Report No. Economic 'ernorarcun r- on SwaziL....Currency Equivalents Annual Averages 1980 US$1.00 = E 0.745 1981 US$1.00 = E 0.956 1982 US$1.00 = E 1.076 1983 US$1.00 = E 1.222 1984

Report No. 5466-SW,V

Economic / 'ernorarcun r- on SwaziL..nd

November 1, 1985

Coutntry Programs [)Depid-t -l( it IEastern and Southern Africa Re on.lce

FOR OFFICIAL USE ONLY

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Document of the World ;L"k

Ti i sd c u n t e. . ta rs r -tI,ri di'irhution ind nay be us'd" by r ecipiInts

only in thc, performance of tl(Ier official duties,. it,, conten t, may [lot otherwisebe diisclosed withiouti Wmi d B:Ink authorization.

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Currency Equivalents

Annual Averages

1980 US$1.00 = E 0.7451981 US$1.00 = E 0.9561982 US$1.00 = E 1.0761983 US$1.00 = E 1.2221984 US$1.00 = E 1.985

Fiscal Year

The Government operates on an April to March fiscal year.

This report is based on the findings of a World Bank economicmission which visited Swaziland in December 1984. The mission consisted ofMr. Raymond Rabeharisoa (Senior Loan Officer), Mr. Carlos Elbirt(Economist), and Ms. Kiran G.B. Singh (Economist). The economic missionalso drew upon the work of the Population and Health Sector Review missionwhich took place in May/June 1984. A draft of the report was discussedwith the Swaziland authorities in September, 1985.

FOR OMCUL USE ONLY

ABSTRACT

This report describes the current situation of Swaziland'seconomy, examines the main policy issues and analyses the prospects of theeconomy for the rest of the century.

Resumption of economic growth and employment creation are theoverriding issues facing the Kingdom of Swaziland. The economy expanded byabout seven percent per year during the 1960s and 1970s. Economic growthduring the last three years, however, has been negligible, a situationchiefly associated with the world and regional recession, low exportprices, the regional drought, and, more recently, the cyclone -Domoina7. Acontributing factor to the slow growth has been the shortage of skilledmanpower. Meanwhile, population is growing rapidly by 3.6 percent peryear. Because of the openness of its economy and its membership in theSouthern Africa Customs Union and the Rand Monetary Area, the onlymacro-policy instrument controlled by the Swazi authorities is fiscalpolicy. Fiscal performance has been satisfactory.

While Swaziland's economic prospects will continue to dependlargely on external events, there are some issues amenable to policy actionthat can affect longer term development:

- Rapid population growth.

- Slow development of agriculture on the Swazi Nation Landwhich is owned by the King and administered by the localchiefs. Soil erosion and cattle over-grazing are also majorissues. The present land tenure/use system needs to bestudied so as to determine if it constitutes a bottleneck todevelopment.

-- Shortage of skilled manpower which requires, inter alia,that education be more oriented towards preparing the peoplefor what is relevant for the needs of the economy.

- The need to improve the finances of some parastatals, toidentify/evaluate new projects to be executed over themedium-term by the public sector with clear indications ofpriorities, and to implement a program aimed at enhancingthe impact of external technical assistance on training oflocals and on institution building.

- The need to promote private investment by implementing acomprehensive plan of promotion in Europe, USA, the FarEast, and South Africa.

This docun=mt. has a resuictd di'bution and may be used bynrecients only in the per(fornnc of|etir ofiwW dute Its contents may not otherwis be dicsed witho Wold Bank authoizatio |

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SWAZILAND

COUNTRY ECONOMIC MEMORANDUM

Table of Contents

Page No.ABSTRACT .o.....* .........................

ECONOMIC INDICATORS.........

SUMMARY AND CONCLUSIONS-o- .......... o.................. ..... i-ix

I. RECENT ECONOMIC DEVELOPMENTS

A. Major Conclusions on Recent Developments-................ 1

B. General Background ... .............................. 2

C. Economic Structure and Growth .............. o .......... o.... 3

D. Consumption, Investments and Savings .................... 5

E. Balance of Payments. ............... w................... 6

F. Fiscal Trends .......... ................ _..

G. Money, Credit and Prices..... ........................... 14

H. Employment and Wages .................................... 16

II. DEVELOPMENT ISSUES

A* IntroductiLon o.o m.oo.oo.o.o.o..oo.o.oooooo..l8

B. The Government Development Strategy ................. ... 18

Co Population ..o..... og.o.oo oe oe.eg.ooeoo... 20

Do Healthoo . .... o. ..... .... .... ...... ..... o22

E. Agriculture.;- o. .... .o.... oo..oo o..o... oo.24

Fo Industryo.. ..... o..o...o*oo.oo ...... oooo.25

G. Energy... ... ..... oo.. 27

H. Tourism ..... o.. . ............. 28

I. Educationo. ...o.... . ........ o.. 29

J. Government Expenditures. .o.....o.o.o.o.oo..... o.......30

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III.ECONOKIC OUTLOOK

A. Iutroduction ......................................... 32

B. Output and Expenditures ....... .. . -.. ..... . 32

C. Balance of Payments .......... ....... 36

D. Central Government Finances ......... . . ................ 39

E. Creditworthiness ...................................... 40

ANNEX Ab .................. o............. .... . .42

ANNEX Be* ............. ......................... ......... 44

STATISTICAL APPENDIK .................................. .... 48

M-AP ....... o............................ ..... 98

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SZIAND

G;S NATM#AL ERr IN L983 &aL XE (F aQUM (Z cwstant price)

US$ Zii Z 1982-83

GNP at ?arbet Prices 477.7 100.0 1.7Gs Domestic Investreu 124.2 26.0 -15.4gross Natnal Savir 39.5 8.3Current kAcuaut Balac 84.7 -17.7Exports of Qojds, MS 369.8 77.4 21.8IiWorts of Cods, NFS 532.6 111.5 4.4

CxIffr,IABOR FECE AlND Value Added Labw Farme 1/ V.L Per orberPFU F TlVflY IN 1982/83 115$ Mi. %Z :hms. Z i$ Z of Ave.

Agrclture 121.5 27.3 25.1 31.7 4,840.5 86.1T.dutry 134.8 30.3 23.2 29.3 5,8124 103.4Services 188.7 42.4 3D.9 39.0 6,106.7 108.7

Total/Average 445.0 100.0 79.2 100.0 5,619.2 100.0

G0ER y FANCE Gentral Govemuent

(E.Mln.) Z Of GQP__85/86 FY83/84 CFY8L82-F83/84

3urrent Reeipts 204.8 29.1 2B.1Qireit EtxenxLures 148.9 22.1 21.2

arrent Surplus 55.9 7.0 6.7Capital Ekptuditures 59.3 11.i 12.5ExternalAssistane (net) i 6.2 1.6 L4

1E, a ir AND FRIC 1980 1981 L982 1983 1984(October)- (-iflhon E Ci Endiim 1Erikd

Money arxl Qasi qmey 133.6 141.5 161.4 198.1 253.0Bark (meit tD Piblic Sector 2/ -65.7 -52.1 -31.0 -16.4 -0.4Bank Credt to Private Stor 98.3 131.9 140.5 146.5 160.8

(Percentage or Numde .Ietrs)

xey and rQasi Money as Z of GEP 28.7 25.5 28.2 32.1 36.5

COmer Price Ikim al percentag charpes in: 14.2 13.9 14.5 11.8 14.5

Bark Ortit to Pliblic Sector 2L3 2D.7 40.5 47.1 -207.3

Baik Cdt to Private Sector 15.1 34.2 6.5 4.3 9.8

I/ DefIned as paid ezloymnmt in GDernment and private sectDrs._ nlde reasury bills.

not available EAISAnot appicable

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R PAS AND CNPIA FfI

BAIANCE aF PANIS ?ER(EAMISE EaKC(AWRAC 1981-83)

1982 1983 1984 2/ -i Mla. Z

5xMports of Goods and NFS 384.5 369.8 360.0 Sugar 118.6 34.0lnports of Goods and NFS 538532.6 497.9 W0dPn1P 59.3 17.0Resowre L-1ance -1540 -162.8 -137.9 Asfetcs 17.7 5.1

0ther 153.2 43.9TOUl 348.8 100.0

Factor Srvices (et) 1 67.5 80.0 69.5Net %:ansfers 0.4 -1.9 -1.9Belarnc oa Girrent Acut -86.1 -84.7 -70.3 ETL , DEC.31,1983

US$ Mn.

Pbblc Sector apital Thf low Rthli Dbt, mxl. g ed 189.5(net) 49.8 51.3 31.8 1 Pr e 1 -Grams 29.4 29.1 25.0 Total outsa ad DLsburse 189.5lTan mlzrS 30.5 34.4 20.0&r rl7n -10.2 -2.2 -13.2

IEK: SERVICE RATD 3/ FU 1983

Privace Capital Inflo (net) 31.2 49.6 38.5 Ebbc Debt, incL: gzraneed 6.3Qiar{~ in Reserve -5.1 16.2 0.0 ed Pdve et±.Net rvseve Iel 75.9 93.1 93.1 Total Qustading & Mi-o4 6.3

IUM/DA DI== (J ANPIAY 31,1985)

Imp~orts of fbl and (bffJlion US$)lbricants 76.3 78.3 76.7 IBRD ID

RE (aF EM& Outstanding &sbarsed 45.19 7.7019B1 1982 1983 1984 4/ sbursed 7.04 0.00

US$1.00 = E 0.8703 1.0837 1.1122 1.8914 CsO ng 1.13

£1.00 = USS 1.1490 0.9228 0.8991 0.5287 Lldisbursed 52.23 7.70

1/ Jw-c.ues Receipts from tie Soutbern Africa Qstis IUilons.

2/ visonal enstem .31/ service ar a per-enage of giods and non-factor services./ As of Dcember.

EAISA

SUMMARY AND CONCLUSIONS

Introduction

i. Resumption of economic growth and employment creation are theoverriding issues facing the Kingdom of Swaziland. The country's economy,which is largely based on the private sector and on market forces, expandedby about seven percent per year during the 1960s and 1970s, well above theaverage for Sub-Saharan Africa. This growth resulted in a relatively highper capita income of almost US$1,000 in 1980. Economic growth has,however, slowed considerably during the last three years (1981-84) when GDPgrowth averaged a mere 0.5 percent per year, a situation chiefly associatedwith the world and regional recession, low export prices-particularly thatof sugar-the regional drought, and, more recently, the cyclone -Domoina-.A contributing factor to the slow growth has been the shortage of skilledmanpower which recently has been more noticeable. Meanwhile, thepopulation is growing rapidly, by 3.6 percent per year (3.3 percent is theaverage for Sub-Saharan Africa). The labor force is growIng even faster,as a result of the relatively youthful age structure of the population, offewer job opportunities in South Africa where part of the labor force has,ovez the years, found employment (presently, about 10,000 mine workers)and, possibly, of the increasing proportion of women entering the labormarket. GDP would have to grow by at least six to seven percent per yearjust to absorb the new workers entering the labor market.

The Present

ii. Swaziland's economy has been shaped by the complexity of itsgeopolitical situation. The country is small, with fewer than 800,000people in an area of 17,000 square km. Except for a short stretch of itseastern edge, which borders Mozambique, Swaziland is surrounded by theterritory of the Republic of South Africa. As a result, it is inevitablylinked with the South African economy. It belongs to the Rand MonetaryArea (RMA) and to the Southern Africa Customs Unions (SACU). This means,in effect, that events in South Africa determine its exchange rate, andtariff policies, and to a dominant extent, interest rates, and monetarypolicies. Because of the openness of the economy and the country'smembership in SACU and the RMA, practically the only relevant macro-policyinstrument available to the Swazi authorities is fiscal policy, and thismainly in relation to expenditures, since revenues are largely dependent onthe Customs Union which provides 60 percent of total revenues. Swaziland'smembership in the Southern Africa Development Coordination Conference(SADCC), on the other hand, has been a step towards fostering closereconomic ties with other countries in the region and, hence towardsreducing external dependence on South Africa.

iii. Government economic management has, by and large, been sound.The financial performance of the public sector has been generallysatisfactory, as evidenced by the high level of Central Government savings,about seven percent of GDP, which financed about sixty percent of capitalexpenditures. The composition of public expenditures also appearsappropriate, emphasizing education, health, and economic infrastructure

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(agriculture, electricity, transport and communications). The basiceconomic infrastructure is in place and does not constitute a bottleneck todevelopment while education and health services have been steadilyupgraded. Therefore, maintenance of this infrastructure should takepriority over new investments. Although several investments have notbrought, ex past, the expected benefits, the public sector has notundertaken Twhite elephant- projects that have plagued many other Africancountries. It should also be noted that membership in the RMA and SACUhave been, so far, economically advantageous to Swaziland. Interest andexchange rate policies are adequate and SwaziLand receives substantialrevenues, equivalent to around 18 percent of GDP per year, from the CustomsUnion without incurring any major collection costs. The economic andpolitical risks of such membersaip are, nevertheless, considerable.Foremost among them, is the fact that about 75 percent of Swaziland'sforeign exchange reserves are held with the South African Reserve Bank, aswell as the country's high dependence on SACU for its revenue. Any majorcrisis in South Africa could, therefore, have an amplified impact onSwaziland as well as on other members of the RMA and SACU.

Main Issues

iv. The Government's development strategy is appropriate. It focuseson increasing the efffciency of public expenditures, on stimulating privateinvestment, on emphasizing vocational training and on fosteringagricultural development. It is recognized that, given the small size ofthe domestic market, development efforts will have to concentrate onexport-oriented activities with emphasis on agro-based activites and, to alesser extent, on tourism where the country has comparative advantage.Swaziland is generally free of price or other forms of distortions createdby government intervention. Nevertheless, the country's economic prospectswill continue to depend largely on external events. There are, however,some issues amenable to policy action that can affect longer termdevelopment.

v. Reducing Population Growth. Population growth will be a majorissue even if favorable economic conditions prevail in the future.Population is now increasing at 3.6 percent per year. However, if nofertility decline takes place, population growth is likely to accelerate,reaching four percent per year by 1995, since the mortality rate isexpected to continue its decline. To reduce population growth will requirelower fertility rates. Increasing the proportion of people using modernmethods of contraception will be necessary. Tnis could be achieved byincreasing and improving family planning services, which do not meetpresent demand, and by enhancing education and information programsparticularly towards men, as they are believed to be more opposed to familyplanning than women. In addition, family life education needs to beintroduced in secondary schools.

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vi. Maintaining Public Sector Financial Stability. The preservationof sound financial performance in the public sector will require carefulmonitoring. In the past, current expenditures. particularly the wage bill,have grown very rapidly. This was sustainable, and perhaps appropriate,thanks to the fast growth in Customs Union receipts which appears unlikelyin the future because of the economic slowdown and the associated slowdownin imports. Consequently, restraint and improved controls on expenditureswill be necessary, in particular, on hiring temporary workers at theMinistries of Education and Works. An area in which the government hasalready made steady progress is in monitoring of budgetary allocations. Asa result, overspending (above the budget) which was an important issuebefore, has been sharply reduced. Financial improvements are needed insome government agencies and parastatals which presently require governmentsubsidies, particularly the Central Transport Administration, Royal SwaziAirways, Swaziland Railways and the National Industrial and DevelopmentCorporation of Swaziland (NIDCS). The Central Transport Administrationmaintains and repairs all governmeat vehicles and charges for theseservices. It suffers from poor management which has resulted in costly andinefficient services. To solve the problem, the Government is introducingimproved management practices, tighter accounting controls, and issubrontracting part of its work to pri vate garages. Swaziland Railwayscannot cover its fixed costs with the present low level of freightresulting from the closure of an iron-ore mine in 1977. With thecompletion, in 1985, of a new link which will connect the present SwaziRail system with the northern South Africa rail link, more freight fromSouth Africa will be forthcoming and the company expects to eliminate theneed for government subsidies in about four years. Swazi Airways, giventhe small size of the domestic market, does not appear viable. However,losses could be minimized through better coordination of air transportationin Southern Africa, which could result in an increased level of capitalutilization. The establishment of a regional pool of common airtransportation services could also have some efficiency and cost-savingbenefits. Regional institutions such as SADCC, could be instrumental instudying and implementing the required measures. The National Industrialand Development Corporation of Swaziland (NIDCS) is designed to promoteprivate investment, to promote joint financing with the private sector andto build required industrial infrastructure. During the last three yearsNIDCS incurred operational deficits. The Small Enterprises DevelopmentCompany (SEDCO) which is a subsidiary of NIDCS, has also incurredoperational deficits. As a result, both institutions pose a burden onpublic finances and are almost unable to tap resources from the financialmarket. The Government is studying the introduction of measures to improvethe eficiency and portfolio of these institutions. Finally, the re-ntsetting-up of the Public Enterprise Monitoring Unit will allow theGovernment to closely follow-up the performance of these entities and toimplement measures to remedy their problems.

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vii. In order to improve the efficiency of public expenditures, thefollowing measures are recommended. First, future composition ofexpenditures in education should reflect the Government's policy ofimproving the quality of education and making it more relevant to the needsof the economy. This might mean that in order to reduce the shortage ofskilled manpower, expenditures on vocational training should increasefaster than expenditures on regular academic training, provided the costeffectiveness of such training is demonstrated. Second, as a means ofreducing population growth and increasing the efficiency of expenditures onhealth, the Government should concentrate on preventive -are and familyplanning. Given the recent expansion of the health infrastructure, theGovernment should now focus on its maintenance rather than on its furtherexpansion. Third, the Government's institutional capacity to identify,prepare and implementiprojects needs to be strengthened through morequalified personnel and through better coordination at both the projectplanning and execution stages, among various government agencies. Inaddition, public investments (executed by the Central Government andparastatals) should be closely coordinated with ongoing or prospectiveprivate investments, particularly the ones promoted by the NationalIndustrial and Development Corporation and the Small EnterprisesDevelopment Company. It should be emphasized that strengthening theGovernment's capacity to prepare and implement projects is a crucialrequirement to enhance its absorptive capacity which is low and preventsthe country from receiving part of the assistance offered by externaldonors. Fourth, additional efforts are needed to ensure thatexternal technical assistance programs, which are numerous and whichinvolve about 300 expatriates working in Swaziland for the public sector,aim at strengthening local institutions and training local personr;el. Thiswill require the Government to coordinate donor technical assistanceefforts, the identification of priority areas where technical assistance isnecessary, and the appointment of local counterpart personnel. The countrycould also benefit from improved coordination of technical assistanceprograms among the donors themselves. These steps would further increasethe benefits of external technical assistance programs.

viii. Developing Agriculture. Development of commercialagriculture/forestry in the privately-owned land has taken place relativelyrapidly. However, development of the Swazi Nation Land, 55 percent of thetotal land area formally owned by the King and administered by the localchiefs, has, so far, been negligible. A main reason for this seems to bethe low return of agricultural activities in the traditional sector ascompared to wages in the modern sector, which grew rapidly during the 1970sand early 1980s. With the present economic slowdown and drop in realwages, however, this situation might be changing. In addition, it shouldbe examined whether the land tenure/use system is a bottleneck to thedevelopment of agriculture on the Swazi Nation Land. The missionrecognizes that this is a very complex issue and hopes that studies,

-ix

currently underway, will provide adequate solutions. Finally, an importantissue that requires Government action is over-grazing by cattle,particularly in grazing areas of the SNL which is causing alarming soilerosion.

ix. Reaching Agreement on International Waters. Reaching anagreement with South Africa on the use of waters from international riversis a major policy issue, with implications for irrigation and energydevelopment. South Africa has made any discussion of this issueconditional on the presentation by Swaziland of concrete project proposalsfor exploiting those rivers, including the necessary external financialcommitments. As Swaziland. has been unable to do so, South Africa hassteadily undertaken projects on international rivers, thereby reducingwater availability from Swazi rivers. This is bound to have profound,long-term implications. Agreement between the parties involved on anequitable apjortionment of international rivers is necessary. In thisconnection, resolution of this issue needs to be further explored with theassistance of the international community.

X. Promoting Industrial Development. The formulation of a strategyon industrial developmert is crucial for the development of this sector.Such a strategy should include, as key components, an aggressive promotioncampaign to attract potential investors from the industrial countries andthe Far East, measures to strengthen the National Industrial andDevelopment Corporation (NIDCS), the Small Enterprises Development CompanyCSEDCO), and the Swaziland Development and Savings Bank (SDSB), so theywill be able to play their role of promoting and guiding new investors andsmall enterprises and assisting companies financially and technically. Thestrengthening of SDSB should help Swaziland in expanding the medium- andlong-term financial market which is presently very weak. The country hasgood potential mainly in agro-processing and other rural-based activities,and has acces_ to various markets (South Africa, SADCC, Europe, and theUSA). Swaziland's participation in the Lome Agreement and the preferentialtreatment received in the USA for some products also provides additionalmarket advantages. However, foreign investments have not been forthcomingin recent years, among other things, because of the competition from thehomelands (South Africa) which offer very attractive incentives to newinvestors. It should be recognized that Swaziland cannot compete with thehomelands in the generosity of their incentives which appear politicallymotivated. Nevertheless, Swaziland can tap markets in countries which maynot be willing to do businesr with South Africa or its homelands forpolitical reasons. In addition, it appears that Swaziland has better landresources than the homelands thus making agro-based industries in Swazilandpotentially more competitive.

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xi. Promoting Tourism. There is potential for additional developmentof tourism. South African visitors constitute the bulk of tourism (70percent). The Government strategy is to diversify its markets byattracting tourists from the USA, Europe and South America. This could bedone through an aggressive promotion campaign and through -siphoning-offsome long-stay tourists coming to South Africa. The question of linkagesof tourism with the rest of the economy, particularly with agriculture,needs to be studied with a view to increasing the value added of thesector. Evidence indicates that the tourist industry imports from SouthAfrica a great deal of food which could be efficiently produced inSwaziland. Of paramount importance in the development of tourism is theneed to strengthen the Department of Tourism.

xii. Coping with Unemployment and Rapid Urbanization. Since theworking-age population is projected to grow by about 3.7 percent per annumfor the remainder of this century, inspite of any accelerated decline infertility rates, some increase in unemployment appears inevitable duringthis decade. Assuming a constant ratio of active labor force to totalworking age population at the present 53 percent, about 7,000 to 8,000workers would enter the formal and informal labor markets each year. Withonly modest economic growth rates likely during this period (projectionspoint to a three percent average annual growth rate for the rest of thisdecade), and an overall labor-output elasticity of 0.71/ only 4,000 to5,000 workers will find employment each year, that is only about 60 percentof the new entrants to the labor force. However, if economic growthaccelerates to 5 or 6 percent per year, by the end of the century theeconomy might be able to absorb all the newcomers to the labor force. Itshould be pointed out that the agricultural sector, which presentlyprovides for about 90 percent of the informal employment and about 25percent of the formal employment, should provide for 50 to 60 percent ofthe new jobs. Needless to say, tnis reinforces the necessity of aggressiveagricultural development.

xiii. Although the problem of unemployment does not seem to have acomplete solution in the medium-term, the Government is trying to resolveit over the longer-term. Accordingly, it is taking the following measures:

(a) identification and execution of training programs whichwould make the labor force more suitable to the demand ofthe formal sector where half or more of the new workers arelikely to find jobs;

/ Roughly the same as that which prevailed during 1977-82 for the formalsector.

