The National Development Strategy (NDS) of the Kingdom of Eswatini aims to turn the country into a vibrant industrial-led economy within a generation.
To attain this goal will require structural transformation of the Eswatini economy, including providing a conducive business environment. Government’s Strategic Roadmap 2019-2022 provides the framework to resuscitate the economy in order to accelerate development to achieve the country’s Vision as per the NDS. However, a review of the country’s economic policies reveals that historically, very little investment has gone towards the development of a strong base of micro small and medium enterprises (MSMEs). While previous policy statements highlighted the importance of MSMEs, not least the creation of the Small Enterprise Development Company (SEDCO) and other institutions to promote MSMEs, in reality more effort tended to go towards attracting foreign direct investment (FDI).
Government’s focus on attracting FDIs is justified in many cases: FDIs provide jobs, expertise, technology, government revenue, and help to transfer skills through learning-by-doing. But, there is an issue of sustainability.
The country’s experience suggests that when some foreign investors leave, there follows an economic vacuum and an endless list of issues such as decreased government revenue, job losses, deindustrialisation, and a mass exodus of skilled labour to other countries. During Eswatini’s era of rapid growth, which lasted from 1980 – 1989, with the economy growing at 8.3% per annum – which was amongst the highest in the world –, the Matsapha industrial site was home to many foreign firms that provided employment to emaSwati, and generated tax revenue and foreign exchange.
These firms introduced sophisticated business processes, allowed for the transfer and diffusion of technology, and facilitated skills transfer impacting the Eswatini economy positively. It is no surprise that Maasdrop (1974) reports that in 1972; there were 63 enterprises in the manufacturing sector. This included cement manufacturing, butter manufacturing, garment producing factories, a yarn spinning company, carpet manufacturing, a chemical fertiliser manufacturing company, and a manufacturer of radios and televisions. It was by no accident that the country’s development Vision from 1997, projected that Eswatini would be in the top 10% of medium human development group of countries by 2022. Nevertheless, that Vision had not anticipated the end of the civil war in Mozambique (in 1990) nor the advent of democracy in South Africa (in 1994).
These changes in geopolitics diverted investment from Eswatini causing the economy to take a different direction. There was a mass exodus of foreign firms from Eswatini and resulted in mass migration of highly qualified/skilled professionals to neighbouring countries, mainly South Africa, otherwise known as “brain drain.” Today, the brain drain continues relentlessly as emaSwati look for employment and entrepreneurial opportunities outside the country. There are many reasons why employment and economic opportunities in Eswatini have stalled. One of these reasons for the failure of the country’s economy to provide jobs is because Government is yet to prioritise robust and coordinated development of local businesses, particularly, MSMEs.
