company survey report - 2017 - central bank of eswatini · another way of forecasting economic...

aCompany Survey Report - 2017

Ministry of Economic Planning and DevelopmentCentral Bank of Swaziland

Ministry of Economic Planning and Development Central Bank of Swaziland

COMPANY SURVEY

REPORT - 2017

b Company Survey Report - 2017


1Company Survey Report - 2017


TABLE CONTENTS

1. INTRODUCTION ............................................................................................................. 4

2. BACKGROUND & PURPOSE ............................................................................................... 4

3. METHODOLOGY ............................................................................................................. 5

3.1 SURVEY PLANNING..................................................................................................... 5

3.2 SURVEY IMPLEMENTATION ............................................................................................ 5

4. RESULTS & FINDINGS ...................................................................................................... 5

4.1 COVERAGE AND SUMMARY STATISTICS .............................................................................. 5

4.2 SHAREHOLDING STRUCTURE ......................................................................................... 6

4.3 SECTORAL PERFORMANCE AND OUTLOOK .......................................................................... 7

4.3.1 Agriculture ...................................................................................................... 7

4.3.2 Forestry ......................................................................................................... 8

4.3.3 Mining and Quarrying .......................................................................................... 8

4.3.4 Manufacturing .................................................................................................. 9

4.3.5 Electricity and Water Services ............................................................................... 10

4.3.6 Construction .................................................................................................... 10

4.3.7 Wholesale and Retail .......................................................................................... 11

4.3.8 Tourism .......................................................................................................... 11

4.3.9 Financial Sector ................................................................................................ 12

4.3.10 Transport ....................................................................................................... 12

4.3.11 Information and Communication ........................................................................... 13

4.3.12 Real Estate .................................................................................................... 13

4.3.13 Health and Education ........................................................................................ 13

4.3.14 Municipalities ................................................................................................. 13

4.4 SOURCES OF INPUTS AND DESTINATIONS MARKETS ............................................................... 13

4.5 INVESTMENT ............................................................................................................ 14

4.6 EMPLOYMENT .......................................................................................................... 15

5. CHALLENGES AND OPPORTUNTIES ...................................................................................... 17

5.1 CHALLENGES ........................................................................................................... 17

5.2 OPPORTUNITIES ........................................................................................................ 21

6. CONCLUSIONS .............................................................................................................. 23

Annex 1: Swaziland GDP Projections ..................................................................................... 24

Annex 2: Sources of Inputs and Market Destinations .................................................................. 26

Annex 3: Challenges reported by Companies and Areas for Improvement ........................................27

Annex 4: Sector Specific Challenges ...................................................................................... 35

Annex 5: 2016 General Questionnaire ................................................................................... 37

Annex 6: 2017 Company Survey Team ................................................................................... 40

TABLES

Table 1: Survey Coverage ..................................................................................................... 6

Table 2: Employment .......................................................................................................... 16

Table 3: Main Opportunities highlighted by Businesses in Swaziland .................................................. 22

2 Company Survey Report - 2017


BOXES

Box 1: Evolution of Challenges reported by Companies in the past 3 years .......................................... 18

FIGURESFigure 1: Challenges in the Manufacturing Sector ........................................................................ 19Figure 2: Major Opportunities highlighted by Businesses in Swaziland in 2017 ...................................... 21

Challenge 1: Regulatory Framework ........................................................................................ 19Challenge 2: Tax Issues ........................................................................................................ 20Challenge 3: High Costs ....................................................................................................... 20Challenge 4: Government Inefficiency ...................................................................................... 21



LIST OF ACRONYMS

AGOA African Growth and Opportunity ActBoP Balance of PaymentCBS Central Bank of SwazilandEU European UnionFDI Foreign Direct InvestmentGDP Gross Domestic ProductGM Genetically Modified IIP International Investments PositionIMF International Monetary FundLUSIP Lower Usuthu Smallholder Irrigation ProjectMEPD Ministry of Economic Planning and DevelopmentMoA Ministry of AgricultureMT Metric TonMW MegawattNAMBOARD National Agricultural Marketing BoardPPP Public Private PartnershipSACU Southern Africa Customs UnionSCCOM Swaziland Communications CommissionSPTC Swaziland Post and Telecommunications CorporationUSA United States of America



1. INTRODUCTION

Policymakers need up to date information on the state of the economy, and the complex nature of both fiscal and monetary policies often involves tracking and projecting of numerous economic variables that inform economic growth. Given its economic structure, forecasting the country’s growth trajectory is particularly challenging, as it requires not only an analysis of economic activity in the national economy as a whole, but also the examining of economic dynamics at sector levels. Unless policy makers sufficiently appreciate what drives economic activity it will be difficult to come up with meaningful strategies to spur economic drivers required to achieve overarching priorities for strong, sustainable and inclusive growth and eliminate obstacles towards job creation. Furthermore, being part of the global economy, it is important to appreciate Swaziland’s relations with the rest of the world through the interrogation of the country’s Balance of Payments (BOP) and International Investments Position (IIP).

This can be achieved through several means including macro modelling which can be a data-intensive exercise. Another way of forecasting economic activity is supply side forecasting using production data. In order to do this, several countries undertake company surveys1. Company surveys remain an important tool to get information on several aspects of production from businesses in the economy, and to also gain insights into other aspects such as employment trends. Moreover, the tool can be used to get information on certain challenges that hinder business activities in the economy and also assist in understanding available opportunities that can further inform economic growth forecasts.

This is a summary report from the 2017 Company Survey2 . The report is structured as follows: Section 2 discusses a brief background and purpose of the company survey. Section 3 discusses the methodology used for the survey. Section 4 provides an overview of findings and discusses some of the results including coverage, performance, sources of inputs and destination markets, employment, and investments as reported by companies. Section 5 sheds light on the challenges and opportunities by companies. Finally, section 6 offers concluding remarks.

