Investment climate in Swaziland
Swaziland is classified as a lower middle income country with its economy closely linked to South Africa. South Africa accounts for about 85% of imports and about 60% of exports. Economic growth slowed down from 2.4% in 2014 to 1.7% in 2015 mainly because of severe drought and a weaker mining sector and subdued prospects in South Africa. The projection show that the economic growth in 2016 and 2017 will remain below 2%. The social challenges include the high rate of HIV/AIDS and an uneven distribution of resources. Under the current policy, the public debt to GDP ratio could increase from 17.4% in 2015 to 24% in 2018 increasing risks of fiscal un-sustainability.
Why invest in Swaziland?
- Investor friendly tax regime;
- Educated and easily trainable and productive labour force;
- Access to Southern African Customs Union market of nearly 50 million people;
- Access to Southern African Development Community (SADC) market of over 130 million people.
- Access to Common Market of East and Southern Africa (COMESA)- twenty African countries representing a market of over 230 million people and
- Good infrastructure facilities
However despite the above, many potential investors are currently hesitating about investing in Swaziland because of the unresolved social, economic, judicial and political challenges.
Swaziland is ruled by absolute monarch King Mswati III since 1986 with supreme executive powers. Although the constitution provides for three separate organs of government the executive, legislature, and judiciary but under Swaziland’s law and custom, all powers are vested in the king. The king appoints 20 members of the 30-member senate, 10 members of the house of assembly, and approves all legislation passed by parliament.
Swaziland has a population of 1.2 million with rate of 1.1 % per annum. Despite being classified as a lower middle income country with a gross domestic product (GDP) per capita of about $3,230, 63% of the population are living below the poverty line. The projected population results according to Swaziland Global Fund Country Coordinating Mechanism are as follows;
- The population would increase to 1,303,090 in mid-2030,
- The population growth rate would decrease from 1.135 percent to 0.824 percent
It is estimated about 22.1 % of the total population of Swaziland live in urban areas with estimated annual rate of change of 1.32% for the period from 2010 to 2015. The urban population is expected to increase to 345,298 in 2030, representing 26.5 percent of the total population, up from current level of 22.1 percent.
Doing business in Swaziland
The highlights of World Bank score of doing business in Swaziland are summarised as follows;
|Topics||World Bank 2017 Rank||World Bank 2016 Rank||Change in Rank|
|Starting a Business||154||152||
|Dealing with Construction Permits||91||91||
|Protecting Minority Investors||132||129||-3|
|Trading across Borders||31||31||
The government is the in process of creating a conducive environment for addressing the weaknesses pointed out during the survey.
Exchange controls are currently administered by the Central Bank Exchange Control Department. All international commercial transactions should be handled through authorized foreign exchange dealers.
Swaziland has a dual legal system consisting of a set of courts that follow Roman-Dutch law and a set of national courts that follow Swazi law and customs. Swaziland western-style courts do enforce property rights. The legal system has a western-style court system to enforce contracts and the industrial court hears industrial relations matters. The country has various laws governing commercial or contractual laws. The Industrial Relations Act of 2000 created the Conciliation, Mediation and Arbitration Commission (CMAC) to resolve employer-employee disputes. The Company Act of 2009, which outlines commercial law; the Competition Act of 2007, which screens and approves mergers and acquisitions; and the Standards Act of 2003, which promotes quality principles and facilitates the use of standards to reduce technical barriers to trade and investment. The majority of investor disputes are employee-related and resolved in arbitration or the courts.
Key development challenges
- To address the high rate of poverty and inequality in the country.
- To address challenges of HIV/AIDS high prevalence rates
- Increasing investments in human capital
- Implementing transformative development programs to put Swaziland on a high growth rates.
According the latest available results, Swaziland scored 43 points out of 100 and ranked number 69 least corrupt nation out of 175 countries on the 2014 Corruption Perceptions Index reported by Transparency International.
Most visits are trouble-free and incidences of crime levels are relatively low but one should take necessary precautions while in the country.
Unemployment and skilled labour
The country has high unemployment rate of 28.1%.There is a need to invest in human resources in order to address lack of skill as a contributory factor to unemployment.
Attitude to Foreign Direct Investment
The government of Swaziland regards foreign direct investment as a means to drive the country’s economic growth, obtain access to foreign markets for its exports, and improve international competitiveness. All business sectors are open to foreign investment although government approval is needed. The Swaziland Investment Promotion Authority (SIPA) is charged with designing and implementing strategies for attracting desired foreign investors.
Restrictions on Foreign investment
Foreign investors own the majority of Swaziland’s largest businesses, either fully or with minority participation by Swazi institutions. There are no legal restrictions on foreign ownership that are discriminatory against foreign investors, but the government and the royal family’s direct investment in industry is a practical limitation to foreign investment requiring a Swazi investor or joint venture. Both foreign and domestic private entities have a right to establish businesses and acquire and dispose of interest in business enterprises. The only industries that have limits on foreign control are mining and real estate. According to the Mines and Minerals Act of 2011, in any mining company the king acquires 25 percent of shareholding without any monetary consideration and another 25 percent shareholding is allocated to the government. Foreigners cannot own the majority of the country’s land as it remains in trust for the Swazi nation and the King and chiefs have control over its use and allocation.
Intellectual Property (IP) Rights.
Copyright protection is addressed under four statutes dated 1912, 1918, 1933 and 1936 that Swaziland inherited from the colonial era, under which copyrights, patents, and trademarks were protected under various acts promulgated by colonial authority. In August 2014 a Copyright and Neighbouring Bill repealing the Copyright Act of 1912 was circulated and in February 2015, the government circulated two more bills, one for the establishment of an intellectual property tribunal and the Trademarks Amendment bill amending the Trademarks Act of 1981. All these bills are still to be debated in Parliament.
The resources include asbestos, coal, clay, cassiterite, hydropower, forests, small gold and diamond deposits, quarry stone, and talc
Information about Investment climate in Swaziland has been summarized as follows;
Development partners of Swaziland
Double Taxation Treaties in Swaziland
Exports of Swaziland
International Trade Agreements with Swaziland
Investment Authority of Swaziland
Investment guarantees in Swaziland
Investment Incentives in Swaziland
Investment opportunities in Swaziland
Natural resources of Swaziland
Trading partners with Swaziland
Swaziland Stock Exchange
Sources of information