
IS ESWATINI’S 12% GROWTH TARGET FEASIBLE?
In a bold policy statement, Prime Minister Russell Dlamini has announced the government of Eswatini’s plan to pursue an average economic growth rate of 12% within the next five years.
This ambitious target, laid out as part of what is said to be a progressive investment and industrialization policy framework, is presented as the cornerstone of a broader effort to accelerate the country's development. But the question remains: can our country realistically achieve such a monumental leap?
Over the past five years, the country’s economic growth has averaged a modest 3%, according to the Index of Economic Freedom. This slow rate of expansion reflects several structural challenges, including high unemployment, dependency on the Southern African Customs Union (SACU) revenues, and a lack of diversification in key economic sectors. For the country to quadruple its growth rate within such a short period would require unprecedented transformations in policy, investment, and productivity.
While, perhaps, the target of 12% might be a reflection of the government’s desire to see rapid industrialization and job creation, setting an aspirational goal does not automatically translate into tangible outcomes, and the reality on the ground suggests a long and complex road ahead for our nation.
Central to the government’s plan, as reflected in the Policy Statement, is the development of a robust industrialization and investment policy framework. Eswatini, with its strategic location in the region, has the potential to attract investment, particularly in sectors like agribusiness, renewable energy, and tourism. However, to truly capitalize on these opportunities, the government must ensure that it creates an enabling environment for investors.
At present, the country ranks relatively low on the World Bank’s Ease of Doing Business Index, which highlights the regulatory and bureaucratic barriers that deter foreign investment. Cutting through red tape, improving infrastructure, and enhancing workforce skills are critical steps that must be taken to support industrial growth. Without these reforms, the 12% target risks being more of a slogan than a reality.
A significant barrier to achieving this ambitious growth target lies in the country’s fiscal challenges. Eswatini’s public finances have long been constrained by budget deficits, driven in part by our over-reliance on SACU revenues. These customs receipts, which make up a significant portion of our national revenue, are volatile and highly dependent on regional economic conditions, particularly in South Africa.
To achieve and sustain high levels of growth, the country will need to diversify its revenue sources, reduce its dependence on SACU, and institute stronger fiscal management practices. This would involve not only curbing public expenditure but also ensuring that tax collection mechanisms are streamlined and effective, among other things.
The government’s capacity to manage these fiscal pressures while still investing in critical infrastructure and social services will be a key determinant of success. Without prudent fiscal policies, the goal of achieving 12% growth will be difficult to reach.
But these are just the subjective factors defining the domestic policy landscape; the external economic forces will also shape the country’s growth trajectory. Indisputably, the economic health is tied closely to South Africa, our largest trading partner. Any economic downturn or instability in South Africa could have ripple effects on Eswatini, undermining our growth prospects. Moreover, global factors such as commodity price fluctuations, trade restrictions, and geopolitical tensions all have the potential to either boost or stall our growth ambitions.
To an extent, the World Bank acknowledges the objective factors in its report on Eswatini. “Difficulties in the external and domestic environments constrain the country’s growth potential. Although real GDP growth is expected to continue to grow at 4.1% in 2024, global turmoil and a slowdown in the economy of the major trading partner like South Africa is likely to dampen economic activity,” report the World Bank.
In this interconnected global economy, no country can pursue a high-growth strategy in isolation. The government will need to remain vigilant and adaptable to external shocks if it hopes to achieve and sustain rapid economic expansion.
The Prime Minister’s 12% growth target is an extraordinarily steep target, given the country’s current economic conditions.
For the country to realistically aim for such growth, a clear and actionable roadmap is needed—one that addresses key structural challenges head-on. Reforms in the ease of doing business, improved fiscal management, and greater emphasis on skills development and industrial diversification are all crucial. Furthermore, political stability, good governance, and transparency will be essential in building investor confidence and driving sustainable economic activity.
To pursue such growth, the country must confront the structural arrangement of its politics, where the monarchy holds significant sway over both economic and political affairs. The royal family's high appetite for luxury and leisure has increasingly become a financial burden, with substantial resources from the national budget diverted to sustain their lifestyle. This places immense pressure on the taxpayer, draining funds that could otherwise be invested in critical areas like infrastructure, education, and healthcare. Without addressing this imbalance, the government's ability to achieve meaningful economic reforms and foster sustainable development will remain severely constrained.
A more measured target, perhaps in the range of 6% to 8% growth, could be more realistic and achievable if accompanied by the right policies and concerted efforts across both the public and private sectors.