2. BACKGROUND & PURPOSE

Apart from informing economic developments and outlook, company surveys also contribute to fulfilling the mandate of policy planning and development. Company Surveys are carried out annually between late January and April by a Survey Team3 that comprises; the Macro-Forecasting Team4 and the Balance of Payments Section of the Central Bank of Swaziland’s (CBS) Economic, Policy Research and Statistics Department.The primary purpose of the survey is to:

- Collect data on performance/production, employment and investment so as to come up with an aggregated picture of the macro-economy5

- Gather data and information that will inform medium term GDP forecasts prepared by the Maco-Forecasting Team in advance of the publication of the CBS Annual Report and MEPD Economic Review & Outlook

- Gather data and information so as to inform balance of payments analysis conducted quarterly by the Balance of Payments Section

- Collect information on challenges and opportunities from different sectors of the economy to inform relevant stakeholders and also keep policy makers abreast of economic developments for purposes of planning and implementing appropriate policy measures

_________________________________________

1These countries include but not limited to the following; Namibia, Tanzania, Zambia2While called ‘Company’ Survey it is important to point out that important government institutions, parastatals and other non-private-sector institutions that can help inform sector-specific performance are also surveyed.3A complete list of the members of the survey team can be found in Annex A4The Maco-Forecasting Team comprises the Macroeconomic Analysis and Research Division of the Ministry of Economic Planning & Development (MEPD) and the Real Sector Section of the Central Bank of Swaziland’s Economic Policy Research and Statistics Department (EPRS). 5Companies are classified into the different sectors according to the System of National Accounts (SNA) currently being used by the Central Statistical Office so that GDP projections (produced at a later stage) are comparable with the historical data. Companies are also classified using the ISIC 4 classification according

to the main activity.



3. METHODOLOGY

3.1 SURVEY PLANNINGThe survey team meets at the outset in order to:

- Draw up a sample frame (company listing) that is representative of the overall structure of the economy - Agree on the survey instruments to be used i.e. survey questionnaire - Design appropriate questionnaires for different sectors to accommodate sector dynamics and performance

measures- Capture information for a period of 5 years such that the data looks at performance in the past 2 years,

current year and outlook for the next 2 years- Set up appointments with selected companies

3.2 SURVEY IMPLEMENTATIONThe questionnaire6, with guidelines on how to complete it, is sent out to companies in the sample frame. Companies are also approached for a meeting to allow the survey team to better appreciate some of the information given through a discussion. A group of up to 4 members of the survey team attends to an average of three companies per day depending on the geographical location and availability of companies.

A detailed company report is prepared following the meeting. These individual reports are then put together in the Company Survey Consolidated Report. Information provided by the companies is treated with utmost confidentiality and is used solely for analytical purposes. The Consolidated Report is then summarized into the Company Survey Summary Report concentrating on sectoral performances and related issues. This report is shared with relevant stakeholders to shed light on the important aspects mentioned earlier. The historic, present as well as future performance indicators feed into the process of revising the GDP estimates and medium term GDP projections. Similarly, other information from the survey is used to analyse the Balance of Payments of the country.

4. RESULTS & FINDINGS

4.1 COVERAGE AND SUMMARY STATISTICSThe sample frame of companies selected for the survey reduced slightly from 193 in 2016 to 173 in 2017 (see Table 1 for a detailed statistic on coverage). This decline needs to be viewed on the background of the high number of companies selected in 2016. Moreover, it was also concluded that some companies need not be visited every year. Companies selected are representative of the economy according to the different sectors. Where a large number of small players dominate the sector (e.g. agriculture), the team sampled the umbrella player (Ministry of Agriculture) or a regulator (or marketing boards). In other instances, like in the manufacturing sector where there are several different lines of production that need to be considered for national accounts, the team sampled a large number of companies since their operations are diverse and a true picture cannot be deduced by simply visiting the regulators. Important government agencies which either regulate particular sectors, help in coordination or provide data for the several smaller players are also surveyed in order to get an overall statistic of the entire sector. Finally, the survey sample also takes into account geographical considerations such that all the businesses from the different regions are represented.

In line with the reduced sample, the number of companies surveyed in 2017 reduced to 107 from 126 in 2016. In line with the structure of the economy, a high number of companies visited were from the tertiary sector (about 55 percent of all companies visited). In the secondary sector, especially in manufacturing, as many as 29 companies were visited given the several different lines of production within the sector. Overall, about 37 percent of the companies visited were from the secondary sector. Finally, while only 8 percent of the companies visited are from the primary sector, information was gathered from the biggest players within the important industries along with certain government agencies and regulators.

________________________________________6There are several sector-specific questionnaires. See Annex 4 for a general (not sector specific) questionnaire.



Full coverage was achieved for sectors such as utilities and marketing boards due to the small number of players in those sectors. Coverage for other sectors like construction, financial services, mining and transport was also high. Moreover, compared to last year, there were significant improvements in the coverage of sectors like health, education and agriculture. On the other hand, coverage of the ICT, Government, wholesale and retail, and real estate sectors remained on the low side. Given the large number of companies in manufacturing, the coverage can be said to be fairly representative. The decline in coverage was partly due to the lack of availability of companies for meetings.

Table 1: Survey Coverage

SectorListed Surveyed Coverage (%)

2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017

Agriculture 13 12 14 10 7 6 6 6 53.8 50.0 42.9 60.0

Construction 4 8 8 7 4 4 7 7 100.0 50.0 87.5 100.0

Education 0 2 10 3 0 1 4 2 0.0 50.0 40.0 66.7

Financial Services 16 19 21 19 13 17 19 15 81.3 89.5 90.5 78.9

Government 5 5 5 7 4 3 4 3 80.0 60.0 80.0 42.9

Health 0 2 5 3 0 1 2 2 0.0 50.0 40.0 66.7

ICT 3 4 9 9 2 2 4 3 66.7 50.0 44.4 33.3

Manufacturing 35 48 49 48 24 24 33 29 68.6 50.0 67.3 60.4

Marketing Board 6 6 5 5 5 5 5 5 83.3 83.3 100.0 100.0

Mining 4 4 4 4 3 3 3 3 75.0 75.0 75.0 75.0

Real Estate 4 6 9 6 3 4 5 3 75.0 66.7 55.6 50.0

Tourism 15 16 14 15 6 9 10 9 40.0 56.3 71.4 60.0

Transport 8 11 13 10 3 5 7 7 37.5 45.5 53.8 70.0

Utility 2 3 3 3 2 3 3 3 100.0 100.0 100.0 100.0

Wholesale & Retail 24 24 24 24 8 9 14 10 33.3 37.5 58.3 41.7

Total 139 170 193 173 84 96 126 107 60.4 56.5 65.3 61.8

4.2 SHAREHOLDING STRUCTUREThis section makes an analysis of the shareholding structure of the surveyed companies in 2017. The data collected indicate that 70 companies reported on information of the shareholding structure of the entities. A closer look at the analysis shows that 47 percent of the companies have a majority Swazi shareholding (excluding

all public enterprises that were surveyed), followed by South African shareholding accounting for about 33 percent of the surveyed companies. The rest of the companies’ majority shareholding falls within the rest of the world category (other). The category of ‘Other countries’ is mainly accounted for by countries such as USA, UK, and Taiwan. The results of the analysis depicts that at least 53 percent of the surveyed entities have an inward FDI component implying that the country is still a preferred investor destination7. A sectoral synopsis indicates that most of the inward FDI is channeled towards sectors such as manufacturing (mainly textile, food & beverages), financial services, and wholesale & retail.