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(b) introduction of a double tax deduction for trainingexpenditures incurred by private firms which will complementthe efforts on training carried out by the Government;

(c) introduction of other tax incentives for new investments.In granting these incentives, the authorities should givepriority to labor-intensive activites; and

(d) preparation and execution of rural development projectswhich would increase informal employment, particularly inthe Swazi Nation Land.

xiv. All these measures are likely to have a much more clear impactover the longer-term, that is to say over the next decade. They arefacilitated by the absence of major price or wage distortions in Swaziland;a situation that should be maintained. Ir. addition, it should be mentionedthat public expenditures can be a useful means of creating employmentopportunities in the formal sector provided that they are justified oneconomic and financial grounds and within a framework of a policy aimed atkeeping public expenditures within a sustainable level.

xv. Employment creation could be facilitated by appropriate planningfor the growth of cities and towns, to minimize the distance fromresidences to jobs. The pace of urbanization is likely to accelerate inthe years to come. Based on the international experience, it is likelythat the growth rate of Manzini and Mbabane will be at least twice thenational average (6 to 7 percent per year for the rest of the century).Eousing problems might, therefore, become more acute. In addition, thelocation of future industrial estates becomes a very relevant issue. Sincethe present level of urbanization remains low, this is the right moment toidentify and define an urban development policy complemented by soundplanning for industrial estates.

A Look to the Future

xvi. A modest economic recovery is the most likely growth scenario forthe rest of this decade. Growth of GDP should accelerate gradually from Ipercent per year in 1985 to about 4 percent in 1989, averaging 3 percentper year for the period as a whole. The main reason for this slow andgradual recovery is that sugar production which was a major source ofgrowth in the past has almost reached plant capacity and with present worldconditions, it is unlikely to be expanded. vat conditions for growthareexpected to improve during the 1990s. The planned Government projectsand programs on vocational training, industrial promotion, and agriculturaldevelopment should, in the absence of major disruptive events in theregion, result in an accelerated economic growth during the 1990s (5 to 6

- xii- -

percent per year). This growth scenario implies that per capita GDP willcontinue to decline through the 1980s by about -0.5 percent per year. Th'ssituation could be reversed during the 1990s. However, unless populationgrowth rates decline as a result of a rapid drop in fertility rates, percapita GDP growth rates will be very low.

xvii. Given the small size of the domestic market, development isexpected to be led by export-orienced activies. Under the circumstances,non-sugar exports (woodpulp, cotton, citrus, etc.) must grow faster thanGDP. However, there is room for some import-substitution, especially inagriculture. Some projects, which the Government plans to implement, aimat food import substitution, particularly of maize. These importsubstitution projects, however, should not be pursued at any cost. Themaintenance of the sound electricity rate policies and the possibleintroduction of energy-saving measures will be very important steps to keepthe fuel import bill at affordable levels.

xviii. This import/export scenario, combined with some improvement inthe terms of trade, should result in a decline in the current accountbalance of payments deficit from 14 percent of GDP in 1984 to an average of8 percent for the rest of the century. Given a domestic investment of 20to 22 ----ent of GDP, this level of current account deficit implies thatabout 40 percent of domestic investment would be financed by externalsources and 60 percent by national savings. It should be noted, however,that the balance of payments will remain highly sensitive to sugar pricemovements; a 10 percent shortfall in sugar prices would, ceteris paribus,increase the current account deficit by 2 to 3 percentage points of GDP.This illustrates the fact that the continuation of a depressed sugar marketcould have a very detrimental impact on the economy.

Creditworthiness

xix. The balance of payments position of South Africa is the keyvariable which determines foreign exchange availability and, therefore,creditworthiness in the whole RMA. Presently, exchange rate and interestrate policies followed by South Africa ensure, by and large, foreignexchange availability in the RMA. Moreover, Swaziland holds 25 percent ofits reserves outside the South African Central Bank which could amelioratethe immediate impact of any crisis within the RMA on Swaziland. The Swazilocal currency, the Emalangeni, is fully backed by and convertible into theSouth African Rand, which is also legal tender in Swaziland. Consequently,Swaziland has no balance of payments problems, per se. Insofar as publicdebt servicing ability is concerned, as long as there are sufficientEmalangeni generated by the budget and by the public enterprises topurchase Rand or foreign currencies (and the Rand remains convertible toforeign currencies), debt can be serviced.

_ xiii -

xx. Swaziland should be regarded as creditworthy for contractingloans on commercial terms provided that the authorities continue with apolicy of sound fiscal performance mainly through expenditure restraint.Nevertheless, given the openness of the economy and its links with the RMA,creditworthiness under current institutional arrangements is alsocontingent upon the absence of a major crises in South Africa. Theexternal public debt service should remain within manageable limits,accounting for about seven percent of exports and, assuming that one thirdof the debt is serviced by the public enterprises, about 20 percent of theCentral Government revenues during the rest of the century.

I. RECENT ECONOMIC DEVELOPMENTS

A. Major Conclusions on Recent Developments

1. The main conclusions on the recent economic developments are:

(a) The slowdown of economic growth during the last three yearsis attributable to several factors, most of them outside thecontrol of the policy makers (low export prices, recessionin South Africa, the drought and the cyclone in early1984). The deceleration in the growth of sugar productionas plant capacity production was approached, and theshortage of skilled manpower, are also considered majordeterminants in the present economic slowdown, with medium-and longer-term implications.

(b) The econcmy has adjusted to lower level of incomes caused byunfavorable terms of trade. Private expenditures, bothconsumption and investment, declined sharply during the lastthree years.

(c) In spite of a sharp decline in export prices, real exportshave continued to increase. Nominal export earningshowever, have declined and so have imports. Overall, thecurrent account balance of payments deficit is declining.

Cd) The rapid devaluation of the Rand has favored Swazilandexport competitiveness and its balance of paymentsposition. It has had, however, some negative impact on thefinancial situation of those public and private enterpriseswhich had contracted loans denominated in US$ or other hardforeign currencies.

Ce) The financial performance of the public sector has beengenerally satisfactory. The country, however, heavilydepends on Customs Union receipts, more than 60 percent ofthe total current revenue. The wage bill had increased alsovery rapidly in recent times. The Government introduced asales tax in 1984 so as to lessen its dependence on SACUreceipts. This measure, although positive, is unlikely tohave a significant impact on the country's dependence onSACU receipts. The FY84/85 Budget and the Fourth NationalDevelopment Plan contain a policy of restraint on currentexpenditures, including wages.

(f) The finances of some parastatals remain weak. RemedialmeasurRs need to be identified in some cases (such asSwazilazd Airline), or to be implemented in others (such asthe Central Transport Administration).

B. General Background

2. With an area of 17,000 square kilometers, and a population of720,000, the Kingdom of Swaziland is one of the smallest countries inAfrica. It is sub-tropical with a varied climate. The country islandlocked, bounded on the north, west and south by the Republic of SouthAfrica (RSA), and on the east by Mozambique. The country, part of theSouth African plateau, has an interesting topography, with four regions ofnearly equal width, but with varied climate, natural resource distributionand development potential. These regions may be seen as four distinctagro-ecological zones, namely, the Highveld, the Middleveld, the Lowveld,and the Lubombo Range.

3. The Highveld, in the west, is mountainous, has relatively morerainfall than other areas, and contains asbestos and valuable forests.Only 10 percent of the area is suitable for crop agriculture and, with theexception of tobacco in the south, few cash crops are grown. The area isseriously overgrazed and soil erosion has emerged as a major problem.Adjacent to it is the Middleveld with climate and soils amenable to mixedfarming of maize, citrus fruits, cotton, tobacco, and rice underirrigation. Maize, fruit and CGtton are the most important crops grown onfreehold farms. The LCwveld is a savannah type region endowed with largecoal deposits and fertile soils. A hot climate and erratic rainfall makethis part of the country particularly vulnerable to drought. Ranching,large scale production of sugar and citrus on irrigated land, and to alesser extent, cultivation of cotton and rice, are the foremost activitiesin this region, the non-irrigable areas being used for animal husbandry.However, overstocking has led to severe land depletion and in a successionof dry years the threat of soil erosion becomes pronounced. Rising steeplyfrom the plains of the Lowveld is the Lubombo plateau with a climatesimilar to that of the Lowveld and fair to good arable soils Gn 12 percentof its area.

4. Two distinct land tenure systems exist in Swaziland: Swazi NationLand (SNL) and Freehold Title Land or Individual Tenure Land (ITL). SwaziNation Land accounts for 56 percent of the rural land area, the ownershipof which is vested in the King in trust for the Swazi nation. Local chiefsadminister land use and allocate the land. Forty-four percent of the totalland area is freehold land, much of which is devoted to large commercialestates that produce cash crops and exploit forestry resources, all forexport.

5. Swaziland is presently ruled by a Queen Regent who presides overtwo separate political systems that co-exist: the Swazi Government,consisting of a cabinet and a bicameral parliamnent, and the Swazi Nation,represented by the Swazi National Council. The former is responsible forpublic administration and economic and social development, and the latterfor administering and developing tribal lands.

6. The country attained independence in 1968. Its econumy is veryoften and strongly influenced by developments in the Republic of SouthAfrica. This is reinforced by Swaziland's membership in the SouthernAfrican Customs Union (SACU) and the Rand Monetary Area (RHA). Under theexisting agreements, the RSA, the largest and most economically developedmember, formulates monetary, exchange rate and tariff policies.Consequently, Swaziland's money supply, interest rates and exchange ratesare, by and large, externally determined. The SACU allows for freemovement Of goods among member countries and provides common externaltariff and shared tariff revenue. Under the RMA, funds may be transferredfreely within the area, and gold and foreign exchange reserves are pooledbetween the members. Swaziland's membership in the Southern AfricaDevelopment Coordination Conference (SADCC), on the other hand, has been astep in the direction of fostering close economic ties with other countriesin the region, the goal being tc promote regional integration and reduceexternal dependence, particularly on the RSA.

C. Economic Structure and Growth

7. Development of the country's natural resources has been pursuedmainly through a market-oriented approach. The structure of GDP hasundergone little overall change since independence, with agricultureaccounting for about 25 percent and industry about 30 percent. Both thesesectors are dGminated by the export-oriented sugar and woodpulp industries,developed with the participation of foreign private capital. The largestcomponent of the services sector is government services averaging about 17percent of GDP, with its major activity centering on the provision ofeducation and health services.

Table 1: Structure of GDP at Factor Cost(percent)

1980 1981 1982 1983 1984

Agriculture 25.6 26.4 25.9 27.3 27.5Industry 31.3 31.9 31.2 30.3 29.8Government Services 16.7 16.7 17.5 17.2 17.6Other 26.4 25.0 25.4 25.2 25.1GDP at factor cost 100.0 100.0 100.0 100.0 100.0

Source: Statistical Annex

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8. The economy grew rapidly from 1960 through the early 1980s. Thisgrowth resulted in a relative high per capita income of almost US$1,000 in1980. Boosted by a high rate of investment, favorable commodity prices,rapid expansion of tourism, trade and government services, real GDP grew byabout seven percent per year, although there were periodic fluctuationsbrought about primarily by inclement weather and lumpiness of investments.Since 1982, however, this situation changed. Growth has been lower andhighly uneven, the worst year being 1982, when real GDP fell by 0.5percent. This was followed by some resumption of growth in 1983 andvirtual stagnation in 1984.

Table 2: Growth of Value Added(percent)

1960-70 1970-79 1980 1981 1982 1983 1984

Agriculture 6.3 5.5 12.1 11.8 -2.4 7.5 1.0Industry 10.8 9.6 -0.4 10.5 -2.7 -0.8 -1.5Government Services 5.5 8.2 4.4 0.3 2.5Other 5.91/ 6.31/ -1.4 2.5 0.9 1.2 0.4GDP at factor cost 7.7 6.9 3.3 8.3 -0.5 2.1 0.4

Including Government Services.

Source: Central Statistical Office

9. The slowdown of economic growth during the last three yearslargely reflects short-term or exogenous factors. First, sugaroutput,which had grown at an average annual rate of 11.3 percent per annumbetween 1977 through 1980, slowed to 5.5 percent per year during 1980-84,as capacity production was approached. By 1984, the country's productionwas estimated at 96 percent of plant capacity, leaving virtually no roomfor further increase in production unless plant capacity is enlarged.Second, the drought caused the maize crop to decline by almost 50 percentin 1982. Third, there was a slowdown in private investment caused by therecession in South Africa and aggravated by the generous investmentincentives offered by the South African homelands to new investors whomight otherwise have located in Swaziland. Fourth, damage caused by thecyclone -Domoina in early 1984, especially to transport and agriculture

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infrastructure, disrupted production particularly that of sugar. It shouldbe noted, however, that underlying the present economic slowdown, there aremore fundamental structural issues; namely shortages of skilled manpower,small size of the domestic market, weaknesses in the world market for majortraditional exports, and slow growth of production in the Swazi NationLand.

D. Consumption, Investments and Savings

10. Domestic expenditures have declined in real terms since 1981,with the adjustment taking place in both consumption and investment. Thisdecline in domestic expenditure reflects the adjustment of the economy tolower levels of real incomes caused by unfavorable terms of trade. Infact, as a result of low export prices, the negative terms of tradeadjustment measured in 1980 prices, was equivalent to 30 percent of GDP in1984. Imports have declined, reflecting the sharp drop in exportearnings l{.

Tabe 3: Co=sumptica n! Invstment

Z of GDP ONkinal Teras) Groth CZ Real Terms)1980 1981 1982 1983 1984 1981 1982 1983 1984

awmiption 94.3 99.0 99.6 104.8 104.5 14.6 -16.2 -9.1 -2.8Public 17.2 16.9 2D.6 23.1 24.3 7.7 L4 -3.1 2.5Privatel/ 77.1 82.1 79.0 81.7 80.2 16.1 -19.8 -10.6 -4.3=Pae Invst rt 36.9 2&1 29.6 24.6 23.9 -24.5 -5.6 -15.4 -2.5Piblic 12.4 13.2 13.7 12.1 11.5 5.4 -6.8 -10.2 -5.0Private 24.5 14.9 15.9 25 12.4 -39.6 -4.5 -2D.0 0.0

Total Eqxnditures 131.2 127.1 129.2 129.4 1284 3.6 -14.0 -10.5 -2.7Exprts of GQS 70.0 70.0 72.9 66.7 74.2 10.8 7.8 21.8 -1.8imports of WNS 101.2 97.1 102.1 96.1 102.7 5.3 -11.1 4.4 -5.1

Grcss N=tizcl Savrgs 13.2 5.3 13.3 9.3 9.4 na. na. na. na.

1/ 1-nia5 CIaDe In stodks

Sa:rce: Statistical Amex

I/ The resource gap (exports of goods and non-factor services minusimports of goods and non-factor services) has remained fairly stable aspercentage of GDP at around 29 percent.

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11. The adjustment of the economy to reduced levels of expenditureshas not affected the public and the private sectors to the same degree.Private expenditures, both consumption and investment, declined much moredramatically than those of the public sector.

(a) Total real consumption declined as a result of a sharp dropin private consumption. Public consumption, however, hasremained roughly at about the same level during 1981-84.Rapid increases in Customs Union revenues have allowed thepublic sector to maintain its real level of consumptionwithout reducing current savings. In contrast, privatesector consumption declined, as unemployment rose and realwages declined. The sharp reduction in private sectorincomes has left practically no room for private sectorsavings which were close to zero during the last threeyears. Gross National Savings have declined, as a result,from 13 percent of GDP in 1980 to nine percent in 1984.

(b) Both public and private investment declined in real terms,as well as a percentage of GDP. The decline in privateinvestment was, however, wore acute than that in publicinvestment. The rapid deciine in private investment isrelated to the completion of large projects such as the newsugar factory, and the reluctance of foreign investors toundertake new investments in view of the regional recessionand the more attractive package of incentives being offeredby the South African -homelands-.

E. Balance of Payments

12. Swaziland's balance of payments reflects the openness of itseconomy and its membership in the RHA and SACU. There is little scope forpursuing independent trade or monetary policies. Imports and exportscombined account for more than 150 percent of GDP. Swaziland is heavilydependent on South Africa for its imports. As much as 85 percent of itsimports originate in that country, while 30 percent of its exports find amarket there. The remainder are directed to Europe, USA, Canada and theFar East.

13. By African standards, Swaziland's exports are relativelydiversified. Sugar is the main export; accounting for around 40 percent ofthe country's export earnings. Wood pulp exports account for 13 to 14percent of the total. Citrus exports have become increasingly important inrecent times; presently they represent more than 10 percent of the total.Exports of electronic equipment assembled in Swaziland had grown until

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Table 4: Composition of Exports and Imports(percent)

1980 1981 1982 1983

Exports

Sugar 46.0 39.5 32.9 37.9Woodpulp 13.2 14.5 14.1 13.8Asbestos 5.6 5.6 4.3 6.0Citrus (fruit and canned) 6.1 6.9 10.1 11.6Meat and Meat Products 2.6 1.2 1.6 ].3Electrical Equipment 2.9 3.6 4.3 2.2Other (Pineapple, cotton,timber, chemicals) 23.6 28.7 32.7 27.2Total 100.0 100.0 100.0 100.0

Imports

Food, beverages and tobacco 7.3 8.9 9.5 11.2Fuel 16.6 14.1 14.7 14.3Chemicals 10.6 8.3 15.3 11.6Machinery andTransport Equipment 16.3 21.9 21.8 31.2Other 49.2 46.8 38.7 31.7Total 100.0 100.0 100.0 100.0

1982, reaching 4.3 percent of the total exports. Since then, they havedeclined as a result of the recession in South Africa. Exports of chemicalfertilizers to the RSA4 had grown rapidly through 1982 and became animportant export commodity. However, because of the drought, demand forfertilizers dropped and the factory was closed in 1984. Other exports,particularly cotton, are becoming increasingly important. Exports ofasbestos remain at about 5 to 6 percent of the total. This is a lowerlevel compared to those of the 1970s, as a result of health relatedrestrictions enforced in major export markets. Exports of meat and meatproducts are small (less than tw-o percent of the total exports) and areeven declining. This seems to be associated with the low quality of thecattle and the absence of modern techniques in livestock activitiesundertaken in the Swazi Nation Land. Coal exports are negligible and othermining exports are non-existent after the closure of the iron-ore mine in1977.

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14. The country is entirely dependent on imports for fuel and capitalgoods. It purchases two-thirds of its electricity requirements from SouthAfrica. However, import of electricity is declining now that a newhydro-power plant (the Luphohlo-Ezulwini) has started operating. AlthoughSwaziland is a net exporter of food products, it is dependent to someextent on imports of maize, vegetables and processed food (food andbeverage imports represent around 10 percent of the total imports).It is in this area where there is a potential for efficientimport-substitution (efficient import-substitution should not beinterpreted as a substitution at any cost).

15. Export earnings declined from US$418 million in 1980 to US$360million in 1984, in spite of an increase in real eXpGrts of more than 40percent. 'his increase in real exports is associated mainly with increasesin export volumes of sugar, wood pulp, cotton, and pineapple. The declinein nominal export earnings is, therefore, explained by the drop in exportprices, particularly that of sugar. The average price of sugar received bySwaziland in 1984 was almost half of that received in 1980. It must bepointed out, however, that about half of Swaziland's sugar exports go topreferential markets: Europe (under the Lome Agreement) and the USA. As aresult, the average sugar export price received by Swaziland during recentyears has been higher than that of the free market. For example, Swazilandreceived an average of US$291 per metric ton of sugar exported in 1983; atthat time the free market price was US$187, or 35 percent lower.

16. The balance of payments has adjusted rapidly to the decline inexports earnings experienced since 1981. The current account deficit whichin 1980 amounted to US$140 million, or 23 percent of COP, declined to US$70million, or 14 percent. of GDP in 1984. This is chiefly associated with thedecline in imports whIch was greater than that of exports. Central Bank'snet reserves amount td US$100 million or more than two months of imports ofgoods and non-factor service, which is an adequate level 2 /. In addition,public sector debt service remains low, less than seven percent of thetotal exports. Moreover, present foreign exchange policies followed by theRand Monetary Area favor Swaziland's balance of payments position. TheRand (and therefore the Emalangeni) has been devalued against the US dollarby 84 percent in nominal terms from the beginning of 1983 through the endof 1984. During this period, inflation, measured by Swaziland consumerprice index (CPI) reached about 28 percent. Based on export weights, thelocal currency has been devalued by about 15 percent in real terms during1984. This is helping Swaziland in maintaining the competitiveness of itS

exports.

2/ Reserves had declined in 1981 and 1982. Since this decline was mostlyassociated with low sugar prices, Swaziland drew US$10.0 million on theIMF Compensatory Finance Facility (CFF).

Table 5: Balance of Payments 3/(US $ millions)

1980 1981 1982 1983 19842/

Exports (goods and NFS) 418.7 445.8 384.5 369.8 360.0Imports (goods and NFS) 605.2 618.2 538.6 532.6 497.9Resource gap -186.5 -172.4 -154.1 -162.8 -137.9Net Factor Service Income -6.7 8.4 15.7 27.3 30.9Private Transfers -2.3 0.6 0.4 -1.9 -1.9Official Transfersl! 54.0 18.7 51.9 52.7 38.6Current Account Balance -141.5 -144.7 -86.1 -84.7 -70.3Grants 33.9 26.4 29.4 29.1 25.0Public Capital (net) 23.8 13.8 20.2 22.2 6.8Private Capital(net) 109.6 76.6 31.4 49.6 38.5Change in Reserves

l= ucrease) -25.8 27.9 5.1 -16.2 0.0

Memo Items (Z)

Current Account as2 of GDP 23.7 22.7 16.3 15.3 14.5

Terms of Trade Index 100.0 99.0 80.8 67.4 67.8Sugar Price Index I 100.0 80.4 56.1 58.6 55.6Real Export Index 100.0 110.8 119.4 145.5 143.0Real Import Index 100.0 105.3 93.6 97.6 92.7

J Includes SACU compensatory receipts and net SACU receipts.7, Preliminary estimates.~/ Apparent difference with Government figues are due to different

classification of SACU receipts.


17. The country has been receiving sizeable amounts of grants some ofit in the form of technical assistance. Capital inflows to the publicsector have also been substantial. However, due to the concessionarynature of many loans to the public sector, the debt service ratio remainslow, at less than seven percent of total exports. The public and publiclyguaranteed debt at the end of 1984 amounted to US$190 million, or 39percent of GDP.

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F. Fiscal Trends

18. The financial performance of the public sector has been generallysatisfactory. From FY80/81 through FY83/84, the Central Government'scurrent account surplus averaged around seven percent of GDP and financedabout sixty per ent of its capital expenditures. The overall CentralGovernment deficit has been slightly lower than four percent of GDP duringthe last three years. In recent years, this deficit has been financedmainly by drawing down net government deposits with the banking system, byforeign grants and by some external borrowing.

Table 6: Central Government Operations 1(Millions of Emalangeri)

1979/80 1980/81 1981/82 1982/83 1983/84 1984/852/

Recurrent Revenue 3/ 126.2 153.9 129.8 176.7 179.7 204.8SACU 74.2 86.8 62.7 117.6 120.7 130.4Income and Profits 33.3 36.1 40.7 40.6 42.6 50.1Other 18.7 31.0 26.4 18.5 16.4 24.3

Recurrent Expenditure 65.3 84.5 109.1 124.0 136.6 148.9Wages and Salaries 34.9 45.9 59.2 66.6 75.6 83.4Goods and Services 20.2 26.9 31.5 36.2 35.2 34.6Other 10.2 11.7 18.4 21.2 25.8 30.9

Current Account Surplus 60.9 69.4 20.7 52.7 43.1 55.9as % of GDP (16.3) (14.9) (3.7) (9.2) (7.0) (8.1)

Capital Expenditureand Net Lending 65.9 57.7 73.1 75.4 68.5 59.3

Overall Surplus/Deficit -5.0 11.7 -52.4 -22.7 -25.4 -3.4as Z of GDP (-1.3) (2.5) (-9.5) (-3.9) (-4.0) (-0.4)

Foreign Grants 7.2 9.4 4.4 5.4 5.7 11.7Net Foreign Borrowing 9.1 6.2 6.3 0.8 -4.2 -5.5Net Domestic Borrowing -11.3 -27.3 41.7 16.5 15.6 -10.94/

/ Fiscal year April to March.Z/ Preliminary estimates based on the budget.3/ Excludes external outturn grants

I During FY 1984/85, payments of (arrears for E13.7 million) were made.The addition of the financing items is larger than the overall deficitby this amount.


