Economy of Swaziland

Economy of Swaziland
Currency lilangeni (SZL), South African rand (ZAR)
1 April - 31 March
Trade organisations
WTO, SADC, SACU
Statistics
GDP $6.344 billion [1]
GDP rank 159th (nominal) / 157th (PPP)
GDP growth
0.3% (2011 est.)
GDP per capita
$5,807 [1]
GDP by sector
agriculture: 8.2%, industry: 46.9%, services: 44.9% (2011 est.)
6.1% (2011 est.)
Population below poverty line
69% (2006)
Labour force
457,900 (2007)
Labour force by occupation
agriculture: 70%
Unemployment 40% (2006 est.)
Main industries
Coal mining, wood pulp, sugar, soft drink concentrates, textile and apparel
124th[2]
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
$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 Swaziland is fairly diversified, with agriculture, forestry and mining accounting for about 13 percent of GDP, manufacturing (textiles and sugar-related processing) representing 37 percent of GDP and services – with government services in the lead – constituting 50 percent of GDP.

Contents

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

Agriculture

Title Deed Lands (TDLs), 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 (SNL), 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 TDLs on the one hand, and declining productivity subsistence agriculture (on SNL) on the other, may well explain the country’s overall low growth, high inequality and unemployment.

Economic growth

Economic growth in Swaziland 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 SNLs, repeated droughts, the devastating effect of HIV/AIDS and an overly large and inefficient government sector are likely contributing factors. Swaziland’s public finances deteriorated in the late 1990s following sizable surpluses a decade earlier. A combination of declining revenues and increased spending led to significant budget deficits. The considerable spending did not lead to more growth and did not benefit the poor. Much of the increased spending has gone to current expenditures related to wages, transfers, and subsidies. The wage bill today 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 rapid growth in SACU revenues has, however, reversed the fiscal situation, and a sizable surplus was recorded since 2006. SACU revenues today account for over 60 percent of total government revenues. On the positive side, the external debt burden has declined markedly over the last 20 years, and domestic debt is almost negligible; external debt as a percent of GDP was less than 20 percent in 2006.

Trade partners

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. Swaziland’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. Swaziland 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 Swaziland 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.

Swaziland, Lesotho, Botswana, Namibia, and the Republic of South Africa form the Southern African Customs Union (SACU), 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), which is at par with the South African rand.

Infrastructure

Swaziland enjoys well-developed road links with South Africa. Swazi Rail 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 Swaziland through the Port of Maputo in Mozambique. Until recently, 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. 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.

Mining

Currently, Swaziland’s mineral sector is governed under a policy drawn up prior to Swaziland’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.[3]

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.[3]

Although fewer than 1,000 Swazis are directly employed in the mining sector, many workers from Swaziland 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 Swaziland's economy through wage repatriation have been diminished, though, by the collapse of the international gold market and layoffs in South Africa.[4]

Other economic statistics

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

References

  1. ^ a b "Swaziland". International Monetary Fund. Retrieved 18 April 2013. 
  2. ^ "Doing Business in Swaziland 2012".  
  3. ^ a b Mbendi Information ServicesMbendi Information Services, "Mining in Swaziland - Overview",
  4. ^ Encyclopedia of the Nations'Encyclopedia of the Nations, "Swaziland - Mining",

External links

  • web.worldbank.org
  • Economy of Swaziland at DMOZ
  • Swaziland latest trade data on ITC Trade Map
  • CIA World Factbook: Swaziland
  • MBendi Swaziland overview
  • Swazibusiness.com
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