______________________________ It should be noted that the Survey Team used a narrow definition of Foreign Direct Investment (FDI) by majority shareholding (above 50 percent). NB: The IMF

definition for FDI is when a foreign investor who is resident in another economy invests in Swaziland with a shareholding of 10 percent or more.


5

4.2 SHAREHOLDING STRUCTURE

This section makes an analysis of the shareholding structure of the surveyed companies in 2017. The data collected indicate that 70 companies reported on

information of the shareholding structure of the entities. A closer look at the analysis shows that 47 percent of the companies have a majority Swazi shareholding (excluding all public enterprises that were surveyed), followed by South African shareholding accounting for about 33 percent of

the surveyed companies. The rest of the companies’ majority shareholding falls within the rest of the world category (other). The category of ‘Other countries’ is mainly accounted for by countries such as USA, UK, and Taiwan. The results of the analysis depicts that at least about 53 percent of the surveyed entities have an inward FDI component implying that the country is still a preferred investor destination7. A sectoral synopsis indicates that most of the inward FDI is channelled towards sectors such as manufacturing (mainly textile, food & beverages), financial services, and wholesale & retail.

4.3 SECTORAL PERFORMANCE AND OUTLOOK

This section looks in detail at all different industries covered under this company survey exercise. It is important to point out at that the findings presented here are only those received from the surveyed companies. While information received from the companies is treated with confidentiality, it helps come up with an overview for the industry/sector as a whole as presented below.

4.3.1 Agriculture

4.3.1.1 Crop Production

Maize: Maize production fell by nearly 60 percent from 81,000 MT in 2014/15 to 33,000 MT in the 2015/16 harvesting season. This huge drop in maize production resulted from the negative effects of the El Niño induced drought. Anticipated good harvests from the implementation of subsidized inputs and the purchase of 100 new tractors did not materialize due to the severe impact of the drought. In

7 It should be noted that the Survey Team used a narrow definition of Foreign Direct Investment (FDI) by majority shareholding (above 50 percent). NB: The IMF definition for FDI is when a foreign investor who is resident in another economy invests in Swaziland with a shareholding of 10 percent or more.

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Swaziland South Africa Other

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Majority Shareholding



4.3 SECTORAL PERFORMANCE AND OUTLOOKThis section looks in detail at the different industries covered under the 2017 company survey exercise. It is important to point out that the findings presented here were derived from information received from the surveyed companies. While information received from the companies is treated with confidentiality, it helps come up with an overview for the industry/sector as a whole as presented below.

4.3.1 Agriculture4.3.1.1 Crop Production Maize: Maize production fell by nearly 60 percent from 81,000 MT in 2014/15 to 33,000 MT in the 2015/16 harvesting season. This huge drop in maize production resulted from the negative effects of the El Niño induced drought. Anticipated good harvests from the implementation of the government Food Security Project (which include subsidized inputs and the purchase of 100 new tractors) did not materialize due to the severe impact of the drought. In 2016/17 the project entered into the third and final year of its implementation. Despite receiving favorable rains in the 2016/17 planting season, as well as provision of farm inputs, maize production did not increase beyond the pre-drought output. Maize production is estimated at 84,000 metric tonnes in 2016/17 season. The shortage of diesel for tractors was reported as one of the major challenges that affected production in 2016/17.

Cotton: Cotton was one of the most-hard hit crops due to the drought. Only 90 metric tonnes of seed cotton was harvested in 2015/16 down from 800 tonnes the previous season. The production was too little for the ginnery to be operated as it is quite energy intensive. As a result, no cotton was ginned and the harvested cotton seed was stocked for use in the ginnery in FY 2016/17, hence there was no lint or fuzzy seeds produced in the 2015/16 season. This meant that Swaziland Cotton Board (SCB), which sources all the cotton produced in the country for its ginnery, had no income in 2015/16. Improvements in weather conditions in the 2016/17 planting season is expected to yield a significant improvement in cotton production with production estimated at 800 – 1,000 tonnes. The scarcity of non-GM (Genetically Modified) cotton seed coupled with legislative impediments to facilitate the growing of GM cotton are major challenges blocking growth for the cotton industry. On a positive light, the Swaziland Environment Authority (SEA) permitted the SCB to do trials of different varieties of GM cotton seed in 2014/15 and 2015/16 to study the impact of the GM cotton on the environment as well as its effect on productivity. If GM cotton gets the green light there is a huge potential for revival of the cotton industry.

Sugarcane: Drought conditions resulted in a depletion of water levels in most reservoirs particularly those used for irrigation and this negatively affected sugarcane production. Cane and sucrose yields fell by about 15 percent in the 2016/17 harvesting season. While the millers had some mitigating strategies, out-growers were hard hit by the effects of the drought. About 400,000 metric tonnes of cane was lost around the Nsoko area which relies heavily on the Great Usuthu and Ingwavuma rivers - where water levels dropped to record lows. Better performance only came from the Lower Usuthu Smallholder Irrigation Project (LUSIP) areas which benefit from the Lubovane dam – one of the few reservoirs where water levels did not fall significantly.

Banana: Banana production fared well in 2016 with production rising by nearly 50 percent as there was continuous investment in banana production by both citrus estates as well as expansions coming through LUSIP. Citrus estates involved in banana production recorded an increase of more than 45 percent in 2016 with a tonnage of about 8,500 MT. Under LUSIP where production only commenced in 2013, about 700 tonnes of banana was harvested in 2016 of which 20 percent was sold through the formal market (NAMBOARD) and the remaining 80 percent was sold to the informal market. Total revenues from banana sales amounted to about E56 million in 2016, 25 percent higher than the previous year.

Citrus: Citrus production decreased by more than 20 percent in 2016. The decline was, to a large extent, the result of pulling out from older orchids and replanting of newer varieties. The drought conditions also affected the quality of the produce resulting in lower citrus exports particularly grapefruit. Citrus estates continued to diversify within and away from traditional citrus fruits. More focus in the medium term revolves around pulling out oranges and planting more lemons and lime. There is also proposed introduction of other crops. Revenue from citrus production decreased by around 5 percent due to the notable drop in production volumes.