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19. This good financial performance on the part of the CentralGovernment has been the result, to a large extent, of a rapid increase inSACU receipts, which represent 60 percent of the Central Governmentcurrent revenues. These receipts have been substantial in recent years,around 18 percent of GDP. Moreover, Swaziland obtains them withoutincurring sizeable costs of collection (they are mostly collected by SouthAfrica). But this dependence on a single, externally-collected tax is asource of concern since future SACU revenues might not increase as fast asin the past. Against this background, locally-collected revenues (mostlyfrom incomes and profits) have been weak, in view of the prevalentrecessionary conditions. With the depressed state of the sugar market,receipts from the sugar export levy fell drastically, yielding no revenueat all during the last two years. In order to diversify revenue sources, asales tax was recently instituted. This tax resembles a value-added taxand its introduction is a positive development, in view of its potentialbeneficial effects on revenue generation and the minimal adverse effects onresource allocation of this type of tax. The introduction of the sales taxin its present form, however, is unlikely to lessen significantly thedependence on SACU receipts. Consequently, close monitoring of the trendsin SACU receipts shoald be exercised and if thece is a strong evidence thatthis source of income will suffer a steady erosion3/,then new tax measureswill be necessary.

3/ The revenue sharing formula for each SACU member is explained in theprevious World Bank Economic Memorandum on Swaziland, April 1981,Report No. 3028-SW.

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Table 7: Central Government Revenue 1/(In millions of Emalangeni)

1979180 1980/81 1981/82 1982/83 1983/84

Taxes on Income and Profits 33.3 36.1 40.7 40.6 42.6Customs Union Receipts 74.2 86.8 62.7 117.6 120.7Sugar Levy 7.9 13.4 12.3 1.4 -Other 3.6 3.6 3.9 3.7 3.5

Total Taxes 119.0 139.9 119.6 163.3 166.8Non-Tax Revenue 2J 7.2 14.0 10.2 13.4 12.9Total Current Revenue 126.2 153.9 129.8 176.7 179.7

Memo Items:

Total Taxes/GDP (Z) 31.9 30.0 21.6 28.6 27.0Customs Union Receipts/Total Current Revenues(X) 58.8 56.4 48.3 66.6 67.1

Cu,stoms Union Receipts/Imports 3/ (Z) 25.0 18.3 12.5 20.8 20.9

,' Fiscal year April to March2, Property Income, fees, and fines.31/ Imports less re-exports.Source: Statistical Annex

20. The Government is addressing itself to two major issues whichshould be dealt with promptly in order to avoid a deterioration in publicfinances: (a) rhe rapid growth in the wage bill and (b) the losses incurredby several parastatals. An area in which the Government has already madesteady progress is in monitoring of budgetary allocations. As a result,overspending, previously an important issue, has been sharply reduced.

21. The Central Government wage bill has been growing very rapidly.Between FY76/77 and FY83/84, the government's wage and salary bill morethan trebled from E 21.4 million to E 75.6 million. This resulted from acombination of staff and wage increases. During 1977-82, public sectoremployment grew at 5.9 percent per annum. Subsequent efforts to controlthe growth of the civil service have been undermined by the rapid rise innon-established posts4/, mainly in the Ministries of Works andCommunication, and Education. Wage increases have also contributed to the

4/ Non-established means daily-paid posts which are funded directly fromdecentralized funds and pertain mostly to unskilled workers.

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increase in the wage bill, although to a lesser extent. During the sameperiod, 1977-82, the average monthly wage in the public sector increased byfive percent in real terms. To deal with the issue of rapid increases inthe wage bill, (the final outcome of FY84/85, however, is still unknown).In addition, the Fourth National Development Plan calls for a policy ofrestraint on Government expenditures, including wages. It states thatexpenditures should increase by 2.2 percent per year in real terms throughFY77/78, in line with the projected GDP growth.

22. Several parastatals have been incurring deficits and have,therefore, required sdbsidies/transfers from the Central Government. TheCentral Transport Administration (CTA) is a semi-autonomous agency whichmaintains and repairs all vehicles owned by Government and charges forthese services to each Government agency. CTA's operating deficit duringFY84/85 is estimated to be more than E I million. This deficit isattributable to poor organization and management of CTA which have resultedin costly services. In addition, service charges to government agenciesare low (although this does not affect public finances as a whole). TheGovernment is making efforts to solve these problems by improvingmaintainence practices, by sub-contracting repair services with privategarages, and by introducing tighter administrative controls. SwazilandRailways has incurred operating losses for several years. The reasons forthis situation appear related to the reduction in freight, after theclosure of the iron-ore plant in 1977, to a level which does not fullycover its heavy fixed costs. A new raxl link in the northern part ofSwaziland is being completed. This northern link will connect the presentSwazi rail system with the South African railway running from Bordergate toKomatipoort. It will give Swaziland a direct connection with Zimbabwe.The new link is expected to provide additional freight (mostly from SouthAfrica) which will re-establish the financial viability of the rail networkin about four years. In other words, no government subsidies would then beneeded. Royal Swazi Airline Corporation has also been incurring operatingdeficits amounting to E 2-3 million per year. Given the limited size ofthe market, the total elimination of operating deficits does not appearfeasible over the medium-term. Measures to minimize these deficits,however, need to be examined. Improved coordination of air transportationin Southern Africa, could result in an increased level of capitalutilization. The establishment of a regional pool of common airtransportation services could also have some efficiency and cost-savingbenefits. Regional institutions such as SADCC, could be instrumental instudying and implementing the required measures. The National IndustrialDevelopment Corporation of Swaziland (NIDCS) is designed to promote privateinvestment, to promote joint financing with the private sector and to buildrequired industrial infrastructure. During the last three years NIDCSincurred operational deficits. The Small Enterprises Development Company(SEDCO) which is a subsidiary of NIDCS, has also incurred operationaldeficits. As a result, both institutions pose a burden on public financesand are almost unable to tap resources from the financial market. TheGovernment is studying the introduction of measures to improve theeficiency and portfolio of these institutions. Finally, the recent

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setting-up of the Public Enterprise Monitoring Unit will allow theGovernment to follow-up closely the performance of these entities and toImplement remedial measures.

G. Money, Credit and Prices

23. Swaziland's membership in the RMA precludes it from pursuing anindependent monetary policy. Throunhout the RMA, the South African Rand islegal tender, funds are transferred freely within the area and exchangecontrol regulations must conform to thnse followed by the RSA. Swazilandcurrency is the Lilangeni (plural: Emalangeni) which is fully backed by amix of interest-bearing rand deposits, held with the South African ReserveBank, and marketable RSA securities (up to 10 percent).

24. The Swazi authorities have moved with prudence in the few waysthat are open to them in the field of credit supply and regulation ofcommercial banks. As a result, the main features of the monetaryIndicators are the following:

(a) During the last six years, net foreign assets havevaried between 150 to 250 percent of the money supply (MI:currency in circulation plus demand deposits) and between 50to 80 percent of a broadly defined money supply (M2) whichincludes time deposits. Development of a balance ofpayments or external liquidity crisis appears limited fromthe point of view of Swaziland since external foreign assetscover all Ml and a sizeable part of M2. However, sinceabout 75 percent of Swaziland's foreign assets are held withthe South African Reserve Bank, there is some politicalrisk. 5 /

(h) Credit to the private sector has remained stable, at around22 to 24 percent of GDP. The public sector, on the otherhand, has been historically a net creditor of the bankingsystem, although in recent years the outstanding creditbalance to the public sector has declined as the Governmentused part of its resources.

(c) Interest rates follow the trend of the RMA, which reflectregional and international market conditions. As a result,real interest rates are markedly positive. For example, theprevailing prime rate in August 1984 in Swaziland variedbetween 22 and 25 percent. At that time the annualinflation was about 14 percent.

5, Concerning the balance of payments situation in South Africa, rapidadjustments have been carried out in 1983 and 1984. As a result, asmall current account balance of payments surplus was obtained in 1983and, possibly, in 1984 (data still unavailable). The deficit incurrent account amounted to US$4.4 billion in 1981, and US$3.1 billionin 1982.

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Table 8: Monetary Survey(millions of Emalangeni)

(end of period)

1979 1980 1981 1982 1983 19841,

a. Net Foreign Assets 93.9 113.8 89.0 85.7 105.4 175.0b. Domestic Credit(net) 34.2 32.6 79.8 109.5 130.1 110.4

Public Sector -51.2 -65.7 -52.1 -31.0 -16.4 -50.4Private Sector 85.4 98.3 131.9 140.5 146.5 160.8

c. Money Supply 40.2 49.8 51.3 58.1 60.8 72.6(currency in circulationplus demanddeposits - MI)

d. Qaasi money 77.4 83.8 90.2 103.3 137.3 180.4e. M2 = c + d 117.6 133.6 141.5 161.4 198.1 253.0f. Net FGreign Assets

as X of MI(a/c) 233.6 228.5 173.5 147.5 173.3 241.0g. Net Foreign Assets

as Z of M2(a/e) 79.8 85.2 62.9 53.1 53.2 69.2

1/ As of end October


25. Price trends in Swaziland closely follow those in the RSA, theprimary source Of its imports. While consumer goods are not subsidized, ahandful of commodities such as maize, bread, dairy products and meat aresubject to price control, although no government subsidy is involved.These controls have been administered in a flexible manner so prices almostfully reflect market forces and are readjusted periodically to accommodateincreases in costs of production or importation. Consequently, no shortageof commodities has resulted from these controls.

26. Prices have been increasing around 13 percent per annum since1980. There was some sign of a slGwdown in the price increases during1983. HGwever, inflation seems to have been increasing recently, mainly asa result of the devaluation of the Rand, which has had the effect ofraising prices of import goods in South Africa and, therefore, in the wholeRKA.

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Table 9: Retail Price Increases(percent)

Year Swaziland I/ South Africa

1979 11.3 13.11980 14.2 13.71981 13.9 15.21982 14.5 14.71983 11.8 12.31984 2/ 14.5 12.1

1/ Two sets of retail price indtces are prepared in Swaziland.One reflects cost of Living for the middle and high incomegroups in Mbabane, Index A. The other reflects cost of livingfor wage earnings in Mbabane and Manzini, Index B. The second, B,has a weight of almost two-thirds for food as opposed to one-thirdfor high income groups, or Index A. The index included in this tableis the Index A.

2J July 1984/June 1983

Source: Official Sources

H. Employment and Wages

27. The working age population is 374,000 or about 49 percent of thetotal population. It has been growing by 2.5 percent per year, slightlyabove the average for all Sub-Saharan African countries (2.2 percent).There are presently about 80,000 people working for the formal sector (paidemployment) in Swaziland and about 10,000 Swazis in the South African minesas temporary workers. In addition, there are about 11,000 people workingin the informal urban sector aud an estimated 90,000 to 100,000 in thesmallholder agriculture. Therefore, 90,000 people or 45 percent of activelabor force hold wage earning jobs, a relatively high percentage by Africanstandards but, nevertheless, lover than the one prevailing in 1980 (50percent) as a result of tbe slow growth in employment in Swaziland and thedecline in the number of Swazi workers in South Africa.

28. Unemployment is increasing in Swaziland. Available informationshows that between 1979 and 1983 modern sector employment grew at anaverage annual rate of 1.8 percent while population surged ahead at 3.4percent. The ratio of formal employment to population has declined from12.3 percent in 1979 to 11.3 percent in 1983. Only one-third of eachyear's school leavers has been absorbed by Swaziland's formal sector in

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recent years. The employment problem has been exacerbated by the largenumbers of Swazi migrant laborers returning from the RSA mines due to therecession in the RSA, increased mechanization in the RSA mines and the RSApolicy of giving preference to its own labor force in mine employment. Adrastic reduction of Swazi labor recruited for the RSA mines has takenplace, with total employment falling from 21,000 in 1976 to about 10,000 in1983.

29. Employment in the public sector has increased faster than in theprivate sector. The increase in public employment is largely attributableto the rapid increase in the number of non-established governmentpositions. On the other hand, the slow increase in private sectoremployment in recent years appears related to the slowdown in economicgrowth and to the relatively capital-intensive natuce of major privateundertakings. A noticeable development in the employment situation is thedecline in the number of agricultural workers during the period 1979-83.This seems to be related to the labor saving technologies introduced inrecent expansions in the sugar and woodpulp industries and partly due tothe severity of the drought. Expatriates constitute an important segmentof the personnel working in managerial/skilled categories of both theprivate and the public sector. In fact, around 45 percent of thesepositions are filled by expatriates.

Table 10: Paid Employment(numbers employed)

AverageGrowth

1979 1980 1981 1982 1983 1979-83

Public Sector 19995 20052 22496 23188 23180 3.8Private Sector 53884 55077 57243 58719 56029 1.0tAgriculture) (25870) (27539) (24055) (24740) (22841) (-3.1)

Total Paid Employment 73879 75129 79739 81907 79209 1.8


30. Wages are basically determined by market forces and industrialrelations seem to be smooth. Swaziland has no national minimumwage,although minimum wages are set on industry-by-industry basis by 12wage councils. These wage councils comprise representatives from labor,management and an independent third party. Real wages appear to bedeclining as a result of the rapid devaluation of the Rand since 1983.

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I}. DEVELOPMENT ISSUES

A. Introduction

31. Resumption of economic growth and employment creation are themost fundamental issues facing the Swazi authorities. The country hascomparative advantage in agro-based activities and, to a lesser extent,tourism. It is generally free of price or other forms of distortionscreated by government intervention. Basic constraints to economicdevelopment are the small size of the domestic market, competition fromefficient South African firms in the domestic market, and competition fromthe -homelands- for new investments in export-oriented activities. Themajor macro -.ad sectoral issues amenable to policy action that can affectthe future growth of the country are:

(a) Rapid population growth.

(b) Slow growth of agricultural production in the Swazi NationLand.

(c) Lack of a comprehensive program to promote new privateinvestment.

(d) Shortage of skilled manpower.

(e) Lack of programs to promote and diversify tourism.

(f) Inadequate preparation/planning of the public sectorinvestment program.

B. The Government Development Strategy

32. Government's strategy has been to establish an environment andincentive structure conducive to economic growth and to provide neededinfrastructure while leaving investment decisions to private initiative andmarket forces. As indicated above, because of the openness of the economyand the country's membership in the SACU and RMA, Swaziland's ability touse the usual instruments of macro-economic policy to promote developmentis severely restrained. It must be pointed out, however, that Swaziland'sintegration into SACU and into the RMA appears to have been, so far,economically advantageous to the country, for it facilitates trade andinvestments in a market to which Swaziland is naturally integrated and alsoprovides substantial fiscal revenues without sizeable cost of collectionfor the country. Although the Government has traditionally followed amarket-oriented approach to development, it has implemented, for some time,a planning mechanism in which it reviews policies and investments andanticipates new policy guidelines and investments. The Government iscurrently implementing the Fourth National Development Plan, coveringfiscal years 1983/84-1987/88.

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33. The Fourth National Development Plan establishes a macro-economicstrategy calling for:

(a) greater efficiency and control over the use of public funds;(b) stimulation of private investment in existing and new

activities; and(c) creation of more jobs, vocational training programs, and

establishment of productive agricultural employmentopportunities in the rural areas.

34. This strategy focusses on the key requirements for economicgrowth and employment creation. The Government has not been attempting tomitigate the present slowdown in the economy through expansionaryexpenditure policies. The public sector already accounts for 35-40 percentof GDP. Any further increase in this share would threaten the presentsound fiscal performance. Furthermore, given the shortage of skilledmanpower, and the associated limited absorptive capecity, a sizeableIncrease in public expenditures is unlikely to bring about economicgrowtl,. Consequently, improvements in efficiency rather than increases inthe level of public expenditures Is a sound policy. As acknowledged by theauthorities, creation of additional employment opportunities in the ruralareas is a major challenge. Even with rapid growth of the urban-basedindustrial sector, unemployment will rise dramatically if the rural sectordoes not provide additional employment opportunities. The authorities arealso aware of the fact that development will have to take place primarilytbrough export-oriented activities since the size of the domestic market islimited. This does not preclude, however, the undertaking of someimport-substitution activities for products such as maize, vegetables andprocessed food for which local production does not meet current demand (TheGovernment is planning a project aimed at reducing imports of maize fromSouth Africa through providing incentives-extension, improved varieties,and more land-to leading small farmers on the Swazi Nation Land).Import-substitution projects, however, should not be pursued at any cost.

35. The overall macroeconomic strategy is sound. While, the FourthPlan acknowledges and analyses the most important issues, It does notinclude, however, specific measures to deal with a number of them,particularly:

(a) Measures to reduce the high rate of populaticn growth.

(b) Formulation of a prograr. to control and monitor parastatals,particularly those in financial difficulties.

(c) Identification and design of a pipeline of new projects tobe executed according to clearly established prioritiesduring the next three years. This should incorporate theTinkhundla system which provides a mechanism of consultationwith the people in defining project needs and priorities.

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C. Population 6_

36. Although the country has less than a million people, itspopulation is increasing at 3.6 percent per year (the average forSub-.Saharan countries is 3.3 percent). The existing unemployment problemwill be exacerbated by the speed of population growth, by the likelihood ofslow economic growth for the rest of the decade, by fewer job opportunitiesin South Africa, and, possibly, by the increasing proportion of women-entering the labor market. Moreover, population growth at the present ratewill also inhibit the achievement of the Government's goals ofself-sufficiency in maize production by the end of the century, and willlimit the Government's ability to provide basic social services (mainlyhealth and education).

37. The annual rate of population growth has been increasing as aresult of stable but high fertility rates7 /, coupled with decliningmortality rates. The estimated fertility rate is around seven children perwomar _ith no significant change experienced during the 1960s and 1970s.This level of fertility is very high relative to that of the developingcountries in general, including those in Western and Central Africa, but itis around the level prevailing in Eastern and Southern Africa. Declines infertility rates could be achieved by increasing the contraceptiveprevalence rate, the percentage of women in reproductive ages who are usinga modern method of contraception at any given point in time.

38. The growth of the Swazi population under the different fertilityassumptions is illustrated in Table 11. Three scenarios are presented. Inthe first the fertility rate remains const-ant at around seven throughoutthe projection period. This is not necessarily considered realistic, butprovides a benchmark against which the effect of fertility decline can bemeasured. The second shows a rather gradual decline in fertility to 3.8 by2015. This is the likely spontaneous course of fertility decline inresponse tG socio-economiz changes without any strong governmentintervention. The third demonstrates the effect of a more rapid fall infertility to 2.5 by 2015. This scenario is based on the experience ofdeveloping countries that have experienced rapid fe-rtility declines andreflects the type of fertility reduction that could be achieved by theimplementation of strong government population policies and family planningprograms. Because of normal population dynamics, the effects of declinesin fertility on total population in the year 2000 would be small. Thisreflects the large increases that will occur in the numbers of women ofchildbearing age (these women having already been born). However, the

6/ The Population and Health Sectors are based on a World Bank SectorReview carried out in 1984.

7/ The hypothetical average number of live births during a woman'schildbearing years conforming to the age-specific fertility rates of agiven year.

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effect of declining fertility will be more evident in the percentage of thepopulation under 15 years of age and the dependency ratio. Theseindicators have a direct bearing on the ability of the Government to meetbasic needs for education, health and other social services. By the year2015, the effect of different scenarios of fertility decline would bestriking. At cGnstant fertility, population can be expected to reach 2.5million, triple its current level 8 /. With the accelerated fertilitydecline, Swaziland would have a total population of about 1.6 million in2015. The difference in the proportion of the population under 15 and thedependency ratio would be even more striking. With constant fertiliy therecould be 1.13 people under 15 years of age or over 65 for every person ofworking age. On the other hand, with accelerated decline in fertility,each person of working age would have to support only 0.55 people. Thedifferences in these scenarios have important implications for the abilityof Swaziland to generate sufficient employment and to meet the basic needsof its population.

39. To achieve a gradual fertility decline, the contraceptiveprevalence rate would have to increase from the present level of about fourpercent to about 30 percent by the year 2000. If an accelerated decline infertility is to be achieved, the contraceptive prevalence rate would haveto increase to 50 percent by the year 2000. This would require, interalia, the development of a coordinated family planning information,education -nd communications program, using a variety of media andinterpersonal approaches. In particular there is a need to developprograms directed towards men, as they are believed to be more opposed tofamily planning than women. In addition, family life education needs to beintroduced in secondary schools.

81 As a -side effect-, it should be mentioned that the pace ofurbanization in the recent past has been fast. Nevertheless, the levelof urbanization remains low. This is, therefore, the right moment toidentify and define an urban development policy.

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Table I1. Ptyjected Size, Stautre a Grxith of Popula

Averge Arrzal Rate ofPopulatioon SizeCudlUicias) Gr~uth (%)a

As:qytbow, 1985 200M 2D15 198-85 1995-2000 2010-15Ebwatif SimAXb &tiity decli .76 1.34 2.51 3.54(7.0) 3.93(7.0) 4.30(7.0)B.Gtadizal fertlity declie.76 125 1.90 3.54(7.0) 3.M25.8) 2.52(3.8)-Accelerated fertiitydecline .76 119 1.60 3.54(7.0) 2.58(4.7) 1.74(2.5)

Feroutag of the*RlatIu ixir 15 yerof AgeAAN fertlitdy dcline 48 49 51B.G2a, l dec]ime 48 46 40C.S4n1exrated decline 48 43 32

A.f1 fertUlity derlinp 102 107 113GaCOIml dpelIne 102 94 73

C.rhC61erated decline 102 85 55

as The i dwtin paXertiais ar the agsgmptions oafertlity ras.

40. The authorities are concerned about the rapid population growth.Translation Of this concern with action would be expedited by establishmentof a committee to formulate and implement a population policy. Suchcommittee could include high Government officials and representatives ofthe whole spectrum of society. Its work should be supported by relevantstudies and information gathering which, if necessary, could be pursuedwith the technical and financial assistance of the internationalcommunity. More official support should also be given to private sectororganizations, such as the Family Life Association of Swaziland, whichundertake a wide range of community activities, family planning amongthem.

D. Health

41. The health status of the Swazis compares unfavorably with othercountries with a similar per capita income as the infant mortality rate isestimated to be about 105 (per thousand) and life expectancy about 52years. In the absence of better data, one may only speculate on the causes

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of this. For example, little is known about the prevalence of neonataltetanus, but less than 10 percent of pregnant women received a tetanustoxoid injection in 1982. This may, therefore, be a significant problemand needs further investigation. Breast-feeding is no longer as widespreadas in the past, and the duration of it certainly tends to be shorter.Infant weaning practices are often inappropriate, and the problems ofdiarrheal diseases are exacerbated by some forms of traditional medicineand especially the widespread use of enemas for infants. As in most ofsub-Saharan Africa, there is a preponderance of childhood communicable,diarrheal and parasitic diseases. Malnutrition is also a significantproblem which is being investigated; it probably afflicts 10-15 percent ofunder-five children.

