Swaziland

Politics:

• Analysis

  Swaziland politics: Quick View - Another constitutional crisis

  Event

  The Prime Minister, Sibusiso Dlamini, has refused to resign, contrary to the constitution, after a parliamentary vote calling for his resignation.

  Analysis

  The genesis of the problem was an order from the prime minister to the Swaziland Post and Telecommunications Corporation (SPTC) to withdraw from the lucrative mobile network in favour of MTN Swaziland (the local subsidiary of the South African firm, MTN). King Mswati III is a shareholder in the local MTN operation and his daughter, Princess Sikhanyiso Dlamini, is a member of the board. This decision prompted parliament to take an uncharacteristic step on October 3rd of supporting the motion calling for the prime minister's resignation. The members of parliament (MPs) were probably attempting to earn some popular support ahead of the 2013 elections, after the people at a sibaya (a national consultation convened by the king at which ordinary Swazis can express their views) in August called for the resignation of the prime minister and cabinet. The parliamentary vote was 42-6 in favour of the motion. The vote was welcomed by ordinary Swazis, who face higher tariffs in a market lacking in competition.

  The prime minister has stood firm and ordered the cabinet to carry on business as usual. The question now is how the king will react. The most likely course of events is that the king will do nothing, hoping that the issue will peter out. This is probable, given that the MPs do not have the resources to mount a court challenge, and neither do the local civil organisations who also called for the resignation of the prime minister and cabinet.

  October 11, 2012

• Background

  Swaziland: Key figures

  King Mswati III

  King since 1986, and previously considered a moderate, he has adopted an increasingly hard line against the notion of a multiparty system.

  Prince Masitsela

  Regional administrator of Manzini District. Prince Masitsela is the most senior prince and is generally considered to be one of the main leaders of the traditionalists.

  Sibusiso Dlamini

  Prime minister from 1998-2003 and again from October 2008. Mr Dlamini is a hardliner, who plunged Swaziland into a judicial crisis in 2002-04. His appointment has been welcomed by the progressive forces, who believe that it will accelerate open confrontation and political change. He remains influential among the traditionalists.

  Jan Sithole

  Secretary-general of the Swaziland Federation of Trade Unions (SFTU). Mr Sithole is popular among workers and is influential in regional and international trade union circles.

  Mario Masuku

  President of the People's United Democratic Movement (Pudemo). Mr Masuku enjoys the support of radicals and the Swaziland Youth Congress. His stature rose following his lengthy detention and subsequent acquittal on a sedition charge in 2002.

  Themba Masuku

  Deputy prime minister. Mr Masuku returned to the cabinet in October 2008 after a spell with the UN Food and Agriculture Organisation (FAO). He is conservative but more diplomatic than the hardliners.

  Comfort Mabuza

  Director of the Media Institute of Southern Africa. Mr Mabuza is outspoken in favour of political change and open democracy. He is influential in ensuring that political restrictions receive coverage in the regional and international media.

  Chief Gelane Zwane

  An appointed senator and president of the senate, Chief Gelane Zwane will ensure that parliament toes the traditionalist line.

  November 13, 2008

• Structure

  Swaziland: Political structure

  Official name

  Kingdom of Swaziland

  Form of state

  Absolute monarchy

  Legal system

  Parallel systems of Roman-Dutch and customary law

  National legislature

  A bicameral parliament; the House of Assembly is elected through the tinkhundla electoral system, which has three stages: nomination, primary election and secondary election; a secret ballot is now conducted for the last two stages; the Assembly has 55 elected members and ten royal appointees; the Senate consists of 30 members, 20 of them royal appointees and ten selected by the Assembly; the king may legislate by decree; a new constitution containing a number of small changes to the political system came into effect in February 2006

  National elections

  Last parliamentary election in September 2008; next election scheduled for 2013

  Head of state

  Monarch; succession governed by custom

  National government

  The monarch and his cabinet; the new prime minister and cabinet were appointed in October 2008

  Political parties

  Political parties are permitted but are not allowed to put up candidates for elections under the tinkhundla (traditional voting) system; the leading progressive political party, the People's United Democratic Movement, has been banned under the Suppression of Terrorism Act since November 2008