4.3.1.2 LivestockThe population for beef cattle dropped by about 10 percent from 589,000 in 2015 to 525,000 in 2016. This decline mainly resulted from the negative effects of the drought experienced during the second half of 2015 and the first half of 2016. The drought resulted in higher mortality rates due to the lack of water availability and high feed costs which persuaded farmers to sell their cattle. As a result, cattle slaughters grew significantly from 56,000 in 2015 to 61,000 in 2016. The drought also affected birth rates hence the significant erosion in beef cattle stock. It is estimated that a full recovery, under normal weather conditions, would take about 3 breeding seasons.

Other livestock species such as goats and sheep recorded positive growth in population numbers than cattle during the drought. Goat population rose from 443,000 in 2015 to 501,000 in 2016 while sheep production is estimated at 17,000 in 2016 from 15,000 in 2015. However, their slaughter remains dominant in the informal market. Only 325 goats and 17 sheep slaughters were recorded in the formal market in 2016.

The poultry sub-sector performance remained positive in 2016. However, the effects of drought on maize prices resulted in higher feed cost and curtailed expansions in the poultry sector. The piggeries sub-sector also performed well in 2016 with formal slaughters rising from 14,000 in 2015 to 17,000 in 2016. This can be attributed to an increase in the scale of production in the LUSIP areas.

The dairy sub-sector also performed well following the implementation of the Swazi Milk project also known as the ‘Old Mutual Dairy Project’. Through this project about 600 dairy cows were brought into the country in 2016 to boost raw milk production. The total number of dairy cattle in 2016 was estimated at 6,300 compared to 5,500 in 2015. However, the full impact of the dairy project has been marginalized as the implementation of the project has not gone according to the initial plan wherein 700 more dairy cattle were to be imported by the end of 2016. The total dairy stock (milking cows, excluding pregnant ones) was expected to reach 2,500 by December 2017 and 3,500 by 2018. The project was expected to produce about 25 million litres of milk annually by 2018, approximately 2 million litres per month. In mid-2016 raw milk imports ceased as domestic production fully substituted raw milk imports. However, due to the challenges in the implementation of the Swazi Milk Project, Milk production declared towards the end of 2016, resulting in an increase in imports

4.3.2 ForestryPerformance of the forestry sector was mixed but broadly positive. The area harvested increased leading to a higher tonnage of timber production. This led to a significant increase in the processing of diversified wood and wood products. Forestry products that recorded growth include mining timber, transmission poles, structural timber, planking timber and chipboards. A decrease was only observed in the production of saw logs particularly in the north due to the closure of one of the major sawmills in Piggs Peak. The northern side continued to experience forest fires with about 2,500 hectares of young timber burnt in 2016. This has also delayed planned expansion investments. The central and southern regions on the other hand, experienced minimal fires mainly benefiting from improvements in forest fire-fighting strategies.

With more trees reaching maturity, the forestry sector is expected to maintain robust growth which will feed into growth in wood products processing. Forestry companies reported continuous investments in timber processing and value addition to cater for the increased tonnage of timber production. The companies also reported readiness to invest in power generation.

4.3.3 Mining and QuarryingIn 2016, coal production grew by 2 percent to 341,111 MT. Saleable tons, on the other hand, declined by 5 percent to 158,321 MT indicating pressure on yields. A licence to mine coal in high-yielding crown land was granted in 2016 for 6 months culminating in the production of 23,000 MT of the total mined coal. Geological and technological constraints have negatively impacted coal yields and revenues in the recent past. However, there are good prospects anticipated for coal production, boosted by high demand and the possibility of the renewal of licence for mining on crown land and for a new licence to mine an additional area of land measuring about 1,955ha. Moreover, the recent renewal of the licence for the Maloma mine (up to 2028) also provides greater certainty. Furthermore, licences for the prospecting and exploration of coal around the Mpaka-Lubhuku area have



been issued with subsequent activities underway which will provide through-put into a proposed thermal power plant. The eventual implementation of the proposed activities coupled with recovery in commodity prices will translate to increased sales and revenues.

There was an increase in the quarrying of stones in 2016. Quarry production improved from 396,046 MT in 2015 to 419,642 MT in 2016. Although there are a number of ongoing construction activities such as the Manzini-Sikhuphe road, Nhlangano-Sicunusa road and other private sector construction projects, activity in the sub-sector was constrained by Government cash-flow challenges leading to non-payment for services rendered by a number of construction companies. The mining of sand and clay continued with sand showing good potential after introduction of regulatory legislation which has resulted in increased compliance and has further boosted revenues. On the other hand, prospects for performance of quarry stone are positive with the anticipated commencement of projects such as Bulembu-Piggs-Peak-Maguga road and Lukhula-Big Bend road in the medium term.

4.3.4 Manufacturing4.3.4.1 Food Processing A total of 10 companies were interviewed under this category. These belong to different sub-categories which include manufacturing of sugar, processing and preserving of meat, processing of fruits and vegetables, dairy processing, manufacture of confectionary products, manufacture of bakery products and manufacture of grain mill products & animal feeds.

Sugar production declined from 686,778 MT to 586,108 MT in 2016/17. This decline of 15 percent is lower than the 25 percent anticipated earlier due to improvements in weather conditions in the last quarter of 2016. Sugar production is expected to improve in the medium term supported by full recovery from the drought by 2018 and increase in the area planted under LUSIP. Furthermore, there are anticipated efficiency gains as a result of cost cutting measures and support towards out-growers. Downside risks include liberalization of sugar in the EU market in 2017 that will result in reduced sugar prices. While SACU remains the main export market for sugar, this market too is under pressure. Within the SACU market there is an anticipated phasing out of sugar import tariff which has the potential to reduce the demand for domestic sugar through an oversupply of sugar imported from outside the SACU region. Revenues from sugar increased by 13 percent due to an increase in sucrose price per ton coupled with higher total sales volumes (from available stock).

Beef processing performed relatively well in 2016. The drought led to increased supply of beef during the year as farmers opted to reduce their cattle stock. Revenues registered impressive growth for the year under review driven by growth in the industry’s turnover. However, going forward it is anticipated that there will be a reduced supply of cattle stock from domestic sources given the drastic decline in cattle population. While beef prices are expected to rise due to restocking which will cut supply, exports are also likely to decline.

