Eswatini is making strides to redefine its economic landscape with a bold recovery strategy focused on transforming into an export-oriented and private sector-driven economy.
The International Trade Administration (ITA), part of the U.S. Department of Commerce, has emphasized this shift. Over the past year, Eswatini has prioritized attracting international companies to broaden its investment opportunities.
His Majesty King Mswati III has spearheaded several Foreign Direct Investment (FDI) initiatives, visiting major global hubs such as New York City, Singapore, Qatar, Bangladesh, and Taiwan.
At the core of Eswatini’s transformation is the energy sector, particularly renewable energy. The country has introduced policies,
such as the Renewable Energy and Independent Power Producer (RE&IPP) Policy, along with a Grid Code designed to draw in investments backed by sovereign guarantees.
Currently, Eswatini imports approximately 80% of its electricity from South Africa and Mozambique.
However, as energy shortages in these neighbouring nations escalate, it has become increasingly urgent for Eswatini to attain energy independence.
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By 2030, the nation aims for renewable energy to constitute 50% of its energy mix, although specific incentives for investors in this sector have yet to be unveiled.
Additionally, the ITA notes that Information and Communication Technology (ICT) has emerged as a priority area, particularly in response to the digital surge accelerated by Covid-19.
The Eswatini government is rolling out various digital initiatives, including e-governance systems, the Royal Science and Technology Park, and cloud-based solutions.
In line with the Southern African Development Community’s (SADC) digital migration program, Eswatini is exploring advanced ICT innovations such as Open Radio Access Network (ORAN) 5G and low-earth orbit satellite technologies to enhance terrestrial internet infrastructure.
These advancements reflect a forward-thinking approach to technology, creating significant investment prospects within the ICT sector.
The ITA has recognized that Eswatini provides an array of financial incentives to attract investors, including duty-free imports of machinery, profit repatriation, and tax allowances.
Approved investment projects benefit from a 10-year withholding tax exemption on dividends and a corporate tax rate of 10%. Investors in Special Economic Zones (SEZ) enjoy additional perks, such as a 20-year corporate tax exemption,
full VAT and customs duty refunds, and exemption from foreign exchange controls. Purpose-built factory shells and fully serviced industrial sites are also available at competitive rates to support new enterprises.
“The Swati economy is diverse, with agriculture and manufacturing playing key roles. Given the country’s relatively small population, Eswatini has positioned itself as an export-driven economy, utilizing free trade agreements and customs unions to access larger markets,” states the ITA overview.
“Trade is a crucial economic driver, contributing to 90.9% of GDP in 2021, one of the highest trade-to-GDP ratios in the region.”
Eswatini’s membership in significant regional economic groups such as the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), and the Southern African Customs Union (SACU) grants it access to markets with a combined population exceeding one billion.
Additionally, Eswatini’s participation in the Common Monetary Area (CMA) links the Swazi Lilangeni to the South African Rand, which helps maintain currency stability.
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Moreover, the ITA has reported steady growth in Eswatini’s trade relations with the United States. In 2022, Eswatini imported E1.3 billion ($72.5 million) worth of goods from the U.S., a significant increase from E642.4 million ($36.5 million) in 2021 and E373 million ($21.2 million) in 2020.
Exports to the U.S. totalled E394 million ($22.4 million) in 2022, a slight decrease from E413.6 million ($23.5 million) in 2021.
This trade partnership reflects a favourable trend, with the U.S. enjoying a E882 million ($50.1 million) trade surplus with Eswatini in 2022.
Eswatini has also maintained its eligibility under the African Growth and Opportunity Act (AGOA) since 2017, enhancing its trade prospects with the U.S.
Furthermore, the ITA has analyzed that Eswatini’s participation in international initiatives has solidified its role as a significant player in regional development.
In 2019, the African Union designated Eswatini as the regional headquarters of the A-ETrade Group for Southern Africa, aimed at promoting e-commerce and trade integration.
The country is also eligible for benefits under the Taiwan Allies International Protection and Enhancement Initiative Act (TAIPEI Act), U.S.
legislation supporting countries that recognize Taiwan diplomatically. Eswatini’s modern infrastructure, including roads, electricity, water supply, and telecommunications, is viewed as a robust foundation for economic growth.
The ITA concluded, “For U.S. investors, Eswatini presents compelling reasons to explore investment opportunities.
These encompass extended access to regional markets, modern infrastructure, a stable industrial relations environment, and a skilled English-speaking workforce.”
It emphasized that Eswatini’s strong investor protection framework enables businesses to operate confidently while taking advantage of the various incentives available.