  The government

  Monarch: Mswati III

  Prime minister: Sibusiso Dlamini

  Deputy prime minister: Themba Masuku

  Key ministers

  Agriculture & co-operatives: Clement Dlamini

  Commerce, industry & trade: Jabulile Mashwama

  Economic planning & development: Prince Sihlangusemphi

  Education & training: Wilson Ntjangase

  Finance: Majozi Sithole

  Foreign affairs & international co-operation: Mtiti Fakudze

  Health: Benedict Xaba

  Home affairs: Prince Gcokoma

  Housing & urban development: Lindiwe Dlamini

  Information, communications & technology: Winnie Magagula

  Justice & constitutional affairs: Mgwagwa Gamedze

  Labour & social security: Lutfo Dlamini

  Natural resources & energy: Princess Tsandzile

  Public service: Patrick Mamba

  Public works & transport: Ntuhuko Dlamini

  Sports, culture & youth affairs: Hlobsile Ndlovu

  Tinkhundla administration & development: Rogers Mamba

  Tourism & environment affairs: Mduduzi Dlamini

  Central Bank governor

  Martin Dlamini

  January 01, 2013

Economy:

• Background

  Swaziland: Economic background

  Real gross domestic product by sector
  (% share of GDP)
  	2003	2004	2005	2006	2007
  Agriculture	12.3	12.3	12.2	12.0	12.0
  Industry	46.9	46.7	46.7	46.3	45.8
  Services	40.8	41.0	41.1	41.7	42.1
  Source: Economist Intelligence Unit.

  Download text file (csv format)

  November 13, 2008

• Structure

  Swaziland: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011b	2012b
  GDP at market prices (E bn)	25.0	25.0	27.1	28.9a	29.8
  GDP (US$ bn)	3.0	3.0	3.7	4.0a	3.6
  Real GDP growth (%)	2.3	1.2	2.0	1.3a	0.8
  Consumer price inflation (av; %)	12.7	7.4	4.5	6.1a	8.6
  Population (m)	1.15	1.17	1.19	1.20	1.22
  Exports of goods fob (US$ m)	1,569	1,660	1,805	2,011	2,004
  Imports of goods fob (US$ m)	-1,579	-1,781	-1,955	-2,108	-2,130
  Current-account balance (US$ m)	-232	-415	-389b	-279	-30
  Foreign-exchange reserves excl gold (US$ m)	752	959	756	601a	760
  Total external debt (US$ bn)	0.4	0.4	0.6	0.5	0.5
  Debt-service ratio, paid (%)	2.4	2.0b	1.7b	2.7	1.8
  Exchange rate (av) E:US$	8.3	8.4	7.3	7.3a	8.2
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2010a	% of total	Components of gross domestic product 2010b	% of total
  Agriculture & forestry	8.0	Private consumption	75.5
  Industry	46.5	Government consumption	26.8
  Manufacturing	41.7	Gross fixed investment	11.1
  Services	45.5	Exports of goods & services	54.8
  		Imports of goods & services	68.2
  Main exports 2008	% of total	Main imports 2007	% of total
  Miscellaneous Ediblesc	32.6	Manufactured goods	27.2
  Sugar	18.8	Machinery & transport equipment	21.5
  Textiles	8.0	Food & live animals	19.8
  Wood pulp	4.1	Petroleum products	12.0
  Destination of exports 2008	% of total	Origin of imports 2008	% of total
  South Africa	64.7	South Africa	91.8
  US	9.1	Hong Kong	1.0
  Kenya	5.4	South Korea	1.0
  UK	5.0	China	0.9
  a At factor cost. b At market prices. c Mainly soft-drink concentrate.

  Download the numbers in Excel

  Download text file (csv format)

  January 01, 2013

• Outlook

  Swaziland: Country outlook

  Swaziland: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: Social unrest will stay high over the 2013-14 forecast period as the Swazi regime makes little effort to respond to popular discontent. Progress in resolving the fiscal crisis is likely to be neither prompt nor smooth. The broad policy stance is expected to stay market-oriented, and the fiscal incentives offered to new investors are likely to be largely retained. The Economist Intelligence Unit forecasts fiscal deficit at 2.9% of GDP in 2013/14 (April-March) and 2.6% of GDP in 2014/15, assuming that some spending cuts are made in response to growing fiscal pressure to regain access to external financing. We forecast real GDP growth at 0.6% in 2013 and 1% in 2014, in line with expected trends in public expenditure. In both years it will be held back by weak competitiveness in the vital manufacturing sector. We expect average inflation to moderate from 8.6% in 2012 to 6.5% in 2013 and 6% in 2014, in line with trends in South Africa (the source of most of Swaziland's imports) and global commodity prices. We forecast the current-account deficit at 3.9% of GDP in 2013 and 1.4% of GDP in 2014 driven by fluctuations in receipts from the Southern African Customs Union (SACU) and prices for Swaziland's second-largest export, sugar.