There was an improved performance of poultry processing in 2016 driven by increases in both volumes as well as prices. Higher revenues though failed to translate into higher profitability as feed prices rose sharply (price of yellow maize rose by 25 percent). Outlook remains positive as domestic demand is high and supply volumes are anticipated to rise as input (maize) prices stabilize coupled with efforts to improve domestic supply.

Dairy products such as fresh milk, maas and yoghurt registered improved sales and revenue performance attributable to higher volumes and price increases. While the drought did not have much of an impact on the sub-sector, there was insufficient milk produced locally to meet dairy production targets due to other challenges experienced in the second half of 2016. However during the year, cheaper imports provided competition for the local market as it impacted on domestic prices. A marginal growth in performance is anticipated for the medium term mainly driven by increases in volumes and price.

Other lines of food manufacturing such as processing and preserving of fruits, manufacture of confectionary products, manufacturing of edible oils and manufacture of bakery products had mixed performance in terms of volumes and revenues in 2016. However, there are positive prospects for the medium term for the three sub-sectors supported by capacity expansions for some production lines.



4.3.4.2 Manufacturing of Beverages There were 3 companies that were visited under this category. This category includes the manufacture of malt and malt liquors, distilling and blending of spirits and manufacturing of soft-drink concentrates and miscellaneous edibles. Performance in distilling and blending of spirits, mainly ethanol production, was affected negatively by the drought which affected the supply of molasses. Manufacture of soft drinks and miscellaneous edibles recorded modest growth mainly due to developments in the South African market which included consolidation of bottlers as well as the general poor performance of the South African economy particularly in the second half of 2016. While robust growth is expected in ethanol production as supply of molasses is expected to recover in 2017 and 2018, the manufacture of miscellaneous edibles and soft drinks concentrates is expected to be modest in the medium term broadly tracking developments, such as the implementation of a sugar tax in the South African market. Growth in the region for this sector was also affected by the lack of FOREX in some African countries and thereby affecting sales volumes to those countries.

4.3.4.3 Textiles and Wearing ApparelThere were 7 companies that were surveyed. Of these 5 reported positive growth in 2016 mainly buoyed by growth experienced in regional markets where others are still recovering from the loss of the US market following Swaziland’s removal from African Growth and Opportunity Act (AGOA). The medium term growth for the textile sector remains positive as companies reported increased market access into the region coupled with the attraction of new clients. Existing customers also have potential to grow as they continue to expand their footprint throughout the region.

4.3.4.4 Other ManufacturingNine companies were surveyed in this category which includes the manufacture of building materials, plastic products, wood products, furniture, chemical products and curios. Most companies reported good performance in revenues for 2016, largely driven by various factors such as increased domestic demand, completion of construction buildings requiring fittings and also due to positive exchange rate developments particularly for exports. However, these companies also reported several challenges including high inputs costs, competition driving down prices, and restructuring in order to mitigate losses, which hindered production to some extent.

4.3.5 Electricity and Water Services4.3.5.1 ElectricityThe severe drought in 2016 stalled the production of hydro electricity generation and the electricity company had to rely entirely on imports from South Africa. The company recorded a slowdown in sales during 2016 mainly coming from the decline in the demand for electricity used for the purposes of bulk irrigation. Domestic hydro-electricity generation is expected to slowly recover as weather conditions improve. On another note, Independent Power Producers (IPPs) are prospecting on alternative power generation. The national electricity grid is currently receiving electricity generated through the use of biomass and solar which is produced by these IPPs, however at a small scale. Positive growth in electricity generation is projected in the medium term with anticipated participation of more IPPs. There are a number of projects that are in the pipeline to generate power for the domestic economy, these projects include Lavumisa Solar Project (5MW), Wundersight solar project (850KW), Ngwempisi (120MW) and Thermal Power (300MW).

4.3.5.2 WaterTreated water supply volumes fell in 2016 mainly due to the severe drought which saw most dams running dry. However, revenues collected from billed water supply increased even though some revenue was lost due to increased supply of non-revenue (free tanked water) to rationed areas around Mbabane. There was an improvement in the weather conditions and recovery in water levels in dams by the last quarter of the year. Volumes are projected to recover and remain positive over the medium term. The supply of water is expected to increase as some water projects are coming to completion and water connections extended to the rural areas.

4.3.6 ConstructionSix major construction companies, representing the bulk of the sector, were surveyed. Performance in 2016 was positive as most of the surveyed companies reported growth stemming from both private and public projects commissioned during the period. These projects include; Mbadlane-Manzini Road, Nhlangano-Sicunusa Road, MR3 Manzini-Matsapha Resealing, Rehabilitation of Roads in the Municipalities, Siphofaneni, Somntongo & Matsanjeni



(SISOMA) project, Nhlangano Water Treatment Plant, etc. The construction of roads was the major source of growth coming mainly from the public sector. Private sector construction works were mainly focused on buildings, which comprised of; shopping centre at Woodlands Mbabane, Hilton Hotel, UN Headquarters, SRA Headquarters, Mafutseni Filling Station, Usuthu High School, etc.

There is stiff competition among local players in the industry which is exacerbated by the country’s poor economic growth. In the medium term, the sector will continue with ongoing projects and commence other planned public projects. Although delayed payments from Government did not majorly hinder growth in the sector in 2016, going forward, fiscal challenges pose a major constraint that may halt some public construction works. A mega private project which is expected to bring positive growth in the medium term is the Lothair-Matsapha Railway line project which is estimated at about E20 billion.

4.3.7 Wholesale and RetailPerformance in the motor vehicle sub-sector was generally not impressive. The slight growth came mostly from motor vehicle purchases by the private sector. Competition from Asian imports (grey) cars continues to negatively affect the sector. Moreover, higher local prices and long waiting periods for delivery of cars from SA had a negative impact on sales as potential customers prefer buying directly from SA than using local car dealerships. The outlook is expected to remain stagnant as a result of slow economic growth.

Under the fuel wholesaling and retail sub-sector, growth was positive benefiting from the decline in crude oil prices. The size of the market is not growing and as such each retailer makes an effort to provide good services to retain customers and lure customers from competitors. The medium term is expected to remain positive and recovery in the agriculture sector which was negatively affected by drought in the year under review will also boost the sector.

The performance of the clothing retail sub-sector was positive, mainly emanating from the salary review which saw the government sector’s disposable income increasing in the review period. Despite slow economic growth, in the medium term, the recovery from drought is expected to keep the sector afloat as food becomes cheaper and people have more disposable income to spend on non-food items.