42. Health services are provided by the Government, religiousmissions, industry and the private sector. The Ministry of Health operatessix of the nine hospitals in Swaziland, and accounts for about 50 percentof both in-patient and out-patient care. The missions account for about 40percent of in-patient care and 16 percent of out-patient care, whileIndustry is responsible for 8 percent of inpatient care and 33 percent ofoutpatient care. Until recently, the mission health services were operatedlargely independently of the Government, but with increasing financialsubsidies from the Government, they have become more integrated throughcoordinating their services and fee structures. Indeed, through thedecentralised structures of management currently being developed, suchintegration of services in the future could be assured. Closerco-operation at the regional level with other service providers (Industry,for example) and with other concerned sectors, will also be pursued throughthis integrated approach. About 70 percent of the population now liveswithin 8 km of a health facility, and the overall population-bed ratio is457, which is about the average for countries in the region. However, asmost of the higher level facilities are located in the towns, the urbanpopulation-bed ratio is about 100, whereas the rural ratio is about 1450.Traditional medicine is extremely important in Swaziland as there are over5000 diviners and herbalists providing services to an estimated 80-85percent of the population. These traditional practitioners have recentlyformed their own association, and the Ministry of Health has started toprovide them with some training in such areas as treatment of diarrhealdiseases.

43. The Ministry of Health has clearly identified its objectives,strategies and targets for the medium-term. Primary health care isemphasized as the most effective and least costly means of improving thehealth status of the majority of the population. However, given thefinancial constraints faced by the Ministry, it is necessary to establishpriorities among various objectives, since not all of them can be pursuedin the short- and medium-term. This is because a sizeable part of thecapital and recurrent budget is already committed to two externallysupported projects; the upgrading of the Mbabane Hospital and the buildingof a replacement for the mental hospital. In general, it is important thatthe Ministry concentrate on consolidating and re-orienting existingservices to improve the adequacy and appropriateness of health care.

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An important part of this process, is to bring recurrent budgets in linewith Ministry policy and objectives. General expansion of the healthinfrastructure at this stage would be inappropriate with the exception ofconstructing some peripheral clinics which would relieve hospitaloutpatient departments of unnecessarlly high workloads.

E. Agriculture

44. Development of agriculture is a primary concern of theauthorities since this is a key sector in the generation of future growthand employment. The development of commercial agriculture/forestry inprivately-owned land has taken place relatively fast in the past.Operations such as sugar cane, pulp producing forestry, cotton, pineapple,and citrus, are export-oriented and, in most cases, fairlycapital-intensive. On the other hand, development in the Swazi NationLand (SNL), which is owned by the King and administered by the localchiefs, has been negligible.

45. The Government expended a great deal of effort to develop the SNLthrough the Rural Development Area Program (RDAP). This program was not,however, successful. The social and economic infrastructural componentswere executed in line with the targets, but output in the Swazi Nation Landdid not increase. RDAP aimed to increase output through (1) use ofintensifying technologies leading to increased yields and (2) improvementsin the extension worker to farmer ratio. The agricultural benefits werenot realized under RDAP because the intensification strategy did notprovide the riht incentives. The Swazi rural population depends heavilyon wage employment to provide households with cash income (an estimated 80percent of the rural homesteads include one or more wage earners). The RDAintensified crop production strategy called for larger labor inputs torealize increased output. However, given the relatively high wage rates inthe modern sector and low praductivitv in agriculture, rural householdsrather than apply surplus labor to an intensified farming system choseinstead to apply it to wage employment where expected returns are higher.In recent years, however, there is some indication (though mole rigorousanalysis is required) that the disparity between income derived from wageemployment and cash cropping is narrowing. The Government is confronted byan increasingly difficult economic environment characterized by risingunemployment in urban areas, exacerbated by population pressure, decliningmigration opportunlties to South Africa and poor prospects fo- new formalemployment in the domestic economy. As a result, SNL agriculture, not themodern sector, will have to generate most of the rural employn.ntopportunities. This points to the need to improve productivity(particularly for maize, the principal crop) in SNL agriculture so that itbecomes more attractive as an income generating occupation. In addition,It should be determined whether the present land tenure/use system in theSwazi Nation Land is a bottleneck ro development, and whether itdiscourages investment. A land tenure study currently underway, isexpected to provide recommendations to deal with this issue. Another majorissue is cattle over-grazing on SNL grazing land which, is being alarminglyeroded.

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46. Both irrigated and dryland farming will be needed for futuredevelopment of agriculture. A large irrigation scheme involving 50,000 hain the Usutu/Ngwavuma Basin had been proposea but studies indicated that itwas not economically viable (low rate of return). It is now beingredesigned to medium- and/or small-scale irrigation schemes. The newschemes would comprise the most suitable and least expensive areas forirrigation. Therefore, they are expected to yield higher rates of returnthan the original proposal. It must be pointed out, however, thatagreement with neighboring countries on water use of international riversis a major issue in any possible irrigationu/ydropower project. SouthAfrica has been conditioning any discussion of this issue to thepresentation by Swaziland of concrete project proposals to exploit thoserivers including the external commitments necessary for such projects. AsSwaziland has been unable to do so, South Africa bas steadily undertakenprojects on international rivers. This has resulted in a sharp reductionof water availability in the Swazi rivers.

F. Industry

47. Swaziland has a good industrial potential, mainly inagro-processing and other rural-based activities. It enjoys access tovarious markets (South Africa, SADCC, Europe, and USA). Swaziland'smembership in the Lome Agreement and the preferential treatment received inthe USA for some products could also provide additional market advantages.However, the country faces some constraints and difficulties in thedevelopment of its industrial sector: first, the problem of shortage ofskilled manpower; second, the decline in external private investment inrecent years; and third, heavy competition from South Africa and thehomelands, which offer very attractive incentives to new investors.The authorities regard the competition from the homelands as a key factorin the present decline of private investments in Swaziland.

48. Swaziland will need to depend, to a large extent, on expatriatesfor skilled manpower. The resolution of the shortage will take place onlyin the longer-term. It is necessary, therefore, to facilitate the entranceof foreigners who could provide the needed expertise. This has beengenerally the case in Swaziland. However, in recent times, obtainingworking permits by expatriates has been subject to long delays due toincreasing administrative red tape.

49. The declin3 in private investment highlights the need toformulate a strategy for industrial development. Such a strategy shouldinclude, as a key component, a comprehensive package for private investmentpromotion. The core of such a package should be:

(a) A restructuring and strengthening of the National Industrialand Development Corporation of Swaziland (NIDCS) so it caneffectively play its role of promoting, identifying, guiding

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new investors, and -selling high priority projects. NIDCSshould play a catalytic role, facilitating private sectorinvestment, while minimizing its financial involveuent inany new project. By the same token, the Small EnterprisesDevelopment Company (SEDCO) needs to be strengthened as anindependent parastatal able to provide assistance to smallenterprises in project identification, personnel trainingand mangement counselling;

(b) An aggressive promotion campaign in the UK, USA, Europe, theFar East, and South Africa to attract potential investors.This campaign should emphasize the available nationalresources, the country's political stability, its access tovarious preferential markets, its long tradition offavorable treatment of external investment, and thepossibility of limited tax concessions;

(c) An active Government role in promoting needed training forSwazi nationals, including the provision of tax incentivesfor private sector programs on training; and

(d) An expansion of the medium- and longer-term financial marketmainly by strengthening the Swaziland Development andSavings Bank (SDSB). A strengthened SDSB will probablyrequire a new capital subscription, improvement in itsresource planning and cash flow forecasting, and betterfinancial and procedure controls.

50. Tax incentives could be an appropriate tool for industrialpromotion provided they are properly defined. In any case, it should beclear that tax incentives, by themselves, cannot overcome the presentproblem of decline in private investment. Consequently, they need to beimplemented as a complementary part of a promotion package. Moreover,Swaziland is unable and should not try to compete with South Africa and thehomelands in the generosity of the ince_..ives for new investors. But, asmentioned before, Swaziland has several advantages which could be decisivein selecting the country as a recipient of new investments. Moreover, itsagricultural resources appear richer than those of the homelands.Therefore, while purely assembly-type industries might be more profitablein the 'homelands" that might not be the case with agro-based industries.

51. The authorities have recently introduced some tax measures. Theyinclude, in their most relevant part, several sound measures which shouldbe implemented without delay:

(a) To encourage labor-intensive activities, all expensesincurred on an approved training scheme may be deducted as anormal business expense and then again as a

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training expense. Formerly, this rule applied only to themanufacturing industry, but it has now been extended to allsectors.

(b) More double taxation agreements will be negotiated. Thereare presently double taxation agreements with the UnitedKingdom and the Republic of South Africa. The reaching ofsuch agreements with other countries wouldfacilitate thetransferring of capital and human resources into Swaziland.

52. The Government has recently approved a law exempting some newfirms from paying taxes on profits. While a full assessment on the meritsof this law is yet to be made, it appears that it enables the Government topursue further industrialization without jeopardizing the Government'sfinances. Nevertheless, in applying this law, the Government should aim,in the mission's view, at promoting new firms which are labor-intensiveagro-processing and/or other rural-based activities.

G. Energy

53. Availability of energy is not a serious constraint todevelopment. The Swaziland Electricity Board (SEB) is well wanaged andenjoys a sound financial position. SEB used to purchase about 35MW or halfof its energy requirements from South Africa, but this dependence wasreduced to about 25MW after the completion of the Luphohlo-Ezulwinihydro-power station in early 1985. The longer term energy situation,however, should be carefully assessed and a comprehensive developmentstrategy for the sector developed. The energy assessment to be undertakenby UNDP-World Bank, probably in 1985, could be very useful in this regard.The question of how much and for how long to rely on South Africanelectricity needs to be answered, taking into account the energy/wateravailability issue in its entirety. While purchasing from a relativelycheap source is economically unobjectionable, it must be borne in mind thatSwaziland is purchasing energy from South Africa which produces itbyutilizing, in some cases, international rivers that cross intoSwaziland. The water of these rivers is also used in irrigation in SouthAfrica with the result that the rivers are drying up in Swaziland. FromSwaziland's point of view, the relevant question is whether the countrybenefits more by purchasing energy from South Africa while, at the sametime, its rivers are drying up, or by producing its own energy throughappropriate hydro-projects located in Swaziland provided that Swailand andSouth Africa agree on an equitable apportionment of international rivers.As explained before, the existence of such projects has been the conditionof South Africa to discuss the utilization of international river waters.If Swaziland undertakes such projects it would also be able to use therivers' waters for irrigation projects.

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H. Tourism

54. While it is clear that tourism is not, nor will it be, a leadingeconomic sector, there is potential for additional development of thesector. It contributes less than five percent of GDP and employs about2,000 people. Nevertheless, the country has numerous naturalattractions,-it is called the Switzerland of Africa--and promotion oftourism is an appropriate Government policy. At present, South Africanvisitors constitute the bulk of tourism (almost 70 percent). They areattracted mainly by gambling and related activities.

55. The Government strategy is to diversify tourism. It is aiming atattracting tourists from USA, Europe and South America. This would requirean aggressive promotion campaign aiming at -siphoning-off some long-staytourists coming to South Africa. This is a different kind of tourist, whowill be attracted by the African beauty and rich cultural tradition ofSwaziland, rather than by gambling and related activities. Moreover, thistype of tourism could increase the value added by the sector, which ispresently low, and could facilitate the linkage of tourism wich the rest ofthe economy, particularly with agriculture, food-processing, andhandicrafts. The Government is also paying attention to the creation ofnew tourist areas, away from the Ezulwini Valley. In this connection, anew Government/hotel is going to be built at Piggs Peak in the north-westof the country, near the Johannesburg-Kruger Park-Durban internationalcircuit. Management of this hotel is planned to be contracted with awell-known American firm and could therefore complement Government effortsto attract tourists from the North American market.

56. The Government strategy to diversify tourism is sound and shouldbe pursued vigorously. However, attention should be paid to the following:

Ca) A comprehensive promotion plan needs to be designed andimplemented. This requires, in turn, the strengthening ofthe Department of Tourism, which appears weak at present.

Cb) Government equity in new hotels should be restricted toamounts that demonstrate good faith rather than a strongfinancial commitment on the pa.-. of the Government. Themain role of the Government should be the -selling- process,'.e. the attraction of private investors into Swaziland,rather than direct investment.

(c) The question of linkages of tourism with the rest of theeconomy needs to be studied. In addition, training needsshould be assessed, particularly for middle-levelmanagement, promotion of handicrafts, and marketarrangements to supply the tourist industry.

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I. Education

57. Swaziland has made steady progress towards achieving universalprimary education and expanding higher levels of education. Education isthe largest public sector expenditure component, accounting for almost onefourth of the budget, or seven percent of GDP. The Government continues toview education as a high priority activity. Its efforts have resulted irL arapid increase in the adult literacy rate from 30 percent in 1966 to 65percent in 1982. The enrollment ratio has reached around 107 percent forprimary schools (gross enrollment ratio), and about 50 percent forsecondary schools (also gross enrollment). All these indicators comparefavorably to those of middle income Sub-Saharan countries, where theaverage enrollment ratio for primary schools is 100 percent and forsecondary schools 17 percent.

58. The key issue for the education system is to address the shortageof skilled manpower especially at professional, semi-professional andartisan levels through improving the quality of education to make it morerelevant for the economic needs of Swaziland. It is estimated that thereare about 1,500 expatriates in Swaziland who are professional,administrative, or skilled workers. These expatriates who in most cases,are working in Swaziland for a limited period of time, hold over a half ofthe higher level managerial and professional positions in the privatesector and about 10 percent in the public sector. While this aelioratesthe shortage of skilled personnel, it is, nevertheless, a costly way offilling skilled personnel positions. At the same time, however, only oneout of three who leaves primary school finds a job in the formal sector.This indicates the need to make education more oriented towards meetingmanpower demand. Several efforts, at national and regional levels, havealeady been undertaken. A comprehensive survey designed to identify thespecific manpower needs of Swaziland and the ways to meet these needs willbegin shortly.

59. The Swazi authorities are pursing a policy of diversification ofeducation so as to make it more relevant to the economic needs of thecountry while, at the samp time, sustaining the cultural values of Swazisociety. Improved coordination with the private sector in the provision oftraining programs will minimize overlapping and consequently will reducecosts. A full assessment of the cost implications of a morevocationally-oriented education is yet to be made; but it is critical thatsuch programs be cost effective. Finally, it is recognized that familyplanning programs should also be pursued through education, primarily byincorporating health and family planning in the curricula.

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J. Government Expenditures

59. Central Government total expenditures have fluctuated between 30and 35 percent of GDP during the last five years, mainly as a result offluctuations in capital expenditures. 9 / Current expenditures, however,have been steadily increasing as percentage of GD?, from 17 percent in 1979to almost 22 percent in 1983. Although real increases in CentralGovernment current expenditures have not xeen extremely high, around 3.5percent per year, the slowdown in GDP growth has made these increases morenoticeable.

60. The composition of the current expenditure has been generallystable. Social services, mostly education and health, represent more than40 percent of the total expenditures. Education alone, the largest singleexpenditure component, accounts for almost 25 percent. General publicservice, which includes general administration, public order, and safetyrepresents also around 25 percent of the current expenditures. Economicservices, which include mainly agriculture and transport/communications,represent around 20 percent. Expenditure on defense account for 10 percentof the current expenditures (all defense expenditures are regarded ascurrent). The rest, somewhat more than five percent of currentexpenditures, are accounted for by interest payments on Central Governmentdebt.

61. Te composition of capital expenditures largely reflects theundertaking of size-ble projects in agriculture (Rural Development AreaProgram and Mnjoli dam for the Third Sugar Mill), transportation(enlargement and improvement in the Matsapha Airport, road improvements),and education (primary and secondary schools). In addition, there wereseveral new projects executed by parastatals which were, in some cases,financed by Central Government capital transfers and/or on-lending. Thisincludes the Northern Rail Link, the Luphohlo-Ezulwini hydro-electricpowerproject, and the lending to the NIDCS which, in turn, lends to orobtains equity participation in domestic enterprises.

62. Technical assistance received by Swaziland's public sector frombilateral and multilateral organizations is quite substantial. There arepresently around 300 expatriates at middle- and high-level positionsworking mostly for the Central Government. External TechnicalAssistanceagreements are worth a total of about US$20 million or, given thepresent rate of disbursement, about US$7 million per year. The assistanceis heavily concentrated in education (40 percent of the total), agriculture(18 percent), humanitarian and aid relief (13 percent). Other sectorswhich also benefit from the assistance are: transport (8 percent), health(8 percent) and general development (6 percent).

9/ The public sector as a whole accounts for a-ound 35-40 percent of GDP.It does not include the Tibiyo Fund which is a business-oriented fundestablished by the late King. Tibiyo plays a leading entrepreneurialrole, receives no subsidies and its companies are not suo4ect topreferential tax treatment.

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63. The quality of the Central Government expenditures appears, by

and large, appropriate. They have been directed to the provision of basic

infrastructure (transport, communications, electricity) needed to

facilitate private investments and to the upgrading of the social services

(education, health) available to the population. In this regard, the

Government has largely succeeded: the economic infrastructure is in place

and does not constitute a bottleneck to development, and health and

education standards have improved steadily. In addition, the Governeunt

has not undertaken 'white elephant" projects that have plagued many other

African countries. Future expenditures should focus on maintenance, (which

should take priority over new investments) improvement and, in some cases,

expansion of the country's infrastructure. In relation to expenditures in

the so-called social sectors, some adjustments seem necessary in education

and health so as to reflect development priorities. In education,

expenditures on vocational training should increase faster than

expenditures on regular academic training. In health, expenditures should

be directed primarily for preventive care and family planning. In

addition, expenditure on maintenance and consolidation of the presenthealth infrastructure should have higher priority than expansion, with the

exception of some peripheral clinics.

64. An important issues is the rapid growth in current expenditureresulting, to a large extent, from increases in the wage bill. If the

present sound financial situation is to be maintained, Central Governmentcurrent expenditure should probably not exceed, say, 22 percent of GDP,which is the present level and is the level projected in the FourthNational Plan. In order to achieve this goal, a key variable to monitor is

the number of temporary, non-established posts. Furthermore, theestablishment of clear policies for hiring temporary workers is not only afinancial issue but also a developmental one. For it is inappropriate to

tackle the unemployment issue through the provision of these types of jobs.

65. The preparation/planning process of the investment program nas

been inadequate and project implementation performance unsatisfactory.This appears to have resulted from two major shortcomings: shortage of

qualified personnel in the units in charge of project preparation and

implementation; and insufficient coordination among different government

agencies. The present unevenness shown in the investment from year to year

is a result of these weaknesses.' 0 /

66. External technical assistance has made a very positive

contribution to the economy. However, it has not developed local

counterparts to the extent expected. Therefore, the need for technicalassistance has tended to perpetuate itself. The resolution of this issue

requires concerted efforts on the part of the donors providing the

assistance and the Government.

10/ An indication of this, is the fact that the Central Government project

pipeline included in the Fourth National Plan is incomplete. The Plan

includes an achievable level of public investment, given the financial

and absorptive capacity of Swaziland, of about 10 percent of GDP.

However, the projected level of investment contains a gap of

unidentified investments which gets bigger as we look further into the

future. For instance, the amount of unidentified investments for

FY86/87 accounts for 60 percent of the total planned investment, and

for FY87/88 for 75 percent.

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III. ECONOMIC OUTLOOK

A. Introduction

67. In this chapter possible economic scenarios during the rest ofthe century are outlined. Even more than most less developed countries,the future of Swaziland depends on events beyond its control, namelydevelopments in Southern Africa, the evolution of the SACU and the RHA, andexport prices. If international conditions are generally favorable and nodisruptive crisis take in the region, a gradual economic recovery could beexpected during this decade, followed by a more rapid and sustaineddevelopment during the next decade. This general conclusion is based onthe existence of relatively abundant natural resources in Swaziland and onthe Government's intention to continue with its sound policies and toimplement new measures necessary for the development of Swaziland.

B. Output, Employment and Expenditures

68. Modest economic growth is likely for the rest of this decade.This economy should gradually recnver from the present recession, growingby 1 percent in 1985 and 1986, 2 percent in 1987, 3 percent in 1988, and 4percent in 1989. This is roughly consistent with the Fourth NationalDevelopment Plan which assumes economic growth of 2.2 percent per year forthe next three years. During this period the Government plans to undertakeseveral new projects in vocational training, industrial promotion andagricultural development, -vLich would accelerate economic growth in futureyears. As a result, growth could accelerate to five to six percent peryear during the 1990s.

69. The major reason for the aodest growtb prospect for the next fewyears is that there can be only a very minor increase in sugar production.Present production is around 380,000 metric tonnes, while the plantcapacity is around 400,000. Production probably cannot exceed, say395,000. Because of poor prospects for the world suga.r market, it isunlikely that production capacity will be expanded.

70. However, a gradual acceleration of growth in the rest of theeconomy should take place. Non-sugar agriculture is projected to growrapidly particularly during the next decade. This growth is predicated onthe recovery of maize production and on the development of activities suchas cultivation and processing of cotton which has good potential (severalprojects are being undertaken in this connection.) Development ofagriculture will require the identification/execution of feasible irrigatonprojects, the encouragement of rural development in the Swazi Nation Landand the possible introduction of changes on land tenure/use policies. Witha very aggressive promotion campaign and a strengthened NIDCS, themanufacturing sector could grow by about five percent dr-ing the 1990s,

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(This would imply an expansion of non-sugar manufacturing of about seven toeight percent per year). Food processing and other agro-based industriescould constitute the core of the expansion in manufacturing. Tourism andtourism-related activities could grow by five to six percent per year overthe longer term if the necessary promotion for market diversification andmeasures to strengthen the Department of Tourism are implemented.Government services, on the other hand, should grow somewhat slower thanGDP so as to maintain the present sound financial situation of the CentralGovernment.

71. This growth rate will require a level of investment of 20 to 22percent of GDP which was the level prevailing during the 1960s through themid-1970s. This implies a decline in the increment.' capital output ratio(ICOR) from 10 during 1985-90 to 5.2 in 1990-95, and to 4.7 in 1995-2000.This is not out of line with the experience during the 1960s and 1970s,when the economy was growing fast in Swaziland and the ICOR was aroundfive. The projected ICORs imply that public and private investments willbe directed towards efficient ar-I productive activities. It is also inline with the experience of countries such as Zimbabwe (ICOR for the period1969-76 was 4.8) and Botswana (ICOR for the period 1974-81 was 3.5).

72. It should be pointed out that because of the high rate ofpopulation growth, this scenario could result in declining per capitaincome over the next few years and only a modest increase during the1990s. By the year 2000 per capita income would only be 14 percent abovethe 1980 level.

73. In order to finance the required level of investment, nationalsavings would have to increase from 9.4 percent of GDP in 1983, a low ratecaused mainly by depressed sugar prices, to around 14 percent during the1990s. This would be still below Swaziland's saving ratio during the 1960sand i970s (Above 20 percent of GDP). This increase in national savings ispredicated upon the recovery of export prices which would increase nationalincomes, and on a policy of restraint on both public and privateconsumption, which should grow slower than GDP. Real per capitaconsumption would decline by 0.6 percent per year during the rest of the1980s but would increase by almost one percent per year during the 1990s ifpopulation growth rates decline as a result of accelerated fertilitydeclines.

74. Since the working-age population is projected to grow by about3.7 percent per annum for the remainder of this century, inspite of anyaccelerated decline in fertility rates, some increase in unemploymentappears inevitable during this decade. Assuming a constant ratio of activelabor force to total working age population at the present 53 percent,about 7,000 to 8,000 workers would enter the formal and informal labormarkets each year. With only modest economic growth rates likely duringthis period (projections point to a three percent average annual growthrate for the rest of this decade), and an overall labor-output elasticity

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of 0.711/ only 4,000 to 5,000 workers will find employment each year, thatis only about 60 percent of the new entrants to the labor force. However,if economic growth accelerates to 5 or 6 percent per year, by the end ofthe century the economy might be able to absorb all the newcomers to thelabor force. It should be pointed out that the agricultural sector, whichpresently provides for about 90 percent of the informal employment andabout 25 percent of the formal employment, should provide for 50 to 60percent of the new jobs. Needless to say, this reinforces the necessity ofaggressive agricultural development.

