Swaziland Economic Outlook
- Economic growth remains subdued and is estimated to have slowed down in 2016 to -0.6%, mainly due to two factors, severe drought and fiscal pressures; while prospects will be sluggish in 2017 and 2018.
- The political scene has continued to be relatively stable since the September 2013 elections, but the country’s ranking in participation and human rights remains low.
- Swaziland possesses a prominent industrial sector with a limited level of entrepreneurship that can be enhanced through a comprehensive industrial policy to develop local entrepreneurs and create productive employment for the citizens.
Swaziland’s economy continues on a declining trajectory with growth projected to have declined to -0.6% in 2016 from 1.7% in 2015. This reflected a slump in the primary sector as agricultural production declined because of the El Ninˇ o-induced drought. Rain-fed crops, particularly maize and cotton, along with irrigated crops, mainly sugar cane, recorded significant declines. In addition, a large decline in revenues from the Southern Africa Customs Union (SACU) put considerable pressure on the fiscal account. Against this backdrop, an expansionary fiscal stance amplified the negative impact of these shocks. Short-term prospects in 2017 and 2018 indicate a sluggish recovery, with growth remaining at 1.4% and 2.3% respectively, mainly predicated on improved agricultural performance due to improved weather conditions, as evidenced by normal to above normal rains in the 2016/17 planting season. The major downside risk emanates from the fiscal front, especially, the trajectory of SACU revenues, underscoring the need to expedite the passing and implementation of the amended Public Finance Management (PFM) bill. Swaziland continues to face major social challenges, such as high poverty and inequality; high unemployment, especially among youth; gender disparities; and a high rate of HIV/AIDS. Despite its classification as a low middle-income country, around 63% of the population live below the poverty line. Moreover, inequality is substantial; this is reflected in the Gini coefficient of 0.51.
Swaziland remains in the low human development category with a Human Development Index (HDI) value unchanging for four straight years of 0.531 from 2011 through 2015, which places it at 150 out of 188 countries. The country’s Millennium Development Goal (MDG) achievement record highlights a lack of progress in both the poverty and health-related MDGs. Future human development plans need to integrate the unmet goals of MDGs into the post-2015 United Nations development agenda, which proposes 17 Sustainable Development Goals (SDGs), with clear targets and indicators.
The industrial sector is Swaziland’s second largest sector in terms of contribution to GDP with an estimated share of 42% in 2014 after the tertiary sector (51%) and far above agriculture (6%). Manufacturing remains the dominant sub-sector accounting for 36% of GDP, with the main activities comprising commercial agro-processing of sugar (particularly Coca-Cola concentrate), wood pulp, citrus fruit, pineapples, meat and clothing and textiles. In recognition of the linkage between industrialisation and entrepreneurship, the government has put in place various initiatives to develop and promote indigenous Swazi entrepreneurship, particularly in small and medium enterprises (SMEs). However, the 2013/14 Integrated Labour Force Survey shows that there is limited entrepreneurship with the share of self-employment in all activities at only 20% of the labour force. Data on characteristics of entrepreneurs in SMEs reveals that 56% and 44% are owned by men and women, respectively. Also, young entrepreneurs – aged between 22 and 35 – own 33% of the country’s small businesses, with the services sector emerging as the leading small business sector. The government recognises that entrepreneurship can help the youth unemployment challenge. Towards this goal, it is focusing on various measures comprising inclusion of entrepreneurship training in the school curriculum, continued support of specific programmes that offer hands-on experience at the secondary and tertiary levels and revamping the Youth Enterprise Revolving Fund initiative. Swaziland needs a comprehensive industrial policy to support diversification, develop local entrepreneurs and to promote industrialisation across the country.