Supermarkets recorded a positive performance in 2016 owing to both high food prices and an increase in disposable income especially for the public sector. Trends of public and private sector wages have a huge impact on the outcomes of the sector. The slow economic performance will have a negative impact in the subsector; however, future prospects remain positive.

The performance for building material, in terms of sales and revenues, was somewhat negative due to escalating prices and poor economic growth. Future prospects are expected to remain constrained due to the increasing number of players in the sector coupled with the fact that most peoples’ spending is channelled towards consumption spending.

4.3.8 TourismThere were 9 establishments surveyed in the tourism sector and data shows that performance was positive, partly due to low base effects from 2015 and other economic developments. International arrivals were on an upward trend, owing to the country hosting the SADC conference and adaptation to SA immigration laws. Bed nights sold and conferencing were also on a rising trend in majority of the 9 establishments, contributing positively to revenue generated. Most establishments’ revenues increased while profitability remained constant due to a rise in food prices which inflated input costs.

The country’s hosting of events such as the Bushfire Festival, the Hypnotic Festival, Joyous Celebration concerts, etc. boosted revenues in the sector. South Africa’s economic and social developments have a huge bearing on the country’s tourism sector as most tourists come through SA borders or are from that country. The depreciation of the Lilangeni also had a positive impact in the sector. The outlook is expected to remain slightly positive with the unveiling of new establishments like the International Convention Centre (ICC) which are expected to attract international events.



4.3.9 Financial SectorThe financial sector is divided into banking, non-bank institutions, insurance, pension funds and asset managers. In the banking sector, all commercial banks were surveyed including the building society. Notwithstanding the scraping of cash deposit fees by the CBS in July 2016, all banks reported positive growth in their revenue lines arising from increases realized from credit extended, with the exception of credit extended to the agricultural sector (due to the drought). A bigger proportion of the banks realized positive growth in deposits mainly on account of funds coming from corporate clients. With respect to interest earned, most banks recorded increases in 2016 mainly driven by the extension of unsecured loans and mortgages. On the profitability space, the performance was mixed with some sector players reporting slight declines in profits while others posted increases, though subdued relative to the budgeted profit for the year. Growth in the medium term for this sector is expected to come from the new systems efficiencies, increase in pricing and launching of new products. There is also anticipated growth in residential mortgage due to various real estate projects being implemented across the country.

Surveyed insurance entities recorded positive growth in total revenues, growing by an average of about 10 percent in 2016 when compared with 2015. This increase was mainly driven by growth in engineering policies from on-going capital projects in the country, mainly roads and property. Despite the registered growth in total revenue in 2016, profits declined due to a significant increase in claims and reinsurance premiums. The outlook remains negative with most industry players predicting continued declines in profitability even in 2017.

Despite some challenges stemming from the drought experienced in 2016 which affected performance of agriculture loans, revenue by Development Finance Institutions (DFIs) grew from E228 million to E268 million in 2016. However, credit extended to the different portfolios remains mixed as some credit to certain portfolio lines had to be suspended in order to minimize over exposure. Growth for this subsector is expected to pick up in the medium term as the effects of the drought are starting to die down leading to a slight increase in revenue earnings.

Total turnover for asset managers grew by over 10 percent in 2016 alongside profits. However, there is uncertainty for the medium term, especially with regard to the anticipated 50 percent local asset requirement to be implemented by the regulator since relevant players believe that there aren’t enough good investment avenues within the economy.

Data collected on the pension funds indicate a decelerated growth trajectory in 2016, though remaining positive. Total revenue grew by a little less than 10 percent in 2016. The slowdown in growth was due to under-performance by the South African portfolios owing to the Brexit, the Trump presidency, as well as political developments in South Africa. The outlook for the sub-sector is not good with lots of losses emanating from revaluations due to international sentiments.

4.3.10 TransportThe survey on the transport industry covered sectors including road, air, rail and warehousing & storage. Air travel reported a marginal growth increase of about 1 percent in the number of passengers mainly benefiting from the SADC Summit that the country hosted in 2016. The sector recorded good revenue growth per passenger for the period under review emanating from the slight growth in passenger numbers and exchange rate gains. The outlook for this sub-sector is not positive as more players are likely to come on board yet the customer base is not growing and thus it would be difficult to grow in the medium term. The rail sub-sector recorded positive growth mainly benefiting from transit and export business in terms of both volumes and revenues. The main products that contributed to this performance in 2016 were sugar and coal exports. The sub-sector anticipates growth in volumes and revenue that will come from sugar and coal exports in the medium term.

In the road (freight) transport sub-sector, data indicated positive revenue growth of about 12 percent in 2016, translating to slight increases in profits. Prospects for the medium term are mixed. On one hand, the recovery from the agriculture and manufacturing sectors would support growth in this sub-sector while on the other hand the government’s fiscal challenges would pose a negative risk especially if it results in lower activity in the construction sector. Warehousing and storage posted revenue growth in 2016 due to increases in enrollment figures in the wake of the full implementation of FPE programme, which has resulted in the need for space in which to store learning materials before these are distributed to schools.



4.3.11 Information and CommunicationData collected from the telecommunication industry shows that the sector performed fairly well in 2016. Total turnover increased by 4 percent mainly driven by growth observed in data as there is a general increase in coverage as people modernize and are now appreciating the use of the internet as well as other revenue streams such as money deposits and transfers. Growth in the short to medium term is expected to pick up as voice calls and data usage are expected to grow as the market will be welcoming new players in the telecommunication industry.

On the regulatory sphere, during 2016 the regulator approved a couple of internet service providers (ISP). In telecommunications, the regulator converted two licenses that existed in this space thereby permitting them to provide both fixed line and mobile services. In addition, the regulator approved licence for a third operator. The outlook for the sector looks positive with the new licences allowing for more flexibility in technological progress and the promotion of competition.

4.3.12 Real EstateThe entities surveyed, reported declines in turnover from property sales and rentals during 2016. The poor performance in this sector emanated from the fact that the values of property sales in 2016 were lower than those achieved in 2015 despite more sales realized in 2016. The industry is projecting positive growth in the near future for both property rentals and property sales as there are prospects for good deals to be approved in the near term.

4.3.13 Health and EducationDuring 2016, the survey covered both public and private health institutions. There was a moderate growth in the number of cases reported and treated as there were no disease outbreaks in the year under review which would have warranted a hike in the number of cases. The drought which posed a health threat did not result in any outbreaks especially diarrhoea which is related to portable water issues. In the medium term performance in health output is expected to be modest as the continued slowdown in patient intake from Government’s Phalala Fund will result in subdued growth in terms of both the number of patients attended to and revenues generated by the health sector.