75. Although the problem of unemployment does not seem to have acomplete solution in the med.um-term, the Government is trying to resolveit over the longer-term. Accordingly, it is taking the following measures:

(a) identification and execution of training programs whichwould make the labor force more suitable to the demand ofthe formal sector where half or more of the new workers arelikely to find jobs;

(b) introduction of a double tax deduction for trainingexpenditures incurred by private firms which will complementthe efforts on training carried out by the Governient;

(c) introduction of other tax incentives for new investments.In granting these incentives, the authorities should givepriority to labor-intensive activites; and

(d) preparation and execution of rural development projectswhich would increase informal employment, particularly inthe Swazi Nation Land.

76. All these measures are likely to have a much more clear impacrover the longer-term, that is to say over the next decade. They arefacilitated by the absence of major price or wage distortions in Swaziland;a situation that should be maintained. In addition, it should be mentionedthat public expenditures can be a useful means of creating employmentopportunities in the formal sector provided that they are justified oneconomic and financial grounds and within a framework of a policy aimed atkeeping public mpenditures within a sustainable level.

77. Employment creation could be facilitated by appropriate planningfor the growth of cities and towns, to minimize the distance fromresidences to jobs. The pace of urbanization is likely to accelerate inthe years to come. Based on the international experience, it is likelythat the growth rate of Manzini and Mbabane will be at least twice thenational average (6 to 7 percent per year for the rest of the century).Housing problems might, therefore, become more acute. In additionm thelocation of future industrial estates becomes a very relevant issue. Since

1/ Roughly the same as that which prevailed during 1977-82 for the formalsector

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the present level of urbanization remains low, this is the right moment toidentify and define an urban development policy complemented by soundplanning for industrial estates.

Table 12. Population and Output Scenarios(Z - average annual rate)

1985-90 1990-95 1995-2000

. GDP growth 3.0 5.0 6.0of which: non-sugar

activities (3.6) (6.2) (7.5)

. Growth of consumption 2.8 4.0 3.5

. ICOR 10.3 5.2 4.7

Accelerated Fertility Decline

. Population Growth 3.46 3.07 2.58

. Per Capita GDP Growth -0.46 1.93 3.42

• Per Capita Consumption -0.66 0.93 0.92Growth

No Fertility Decline

= Population Growth 3.66 3.77 3.99

= Per Capita GDP Growth -0.66 1.23 2.01

. Per Capita Consumption -0.86 0.23 -0.49

. Investment (Z of GDPthe last year of theindicated period) 20.4 20.4 22.0

. National Savings (Zof GDP the last year 19.0 10.6 14.0of the indicatedperiod)

Source: Mission estimates

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C. Balance of Payments

78. Swaziland's balance of payments position should improvegradually. This will depend on the relatively rapid growth of exportswhich underlines the export-oriented nature of the growth and on a modestimprovement in the terms of trade from 1985 until 1990 resulting fromexpected more favorable sugar prices 1 2 /. On the other hand, imports can beexpected to grow at about the same rate of GDP. The current accountbalance of payments deficit should average around 8 percent of GDP duringthe rest of the century. If domestic fixed investment is about 22 percentof GDP, this would mean that investment in Swaziland will be financed 60percent by local savings and 40 percent by external resources. Thisappears reasonable provided that the government and the private sectorstrengthen their capacity to mobilize domestic savings and to seek externalresources.

79. Attaining the growth scenario previously dicussed will requireannual real growth of exports of 3.3 percent during 1985-90; 5.5 percentduring 1990-95, and 7.0 percent during 1995-2000. This is ambitious butattainable (The median annual growth rate for the Sub-Saharan Africancountries was 6.2 percent during the 1960s). But the growth rates ofnon-sugar exports will have to be even higher since sugar exports are notexpected to increase.

80. Rapid growth of exports will be necessary, particularly ofcotton, of agro-processing products and of non-factor services whichcomprise mainly tourism receipts. Since practically no real growth islikely in sugar exports, a gradual diversification of exports would takeplace. In 1980 sugar exports accounted for 45 percent of the totalmerchandise exports. By the year 2,000 they would account for only 25percent. While imports should grow at about the same rate as GDPI/,there are two import items, however, which could grow marginally slowerthan GDP during the 1990s: food and fuel. In the case of food, thisimplies efficient import substitution of maize and vegetables. Holdingfuel import growth below that of GDP will require the continuation of soundtariff policies on energy and the possible introduction of energyconservation measures.

81. The terms of trade are expected to improve during the rest of the1980s mainly as a result of some recovery in sugar export prices. A slightdeterioration, however, is expected during the 1990s mainly due to rapidincreases in fuel import prices.

12/ The overwhelming importance of sugar is illustrated by the fact that a10 percent shortfall in sugar prices increases the current accountbalance of payments deficit, ceteris paribus, by two to threepercentage points of GDP. This illustrates the fact that continueddepressed sugar markets could have a very detrimental impact on theeconomy.

13/ This is also the import elasticity for the Sub-Saharan Africancountries as a whole for the period 1970-82.

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82. The balance of payments scenario is conservative in two importantrespects. SACU receipts would increase by an annual average of 1.5 percentper year in real terms. This is far below the projected growth inimports. Furthermore, interest rates on external debt are expected toincrease steadily, reflecting a gradual change in the debt structure toinclude a higher percentage of loans on conventional terms (the averagematurity period would decline from 14 years in 1983 to around seven in1997, and average interest rates would increase from the present 5 or 6percent to about 8.5 percent in 1992).

83. Swaziland should be able to obtain the external capital necessaryto sustain a current account balance of payments deficit averaging 8percent of GDP during the rest of the century. The envisaged scenarioassumes that external grants and concessional loans will decline in realterms wbich illustrates, from a conservative view point, the capacity ofthe country to service its external debt. It also assumes increasinglevels of private capital inflows, including direct private investment,during the 1990s. It should be pointed out that most of the public sectorexternal capital requirements, both grants and loans, for the next threeyears have already been committed or pledged by donors. Obtaining externalcapital has been facilitated by the fact that the country needs it forproject execution, not for balance of payments or budgetary support.

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Table13. Balce of P ts ectiuB(U$ mdUin)

1984 1985 1986 1988 1990 1995 2000

Elports, GIS 360.0 390.5 426.9 567.6 799.1 1,236.9 2,149.7Tqports, GNFS 497.9 502.0 544.2 682.6 921.9 1,540.0 2,540.3Reasource Gp -137.9 -111.5 -417.3 -115.0 -122.8 -03.7 -390.3sACJ-C ea tor Receipts 26.0 26.5 3D.9 37.1 50.4 84.7 139.9

SUM-OthEr ReiptS 12.6 11.3 17.0 18.6 2E.3 43.6 72.0Factor Service inTme 30.9 25.6 28.0 33.5 3B.9 53.0 9.9. Ivestment T (Net) 4.4 -5.3 -5.8 -7.1 -9.0 -15.1 -25.8. Labor Tr (Net) 35.8 43.2 46.7 55.8 68.0 101.0 846. interest ouaPubl Debt 9.3 12.3 12.8 15.3 20.1 32.9 49.0Net Crrent Transxfes -1.9 -2.0 -2.2 -2.8 -3.8 -6.2 -10.4

Owrrent Acact -70.3 -50.1 -43.4 -28.6 -11.0 -127.9 -179.2

Public Capital (Net) 3L8 29.8 33.1 43.6 49.3 55.7 61.2Grants 25.0 21.7 23.4 27.2 28.6 22.2 16.7Ic-n Disbissiants 20.0 25.0 26.2 36.1 45.8 85.2 126.9

hivrtlzatia -13.2 -16.9 -16.5 -19.8 -25.8 -51.7 -83

Priute Capital (Net) 385 20.3 8.9 -2.4 -15.0 97.6 158.8

T-rease in Reserves 0.0 0.0 -1.4 12.7 23.3 25.5 40.8Reserve level 93.1 93.1 91.7 114.7 153.5 259.2 427.8Reserve level in !Ith of

liqports 2.2 2.2 2.0 2.0 2.0 2.0 2.0

MelD Itan

Average Anwal Growth tates(X)

1985-90 1990-95 1995-2000.Exports 3.3 5.5 7.0

Of uhLch: non-sugar exports (4.3) (7.3) (8.8)

Bizports 3.0 4.8 5.7

1985 1986 1988 1990 1995 2OOTerms of Trae Index(1980 - 100) 72.7 73.1 76.7 79.8 71.9 71.9

Real Sugar Prim I(1980 - 100) 37.0 39.6 48.9 65.3 54.4 54.4

Qirenzt Accott Deficit(C of CM) 10.9 8.7 4.6 1.4 9.7 8.0

Source: MIission siURm

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D. Central Government Finances

84. The Central Government will h- able to improve its financialsituation marginally if the policies of expenditure restraints called forin the Fourth National Plan continue to be enforced. Current expendituresshould increase somewhat slower than GDP. Customs Union Revenues willcontinue to be the dominant source of Central Government revenues as longas the country remains in SACU. Public investment should account for 10-12percent of GDP and would be largely financed by Central Governmentsavings. As an overall target, the Central Government's deficit should beheld below 4 percent of GDP.

85. Underlining this scenario on Central Government performance, isthe requirement that public enterprises not receive major support from theCentral Government. As explained before, Royal Swazi Airways is the mostprominent case in whieh measures to secure long-term financial viabilityneed to be examined carefully. Other public enterprises appear to be in amore favorable position over the longer term.

86. The assumptions made In the projections of Central Governmentfinances are basically conservative, particularly in relation to revenue.SACU revenues are projected to grow at slower rates than in the past, at anaverage annual real increase of 1.5 percent. As a result, SACU revenuesshould decrease from almost 20 percent cf GDP in 1983 to about 15 percentin 1990 and to 12 percent in the year 2000. This growth in SACU revenuesis very modest and should be attainable. However, if for any reason itfails to materialize, new taxes must be introduced so as to correct anypossihle imbalance in both the balance of payments and the fiscalaccounts. Taxes on profits and income which accounted for 8.2 percent ofGDP in 1983 should account for around 6.5 percent of GDP during the rest ofthe century reflecting the introduction of limited tax exemptions. Salestax, once it is fully enforced, should account for around 3.5 percent ofGDP.

87. As a result, total current revenues which accounted for about 30percent of GDP during the 1982-84 period, would decline to 27 percent ofGDP in 1990 and to 24 percent in the year 2000. This will require that therate of increase in real current expenditures will be lower than that ofthe GDP. This implies a policy of restraint in employment ofnon-established workers and only of moderate increases in wages.Nevertheless, Government should be able to provide the basic services ineducation and health to which it is committed.14/ As a result, current

14/ Again, this could become unattainable if fertility rates do notdecline. An accelerated fertility decline vis a vis no fertilitydecline means that 150,000 more people would require health care in theyear 2000 (The recurrent healtb cost per person in 1979/80 wasestimated at E 5.25) and that 30,000 more children would go to school(at a cost of E 26 per child-year in 1979/80).

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expenditures would decline from around 20 percent in 1984 to 19 percent in1990 and to 15 percent in the year 2000. Central Government's wage billwhich accounts for about half of the total current expendittures woulddecline from 11 percent of GDP in 1984 to about nine percent in the year2000.

88. The resulting Central Government savings should account for 7 to8 percent of GDP during the rest of the century (about the "historical-level). If Central Government investment accounts for 10 to 12 percent ofGDP, the resulting overall deficit would fluctuate around two percent ofGDP and would remain below the target, 4 percent of GDP. This overalldeficit is relatively low and should be covered almost entirely by externalcapital inflows.

E. Creditworthiness

89. The balance of payments position of South Africa is the keyvariable which determines foreign exchange availability and, therefore,creditworthiness in the whole RMA. Presently, exchange rate and interestrate policies followed by Soutb Africa ensure, by and large, foreignexchange availability in the RMA. Consequently, anyone in Swaziland whohas the necessary local currency (Rand or Emalangeni which areinterchangeable) can purchase the foreign currency needed to serviceexternal debt. Swaziland holds 25 percent of its reserves outside theSouth African Reserve Bank which ameliorates its dependence on SouthAfrica, Nevertbeless, if there is a major balance of paymeats crisis inSouth Africa, the public or private sector will be unable, at one point, toobtain the needed foreign exchange.

90. From Swaziland's viewpoint, therefore, the ability of theGovernment to service its debt depends on the fiscal performance. But eventhis performance is not entirely within the domain of the Swazilandauthorities because of the heavy dependence on SACU revenues. As a result,any assessment on the creditworthiness of Swaziland is, necessarilyrestrictive.

9i. At present, Swaziland should be regarded as creditworthy forcontracting loans on commercial terms provided that the authoritiescontinue with a policy of sound fiscal performance mainly throughexpenditure restraint. The external public debt service is projected toaccount for about seven percent of exports and, assuming thbt one third ofthe public debt is serviced by public enterprises, for about 20 percent ofthe Central Government revenues.

92. To sum up, the country is creditworthy for loans on conventionalterms because:

(a) prospects for growth in the longer terms are encouragingprovided that efforts to solve the managerial/technicalpersonnel shortage continue, that aggressive investment

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promotion campaigns are undertaken, and that measures todevelop agriculture are introduced, possibly on landtenure/use policies and new irrigation schemes. It shouldbe emphasized again that the projected rapid growth will notmean a significant improvement in the living conditions ofthe Swazis unless population growth rates decline sharply;

(b) balance of payments sustainability should be attalnable ifthe present exchange rate policies continue in the RandMonetary Area, and no major crises take place, if efforts toslowdown the growth of food and fuel imports are undertaken,and if, as expected, a moderate improvement in the terms oftrade takes place during the 1980s:

(c) financial situation of the public sector appears sound andis expected to continue If expenditure restraint policies asoutlined in the Fourth National Plan continue to be enforcedand if additional efforts are undertaken to improve thefinances of those public enterprises which are experiencingfinancial difficulties; and

(d) the external public debt service ratio and the need forcontracting loans seem to be within manageable limits and donot pose unbearable burdens on the country's economy. Thus,allowing the country to gradually reduce the need forexternal grants and concessional loans.

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ANNEX A

LIST OF KEY ISSUES AND POSSIBLE RECOMMENDATIONS

ISSUES Recommendations

Reduction of the population Implementation of a health/familygrowth rate. planning project to reduce fertility

rates.

Promotion of private Implementation of a comprehensive planinvestment. of promotion in Europe, USA, and South

Africa.

Development of Agriculture Study of the present tribal landtenure/use system.

Strong measures/programs againstover-grazing and soil erosion.

Reduction of skilled Definition of programs/projects onmanpower shortage. training.

More focus on vocational training.

Definition of a long-term Energy assessment to be undertaken.energy strategy.

Formulation of housing/urban Study to be undertaken.development policies.

Tourism development. Promotion of tourism in non-traditionalmarkets.

Strengthening of the Tourist Department.

Improvement in finances Close monitoring of the present Swaziof parastatals. Railways' program aiming at attaining

the company's financiallyself-sufficiency over the medium-term.

Concrete measures/Drogram to improvefinances at the Royal Swazi Airways.

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Improvement of managerial/operationcapability at the Central TransportAuthority. Possible redefinition offunctions.

Control of current Reduction of expenditures forexpenditures of the non-established positions.Central Government.

Improvement in efficiency Strengthening local managerial capacityof public expenditures. to implement/monitor projects.

Identification/evaluation of newprojects to be executed by the publicsector over the next 4-5 years. Clearestablishment of priorities.

Better designing of projects at NIDCSincluding only -token--Governmentguaranteed/equity in such projects.

Implementation of a program to enhancethe impact of technical assistance ontraining of locals and on institutionbuilding.

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ANNEX B

Central Government Expenditures

Public FiDances and the Fourth National Plan

The National Plan outlines a Central Governmentfinancial/investment scenario for the next three years which is sound andrealistic. First, it assumes modest increases in current expenditures:only two to t-ee percent per year in real terms. As stated before,attaining this objective will largely depend on the control of the wagebill, particularly non-estalbished posts. Second, current revenues arealso expected ro rise moderately in line with SACU revenues. Third, as aresult, Central Government current savings will show a somewhat decliningtrend in real t'rms but will, nevertheless, be kept at acceptable levels,around eight percent of GDP in 1987. Fourth, the planned annual level ofinvestment is E 73.0 million in 1983/84 prices, or US$57 million, for theperiod 1985/86-1987/88. This is an achievable level of investuent, giventhe absorptive capacity of Swaziland. Yet, to be sustained, it willrequire serious efforts in project design/preparation and implementation.Fifth, financing of the overall deficit seems to be attainable. It isassumed that external grants will decrease (which is expected, given therelative sound financial -nsilion of Swaziland), that the use of domesticcredit will be minimal, and that gross external borrowing will be withinmanageable an4 obtainable limits (By 1987, E 16.9 million, in 1983/84prices, will be needed in gross extex-nal Central Governaent borrowing).

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Central Government Investment Program and Financing(Ia millions of 1983/84 Emalaugeni)

Actual Est. Projected1983/84 1984/85 1985/86 1986/87 1987/88

Current Revenues 183.6 189.8 202.7 193.6 200.9Current Expenditures'/ 116.2 128.4 133.5 137.0 142.0

Savings 67.4 61.4 69.2 56.6 58.9

Investments 80.6 68.6 73.0 73.2 73.0Committed (80.6) (68.6) (43.2) (26.7) (16.7)Unallocated (-) () (29.8) (46.5) (56.3)

Overall Deficit 13.2 7.2 3.8 16.6 14.1

Financing

External Grants 8.8 5.8 4.6 4.6 4.6Net External Loans 2.1 -0.5 -0.8 9.0 7.5

Gross Borrowing (12.7) (9.3) (10.1) (16.9) (16.9)Amortization (-10.6) (-9.8) (-10.9) (-7.9) (-9.4)

Domestic Financing (Net) 2.3 1.9 - 3.0 2.0

1/ Excludes Posts and TelecommunicationsSource: Fourth National Development Plan

The Investment Program

Although the Government has planned the level of publicinvestment for the next three years, there is a gap of unallocatedinvestments which gets bigger as we look further into the future. Forinstance, the amount of unallocated investments for 1986/87 accounts for 60percent of the total planned investment, and for 1987/88 for 75 percent.This is a crucial issue; it reflects the weakness of the Swaziadministration and donors in preparing projects well in advance accordingto clearly established priorities and in planning their execution.According to previous experience, the ratio of annual investment/total costof projects under execution is around 0.2. Hence, given a projectedinvestment of E 73 million, the Central Government project pipeline shouldcomprise projects amounting to, say, E 370 million ready forimplementation every year. However, taking into account that about twoyears are needed between identification and start of implementation, andallowing for contingencies and eventual shifting required by unforeseeablecircumstances, it appears advisable to build up a pipeline of projectsready for implementation amounting to about E 500 million (in 1983/84

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prices). That would allow an investment program covering, at least, threeto four years with very small unallocated amounts. In other words, thatwill make the investment program a longer term oriented exercise in whichpriorities can be better defined because there is no urgency toidentify/implement projects in order simply to achieve a certain level ofinvestment.

Ongoing Projects

During FY84/85 total cost of projects under execution amounted toabout E 373 million. The main features of the investment program underexecution are the following:

(a) The dominant sector is works and communications whichaccounts for around 44 percent of the total CentralGovernment expenditures. The main projects in this sectorare road rehabilitation, necessitated by the damage causedby the cyclone in early 1984, improvement of the MatsaphaAirport, and construction of the Northern Rail Link.

(b) In education, capital investments are being dominated by theconstruction of primary and secondary schools (under theThird Education Project), and, by the construction of twoTeacher Training Colleges located in Nywane and Piggs Park.

Cc) In agriculture, the most important investments are relatedto crop development (small scale irrigation, seedmultiplication, farmer training center). The RuralDevelopment Area Program had been completed in 1983/84although it might be reinitiated under a new design in thenear future.

(d) In health, the Government is carrying out three majorinvestments: Ci) rehabiliation of the Mbabane Hospital; (ii)rehabilitation of the Mental Hospital; and (iii)construction of health centers.

(e) Other investments include mainly -onstruction of facilitiesfor the Central Administration.

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Summary of Estimated Capital Expenditure 1984/85(In millions of Emalangeni)

Estimated Est.AmountTotal Costs of Exec.Projects _ FY1984/85 _

Works and Communication 174 47 31 45Education 52 14 12 18Agriculture and Natural Resources 53 14 7 10Health 25 7 6 9Other 69 18 13 18

TOTAL 3731/ 100 691/ 100

1/ Excludes E 12 million of Capital Transfers2/ Budgeting estimates.

New Projects?

New projects with improved design should complement on-goingprojects. In this connection, particular attention should be given to thefollowing possible new projects:

(a) A comprehensive agriculture/rural development project thatcould include already identified components such as maizeproduction and small scale irrigation. This project couldinclude components dealing with the difficult issues of landtenure/use, soil erosion, and cattle over-grazing.

Cb) Design of an irrigation project in the Usutu/NggawavumaBasin by scaling down the original 55,000 ha. project so asto make it economically and financially viable.

(c) Preparation of additional projects to address the shortageof skilled manpower.

(d) Identification and implementation of population/healthprojects. Incorporation of family planning in educationalprojects/programs.

(e) Continuation and enhancement of road projects with specialemphasis on road maintenance, reduction of road accidents,and the institution-building attached to these tasks.

(f) Initiation of a comprehensive package project for industrialdevelopment which could include a credit component, measuresto improve efficienc- of NIDCS and other public agencies andmore construction of industrial facilities. In relation tothe expansion of industrial facilities, it should beundertaken according to a well-conceived urban developmentpolicy which is yet to be formulated.

