Swaziland Economy Facts
Swaziland has a high gross domestic product (GDP) per inhabitant, measured by African dimensions. However, the income is unevenly distributed among the inhabitants. Four-fifths of the population performs small-scale agriculture and livestock management for housing needs on land owned by the King.
Export crops such as sugar cane, cotton, citrus fruits and pineapples are grown on around 40 percent of the agricultural land. The great importance of agriculture to the Swazis makes them dependent on good weather conditions. Recurrent droughts have periodically created food shortages and even famine.
- Countryaah.com: Major imports by Swaziland, covering a full list of top products imported by the country and trade value for each product category.
Despite the fact that the vast majority of Swazis feed on agriculture, the industry accounts for a multiple share of the country’s GDP. The food industry, where foreign companies have invested, is most important. Important export goods from the industry are sugar, fruit concentrate and cotton yarn.
Swaziland has assets of coal, diamonds and gold, but the mining industry has declined economically since the 1960s. However, many Swazi men work in South African mines and thus provide for their families at home. However, cuts in South Africa’s mining industry during the 2000s led many Swazi guest workers to move home. Thus, the money the men send home has diminished in importance to the country’s economy. To a certain extent, this loss has been offset by the increasing number of well-educated Swaziland people working in South Africa and the United Kingdom and sending money from there.
- Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including SWZ which represents the country of Swaziland. Check findjobdescriptions to learn more about Swaziland.
AIDS a threat to the economy
Between 2004 and 2013, economic growth averaged just over 2 percent per year. During the first two years, the economic development of drought and a decline in the textile industry were hampered (see Industry). Growth in the following years, thanks to better weather conditions and greater demand for the country’s export products. However, widespread corruption has reduced the willingness to invest with foreign investors and international financial institutions such as the International Monetary Fund (IMF). Not least, the royal house’s waste of state assets has contributed to this (see Modern History and Current Policy). The result has been low tax revenues to the Treasury and constant budget deficits.
However, the biggest threat to Swaziland’s long-term economic development is the fact that the AIDS epidemic has hit the country very hard (see also Social conditions).
Swaziland is heavily dependent on the South African economy. The Swaziland currency, lilangeni, is linked to the South African Rand and the country is part of the South African Customs Union (Sacu), which brings significant revenue to the state. South Africa is one of the most important investors in Swaziland’s industry.
There is a program for privatizations and other market economy reforms, but conservative groupings within the ruling elite have slowed the pace of reform. Airlines, dairies and water companies are examples of companies that have been privatized.
Swaziland’s external debt in 2013 corresponded to almost a tenth of GDP. In 2012, the country received $ 89 million in official development assistance. In the case of drought and famine, the dependence on aid increases considerably.
Acute economic crisis
A severe financial crisis in the first half of 2011 led to an acute shortage of money in the Treasury. The crisis was mainly caused by sharply declining revenue from the Sacu Customs Union and by high costs for the royal house and the salaries of public servants. The budget deficit exceeded 14 percent of GDP, while the foreign exchange reserve fell for the 17th consecutive month to $ 523 million, which would be enough for two weeks of imports. Swaziland turned to the IMF with a loan application, but the fund demanded, among other things, increased taxes and reduced salaries for government employees. The government then appealed to South Africa for a loan. This was granted, but the South African government demanded that economic and political reforms, such as reduced costs for the court, be implemented in Swaziland. Swaziland therefore refused the loan.
In 2013, the economy turned slightly up, mainly thanks to increased revenue from the Customs Union, Sacu and an increased tax collection. The financial year 2012/2013 showed a small surplus and the foreign exchange reserve strengthened somewhat. In November 2014, the World Bank approved a financial support program for the period 2015–2018. In particular, the money would be spent on poverty reduction, attempts to increase Swaziland’s competitiveness in the world market and to create new jobs in tourism and agriculture.
However, the government did not use the increased revenue to pay off debts and more, but instead increased the expenditure. In 2014, for example, the court’s budget was increased by 10 percent. Thus, the country’s economic outlook continued to look bleak.
FACTS – FINANCE