Two tertiary institutions were surveyed and data showed mixed performances in terms of enrollments with one institution reporting an increase while the other a slight decline. Despite the lack of funding from Government in terms of scholarships, the medium term enrollment figures are postulated to rise as the institutions plan to introduce new faculties in a bid to increase the number of programs and attract more students.

4.3.14 MunicipalitiesThe team surveyed three municipalities with all reporting that 2016 was a difficult year in terms of mobilizing funds. This was mainly on account of the poor fiscal position of Government which affected property tax payments by Government and the increase in the number of child headed homes and pensioners who cannot afford to pay property taxes for their residential properties. In the medium term, the performance of municipalities is expected to be stagnant due to various reasons including reviews of property valuation outcomes, projected decline in Government subventions as well as the non-improvement of the fiscal position from the Government side.

4.4 SOURCES OF INPUTS AND DESTINATIONS MARKETSSources of inputs for production remain an important indicator that is tracked through the company surveys. Swaziland, being a small and open economy depends on international markets for most inputs for its industrial production. However, sources vary significantly across industries/sectors. The following section gives an overview of the sources of inputs from the sample of companies that responded to this question on the survey instrument.



Industries in the primary sector (i.e. agricultural production and forestry) depend almost entirely8 on domestic sources of inputs, except for certain machinery which may be sourced from other countries. For food processing about two thirds of the inputs are sourced locally. Other industries in the secondary and tertiary sectors overwhelmingly depend on inputs from outside the country, notably South Africa. About 60 percent of the inputs in manufacturing are sourced from this country. The inputs proportion for the wholesale and retail sector increased to a high of over 70 percent. In the fuel and car dealership industries almost all inputs are sourced from South Africa and re-sold further in the domestic market. Other regions become important for certain sectors, for instance, a majority of inputs in the textile industry are sourced from Asia. For beverage manufacturing a substantial proportion of the inputs are sourced from Europe and the USA.

Locally, the drought has severely affected crop production levels and prices of these inputs sky-rocketed in 2015/2016. This posed a significant challenge especially in the food and related industries. Similarly, irregular supply of electricity and water also affected production. The shortfall in production in the region also necessitated sourcing of inputs from other regions. Companies that depend on inputs from outside the region were also affected by the volatility in the exchange rate.

Just as Swaziland depends on the outside world to source inputs for production, a large proportion of the output is also exported outside. Looking at markets of the companies in the sample, it is evident that South Africa is a major destination. These include mining, forestry, manufacturing, transport and so on. South Africa is also increasingly absorbing the domestic textile output. Other important markets include the wider Africa region for beverages, forestry and textiles among others. A substantial proportion of commercial agricultural produce goes to the EU, while the domestic economy absorbs about a third. Most processed foods and beverages are also targeted for the local market. Almost all companies in the wholesale and retail space sell to the domestic market. Tourism is another sector the domestic economy contributes most (about 38 percent of the guests are from Swaziland) followed by South Africa, while other regions combined account for about 30 percent9. In terms of exports, the depreciation of the exchange rate provided an opportunity for increased exports as it boosted competitiveness. This was also observed in the tourism sector. However, political uncertainty in South Africa and high costs of inputs offset such benefits.

4.5 INVESTMENTFrom the total number of companies surveyed, data show that investment amounted to over E1.6 billion10 in 2016. Out of the total number of entities visited by the survey team about 38 percent provided information on investments in 2016, while 22 percent provided investment information for 2017 which amounted to E1.5 billion.In 2016, there was a total planned investment of E242 million for agriculture, of which E117 million came from the sugar industry for expansion projects, including the setting up of irrigation infrastructure. In the citrus industry, about E6 million was spent for new planting, replanting and acquisition of machinery. Investment expenditure of about E250 million has been set aside for the expansion of fuser lines within the sugar industry and drip irrigation.

A further E6 million has been set aside within the citrus industry for replanting. Under animal production, there are planned investments amounting to E65 million for the development of a processing plant to be leased to dairy processers. Investments in the forestry sector amounted to about E120 million in 2016 - expansion of dry area and development of new processing plant worth E60 million and the development of a sawmill, drying kiln and fire-fighting equipment. A planned investment of E25 million has been set aside towards a door processing plant.Under manufacturing, E327 million was invested in 2016 in the food and beverages line for replacement of machinery and processing equipment, plant and farm expansion as well as water treatment plant. A further E31 million will be invested for the farm expansion and machinery. A total of E49 million was invested in textiles for the expansion of factory space, new factory shells and equipment in 2016. The sector will spend another E77 million for the expansion of factory shells. A total of about E24 million was channelled under other manufacturing towards establishing new property/factory and machinery. A further E22 million will be spent towards the procurement of new vehicles. _________________________________________8This may not be reflected in the table because most of the agricultural production is predominantly subsistence and is not covered by the survey.9This refers to the total number of guests that different players in the sector reported and not necessarily revenues.10This exclude major projects like LUSIP II Extension worth E2 billion, sugarcane expansions of about E2 billion, Lothair-Matsapha Railway line Project worth about E20 billion and several other power generation projects, since there was insufficient information on timeframes and other aspects for further analysis



About E493 million was spent towards water supply and maintaining infrastructure for electricity. The construction industry is reported to have spent E58 million in 2016 towards acquisition of plant and equipment. Further E370 million will be spent towards capacity enlargement and machinery.

The largest investment was made in the financial services industry in 2016, amounting to E390 million. Bulk of this was in the banking sector for the setting up of new systems, installation of ATMs and acquisition of fixed assets. There are planned investments of close to E100 million for 2017, with the banking sector a major contributor. In the wholesale and retail industry, an investment of E10.5 million was dedicated to the procurement of vehicles and construction of filling stations. The sector has projected to spend about E28 million for filling station renovations. A further E50 million will be invested for the addition of new retail store branches in the medium term.

E70 million was spent in the acquisition of fixed assets in 2016 by transport companies, the bulk of which was towards the rail sub-sector for the procurement of rail wagons. Not much planned investment was indicated for the coming years. Investment expenditure in the telecommunication industry in 2016 was related to the coming on stream of a new player in the telecommunication industry, ISPs for the new applicants. There was also a purchase of a frequency monitoring spectrum reported in the year. The tourism industry spent E13.8 million towards renovations and expansion of its establishments. A further E115 million will be spent on the refurbishment and expansion of rooms in 2017. Finally, municipalities reported investment amounting to E9.7 million which was mainly towards the construction and rehabilitation of road infrastructure and acquisition of fixed assets.