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STATISTICAL APPENDIX

Table of Contents

TableNumber

Section I. Population

1.1 Selected Demographic Data1.2 De Facto Population by Sex, Age and Ethnic Group, 19761.3 Absentees Outside Swaziland by Sex and Age Group, 19761.4 Population in Urban Areas, 1966 and 19761.5 Estimated Total Employment in the Formal Sector, 1977-821.6 Paid Employment in the Private and Government Sectors by

Industry, 1977-831.7 Private Sector Employment by Skill Level and Citizenship, 1977-82

Section II. National Accounts

2 .1 Gross Domestic Product at Constant Factor Cost by IndustrialOrigin, 1977-83

2-.LA Percentage Distribution of Gross Domestic Product at ConstantFactor Cost by Industrial Origin, 1977-83

2.1B Growth of Gross Domestic Product at Constant 1980 Factor Cost byIndustrial origin, 1977-83

2.2 Consumption, Investment and Savings2.2A Consumption, Investment and Savings in Constant Market Prices

2.3 Implicit GDP Deflator, 1975-83

Section III. Balance of Payments

3.1 Balance of Payments3.2 International Reserve Position, 1977-833.3 Merchandise Exports, 1977-833.4 Export Quantum Indices, 1977-833.5 Distribution of Major Exports by Countries of Destination, 19833.6 Merchandise Imports, 1977-83

Section IV. External Debt

4.1 Actual and Projected External Public and Publicly GuaranteedDebt

- 49 -

Section V. Public Finance

5.1 Summary of Central Government Operations, FY78/79-FY84/855.2 Central Government Revenue, FY78/79-FY84/855.2A Percentage Distribution of Central Government Revenue,

FY78/79-FY84/855.3 Central Government Recurrent Expendsiture, FY78/79-FY84/855.3A Percentage Distribution of Central Government Recirrent

Expenditure, FY78/79-FY841855.4 Central Government Capital Expenditure, FY7-8/79-FY84/855.4A Percentage Distribution of Central Government Capital

Expenditure, FY78/79-FY84/855.5 Central Government Expenditure by Sectors, FY78/79-FY84/855.5A Percentage Distribution of Central Government Expenditures,

FY78/79-FY84/855.6 Economic Classification of Central GoveTnment Expenditures and

Net Lending, 1978/79-1984/85

Section VI. Monetary Statistics

6.1 Monetary Survey, 1976-846.2 Bank Loans and Advances by Type of Industry, 1977-846.3 Comparative Interest Rates: Swaziland and South Africa, 1977-84

Section VII. Agricultural Statistics

7.1 Sugar Production and Sales, 1977/78-1984/857.2 Land-Use, 1982/837.3 Individual Tenure Farms: Number and Total Area by Size, 1982/837.4 Food Crop Statistics for Swazi Nation Land, 1977/78-1982/837.5 Major Crops of Individual Tenure Farms, 1977/78-1982/837.6 Individual Tenure Farms: Volume and Value of Major Citrus Crops,

1978/79-1982/837.7 Seed Cotton Production, 1975/76-1982/83

Section VIII. Other Sectors

8.1 Number of Cattle Died, Slaughtered and Exported, 1977-838.2 Mineral Production and Exports, 1977-838.3 Number of Consumers and Sales of Electricity by the Swaziland

Electricity Board, 1977-848.4 Minimum Wage for General Laborers in Selected Industries, 1978-838.5 Monthly Earnings of Males by Skill in the Private Sector, 1978-828.6 Pupils and Teachers in Primary and Secondary Education, 1977-838.7 Teacher Training, Technical Training and Higher Education,

1981/82-1983/84

Section IX. Prices

9.1 Comparative Price Indices: Swaziland and South Africa, 1980-84

Table 1.1: SWAZILAND - Selected Demographic Data

Population 1984 (de facto) 721,0001/

Birth Rate (per thousand) 51.0

Death Rate (per thousand) 15.0

Total Fertility Rate 7.0

Rate of Natural Increase 3.6X

Rate of Population Growth2 3.6X

Infant Mortality (per thousand) 105

Life Expectancy 52.0

Population Under 15 years 48.02

Population Over 65 years 2.5%

1 Projection

2 Between the 1966 and 1976 census.

Source: World Bank, Population and Health Sector Review, November 1984

Table 1.2: SWAZILAND - De Facto Population by Sex, Age and Ethnic Group, 1976

------All Groups ---- ------Africans --------- -----Non-Africans----- Non-Stated Ethnic GroupAge Total Male Female Total Male Female Total Male Female Total Male Female

0- 4 88402 43193 45209 86999 42475 44524 1400 716 684 3 2 15- 9 79298 39422 39876 77897 38661 39236 1399 759 640 2 2 010-14 66838 33055 33783 65540 32385 33155 1259 650 609 39 20 1915-19 52103 23560 28543 51297 23195 28102 795 356 439 11 9 220-24 38541 15286 23255 37772 14935 22837 763 346 417 6 5 125-29 33402 13776 19626 32351 13235 19116 1048 541 507 3 0 330-34 25359 11248 14111 24262 10660 13602 1096 587 509 1 1 C35-39 25095 11863 13232 24150 11310 12840 943 552 391 2 1 140-44 18512 8872 9640 17796 8464 9332 714 407 307 2 1 145-49 17737 8801 8936 17125 8447 8678 610 352 258 2 2 050-54 11987 5688 6299 11484 5405 6079 501 281 220 2 2 055-59 10161 4903 5258 9685 4606 5079 473 295 178 3 2 160-64 8209 4027 4182 7894 3851 4043 311 173 138 4 3 165-69 6035 2755 3280 5869 2655 3214 166 100 66 - - -

70-74 4303 1995 2308 4200 1941 2259 103 54 49 - - -

75 and over 6921 2669 4252 6827 2621 4206 93 48 45 1 - 1Not Stated 1631 748 883 1600 729 871 31 19 12 - - -

Total 494534 231861 262673 482748 225575 257173 11705 6236 5469 81 50 31

Source: 1976 Swaziland Population Census, Vol. II.

Table 1.3: SWAZILAND - Absentees OutSide Swaziland by Sax and Age Group, 1976

Total Absentees Male AbsenteesAge Total Mines Farm Other N.S. Total Mines Farm Other N.S.

0- 4 407 9 4 387 7 205 7 2 193 35- 9 676 4 28 642 2 322 3 17 301 110-14 1094 12 180 896 6 544 12 112 416 415-19 3405 1107 457 1835 6 2416 1089 300 1021 620-24 5559 2801 333 2424 1 4488 2774 256 1457 125-29 4504 2087 220 2195 2 3486 2051 164 1269 230-34 2862 1208 134 1519 1 2134 1195 107 831 135-39 2217 903 129 1177 8 1639 893 98 644 440-44 1490 500 109 877 4 1089 498 84 504 3 145-49 1289 469 94 725 1 1014 459 81 473 1 @50-54 705 196 51 458 0 524 194 43 287 055-59 412 121 24 265 2 314 116 21 176 160-64 267 71 23 170 3 189 71 21 97 065-69 132 33 11 87 1 88 31 9 48 070-74 70 11 10 49 0 46 11 6 29 075+ 75 8 4 63 0 45 8 3 34 0N.S. 486 202 34 245 5 360 198 30 129 3

Totals 25650 9742 1845 14014 49 18903 9610 1354 7909 30

Source: 1976 Swaziland Population Census, Vol. II.

Table 1.4: SWAZILAND - Populatior. in Urban Areas, 1966 and 1976

AnnualTown 1966 1976 Growth Rate

Mbabar.e 13,803 23,109 5.3%Manzini 6,081 10,019 5.1%(Manzini Peri-urban) (10,025) (18,818) 6.5%Big Bend 2,924 2,083 -2.5XPiggs Peak 1,417 2,192 4.4XNhlangano 1,586 2,097 2.7%Siteki 1,457 1,362 -0.6%Hlatikulu 984 1,183 1.9%Lavumisa 762 765 0.0%Mankaiana 587 597 0 2%

Source: 1976 Swaziland Population Census

Table 1.5: SWAZILAND - Estimated Total Employment in the Formal Sector, 1977-82

1977 1978 1979 1980 1981 1982

Private Sector 60,272 62,9R4 63,857 65,768 68,126 70,132

of which: Paid Employees 49,273 52,292 53,884 55,077 57,243 58,719

Self-Employed 1,109 827 595 753 756 867

Unpaid Family Workers 1,390 1,065 285 546 431 540

Small Swazi Traders 1,800 1,900 2,000 2,100 2,200 2,300

Employment by Private Homesteads 6,700 6,900 7,093 7,292 7,496 7,706

Public Sector 16,952 18,964 19,995 20,052 22,496 23,188

Total Employment 77,224 81,948 83,852 85,820 90,622 93,320

Employment X of Population 13.8 14.1 14,0 13.8 14.1 14.0

Source: CSO, Employment and Wages, various years

Thle 1.6: ZIlAND - Paid rWlonrt In the Private a& QGDmnm.nt Sdateby T*Amtry, 1977-832/

(mU-War data)

1F1vaZe Sector MUcBetor Toat alI1977 1978 1979 1980 1981 19S2 19832 1977 1978 1979 19- ) 1981 18 198 3f 1977 1978 1979 198D 19S1 1982 1983y

Ag 1icu iral& or itry 24,883 25.371 25,870 27,539 24,055 24,740 22,841 1,494 1,781 1,794 2,419 2,690 2,862 2,278 26,117 27,152 27,664 29,958 26,71.. 27,602 25,119

HinirJ md mUQny1'u 3,086 2,607 2,554 2,528 2,580 2,664 2,499 - . . - - - 3,086 2,607 2,554 2,588 2,58) 2,664 2,499

luufhaciutq 8,411 8,743 8,93 9,253 13,880 14,262 12,089 - , , , - - - 8,411 8,743 8,938 9,253 13,88) 14,262 12,089

teatrldty * lbter - - - - 1,226 1,208 1,213 1,216 1,453 1,509 1,128 1,225 1,208 1,213 1,216 1,453 1,509 1,128

(5smtiawX 2,817 5,314 5,641 3,727 4,345 4,100 4,748 1,264 2,595 2,560 2,357 2,409 2,443 2,787 4,081 7,909 8,201 6,084 6,754 6,543 7,545

MatrihJin, etc. 5,516 5,589 6,042 5,874 5,862 6,197 7,036 - , , . - - 9 5,516 5,589 6,042 5,874 5,862 6,197 7,045

1pamport, etc. 874 991 944 1,148 1,510 1,550 1,733 1,894 1,943 2,789 2,168 2,889 3,021 2,478 2,768 2,934 3,733 3,316 4.39 4,571 4,211

F1zae 1,477 1,456 1,434 2,328 2,110 2,178 1,790 - . . 4 0 400 612 1,477 1,456 1,434 2,323 4,510 2,578 2,402

Other Srvici 2,209 2,221 2,461 2,620 2,901 3,028 3,293 11,074 11,437 11,639 11,892 12,655 12,953 13,888 13,213 13,656 14,100 14,512 15,556 15,981 17,171

Total-AII lIdstrlm 49,273 52,292 53,884 55,077 57,243 58,719 56,03 16,952 18,964 19,995 20,052 22,496 23,188 23,18) 66,225 71,256 73,879 75,129 79,739 81,907 79,209

4' -W' are for AJu, 1970dJ Fatite

Slxz CSD, fwlnMt OM 1Mu, arlw ywarn aM otlidal srxc .

lTble 1.7: 9AZILAND - Private Sector Em1oyment by Sdll Level andCitimmiuhip, 1977-82!/

N.

1977 1978 1979 1980 1981 1982

Professional & TechidcalE9azi Citizens 583(54.1) 648(56.8) 530(45.2) 587(47.7) 710(51.5) 915('3.3)Nbn-aCtimns 505(45.9) 492(43.2) 650(54.8) 643(52.3) 669(48.5) 655(41.7)

Admdnistrative & ManegerialSwazi Citizem 545(50.7) 686(53.8) 798(56.2) 713(54.7) 838(57.0) 904(56.0)Nonr-Citizern 541(49.3) 589(46.2) 623(43,8) 58R(45,3) 632(43.0) 709(44.0)

Clerical & RelatedSwazi CitizeTs 2276(92.0) 2745(93.3) 2902(94.4) 3183(95.4 3965(96.7) 3530(95.7)NbM-n tite 197 (8.0) 196 (6.7) 172 (5.6) 154(4.6) 135(3.3) 159( 4.3)

SkiledSwazi Citizem 1018(63,7) 1174(63.4) 1336(69.0) 1354(73.2) 1581(76.7) 1644(77.7)Non-Citizens 581(36.3) 678(36.6) 600(31.0) 495(26.8) 479(23.3) 473(22.3)

Semi-SkiledSwazi CitizenB 5719(97.1) 5593(95.0) 6263(94.2) 675(96.9) 63000(97.6) 5764(97.1)Nn-Cltizem 163( 2.9) 294( 5.0) 389 (5.8) 206(3.1) 152(12.4) 173( 2.9)

UillkledS&azi CitizErs 36759(99.0) 38796(99.0) 39309(99.2) 40097(99.3) 41509(99.3) 39690(99.6)Non-CItizene 376 (1.0) 401 (1.0) 306 (0.8) 304 (0.7) 273 (0.7) 159( 0.4)

TotalSwazi Citizers 46910(95.2) 49642(94.9) 51144(94.9) 52686(95.7) 54903(95.9) 52447(95.7)Not-Citizen 2363 (4.8) 2650( 5.1) 2740 (5.1) 2391 (4.3) 2340 (4.1) 2328 (4.3)

a Nlnbeis in parentheis are the percentege sharm of Swazi citizem andnon-citizens In eSplInent at eadh skldl level.

Scxzre: C50, ftloyment ad es, variaca years

TABLE 2.1SWAZILAND- GROSS DOMESTIC PRODUCT AT CONSTANT FACTOR COST

BY INDUSTRIAL ORIGIN, 1977-1983(MILLIONS OF 1980 EMALANGENI)

ITFJ 1977 1978 1979 1980 1981 1982 1983------------------------------------------------------------------- __--------__------------

AGRICULTURE AND FORESTRY 74.8 86.9 83.4 93.5 104.5 102.0 109.7SNL - CROP PRODUCTION 10.3 15,3 11.1 15.0 15.5 8.6 8.6IT - CROP PRODUCTION 39.5 44.0 43.1 52.5 61.0 65.8 71.5LIVESTOCK 19.5 22.4 24.4 20.7 22.3 21.7 23.7FORESTRY 5.4 5.2 4.8 5.3 5.7 5.9 5.9

MINING 15.3 15.4 14.5 14.1 14.6 12.2 10.7MANUFACTURING 65.3 69.8 71.6 79.6 88.4 92.6 88.8ELECTRICITY 3.0 3.3 3.6 4.4 4.6 4.5 5.0CONSTRUCTION 13,5 27.9 25.1 16.2 18.7 13.6 17.4WHOLESALE AND RETAIL 23.7 25.4 26.1 27.0 27.7 26.5 25,1HOTELS AND RESTAURANTS 13.8 7.4 8.2 8.6 7,3 8.2 9.4TRANSPORT AND COMMllNICATIONS 21.8 24,4 24.7 20.5 21.4 21.4 22.2BANKING AND INSURANCE 11.3 11.5 12.5 13,6 15.4 15.1 15.4OTHER BUSINESS SERVICES 8.9 9.9 10.1 10.0 10.7 10.6 10.7OWNER-OCCUPIED DWELLINGS 13.6 14.3 15.0 15.6 15.8 16.0 16.0OTHER SOCIAL SERVICES 5.0 5.2 5.5 5.9 6.5 7.3 7.5GOVERNMENT SERVICES 52.0 56.2 57.9 61,1 66.1 69.0 69.2OTHER PRODUCERS 6.3 6.4 6.6 6.5 6.7 ;'.1 7,4ESS: IMPUTED BANK SERVICE

CHARGES -9.6 -10.6 -10.,6 -10.9 -12.3 -12.2 -12.4

GDP (FACTOR COST) 318.7 353.5 354.2 365.7 396.1 394.0 402.1NET INDIRECT TAXES 74.1 91.1 89.1 99.6 101.7 98.6 98.8

GDP (MARKET PRICES) 392.8 444.6 443.3 465.3 497.8 492.6 500.9SOmURmumEu: =a====m STATISTICMA OFmFIC === Sm== ESTIA

SOURCE: CENTRAL STATISTICAL OFFICE AND STAFF ESTIHATES

TABLE 2.IASWAZILAND- PERCENTAGE DISTRIBUTION OF GROSS DOMESTIC PRODUCT AT CONSTANT

FACTOR COST BY INDUSTRIAL ORIGIN, 1977-1983(PERCENTAGE)

…-----------------------------------------------------__---------------------__------------ITEM 1977 1978 1979 1980 1981 1982 1983

___________________________________________________________________________________________

AGRICULTURE AND FORESTRY 23.5 24s6 23.5 25.6 26.4 25.9 27.3SNL - CROP PRODUCTION 3.2 4.3 3.1 4.1 3.9 2.2 2.1IT - CROP PRODUCTION 12.4 12.4 12*2 14.4 15.4 16.7 17.8LIVESTOCK 6.1 6.3 6.9 5.7 5.6 5.5 5.9FORESTRY 1.7 1.5 1.4 1.4 1.4 1.5 1.5

MINING 4.8 4.4 4.1 3.9 3.7 3.1 2.7MANUFACTURING 20.5 19.7 20.2 21.8 22.3 23.5 22.1ELECTRICITY 0.9 0.9 1.0 1.2 1.2 1.1 1.2CONSTRUCTION 4.2 7.9 7.1 4.4 4.7 3.5 4.3WHOLESALE AND RETAIL 7.4 7.2 7.4 7.4 7.0 6.7 6.2HOTELS AND RESTAURANTS 4.3 2.1 2.3 2.4 1.8 2.1 2.3TRANSPORT AND COMMUNICATIONS 6.8 6.9 7.0 5.6 5.4 5.4 5.5BANKING AND INSURANCE 3.5 3.3 3.5 3.7 3.9 3.8 3.8OTHER BUSINESS SERVICES 2*8 2.8 2.9 2.7 2.7 2.7 2.7OWNER-OCCUPIED DWELLINGS 4.3 4.0 4.2 4.3 4.0 4.1 4.0OTHER SOCIAL SERVICES 1.6 1.5 1.6 1.6 1.? 1.9 1.9GOVERNMENT SERVICES 16.3 15.9 16.3 16.7 16.7 17.5 17.2OTHER PRODUCERS 2.0 1.8 1.9 1.8 1.7 1.8 1.8ESS: IMPUTED BANK SERVICE

CHARGES -3.0 -3.0 -3.0 -3.0 -3.1 -3.1 -3.1

GDP (FACTOR COST) 100.0 100.0 100.0 100.0 100.0 100.0 100.0NET INDIRECT TAXES 23.3 25.8 25.2 27.2 25.7 25.0 24.6

GDP (MARKET PRICES) 123.3 125.8 125.2 127.2 125.7 125.0 124.6=a======n n==m==== =m -- imin mmmu= m=m===Mn *=="minm

…----------------------------------------------------------__----------------__------------

SOURCE: CENTRAL STATISTICAL OFFICE AND STAFF ESTIMATES

TABLE 2.1BSWAZILAND- GROWTH OF GROSS DOMESTIC PRODUCT AT CONSTANT 1980 FACTOR COST

BY INDUSTRIAL ORIGIN, 1977-1983(PERCENT)

…--------------..------------------------------------------------__----------__-------------IT'£4 1977 1978 1979 1980 1981 1982 1983

------------------------------------------------------------------- __--------__-----------_

AGRICULTURE AND FORESTRY -13.9 16.2 -4.0 12.1 11.8 -2.4 1 7.5SNL - CROP PRODUCTION -32.7 48.5 -27.5 35.1 3.3 -44.5 -IT - CROP PRODUCTION -72.6 11.4 -2.0 21.8 16.2 7.9 8.7LIVESTOCK -12.9 14.9 8.9 -15.2 7.7 -2.7 9.2FORESTRY 3.8 -3.7 -7.7 10.4 7.5 3.5 -

MINING -0.6 0.7 -5.8 -2.8 3.5 -16.4 -12.3MANUFACTURING -6.4 6.9 2.6 11.2 11.1 4.8 -4.1ELECTRICITY -9.1 10.0 9.1 22.2 4.5 -2.2 11.1CONSTRUCTION -51.6 106.7 -10.0 -35.5 15.4 -27.3 27.9WHOLESALE AND RETAIL -6.7 7.2 2.8 3.4 2.6 -4.3 -5.3HOTELS AND RESTAURANTS 86.5 -46.4 10.8 4.9 -15.1 12.3 14.6TRANSPORT AND COMMUNICATIONS -10.7 11.9 1.2 -17.0 4.4 - 3.7BANKING AND iNSURANCE -1.7 1.8 8.7 8.8 13.2 -1.9 2.0OTHER BUSINESS SERVICES -10.1 11.2 2.0 -1.0 7.0 -0.9 0.9OWNER-OCCUPIED DWELLINGS -4.9 5.1 4.9 4.0 1.3 1.3 -OTHER SOCIAL SERVICES -3.8 4.0 5.8 7.3 10.2 12.3 2.7GOVERNMENT SERVICES -7.5 8.1 3.0 5.5 8.2 4.4 0.3OTHER PRODUCERS -1.6 1.6 3.1 -1.5 3.1 6.0 4.2ESS: IMPUTED BANK SERVICE

CHARGES -8.6 10.4 - - 2.8 12.8 -0.8 - 1.6

GDP (FACTOR COST) -9.8 10.9 0.2 3.2 8.3 -0.5 2.1NET INDIRECT TAXES -18.7 22.9 -2.2 11,8 1 2.1 -3.0 0.2

GDP (MARKET PRICES) -11.7 13.2 -0.3 4 5.0 4 7.0 -1.0 5 1.7inmmm uw=m umnm o====== u=www m =u====nun =mw"= * wuu.

…_____________________________________________________,.____________________________________

SOURCE: CENTRAL STATISTICAL OFFICE AND STAFF ESTIMATES

Table 2.2: SWAZILAND - Consumption, Investment and Savings

Millions Emalangeni X of GDP1980 1981 1982 1983 1984 1980 1981 1982 1983 1984

Gross Domestic Product(GDP)465.3 554.1 571.4 616.6 692.9 100.0 100.0 100.0 100.0 100.0Resource Gap 145.1 150.0 166.9 181.1 197.0 31.2 27.1 29.2 29.4 28.4Exports GNFS 325.7 388.0 416.7 411.3 514.3 70.0 70.0 72.9 66.7 74.2Imports GNFS 470.8 538.0 583.6 592.4 711.3 101.2 97.1 102.1 96.1 102.7Total Expenditures 610.4 704.1 738.3 797.7 890.0 131.2 127.1 129.2 129.4 128.4Investment 171.6 155.5 169.0 151.7 165.7 36.9 28.1 29.6 24.6 23.9

Public 57.7 73.0 78.3 74.7 79.5 12.4 13.2 13.7 12.1 11.5Priv"te 113.9 82.5 90.7 77.0 86.2 24.5 14.9 15.9 12.5 12.4

Consumption 438.8 548.6 569.3 646.1 724.3 94.3 99.0 99.6 104.8 104.5Public 79.9 93.9 117.9 142.6 168.6 17.2 16.9 20.6 23.1 24.3Private 358.9 454.7 451.4 503.5 555.7 77.1 82.1 79.0 81.7 80.2 1

Gross Domestic Savings 26.5 5.5 2.1 -29.4 -31.4 5.7 1.0 0.4 -4.8 -4.5 ON

Net Factor Income -5.2 7.3 17.0 30.4 44.1 -1.1 1.3 3.0 4.9 6.4 0

Net Current Transfers 40.2 16.8 56.7 56.5 52.4 8.6 3.0 9.9 9.2 7.6Gross National Savings 61.5 29.6 75.7 57.4 65.2 13.2 5.3 13.3 9.3 9.4Gross National Product(GNP)460.1 561.4 588.4 647.0 737.1 98.9 101.3 103.0 104.9 106.4

Sources: Official Sources, Mission Estimates

- 61 -

Table 2.2A: SWAZILAN'D - Consumption, Investment and Savingsin Constant Market Prices

(in 1980 Emalangeni)

1980 1981 1982 1983 1984

GDP Market Prices 465.3 497.8 492.6 500.9 502.6Terms of trade Adjustment .0 -3.5 -74.7 -154.8 -150.2Gross Domestic Income 465.3 494.3 417.9 346.1 352.4Exports GNFS 325.7 361.0 389.2 474.0 465.7Imports GNFS 470.8 495.7 440.5 459.8 436.4Exports (Import capacity) 325.7 357.5 314.5 319.2 315.5Total Expenditure 610.4 632.5 543.8 486.7 473.3Investment - Total 171.6 129.6 122.4 103.5 100.9Public 57.7 60.8 56.7 51.0 48.4Private 113.9 68.8 65.7 52.5 52.5

Consumption - Total 438.8 502.9 421.5 383.2 372.4Public 79.9 86.1 87.3 84.6 86.7Private 358.9 416.9 334.2 298.7 285.7

Gross Domestic Savings 26.5 -8.6 -3.6 -37.1 -20.0Transfers and Service Payments 35.0 19.4 45.6 49.4 38.1Gross National Savings 61.5 10.7 42.0 12.3 18.2


Table 2.3: SWAZILAND - Implicit GDP Deflator, 1975-1983(1980=100)

1975 1976 1977 1978 1979 1980 1981 1982 1983

GDP at Market Prices 213.4 235.3 263.5 323.3 372.9 465.3 553.9 571.1 616.8(current prices, E Mill.)

