Swaziland's potential for economic growth and poverty reduction remains promising. The country has substantial natural resources and fertile land, which offer great potential for agriculture-led development, key to future economic growth and poverty reduction in the country. Swaziland also has a well-diversified agro-based manufacturing industry, with sugar and wood pulp as the main foreign exchange earners. Recent years have seen the growth of textile production, especially with the country’s participation in the African Growth and Opportunity Act (AGOA), a United States Trade Act designed to enhance access to U.S. markets for 39 Sub-Saharan African countries.

Over time, the role of agriculture as a key driver in the Swazi economy has declined while manufacturing and government services have emerged as the dominant sectors. Tourism is expected to offer growth opportunities in the future with the development of the Lubombo Development Initiative launched in 1997 by South Africa, Mozambique and Swaziland, and other initiatives. However, to attain its potential for attaining high and sustainable growth and poverty reduction, Swaziland needs to tackle a number of challenges.

Development Policy

Classified as a middle income country by Multilateral Development Banks (MDBs), including the African Development Bank, the country has been denied much-needed concessional resources appropriate to  address its social challenges. Key  challenges in 2008 included a  low real GDP growth rate, a high level of poverty (69%), growing unemployment, high HIV/AIDS prevalence rate, over-dependence on the Southern African Customs Union (SACU) revenue (over 60%), and inability to attract substantial foreign direct investment. High income inequalities, marked by a gini coefficient of 0.51, coupled with other socio-economic factors, contribute to the high incidence of poverty in the country. Poverty is most pronounced in the rural areas. Gender inequalities persist in Swazi society and are most pronounced  in access  to and control of productive resources. An estimated 63 per cent of Female Headed Households (FHH) are poor compared to  52 per for Male Headed Households. Issues of governance were also reported to have had a negative impact on the investment climate and growth. 

Real GDP, which has declined over the years from 2.9 per cent in 2003 to 2.3 per cent in 2007, has been below the average of the Southern African Customs Union, to which Swaziland joined in 2000. the country’s real GDP growth rate is below the 5.5 percent required to half poverty by 2015.

Bank Group assistance strategy to Swaziland for the period 2009-2023 is contained in its Results Based Country Strategy Paper that was being finalized in the last quarter of 2008. It is based on the government’s development agenda, outlined in the National Development Strategy (1997-2022), and the Bank’s New Strategic Framework for Enhancing Bank group Support to Middle Income Countries. It was developed in consultation with the Ministry of Finance, the Ministry of Economic Planning and Development, and other stakeholders.

The strategy places emphasis on the acceleration of economic growth and the need to make important strides to overcome the HIV/AIDS pandemic. It identifies quantitative targets to be attained during the implementation period and rests on two pillars, namely; Investing in Infrastructure to Improve Productivity and Competitiveness and Investing in Pro-Poor Socio-Economic Services. Expected outcomes include the development of infrastructure to enhance the business environment and also ensure increased agricultural productivity and food security. Other expected outcomes include strengthened health systems and improved and equitable access to quality education, skills development and employment.