Eswatini

Economic Overview

The Kingdom of Eswatini (formerly Swaziland) is a small, landlocked monarchy in Southern Africa with an economy that is highly integrated with that of its larger neighbor, South Africa. The country's economic structure is relatively diversified for its size, with significant contributions from a manufacturing sector and commercial agriculture, particularly sugarcane. The 2025-2026 outlook is for modest growth, heavily influenced by South Africa's economic performance, climate conditions affecting agriculture, and the country's unique political landscape.

GDP Size & Growth Trajectory

Eswatini's economy is small, with a GDP of around $4-5 billion. Growth has been modest, impacted by a combination of factors including drought, the knock-on effects of South Africa's weak growth, and periods of political and social unrest. The World Bank forecasts growth to be around 2.9% in 2025.

Sector Composition

• Industry: This sector is a surprisingly large contributor, accounting for over 40% of GDP. This is driven by a manufacturing sector that processes agricultural goods (sugar milling, fruit canning) and produces textiles and soft drink concentrates for export.
• Services: The services sector accounts for roughly 50% of GDP, led by wholesale and retail trade, and public administration.
• Agriculture: This sector contributes about 7% to GDP but is the primary source of livelihood for the majority of the population. The sector is dominated by commercial sugarcane cultivation, which is a major source of export revenue.

Inflation Trends

Inflation in Eswatini is closely linked to trends in South Africa due to the currency peg and the high volume of imported goods. The Central Bank of Eswatini aims to keep inflation within a manageable range.

Fiscal & Monetary Policy Stance

• Monetary Policy: Eswatini is part of the Common Monetary Area (CMA) with South Africa, Lesotho, and Namibia. Its currency, the Lilangeni (SZL), is pegged 1:1 to the South African Rand (ZAR). This arrangement means that its monetary policy largely follows that of the South African Reserve Bank.
• Fiscal Policy: The government relies heavily on revenues from the Southern African Customs Union (SACU), which can be volatile. Managing public spending and a high public sector wage bill are key fiscal challenges.

Table 1: Key Macroeconomic Indicators (2023-2026F)

Market Size & Demand Potential

The domestic market is very small due to the small population size. The economy is heavily export-oriented and integrated with South Africa.

Population Size and Demographics

With a population of around 1.2 million, Eswatini has a small domestic consumer base.

Urbanization and Consumer Hubs

The two main urban centers are Mbabane (the administrative capital) and Manzini (the commercial hub).

Business Environment

The business environment presents a mix of opportunities and challenges, influenced by the country's unique political structure.

Ease of Doing Business & Regulatory Reforms

The Eswatini Investment Promotion Authority (EIPA) is the national agency responsible for promoting and facilitating investment. The government has made efforts to improve the business climate, but investors can face bureaucratic hurdles.

Political Stability & Governance

Eswatini is one of the world's last remaining absolute monarchies, which creates a unique political and governance dynamic.

Political Environment

King Mswati III is the head of state and holds ultimate executive, legislative, and judicial power. While this provides a high degree of top-down policy continuity, there have been growing calls for democratic reforms, leading to periods of social and political unrest. This underlying political tension is a key risk factor for investors.

Rule of Law & Investor Protection

The legal system is a dual system, combining Roman-Dutch law and customary law. While a legal framework for business exists, the rule of law can be influenced by the monarchy.

Infrastructure Readiness

Infrastructure is relatively well-developed for the size of the country.

Transport and Logistics

As a landlocked country, Eswatini relies on the transport corridors of its neighbors, primarily through South Africa to the port of Durban and through Mozambique to the port of Maputo. The internal road network is generally of good quality.

Energy Sector

The country imports a significant portion of its electricity from South Africa's Eskom, which exposes it to the risks of South Africa's energy crisis. There is potential to develop domestic renewable energy sources, particularly solar and biomass from sugarcane waste (bagasse).

Sector-Specific Opportunities

1. Agriculture and Agro-processing

This is the core of the economy. The sugar industry is highly efficient and a major exporter. There are opportunities in diversifying into other high-value crops and in further value addition, such as producing ethanol from molasses.

2. Manufacturing

The manufacturing sector is a key driver of exports. Textiles and apparel have been a significant sub-sector, benefiting from trade agreements like the African Growth and Opportunity Act (AGOA). There are also opportunities in food and beverage processing.

3. Tourism

Eswatini offers a unique cultural and wildlife tourism experience, with a reputation for being "Africa in a nutshell." Opportunities exist in developing hotels, game lodges, and cultural tourism attractions that leverage the country's rich traditions and monarchy.