GDP at Market Prices 396.7 387.6 392.8 444.6 443.4 465.3 497.8 492.6 500.9(constant prices, E Mill.)

Implicit GDP Deflator 53.8 60.7 67.1 72.7 84.1 100.0 111.3 116.0 123.1

- 63 -

Table 3.1: SWAZILAND - Balance of Payments a/(Millions of Emalangeni)

1980 1981 1982 1983 1984

Total Exports GNFS 325.7 388.0 416.7 411.3 514.3Total Imports GNFS 470.8 538.0 583.6 592.4 711.3Resource Gap -145.1 -150.0 -166.9 -181.1 -197.0SACU-Compensatory 24.8 20.3 34.8 35.7 37.1SACU-Other Receipts 17.2 -4.0 21.5 22.9 18.0Factor Service Income -5.2 7.3 17.0 30.4 44.1. Invest Income (Net) -13.1 -4.8 1.6 4.3 6.3. Labour Income 13.5 18.8 24.0 35.5 51.2. Interest on Public Debt 5.5 6.7 8.7 9.5 13.3

Net Current Transfers -1.8 0.5 0.4 -2.1 -2.7

Current Account -110.1 -125.9 -93.3 -94.2 -100.5

Public Capital (Net) 44.9 35.0 54.0 57.0 45.4Grants 26.4 23.0 31.9 32.4 35.7Loan Disbursements 22.5 18.7 33.1 38.3 28.6Amortization 4.0 6.7 11.0 13.6 18.9

Private Capital (Net) 85.3 66.6 33.8 55.2 55.1

Change in Reserves 20.1 -24.3 -5.5 18.0 0.0Reserve Level 113.8 86.6 82.2 103.5 133.0Memo ItemCurrent Acc/GDP (Z) -23.7 -22.7 -16.3 -15.3 -14.5

a/ Apparent difference with Government figures are explained by thedifferent classification of SACU receipts.

Sources: Official sources, Mission estimates.

TABLE 3.2SWAZILAND - INTERNATIONAL RESERVE POSITION, 1977-1983

(EMALANGENI MILLIONS)

ITEM 1977 1978 1979 1980 1981 1982 1983

OFFICIAL RESERVESNET - END OF YEAR 31 82.3 94.6 89.4 113.8 86.6 02.3 103.6GROSS - END OF YEAR 90 82.8 97.4 91.9 114.6 88.0 83.5 116.5

IMPORTS, CIF 71 194.8 270,9 366.0 468.4 519.7 562.8 609.1

OFFICIAL RESERVES/IMPORTS (%) 32 42.2 34.9 24.4 24.3 16.7 14.6 17.0

NET RESERVES IN MONTHS OFIMPORTS CIF 33 5.0 4.2 2.9 2.9 2.0 1.8 2.0

SOURCE: CENTRAL BANK OF SWAZILAND

- 65 -

MARU 3.3SRMZILAND- MANaDISE EME(=rS, 1977-83

(CaEBHH ERUES, E MILIan)

ITEM L977 1978 1979 1980 1981 1982 1983

SUGAR 51.8 59.6 71.0 128.4 125.8 109.2 122.8IOOD PULP 30.1 27.1 28.2 36.9 46.4 46.5 44.8IRON ICE 9.3 6.2 5.3 1.9 - - -AS1ESTB6 14.9 18.2 17.6 15.6 17.8 14.4 19.5Gftls B= 10.4 7.2 9.4 7.6 9.2 15.6 14.9cANNED FJIC 5.7 8.2 9.2 9.4 12.7 18.0 22.5WEAT ADME MM ER3CixxES 4.3 6.4 9.1 7.1 3.7 5.3 4.3Oa^L 1.4 2.1 2.9 2.7 3.1 2.9 2.0CEiMICAIS - 6.7 10.0 23.7 36.4 55.3 42.7ECEcuRTCL EwXliBENmf 2.2 3.2 3.5 8.2 11.6 14.4 7.4OTHER 13.1 25.8 31.1 37.7 51.5 50.3 42.8

-tu-L 143.2 170.7 197.3 279.2 318.2 331.9 323.7

SURCE: ChAL STATlSL E e

- 66 -

ThULU 3.4SWMZAZ5AD- EXPF QW?fl4 INDICES, 1977-83

(1976=100)

1THM 1977 1978 1979 1980 1981 19& 1983

SUGAR 102.4 114.2 119.1 l19.8 174.2 173.8 188.611)0 PULP 76.2 84.0 83.7 81.9 86.8 91.3 93.6CHEMICAS 100.0 183.0 235.0 474.0 633.1 903.8 655.8ASEESMS 85.0 90.0 94.6 75.0 75.4 64.2 74.8INIE R ABONE flMM 92.0 102.1 105.7 126.4 136.9 138.2 147.0

SOUCE: CAL STATI C:F1E

- 67 -

Table 3.5: SIAZILAND - of Major Exports by Cautries of Detination, 1983Cpercentage)

Canned MBat andSugar Wodp Coal Fruits Heat Prxts

Africa - 23.5 100.0 5.8 16.6Coomn Custos Area - 23.5 - 5.8 -Other - - 100.0 - 16.6

Eigmpe 36.8 6.3 - 94.2 77.3U.K. 36.8 0.6 - 94.2 77.3Other - 5.7 - 0.0

North & South Awica 34.6 8.8 - - -

USA 13.2 3.1 - - -

Other 21.4 5.7 - -

Far East Asia - 53.9 - - -

Japan - 16.9 - - -Other - 37.0 - - -

Al Otber Goutries 28.6 7.5 - - 6.1

TOTL 100.0 100.0 100.0 100.0 100.0

- 68 -

TAX 3.6SMZIrD- MaDMISE IMESS, 1977-83

(CBRElE EliCS, E M1U:)

rThM 1977 1978 1979 1980 1981 1982 198311

FODAMDLlVE AN&S 16.0 19.0 19.7 27.9 40.3 48.2 59.9BEVERAGES ASM 0BA 7.9 8.0 4.9 6.2 6.2 5.2 8.0

QWr HAIUMAS, INfDM 1.1 1.4 2.1 2.5 3.3 2.5 6.7MRAL F(HS AND ItW15Ch 23.7 25.8 47.7 77.8 73.5 82.7 87.2

ANAL, VE¢DE OLIS AND FAT 0.6 0.7 0.3 0.6 1.0 1.2 1.7CIFMICAIS M CHUM& PWUI7r 15.7 23.6 42.9 49.6 43.3 86.0 70.6IIDFACDRES CMSSUMM BY 19.7 2B.2 68.0 79.7 59.4 49.0 63.4

NKCEIRIALMA(HNEW AND 7RNERE(1JFN 39.0 67.8 61.0 76.5 113.8 123.0 190.1HISOEIANI I1NURE3 17.3 19.8 56.2 68.5 63.3 59.4 37.1OHM=IE NOT CZASSIFED BYKCmID 53.8 76.6 63.2 ;9.1 115.6 105.7 84.4

TUTL lM S CF 194.8 270.9 366.0 468.4 519.7 562.8 609.1

I/ Prliuinazy

SOE: CEAL SMTIT CFFEE

Table 4.1: SWAZILAND - ActuaL and Projected External Publicand Publicly Guaranteed Debt

(US$ million)

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1995 200__

External Public Outstanding Debt 165.6 161.9 170.4 182.7 189.5 197.6 207.3 217.9 234.2 251.0 271.7 420.9 621.0Interest 7.1 7.7 8.( 8.5 9.3 12.3 12.8 14.5 15.3 18.7 20.1 32.9 49.1)Amortization 5.1 7.7 10.2 12.2 13.2 1h.9 1b.5 18.8 19.8 23.4 25.1 51.7 82.3Total Service 12.2 15.4 18.2 2U.7 22.5 29.2 29.3 13.4 35.1 42.4 45.2 H4.6 131.3

Debt to CDP (X) 27.7 25.4 32.3 33.0 39.1 52.2 50.5 48.2 46.6 44.4 42.4 39.2 33.8Debt Service Exports(Z) 2.9 3.5 4.7 5.6 6.3 7.5 6.9 6.8 6.2 6.4 5.7 b.8 h.1Debt Service Central Government

Revenues (Z) 6.2 10.3 11.1 12.1 15.5 26.6 25.6 26.6 25.3 27.2 26.2 31.0 30.2Average Debt Maturity (years) 21.5 15.9 13.9 13.8 11.2 12.0 12.0 11.0 11.0 30.0 10.0 7.5 7.0(Average Interest Rates (%) 4.6 4.9 5.0 5.1 6.0 6.5 6.5 7.0 7.0 8.0 8.#1 8.5 8.5 %0


- 70 -

MMHE 5.1sAR CF aNAL aErEM OMAs , FY78/79-F /85

O M CF EN4LANGI)

TIEM 1978179 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85

REVENUE AND (RA&1S 104.3 133.4 163.3 134.2 182.1 185.4 216.5

TAX REVENUE 90.4 119.0 139.9 119.6 163.3 166.8 188.6NCNTAX REVENaE 8.2 7.2 14.0 10.2 13.4 12.8 16.2GRANI5 5.7 7.2 9.4 4.4 5.4 5.7 11.7

EDITURE AND MEr IHEDflG 151.0 131.2 142.2 182.2 L99.4 2D5.1 221.9a/

caRRENI ExPENDI1URE 60.6 65.3 84.5 109.1 124.0 136.6 148.9CAPITAL EPlEUNDRE 52.4 44.7 45.3 61.9 57.7 53.9 45.0NET IBWIMI 38.0 21.2 12.4 11.2 17.7 14.6 14.3

0ERATL SURHL -46.7 2.2 21.1 -48.0 -17.3 -19.8 -5.4

FINANCEiG 46.7 -2.2 -21.1 48.0 17.3 19.8 -5.4

FCREIGi 46.4 °.1 6.2 6.3 0.8 4.2 -5.5LIxES=c 0.3 -11.3 -27.3 41.7 16.5 15.6 10.9

a/ TIrcn, E13.7 d I lin of paymets of arrears not accrued In pevl. years.

S e: Data provided by sM azl Drities arnd 1MF

- 71 -

TAKE 5.2cHOAL aMWfT REVENIE, FY78/79-F84/85

(MnLLION CF E4AtANMI)

im 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/851/

TAX REVENIE 90.4 119.0 139.9 119.6 163.3 166.8 188.6TAES a Nr E & 26.5 33.3 36.1 40.7 40.6 42.6 50.1

a4ANIES 12.7 17.8 15.7 18.0 18.4 17.6 27.2INDIVIDJUAIS 10.8 12.2 17.1 20.1 20.2 27.8 24.3NNEStENT' DIVIM;

AND IN1Er 3.0 3.4 3.3 2.6 2.0 2.1 3.6

TAXES CN RIlEKIY 0.2 0.3 0.3 0.4 0.3 0.5 0.2

COa1IPlN, EXMISEAND IRAIE TAXES 63.0 84.8 102.9 77.7 121.6 122.9 137.4

TMS UNICN CEiErS 54.1 74.2 86.8 62.7 117.6 12.7 10.4SUGXAR EiUW IEVY 6.3 7.9 13.4 12.3 1.4 - -WO1 AND GMG TAXES 1.5 1.5 1.4 1.4 1.2 0.7 0.6

LICES D aOIER TA1ES 1.1 1.2 1.3 1.4 1.4 1.6 1.8SAL.ES TAX - - - - - - 4.5

OTER TAXES 0.7 G.5 0.6 0.8 Q.8 0.9 0.8

NONA REVE &2 7.2 14.0 10.2 13.4 12.8 16.2_FER1Y INamK 4.5 3.7 7.2 6.2 8.9 8.4 10.6FEES, SATES

AND EMES 3.4 3.5 5.0 4.0 4.5 4.6 4.6OPERfrM S[ILUES CF

IXIA~Th~~AL SENERPRItS 0.3 - 1.8 - - - -

lUTAL REVEN1E 98.6 126.2 153.9 129.8 176.7 179.7 204.8

GRAN1S 5.7 7.2 9.4 4.4 5.4 5.7 11.7

iTAL REVENUE & GiS 104.3 133.4 163.3 134.2 182.1 185.4 216.5

1n PRUFLD4RIN

SWaRCE: DMIT PFlVED BY SJaZ AUnlORITlES AND IMF

- 72 -

TAE 5.2A1erawtaga Dlstributim of Central Goernt RPvezu, FY78/794Y2/85

(aent)

tin 1978/79 1979/80 1980/81 198/82 1982/83 1983/84 198/851/

TAX REI E 91.7 94.3 90.9 92.1 92.4 92.8 92.1TAS CN NEr IDE & FROM 26.9 26.4 23.5 31.4 23.0 26.6 24.5

aOMPANMS 12.9 14.1 10.2 13.9 10.4 9.7 10.8INDlVI.IXS 11.0 9.7 11.1 15.5 11.4 12.7 11.9

Nll15'1 DIVIIEDAMD II!Sr 3.0 2.7 2.1 2.0 i.1 1.1 1.7

m8ES CN pEf Wry 0.2 0.2 0.2 0.3 0.2 0.2 0.1

AND RAlE T 63.9 67.2 66.9 59.9 68.8 68.4 67.1-STMS NitI 3PLETS 54.9 58.8 56.4 48.3 66.6 67.2 63.7

SUGAR EXWT IEV! 6.4 6.3 8.7 9.5 0.8 - -HU AND GAME; ES 5 1.2 0.9 1.1 0.7 0.4 0.3

-TSAMND 07TE S 1.1 1.0 0.8 1.1 0.8 0.8 0.9SAXES_TAX - - - - - - 2.2

THER TAES 0.7 0.4 0.4 0.6 0.5 0.5 0.4

NONTX EEVFNE 8.3 5.7 9.1 7.9 7.6 7.1 7.9-Y INE 4.6 2.9 4.7 4.8 5.0 4.6 5.1

BEES, lX E _sgAND FM 3.4 2.8 3.2 3.1 2.5 2.5 2.2tAMI SURPLUSES (IF

ENNL dRTSE 0.3 - 1.2 - - - -

TDTAL RvL[ 100.0 100.0 100.0 100.0 100.0 100.0 100.0

;W1S 5.8 5.7 6.1 3.4 3.1 3.2 5.7

TUT REVI & GRAMS 105.8 105.7 106.1 103.4 103.1 103.2 105.7

sMRCE: DM eVEM BY AURERNM D A IMF

TABLE 5.3CENTRAL GOVERNMENT RECURRENT EXPENDITURE, FY78/79-FY84/85

(MILLIONS OF EMALANGENI)

-------------------------------------------------------------- __-------------__-----------------

ITEM 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85------------------------------------------------------------- __--------------__-----------------

GENERAL SERVICES 16.2 17.7 22.4 33.1 31.1 n.ea n.a.GENERAL ADMINISTRATION 8.9 10.1 13.2 21.4 17.1 n.a. n.a.JUSTICE AND POLICE 7.3 7.6 9.2 11.7 14.0 n.a. n.a.

DEFENSE 7,3 8,2 8.5 10.3 12.9 n.a. n.a.

SOCIAL SERVICES 23.9 23.7 34.8 42.3 48.0 n.a. n.a.EDUCATION 14.8 14.9 22.2 25.7 29,8 n.a. n.a.HEALTH 4.7 5.3 7.1 8.2 11.6 n.a. n.a.HOUSING, COMMUNITY AND &SOCIAL SERVICES 4.4 3.5 5.6 8.4 6.6 n.ea n.a.

ECONOMIC SERVICES 9.9 11.4 14.2 17.6 24.1 n.a. n.a.AGRICULTURE 5.2 6.2 7.8 9.2 10.8 n.a. n.a.INDUSTRY AND MINING 0.9 1.0 1.4 1.4 1.7 n.a. n.a.WATER AND SEWERAGE 0.4 0.2 0.4 0.4 0.5 n.a. n.a.TRANSPORT AND COMMUNICATIONS 2.9 3.5 4.0 6.0 9.8 n.sa. n.a.OTHER 0.5 0.5 0.6 0.7 1.3 n.a. n.a.

INTEREST PAYMENTS 3.3 4.2 4.6 5.8 7,9 8.7. 11.4

TOTAL CURRENT EXPENDITURE 60.6 65.3 84.5 109.1 124.0 136.6 148.9

…----------------------------------------------------------------__----------__-----------------

SOURCES: DATA PROVIDED BY THE SWAZI AUTHORITIES AND IMF

TABLE 5.3APercentage Diatribution of Central Government Recurrent Expenditure, FY78/79-FY84/85

(Percent)

--------------------------------------------------- __------------------------__-----------------

ITEM 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85------------------------------------------------------------- __--------------__-----------------

GENERAL SERVICES 26.7 27.1 26.5 30,3 25.1 n.a. n.a.GENERAL ADMINISTRATION 14.7 15.5 15.6 19.6 13.8 n.a. n.a.JUSTICE AND POLICE 12.0 11.6 10.9 10.7 11.3 n.a. n.a.

DEFENSE 12,0 12.6 10.1 9.4 10.4 n.a. n.a.

SOCIAL SERVICES 39.5 36.3 41.2 38.8 38.7 n.a. n.a.EDUCATION 24.4 22.8 26.3 23,6 24.0 n.a. n.aHEALTH 7.8 8.1 8.4 7.5 9.4 n.a. n.a.HOUSING, COMMUNITY AND &

SOCIAL SERVICES 7.3 5.4 6.6 7.7 5.3 n.a. n.ea.

ECONOMIC SERVICES 16.4 17.5 16.8 16.1 19.4 n.a. n.ea.AGRICULTURE 8.6 9.5 9.2 8.4 8.7 n.a. n.a.INDUSTRY AND MINING 1.5 1.5 1.7 1.3 1.4 n.ea. n.e.WATER AND SEWERAGE 0.7 0.3 0.5 0.4 0.4 n.ea. n.e.TRANSPORT AND COMMUNICATIONS 4.0 5.4 4.7 5.5 7.9 n.a. n.a.OTHER 0.8 0.8 0.7 0.6 1.0 n.a. n.e.

INTEREST PAYMENTS 5.4 6.4 5.4 5.3 6.4 6.4 7.6

TOTAL CURRENT EXPENDITURE 100.0 100.0 100.0 100.0 100.0 100.0 100.0


TABLE 5,4CENTRAL GOVERNMENT CAPITAL EXPENDITURE, FY78/79-FY84/85


-------------------------------------------------------------- __-------------__-----------------

ITEM 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85------------------------------------------------------------- __--------------__-----------------

GENERAL SERVICES 12.5 4.0 3.5 6.3 7.8 n.e. n.e.GENERAL ADMINISTRATION 10.7 2.2 2.0 4.1 4.7 n.ea. n.ea.JUSTICE AND POLICE 1.8 1.8 1.5 2.2 3.1 n.ea. n.ea.

DEFENSE - - -

SOCIAL SERVICES 10.9 9.1 16.1 *23.6 15.1 n.ea. n.e.EDUCATION 6.4 6.1 9,8 14.6 7.2 n.ea. n.a.HEALTH 1,2 0.8 1.3 1.0 1.8 n.ea. n.ea.OTHER SOCIAL SERVICES 3.3 2.2 5.0 8.0 6.1 n.ea. n.ea.

ECONOMIC SERVICES 29.0 31.6 25.7 32.0 34.8 n.ea. n.e.AGRICULTURE 17.4 14.7 10.1 11.6 14.1 n.a. n.a.INDUSTRY AND MINING 0.2 2.7 2.4 1.9 0.2 n.ea. n.e.WATER AND SEWERAGE 0.4 1,3 1.7 1,8 1.5 n.e. n.ea.TRANSPORT AND COMMUNICATIONS 10.8 12.8 11.5 16.4 19.0 n.a. n.e.OTHER 0.2 0.1 - 0.3 - n.e. n.ea.

TOTAL CAPITAL EXPENDITURE 52.4 44.7 45.3 61,9 57.7 53.9 45.0

SOURCE: DATA PROVIDED BY SWAZI AUTHORITIES AND IMF

- 76 -

TAKE 5.4A1 rc,mt DistrLhbtui of Central Govrnunt Capital Ehendture, FY78/79Y84/85

(Percent)

mM 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85

GENERAL SER1IES 23.8 89 7.7 10.2 13.5 n.a. n.s.GENAL 1 20.4 4.9 4.4 6.6 8.1 u.sa n.a.JUSTICE AND ILE 3.4 4.0 3.3 3.6 5.4 n&as u.s

D5EFENSE- - - - - u.a. u.a.

SOCIAL SEICES 20.8 2D.4 35.5 38.1 26.2 n.a nuasEDCAMIN 12.2 13.6 21.6 23.6 12.5 nu.s n.saBEATAL 2.3 1.8 2.9 1.6 3.1 nu*s u.saaim SOCEL 1Ii 6.3 4.9 11.0 12.9 10.6 n.s. u.a.

EBEOIC sVI(vS 55.4 70.7 56.7 51.7 60.3 nu.s n.a.AGRIcJ[uLRE 33.2 32.9 22.3 18.7 24.4 n.as neasINUESANDMEN 0.4 6.0 5.3 3.1 0.3 nua. .oa.WATERAND SE)ERAE 0.8 2.9 3.8 2.9 2.6 n.sa nza7RANS16 ANiND (X llIIff 20.6 28.6 25.4 26.5 32.9 .sa. na.s

TIM 0.4 0.2 - 0.5 - nuas na.

