl Bl Bl Bl Bl Bl Bl Bl Bl
(PPP)
. . . . . n. n. n. . n. n. n. n. n. n. n. n. n.

GDP
per 1,6 2,3 3,7 4,4 5,0 6,5 7,0 7,3 7,6 7,9 8,2 8,5 8,8 9,3 9,7 9,8 9,8 9,8
capita 53 59 93 21 33 37 00 87 58 78 68 02 53 17 12 07 14 84
in $
(PPP)

GDP
growt −3. 3.8  8.9  4.0  2.6  5.5  5.2  3.9  2.8  4.5  3.5  2.0  3.5  3.5  3.6  1.0  0.0  0.2 
h 8 % % % % % % % % % % % % % % % % % %
(real)

Inflati
on 18. 20. 13. 12. 12. 1.8  5.2  8.1  12. 7.4  4.5  6.1  8.9  5.6  5.7  5.0  8.0  6.3 
(in 2 % 5 % 1 % 3 % 2 % % % % 7 % % % % % % % % % %
Percent

Gover
nment
debt 12  17  13  14  15  14  10  14  14  15  15  14  18  25  29 
... ... ...
(Percen % % % % % % % % % % % % % % %
tage of
GDP)
Household income or consumption by percentage share:
lowest 10%: 1.6%
highest 10%: 40.7% (2001)
Industrial production growth rate: 1% (2001 est.)
Electricity – production: 470 GWh (2008), 420 GWh (1998)
Electricity – consumption: 1,207 GWh (2008), 962.9 GWh (2001), 1.078 GWh (1998)
Electricity – exports: 0 kWh (2009, 2001, 1998)
Electricity – imports: 768 GWh (2009), 639 GWh (2001), 687 GWh (1998)
note: imports about 60% of its electricity from South Africa (2009)
Currency: 1 lilangeni (E) = 100 cents
Exchange rates: emalangeni (E) per US$1 – 7.3 (2011), 7.32 (2010), 8.42 (2009), 7.75
(2008), 7.4 (2007), 10.5407 (2002), 8.6092 (2001), 6.9398 (2000), 6.1087 (1999),
5.4807 (1998), 4.6032 (1997), 4.2706 (1996), 3.6266 (1995); note – the Lilangeni is at
par with the South African rand

See also[edit]
 Economy of Africa
 Eswatini
 United Nations Economic Commission for Africa