Swaziland’s economy is diversified, with agriculture, forestry and mining accounting for about 13% of GDP, manufacturing (textiles and sugar-related processing) representing 37% of GDP and services – with government services in the lead – constituting 50% of GDP. Title Deed Lands (TDLs), where the bulk of high value crops are grown (sugar, forestry, and citrus) are characterized by high levels of investment and irrigation, and high productivity. Nevertheless, the majority of the population – about 75%—is employed in subsistence agriculture on Swazi Nation Land (SNL), which, in contrast, suffers from low productivity and investment. This dual nature of the Swazi economy, with high productivity in textile manufacturing and in the industrialized agricultural TDLs on the one hand, and declining productivity subsistence agriculture (on SNL) on the other, may well explain the country’s overall low growth, high inequality and unemployment.
Economic growth in Swaziland has lagged behind that of its neighbors. Real GDP growth since 2001 has averaged 2.8%, nearly 2 percentage points lower than growth in other Southern African Customs Union (SACU) member countries. Low agricultural productivity in the SNLs, repeated droughts, the devastating effect of HIV/AIDS and an overly large and inefficient government sector are likely contributing factors. Swaziland’s public finances deteriorated in the late 1990s following sizable surpluses a decade earlier. A combination of declining revenues and increased spending led to significant budget deficits.
The considerable spending did not lead to more growth and did not benefit the poor. Much of the increased spending has gone to current expenditures related to wages, transfers, and subsidies. The wage bill today constitutes over 15% of GDP and 55% of total public spending; these are some of the highest levels on the African continent. The recent rapid growth in SACU revenues has, however, reversed