'LUAL CAPIT EXKENDI 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Nam: mIm FR FY83/84ARE A Fm L IMNRf Es1'MAvS RND A : FY84/85N3DGr ESMrMTES

SOIPCE: DMAT PRVIDED FY SW= AUrnFRTTES AMD DMF

TABLE 5.5Central Government Expenditure (Current and Capital) by Sectors, FY78/79-FY84/85


…-------------- ___________________--____________________________________ITEM 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/852/

GENERAL SERVICES 28.7 21.7 25.9 39.4 38.9 41.9 49.6GENERAL ADMINISTRATION 19.6 12.3 15.2 25.5 21.8 24.6 30.4JUSTICE AND POLICE 9.1 9.4 10.7 13,9 17.1 17.3 19.2

DEFENSE 7.3 8.2 8.5 10.3 12,9 11.8 12,5

SOCIAL SERVICES 34,8 32.8 50.9 65.9 63.1 67.6 67.1EDUCATION 21,2 21.0 32.0 40.3 37.0 44.2 45.1HEALTH 5,9 6.1 8.4 9.2 13.4 14.0 13.3 -

OTHER SOCIAL SERVICES 7.7 5.7 10.6 16.4 12,7 9.4 8.7

ECONOMIC SERVICES 38.9 43.1 39.9 49.6 58.9 60.5 53,3AGRICULTURE 22,6 20.9 17.9 20,8 24,9 23.0 15,7INDUSTRY AND MINING 1.1 3.7 3,8 3,3 1.9 1.8 7.4WATER AND SEWERAGE 0.8 1,5 2,1 2.2 2,0 3.8 2,2TRtANSPORT AND COMMUNICATIONS 13.7 16.3 15.5 22.4 28.8 30.9 27.0OTHER ECONOMIC SERVICES 0.7 0.7 0,6 1.0 1.3 1.0 1.6

INTEREST 3.3 4.2 4.6 5.8 7.9 8.7 11.4TOTAL RECURRENT AND CAPITALEXPENDITURE 113.0 110.0 129.8 171.0 181.7 190.5 193.91/

…----____-------------------------------------------------------------------------------------------

7/ EXCLUDES PAYMENT OF AREARS|, PRELIMINARYNOTE: EXCLUDES NET LENDING


TABLE 5.5APercentage Distribution of Central Government Expenditures, FY78/79-FY84/85

(Percent)

--------------------------------------------------- __------------------------__---------------------

ITEM 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85------------------------------------------------------------- __--------------__---------------------

GENERAL SERVICES 25,4 19.7 20.0 23.0 21.4 21.9 25,6

GENERAL ADMINISTRATION 17.4 11,2 11.7 14,9 12,0 12.9 15.7JUSTICE AND POLICE 8.0 8.5 8.2 8.1 9.4 9.0 9.9

DEFENSE 6,5 7.5 6.5 6.0 7.1 6.2 6.4

SOCIAL SERVICES 30.8 29.8 39.2 38.5 34.7 35.5 34.6EDUCATION 18.8 19.1 24.7 23.6 20.4 23.2 23.6 1

HEALTH 5.2 5.5 6.5 5.4 7.4 7.3 6.8 X

OTHER SOCIAL SERVICES 6.8 5,2 8,2 9.6 7.0 4.8 4.5

ECONOMIC SERVICES 34,4 39.2 30.7 29,0 32.4 31.7 27.5

AGRICULTURE 20.0 19.0 13.8 12.2 13.7 12,1 8.1

INDUSTRY AND MINING 1.0 3.4 2.9 1.9 1.0 1.0 3.8

WATER AND SEWERAGE 0.7 1.4 1.6 1.3 1.1 2.0 1.1

TRANSPORT AND COMMUNICATIONS 12,1 14,8 11.9 13,1 15.9 16.2 13.9

OTHER ECONOMIC SERVICES 0.6 0.6 0.5 0.6 0.7 0.5 0.8

INTEREST 2.9 3.8 3.5 3,4 4.3 4.7 5,9TOTAL RECURRENT AND CAPITALEXPENDITURE 100.0 100.0 100.0 100.0 100.0 100.0 100.0

…_________________________________________________________________________________-________________

NOTE: EXCLUDES NET LENDING


TABLE 5.6ECONOMIC CLASSIFICATION OF CENTRAL GOVERNMENT EXPENDITURES

AND NET LENDING, FY78/79-FY84/85


ITEM 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/852/

CURRENT EXPENDITURE 60.6 65.3 84.5 109.1 124,0 136.1 148.9WAGES AND SALARIES 32.8 34.9 45.9 59.2 66.6 75.6 83.4OTHER PURCHASES OF GOODSAND SERVICES 18,4 20,2 26.9 31.5 36.2 35.2 34.6SUBSIDIES AND OTHERCURRENT TRANSFERS 6.1 6.0 7.1 12.6 13.3 16.7 19.5INTEREST PAYMENTS 3.3 4.2 4.6 5.8 7.9 8.7 11.4

CAPITAL EXPENDITURE ANDNET LENDING 90.4 65.9 57.7 73,1 75.4 66.8 59.3CAPITAL EXPENDITURE 52.4 44.7 45.3 61.9 57.7 53.9 45.0NET LENDING 38.0 21.2 12.4 11.2 17.7 12.9 14.3

TOTAL EXPENDITURE ANDNET LENDING 151.0 131.2 142.2 182.2 199,4 202.9 208.91/

--------------------------------------------------------------- __----------,-__------------------

/ Excludes payments of arrears_/ Preliminary

SOURCE: DATA PROVIDED BY SWAZI AUTHORITIES AND IMF

Table 6.1: SWAZILAND - Monetary Survey,1 / 1976-1984(E Millions)

Net Domestic Credit (net) Money Suprlyl Quasi HoneyEnd of Foreign To Govern- To Private Currency (E) Demand Savings TimePeriod Assets2/ ment3/ Sector4/Total In Circulation Deposits Total Deposits Deposits Total

1976 72.6 -32.5 46.6 14.1 6.5 22.2 28.7 12.1 36.3 48.41977 94.7 -38.6 49.5 10.9 7.3 20.7 28.0 13.4 48.1 61.51978 102.7 -44.4 74.6 30.2 8.9 27.7 36.6 15.7 62.3 78.01979 93.9 -51.2 85.4 34.2 9.6 30.6 40.2 17.7 59.7 77.41980 113.8 -65.7 98.3 32.6 11.9 37.9 49.8 21.4 62.4 83.81981 89.0 -52.1 131.9 79.8 14.4 36.9 51.3 25.7 64.5 90.21982 85.7 -31.0 140.5 109.5 15.0 43,1 58.1 30.2 73.1 103.31983 105.4 -16.4 146.5 130.1 15.2 45.6 60.8 31.9 105.4 137.31984a 175.0 -50.4 160.8 110.4 17.6 55.0 72.6 34.1 146.4 180.4

0a/October '984T/Includes figures for the Central Bank and the four lending banks in Swaziland.7/Includes Government of Swaziland holdings. Figures do not include the estimated Rand in circulation.7/Includes treasury bills, stocks and other bank claims in Government less Government deposits with Banks.n/Includes statutory bodies plus other financial investments by banks.

NOTE: Demand, savings and time deposits include private sector only. Government and interbank deposits areexcluded.

Source: The Central Bank of Swaziland, Quarterly Review, September 1984.

Table 6.2: SWAZILAND - Banlk Loans and Advances by Type of Industry, 1977-1984(E Millions)

(Period Ended)

1977 1978 1979 1980 1981 1982 19 8 3a 19841/

Agriculture 8.7 J 11.8 ] 14.1 1 18.2 1 17.9 ] 17.1 15.4 19.6Forestry 10.1 1 1.7 ] 1.1 ] 1.0 2.4 J 2.9 3.2 0.9Mining and Quarrying 0.2 - - 0.1 2.5 6.2 3.3 3.8Manufacturing 10.1 30.7 32.1 26.4 48.5 47.7 52.0 50.0Construction 0.9 3.6 4.6 4.1 4.3 5.5 11.1 9.9Distribution & Tourism 5.0 6.4 9.3 13.6 9.8 12.4 10.0 11.3Transport & Communication n.a. 4.7 7.1 7.4 5.9 5.8 4.8 5.1Community, Social & Personal

Services 0.4 1.0 0.9 0.8 2.3 1.5 2.8 3.6Other 3.4 1.1 1.4 2.1 7.1 9.8 8.3 12.2

Totul 38.8 61.1 70.6 73,7 100.7 108.9 110.9 116.4

a End of October 1984

Source: Central Bank of Swaziland, Quarterly Review, September 1984and official sources

Table 6.3: SWAZILAND - Comparative Interest Rates; Swaziland and South Africa, 1977-84(percent)

(end of period)

1977 1978 1979 1980 1981 1982 1983 1984L/

Discount Rates

Central Bank of Swaziland 9.00 8.50 7.00 7.00 10.50 16.00 13.50 19.0

S.A. Reserve Bank 9.00 8.50 7.00 7.00 13.50 13.50 13.50 21.5

Treasury Bills

Swaziland - 7.38 - - 12.00 14.52 15.50 19.5

South Africa 7.91 7.37 4.20 6.00 14.03 14.10 17.62 21,77 1

Prime Lending

Swaziland 10.50 10.50 9.50 9.50 13.50 18.00 18.00 22-25

South Africa 12.50 11.50 9.50 9.50 17.00 18.00 20.00 25.00

Bank Deposits: (under E 250,000)

31 daysSwaziland 7.25 6.75 3.75 3.75 8.25 11.25 12,00 16.00

South Africa 8.00 7.00 3.75 4.50 10.25 13.00 13.90 18.21

12 MonthsSwaziland 9.00 8,50 6.00 6.00 10.50 11.50 12.50 17.00

South Africa 9.50 7.80 5.50 8.50 12.00 15.00 16.00 18.05

1 As of September 1984Source: Central Bank of Swaziland, Quarterly Review, September 1984

Table 7.1: SWAZILAND - Sugar Production and Sales, 1977/78-1984/85w(in thousands of metric tonnes)

1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85f/

Production 224.4 247.8 244.4 309.6 349.2 379.9 380.2 383.2(Metric Tonnes)

Total Sales 230.5 237.3 223.6 307.1 336.5 333.4 352.0 362.5(Metric Tonnes)

Exports Value 207.8 213.4 192.6 287.7 125.7 104.6 120.7 130.4 1(E'million) X

Domestic Consumption 22.7 23.7 20.3 19.4 22.3 21.5 19.9 22.0 1(Metric Tonnes)

a Estimate

Source: The Central Bank of Swaziland, Annual Report for the financial year 1983-84

- 84 -

Mble 7.2: SWAZILAND - Lan&-Om, 1982/83(in t of betares)

IidLvidmlLid-Ube Categy l b ole Ccmtzyl/ mzL Nation Land Temire Farw2/

COqplarzd 144.8 88.4 52.3of iich: C6cps 121.1 73.0 48.1

FaIlUc 19.6 15.4 4.2

ga=ig Iarx 3 / 1147.2 864.3 283.0if uiddb: Namwal Veld 1018.0 864.3 184.7

1Iipoved 98.3 98.3

GCaerdal Forest 100.9 100.9Of .ndl: PizE 75.7 75.7

Otbeis 25.2 - 25.2

Other Fm nLand4 / 87.25/ 12.4 74.8

AU Other Iad6/ 249.0 - 249.0

lbca lad 1,725.1 965.1 760.0

1 E1*der urban areas.of appodmtely 11,360 be ¢re.2 -- h*i S1hDya z Nation Ln Scgar poject.3 T e,1s all umlocated cammal gazErg l1d aid untaims and bill o11 n Swaz Nation lad.4 T-nih areas of iTis, bEUiM aind serveIs and zmsed lmi.5 T,Ies Prdiae-Ilad for MkA's aid ax-r SlL resettleznt sd .6 laid sied or uLs ally for triinal S%ad aIMite.

Soarce: Cetral Statisticr Office

- 85 -

Table 7.3: SaZaT - Ividual Temre Fanm;:uer aind Ttral Area by Size, 198Z83

N36ber of Area aE FYarms Brcelt Of TtaESize/Class Fams Ectare Area of Fams In Use

Fams in UseBelow 100 bIecares 79 3,690 0.7110 to500bectares 98 25,142 5.0500 to 1,000 bectare 34 24,88D 4.9

1,000 to 2,000 behares 25 37,318 7.42,000 tD 3,000 betars 12 2,266 5.63,000 tD 4,000 hbeares 15 5223 10.34,000 to 5,000 betares 3 2,923 2.65,000 anl above 24 300,233 63.5

Tota'L Fams in Ue 290 504,672 100.0Uhised HadEg 510 255,38

Total 800 759,98

Sowce: Central. Statistical OEfice

Table 7.4: SWAZILAND: Food Crop Statistics for Swazi Nation Land,1977/78-1982/83!/

1977/78 1978/79 1979/80 1980/81 1981/82 1982/83

(In thousands of metric tons)

OutputMaize 96.3 97.5 96.7 93.7 52.3 29.9Sorghum 0.5 1.6 1.6 1.1 0.7 0.4Beans 0.6 1.1 0.3 0.9 0.4 0.5Groundnuts 1.6 1.5 1.3 0.6 0.5 0.4Jugo Beans 2.7 1,4 1.4 1.6 0.7 0.2Cotton (Seed cotton) ia.a. n.a. n.a. 14.9 8.4 3.8

(In thousands of hectares)Area unde r cultivation

Maize 53,9 71.1 71.1 55.6 58.9 44.1Sorghum 1.0 2.3 2.3 1.6 2.2 1.1Beans 2.1 1.1 1.1 1.8 2.1 1.4Groundnuts 2.8 2.7 2.7 1.5 1.7 1.3Jugo Beans 1.8 2.6 2.6 1.8 1.7 0.7Cotton (Seed cotton) n.a. n.ao n.al 13.0 11,6 7.5

(In thousands of metric tons)Yield

Maize 1.8 1.4 1.4 1.7 0.9 0.7Sorghum 0.5 0.7 0.7 0.7 0.3 0.4Beans 0.3 1.0 0.3 0.5 0.2 0.4Groundnuts 0.6 0.6 0.5 0.4 0.3 0.3Jugo Beans 1.5 0.5 0.5 0.9 0.4 0.3Cotton (Seed cotton) n.a. n.a. n.ea. n.a. 0.7 0,S

a Crop year beginning September 1.

Source: Central Statistical Office.

- 87 -

Table 7.5: SJAZUAND Major Crcps of Iidividml Teare Fans,1977/78-1982/83a/

1977/78 1978/79 1979/80 1980/81 1981/82 1982/83

Productica (Iu tbxusads of mtric tam)

Surcane 1,992.3 2,242.4 2,195.9 2,782.3 3,249.7 3,479.0cotton 10.4 6.9 5.3 10.0 52 9.1Pineapple 23.4 29.9 27.6 29.3 35.2 37.3Rizeb/ 44.0 5.0 0.3 0.9 0.9 na.Maize 9.5 10.0 8.8 9.0 9.0

Area banested (In t }ousazds of bectares)

Su&rcane 19.6 21.0 22.6 26.0 43 35.5Cotton 9.3 7.4 6.5 10.5 - -Pineapple 0.5 ... 1.7 1.7 1.6 1.8Riceb/ 1.3 1.3 0.1 0.3 0.3 n.a.Maize 7.3 7.2 3.6 3.7 3.7 na.

Yield (In metric to per bectare)

Sgircane 101.7 106.8 97.2 107.0 97.6 98.0Gotton 1.1 0.9 0.8 1.0 - -Pineapple 43.8 ... 16.2 17.2 22.0 20.7Rieb/ 3.1 3.9 3.0 3.0 3.0 n..Maize 1.3 1.4 2.4 2.4 2.4 na.

Total Value (Iu thmisaods of emalaogeni)

Sugrcane 30,677.5 35,071.0 45,37940 68,779.4 80,331.6 87,773.9Cotton 3,157.1 3,500.0 2,413.3 4,683.7 2,731.9 4,563.6Pineapple 549.6 1,274.5 1,263J0 1,376.7 1,668.4 2,426.2RiejabI 810.0 81543 76.9 230.7 230.7 naeMai 300.5 315.0 633.6 64840 648.0 na.

]DTAL 35,494.7 40,975.5 49,765.8 75,718.5 85,610.6 94,763.7

Unit Valm (I__eM_l__E_0i, per metric tu)

5ugarcane 15.6 15.6 20.7 24.7 24.7 25.2Cotton 339.3 507.3 455.3 468.4 471.0 501.5Pinepple 42.6 42.6 45.8 45.8Riaeb/ 2D3.7 164.7 256.3 256.3 256.3Maize 33.2 29.6 72.0 72.0 72.0

a precse crqp yeas vay.b, plisbld rice.

Source: Gm3tral. Statistical. Office

- 88 -

Table 7.6: SWAZfND - 1nEvidual Teme Fazs:'Vbhmn and Valm caf Major Citrs (kpas,

1978/79-1982/83

1978/79 1979/80 19081 1981182 L98Zf83

Volm (metric Ir) 62.4 57.4 66.0 589.5 53.4volue (is]anwoi) 9.7 9.2 9.8 8.8 10.2

Vom (metric tow) 34.9 28.7 35.8 33.2 28.5Va1ie (EmiazVeui) 5.1 4.2 5.8 5.4 5.5

Vobum (Ietdct) 27.5 28.7 3D.2 25.2 25.0Vale (Fzal=Wni) 4.6 4.9 4.0 3.3 4.7

Source: G*traL Statistical Office

- 89 -

Wh1 7.7: sMAMA=D Seed Cctm ErOWitIon, 1975/76-198U 83(in metric WM)

SmThscale fais

Tcta1 Vo1u of T±ai volume of TtaE

1975176 12,15B 6,145 50.6 6,013 49.4

1976/77 14,655 7,255 49.5 7,400 50.5

1977/78 22,280 10,414 46.7 11,866 53.3

1978/79 16,097 6,529 41.0 9,505 59J0

1979/80 23,236 9,255 39.8 13,981 60.2

1980/81 24,883 9,961 40.0 14,922 60.0

1981182 14,255 5,810 40.8 8,445 59.2

1982/83 9,127 4,107 45.0 5,02D 55.0

Source: Geitral StatstaL OMf

- 90 -

Tbble 8.1: SWAZI1&Md - Number of Cattle Died, Slaugrtered and Exported, 1977-83(in tboisarx)

1977 1978 1979 19W0 1981 1982 193

National Ebrd Sim2 634.1 644.2 660.5 657.6 655.7 636.0 652.4

DLed 36.9 36.3 35.5 46.0 42.1 55.6 35.3

Saugtered, Taotl 59.9 71.0 79.1 75.7 67.4 72.0. 76.7

wludg the imptedfor sl3agatbr 5D.5 62.6 65.3 64.3 9.3. 70.2. 71.5

Faporred Tlve 3.1 0.9 0.6 0.8 2.2 1.4 1.2

Source: CEO and MixRistry of Agriailture

- 91 -

Table 8.2: SOAZII&ID - wnezal Prcxkzrkm ad Exports, 1977-83(fhQa1 cf nEtric tam)

1977 1978 1979 1980 1981 1982 1983

Prmtioaaiywolite Asbestxs 38.0 36.9 34.3 32.8 35.8 30.1 26.3Iroa Ore 1441.1 1265.9 493.6 - - - -Coal 129.0 165.9 168.4 176.0 157.7 115.0 101.7

EaportsCbrysolite Asbesrs 35.6 33.0 31.2 31.4 31.5 29.6 31.2Itom Ore 1384.3 1046.4 956.7 555.5 - - -Coal 76.9 105.3 165.2 139.6 105.0 77.3 76.2

Siree: C;0

- 92 -

Table 8.3: SIAZEIAnD - Nziber of (5wen and of ElectrEcty the9iaz1.1a Elec±ricty Boaud, 1977-841 /

(in millics of kilowatt bUo)

mtic :rd& and Bmlk taL

Nlder of Giumem at End of Period

1977 5,553 1,587 35 7,4351978 6,111 1,729 310 8,1501979 7,030 1,874 340 9,2441980 7,960 2,010 367 10,3371981 8,697 2,142 378 11,2171982 9,613 2,258 419 12,2901983 10,204 2,401 455 13,0601984 (Jue) 10,431 2,466 465 13,362

;Eeczid-y Sals Rfrg Ftiod(?IiIo of KIlcwt Ho=)

1977 33.0 18.4 I52.7 204.11978 39.7 23.3 140.7 2WJ.71979 45.4 24.4 197.5 267.31980 52.2 26.3 217.0 295.51981 58.6 30.2 221.3 310.11982 63.0 30.2 256.9 350.11983 67.5 32.6 256.1 356.219842/ 51.6 25.1 182.3 259.3

Total loal Phxkxcioa and ;REs-4owI. 1 t4itL - Total local Prid-

_ DLesel 1 frc E= t &T

1977 144.8 1.6 58.9 2D5.31978 120.6 1.3 102.1 224.01979 139.6 4.7 104.2 248.41980 114.4 2.9 187.8 3D5.21981 123.0 2.0 209.0 333.91982 127.0 2.0 22F.0 356.01983 70.0 5.0 330.0 405.0

1 For year ei Marcd 31. Data ewlUde self- erated power of sedral Ind tries.2

Sca,roe: Gtmal Bak of Waziland, Qrterly e Setirr 1984and wlzUadInectrid?t Board

- 93 -

Tabl 8.4: SIAZIL. Ird=m Wage for (ierl Laboremsin Selected i , 1978-831/

1978 1979 1980 1981 19&2 1983

(Iu per h)Retwa-L andi whbeal

Mbabane and ir,fid 60 69 78 105 2D5 2DSElsediee 47 55 63 88 93 93

(Tn ewr pe )ifctrigandl processirg

Fzuit and xvegtable 11.5 15.0 15.0 15.0 15.0 17.0Otbrer 13.9 15.0 15.0 15.0 15.0 17.0

(In Epe dai )Sugr indutry, Jaorers Lth

specfied ocwpaticm 1.33 1.69 2.30 2.99 2.99 2.99Sugr ind try, otber labomz 1.25 1.79 2.45 3.26 2.99 3.19

(In cents per hour)

BuEldixg and axBlut±1oc 24 30 33 46 57 57M:tor and eiymrl trales

Mbabane and Manzio 22 26 26 47 66 66ELsewhere 19 26 25 47 66 66

11 As of Der of each year.

So : Dtartme of LaboE

s M g a | - a. E

I LI k||0X EN l t

3' E Na

I iiIliji

- 95 -

Table 8.6: SWAZLAND - Fbpils ancl ead ieT in Primzyand Secondary F3Azcaion, 1977-83

Number of Nzber of nM!Ls Number ofSdxxls Boys GErls Total Tea :

1977 436 48898 47937 96835 26721978 436 53605 50095 100700 28531979 440 52934 52673 105607 30161980 450 560B2 55937 112019 32781981 470 60249 59664 119913 35881982 468 62978 62325 125303 37691983 468 65492 64275 129767 3922

1977 70 10155 9204 L9359 9781978 76 10657 9927 2D584 10731979 81 11268 10823 22091 11581980 82 1182 11370 23198 1292981 86 1592 12234 24826 1433

1982 86 13428 13041 26469 15011983 89 14014 13787 27801 1518

Scwce: CSt

Table 8.7: SWAZILAND - Teacher Training, Technical Training and Higher Education,1981/82 - 1983/84

Percentage Change1981/82 1982/83 1983/84 1981/82-1983/84 Av. Annual

Teacher Training1 538 12202/ 8473/ 57.4 25.4Primary Teacher Trainees 276 713 692 150.7 58.3Home Economics Teacher Trainees 10 10 10 0.0 0.0In-Service (upgrading) 120 300 - 200.0 n.a.Junior Secondary 132 197 145 9.8 4.8

Swaziland College of Technology 458 543 500 9.2 4.5Industrial 253 330 348 37.6 17.3

Technician, eng. electrical 146 171 165 13.0 6.3Craft, woodwork, construction 107 159 183 71.0 30.8

Commercial 111 126 118 6.3 3.1Secondary Technical/Comararcial

Teacher Training 94 54 34 -63.8 -39.8

University College of SwazilandTotal Enrollment 973 1063 1063 9.2 4.5of which:Swazis 679 883 900 32.6 15.1Teacher Trainees 23 22 16 -30.4 -16.6

1 William Pitcher and Nazarene Training Colleges2 Includes new college in Nhlangano

Source: CSO

- 97 -

TABLE 9.1COMPARATIVE PRICE INDEXES: SWAZILAND AND SOUTH AFRICA

1980-1984

(1975=100)

ITEM 1980 1981 1982 1983 1984

SWAZILAND RETAIL PRICES 1/

INDEX "A- 164.4 187.2 214.4 239.8 273.5INDEX "B" 188.2 225.9 250.3 279.4 313.7CONSUMER PRICE 175.3 201.9 231.6 250.1 293.1

SOUrH AFRICA

WHOLESALE PRICESGOODS PRODUCED IN S.A. 189.3 216.1 245.5 271.8 295.1IMPORTED GOODS 204.7 240.1 261.1 287.1 304.3TOTAL 192.9 231.9 249.3 275.5 297.6

I/ END JULY21 THE A- INDEX IS PREPARED QUARTERLY BY CSO AND REFLECTS COST OF

LIVING CHANGES AFFECTING MIDDLE AND HIGH INCOME GROUPS IN MBABANE.THE -B INDEX IS PREPARED MONTHLY AND REPRESENTS CHANGES IN THE COSTOF LIVING AFFECTING LOW INCOME GROUPS IN THE TWO MAIN TOWNS,MBABANE AND MANZINI.

SOURCE: CENTRAL BANK OF SWAZILAND

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Documents

Report No. Economic 'ernorarcun r- on SwaziL....Currency Equivalents Annual Averages 1980 US$1.00 = E 0.745 1981 US$1.00 = E 0.956 1982 US$1.00 = E 1.076 1983 US$1.00 = E 1.222 1984