The Swaziland Environment Action Plan (SEAP)

Contents | Chapter 1 | Chapter 2 | Chapter 3 | Chapter 4 | Chapter 5 | Chapter 6 | Chapter 7 | Chapter 8

3.1 The Economy | 3.2 People | 3.3 Land | 3.4 Water Sector | 3.5 Biodiversity | 3.6 Agriculture | 3.7 Forestry | 3.8 Manufacturing | 3.9 Tourism | 3.10 Mining | 3.11 Fuel and Energy

3.0 SOCIO ECONOMIC DEVELOPMENT AND THE ENVIRONMENT

3.1 The Economy

The economy of Swaziland is closely tied to that of South Africa, not only by virtue of its close proximity, but also by virtue of its membership in the South African Customs Union (SACU), from which Swaziland derives roughly half of its government revenues, and the Common Monetary Area (CMA). Approximately 80% of Swaziland's imported and 60% of its exports are with South Africa.

Swaziland consists of a traditional subsistence sector and a modern, capital-intensive sector, which is largely foreign controlled. Local participation is through equity share holding through Tibiyo Taka Ngwane, a national development fund.

During 1987-1991, the annual real growth rate of Swaziland's economy was a favourable 7.2%. However, since 1991-1992, partly as a result of a regional drought and economic recession and by the lifting of sanctions, in South Africa, real growth slowed down and foreign investment fell.

Historically, Swaziland has had an agriculturally-based economy. However, in 1991, manufacturing contributed 39.1% to the total GDP, making it the largest sector in the economy. Agriculture accounted for 13.9% of the GDP. Currently, the major sectors are manufacturing and agriculture. Swaziland has a diversified export base, including sugar, wood pulp, pineapples, citrus and minerals.

Since 1990, gross domestic savings have dropped sharply, initially due to declining foreign investment and increased consumption. An increase in the size of the civil service and salary increases have contributed significantly to increased government consumption. and a consequent decline in gross domestic savings. Presently government expenditure is approximately 49% of the GDP. This is considered too high in the face of the slowdown in investment and reduced tax revenues.

Government expenditure considerably exceeds revenues. In 1992-93, there was a budget surplus of E21 million. Now, in 1996-97, there is an anticipated deficit of E136 million, which is expected to grow to approximately E600 million within the next four years. The renegotiation of the SACU agreement within the next ten years, when Swaziland's share of the customs revenue pool may be reduced, will put extra pressure on the budget and balance of payments positions.

Economic growth declined from an average of 4% in 1989-95 (in which the rate swung widely from 1 to 10%) to 2.8 in 1995-96, which is less than the population growth rate (3.4%). This means that on the average, GDP per capita is decreasing and people are getting poorer. (The 1993 Human Development Report classified 46% of the population as living in "absolute poverty"). About 25% of the population between the ages of 15 and 65 is formally employed two thirds in the private sector and one third in the public sector). The number of unemployed has been increasing rapidly (approximately 10% per annum), and formal employment opportunities are static or decreasing. Distribution of income, estimated at $1,100. per capita in the Poverty Assessment Report, is highly skewed, and human development is lagging behind economic growth.