  DOMESTIC POLITICS: We expect social unrest to remain high for most of 2013-14 as the Swazi regime makes little effort to respond to popular discontent with the status quo. Further protests are expected in the main towns and cities, organised by the unions and pro-democracy activists. Although unrest is highly unlikely to spread to rural areas-where the use of confrontation is unpopular-the effective mobilisation of the urban population, combined with pressure from South Africa, could create enough impetus for modest democratic reform. Although the protests have been sparked by the fiscal crisis, they have their roots in a range of longer-standing issues, notably the extravagance of the royals and the political elite, the mismanagement of public money and the government's stubborn resistance to calls for democratic reform. In line with this, the protesters have six main demands: a switch from the tinkhundla (traditional) voting system, under which political parties are not allowed to contest elections, to a multiparty system; the downgrading of the powers of the king, Mswati III (which include the appointment of the prime minister, the cabinet and key advisory committees); a change in the political order from an absolute monarchy to a constitutional monarchy; less spending by the royals and the elite; the resignation of the cabinet; and the unconditional return of all political exiles. So far, the king has stubbornly resisted these demands. If pro-democracy candidates were to win a majority at the next parliamentary election, due in late 2013, it is possible that the king would respond by revoking the constitution and trying to rule by decree (the government's lack of regard for the constitution has already been indicated by Prime Minister Barnabas Sibusiso Dlamini's refusal to step down despite parliament passing a motion calling for his resignation). This would lead to even greater political instability, although it would also intensify pressure for international intervention.

  INTERNATIONAL RELATIONS: Despite its desperate need for external financing, Swaziland has remained impervious to external pressure for democratic reform, notably from South Africa, which has offered it a R2.4bn (US$286m) loan on condition that it introduces political and economic reform. Some change is likely on this front from late 2013, as the fiscal situation worsens. Swaziland will continue to cultivate closer ties with Asia and the Middle East. Its long-standing ties with Taiwan are likely to stay in place, preventing the emergence of closer relations with China. The country will continue to support regional trade integration, but not at the cost of a further erosion of the benefits that it derives from its membership of SACU.

  POLICY TRENDS: The IMF's withdrawal of its advisory team from Swaziland in May 2012 highlighted the government's failure to lay out a viable plan to restore order to the public finances. The government has also shown little sign that it is willing to implement the political and fiscal reforms that form the preconditions for its access to the loan offered by South Africa in 2011. The Fund's oft-repeated recommendations-which include cutting the wage bill, trimming non-priority expenditure, implementing the Enhanced Voluntary Early Retirement Scheme, issuing a second mobile-phone licence and reforming the land-tenure system-are likely to continue falling on deaf ears. Economic policy changes cannot be expected unless there is comprehensive political reform, the likelihood of which is low. However, some changes are likely from late 2013 as fiscal constraints become even tighter, forcing the government to take action. The government is likely to maintain the various fiscal incentives that it offers to new investors, such as duty-free imports of machinery and equipment. The Swaziland Investment Promotion Agency's role as a one-stop shop for investors will continue to ease the time and cost of complying with regulations, although Swaziland will nevertheless remain in the bottom half of the World Bank's Doing Business rankings (in which it came 123rd out of 185 countries in 2013). Weaknesses in the quality of education could worsen owing to spending cuts, exacerbating the shortage of skilled workers. Swaziland is expected to remain a member of the Common Monetary Area (which currently also comprises Lesotho, Namibia and South Africa) and will continue to gain preferential access to regional markets through its membership of SACU and the Common Market for Eastern and Southern Africa. Swaziland has been in a fiscal crisis since 2010-11 when the deficit soared to 14.3% of GDP following a sharp fall in SACU revenue. Part of the reason was the introduction of a revised revenue-sharing formula that allocates a smaller share of SACU revenue to Swaziland. In 2013-14 we estimate that the deficit will narrow to 0.4% of GDP as SACU receipts grow by 145%, owing to a windfall payment and the replenishment of the SACU common revenue pool. Instead of using this to build up a fiscal buffer against fluctuations in SACU receipts-which tend to be volatile-the government plans to raise public spending sharply. This would be of less concern if it were to clear fully its domestic payments arrears, which the Fund now estimates at E1.6bn (US$185m; 5.2% of GDP). In 2013-14 SACU projects that its payments to Swaziland will decline by 26%, leading total revenue to fall by more than 10%. Some retrenchments may have to be made, boosting unemployment, which stands at more than 40%. Overall, we forecast the deficit at 2.9% of GDP in 2013-14. In 2014-15 SACU projects that payments to Swaziland will grow by 16%. This will allow expenditure to rise by roughly 10%, although a large chunk of this is likely to go towards clearing payments arrears. Fiscal performance is also likely to be supported by stronger growth in domestic revenue collection as steps are taken to further expand the tax base. Overall, we forecast the deficit at 2.6% of GDP. The risks to the forecast are significant. The government may continue to resist spending cuts, choosing instead to take on more non-concessional debt from private creditors (which are likely to be at punitive rates, given doubts about its creditworthiness). This would prolong the fiscal crisis and raise the risk of a sovereign debt default, which remains moderate at present as the debt stock is small (public debt as a share of GDP was roughly 14.5% in March 2012) and debt-servicing payments account for a small share of total spending.

  ECONOMIC GROWTH: Real GDP growth will be constrained by the government's failure to lay out a viable plan to restore macroeconomic stability and by its huge payment arrears, which are stifling the growth of local enterprises. Manufacturing capacity has fallen in recent years as a number of textile and apparel companies and pulp and paper mills have been closed because of a decline in competitiveness. This trend is unlikely to be reversed, especially while economic and political instability persists. The manufacturing sector accounts for around 45% of GDP and its weak competitiveness will hold back overall growth. Agricultural growth will be supported by the Lower Usuthu Smallholder Irrigation Project. Growth in services will be constrained by the tight fiscal policy stance. Government spending, which makes up about one-third of nominal GDP, is expected to fall slightly in 2013 and to grow only modestly in 2014. Overall we expect real GDP growth to fall from an estimated 0.8% in 2012 to 0.6% in 2013 before picking up to 1% in 2014. Growth could be slightly higher than forecast if the government were to step up the pace of structural reforms.

  EXTERNAL ACCOUNT: We forecast that exports will fall slightly in 2013 and pick up in 2014, in line with price trends for sugar, the country's second-largest export (behind miscellaneous edibles, which consist mainly of output from the country's Coca-Cola plant). Exports will also be hit by a decline in competitiveness as inflation in Swaziland remains above that in South Africa, the main market for Swazi exports. Imports should grow modestly as domestic demand remains weak and global commodity prices decline slightly. We expect a small trade deficit in both years. Services exports will remain small, entrenching the large services deficit. Income debits are expected to stagnate as the profits of foreign companies are held back by weak economic conditions. We expect the current transfers surplus to fall in 2013 and pick up in 2014, in line with official projections for receipts from SACU. Overall, we expect the current-account deficit to widen from 0.8% of GDP in 2012 to 3.9% of GDP in 2013, before narrowing to 1.4% of GDP in 2014 driven by fluctuations in SACU revenue and sugar prices. Despite Swaziland's increasingly restricted access to foreign financing, we expect that it will receive sufficient funds to finance these modest current-account deficits

  January 04, 2013

View detailed map

Country Briefing

Land area

17,364 sq km

Population

1.2m (2012 UN estimate)

Main towns

Population (2012 World Gazetteer estimates):

Greater Manzini: 97,934

Mbabane (capital): 62,630

Climate

Subtropical; near-temperate on Highveld

Weather in Mbabane (altitude 1,163 metres)

Hottest months, January and February, 15-25°C; coldest month, June, 5-19°C; driest month, June, 18 mm average rainfall; wettest month, January, 252 mm average rainfall

Languages

Siswati and English

Measures

Metric system

Fiscal year

April 1st-March 31st

Currency

Lilangeni = 100 cents; plural emalangeni (E); pegged at parity to the rand

Time

2 hours ahead of GMT

Public holidays

January 1st, April 6th (Good Friday), April 9th (Easter Monday,) April 19th (King's Birthday), April 25th (National Flag Day), May 1st (Labour Day), May 17th (Ascension Day), July 22nd (King Sobhuza's Birthday), September 6th (Independence Day), December 25th (Christmas Day), December 26th (Boxing Day)

January 01, 2013