4.6 EMPLOYMENTA sample of 126 companies provided data on employment used for this analysis; employment data obtained in the 2016 survey exercise was used as a base for the analysis. The team updated employment figures for companies where data was provided in the 2017 survey exercise; for companies that did not provide data in 2017, figures provided in 2016 were assumed to remain constant. Overall employment trends for the sample show a 6 percent and 7 percent growth, in 2016 and 2017, respectively.

Table 2 below shows that employment in the primary sector grew significantly in 2016. While growth in manufacturing may seem slow, the sector is responsible for most employment in the economy. As such, even this slow growth translates to a large number of workers being employed. Other sectors in the secondary sector like construction also saw rapid growth in employment. The tertiary sector, despite its large weight on GDP, accounts for a relatively small proportion of the total employment generated in the economy. It should be noted, however, that employment in certain sectors especially agriculture, mining and construction represent seasonal or temporary employment or workers for certain projects and may not necessarily depict growth in permanent staff.

Agriculture and forestry: Employment in these sectors grew by 34 percent in 2016, mainly coming from expansions in the forestry industry. The citrus industry employment also recorded improvements as banana production performed better. Employment in the agriculture and forestry sector is expected to increase by 6 percent in 2017.Mining & Quarrying: Employment in this industry grew by 35 percent in 2016. Coal and quarry added more people in 2016 broadly in line with increased activity in coal mining and quarried stone production which was supporting a vibrant construction industry. The commissioning of a gold mine in 2016 also added more employment numbers in the industry. In the absence of new mining activity, employment growth is expected to be muted in 2017.



Table 2: EmploymentSECTOR SAMPLE 2015 2016 2017 Growth_2016 Growth_2017

Agriculture & Forestry 6 3,601 4,826 5,114 34.0% 6.0%

Mining & Quarrying 2 525 708 714 34.9% 0.8%

Manufacturing 37 22,673 22,944 25,489 1.2% 11.1%

Food & Beverages 15 11,071 11,176 11,965 0.9% 7.1%

Textile 8 10,051 10,340 11,986 2.9% 15.9%

Other 14 1,551 1,428 1,538 -8.0% 7.7%

Utility 2 1,276 1,345 1,377 5.4% 2.4%

Construction 6 1,841 2,461 2,461 33.7% 0.0%

Wholesale & Retail 15 2,502 2,466 2,485 -1.4% 0.8%

Tourism 9 1,445 1,432 1,417 -0.9% -1.0%

Financial Services 16 2,033 2,142 2,218 5.4% 3.5%

Transport 8 1,427 1,474 1,426 3.3% -3.3%

Real Estate 5 394 399 416 1.3% 4.3%

Education 5 1,130 1,201 1,252 6.3% 4.2%

Health 2 909 968 914 6.5% -5.6%

Municipalities 4 715 684 631 -4.3% -7.7%

Marketing Board 5 394 319 404 -19.0% 26.6%

ICT 4 1,310 1,323 1,327 1.0% 0.3%

Total 126 42,175 44,692 47,645 6.0% 6.6%

Manufacturing: Employment in this sector grew by 1 percent in 2016 and is expected to record a faster growth of 11 percent in 2017. The 2017 growth is mainly attributed to recovery in the sugar industry and anticipated expansions in the textile industry. Employment in other manufacturing industries is projected to recover and grow by 8 percent in 2017 from a decline of 8 percent in the previous year; labour unrest in the manufacture of building materials affected growth in 2016.

Construction: The sector recorded a 34 percent increase in employed staff in 2016, mainly benefiting from continued implementation of public infrastructural projects. Employment levels in this industry will be largely determined by the continued implementation of existing projects in 2017 and commencement of new ones.Financial Services: Employment in the sector grew by about 5 percent in 2016, mainly benefiting from a 6 percent growth in employment from the banking sector. On the other hand, employment in the non-banking sector, which includes asset management, insurance and pension funds, recorded slower growth of 4 percent. The industry is expected to post slower growth of 4 percent in employment figures in 2017; employment growth in banking and non-banking industry is anticipated to decelerate.

Tourism: Tourism industry employment was under pressure in 2016, despite the recovery in activity observed within the overall industry. Restructuring and consolidation in some main players led to the poor outturn in employment. Employment figures for the industry, particularly temporary staff, largely depend on vibrancy in the industry.

Marketing Boards: A decline of 19 percent in marketing boards employment figures was recorded in 2016 as temporary staff for the cotton ginnery were not employed; no ginning due to low cotton yields owing to the



impact of the severe 2015-16 drought. Employment is expected to rebound for this sector in 2017 as the cotton industry recovers.

Municipalities: There was a decline of 4 percent due to restructuring in one of the main cities. A further drop of about 8 percent is anticipated in 2017 as another main city intends to undergo a restructuring process.Other Sectors: Employment in sectors such as education and health showed positive growth in 2016 benefitting from demand for more staff for tertiary education and in public as well as private health institutions. ICT, real estate and transport services employment reported modest growth in 2016.

5. CHALLENGES AND OPPORTUNITIES

5.1 CHALLENGESIn 2016, survey results show that most companies in Swaziland were laden with a number of challenges as they focused on trying to rebuild their businesses coming from a low base after the drought challenges that had a ripple effect on the economy. Notably in 2017, companies view regulation as stifling economic growth and reducing earning potential and thus this challenge rests at the top of the list. Though tax issues were not as pronounced the previous year, in the year under review they are second on the list, with most firms highlighting issues such as the late payment of refunds which become a burden to business operations. Complaints centred on high operational costs, wages and the high costs of utilities which are at times unreliable were predominant in the discussions. The fiscal challenges the country faced in 2016 also had a major effect on businesses with companies feeling the brunt of delayed government payments alongside issues such as limited access to finance (see Box 1 for the evolution of challenges reported by companies in the past 3 years).




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Box 1: Evolution of Challenges reported by Companies in the past 3 years

27.7%24.8%

22.8%22.8%

20.8%20.8%

15.8%13.9%13.9%13.9%

12.9%11.9%11.9%

10.9%8.9%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Regulatory FrameworkTax IssuesHigh Costs

Utilities cost and reliabilityGovernment Ineffeciency

LegislationBorder Issues

Access to FinanceDelay in Payments by Government

Slow Economic GrowthCompetition

Capacity ConstraintsPoor communications infrastructure

Lack of Skilled PersonnelFiscal Crisis

Challenges Facing Business in Swaziland in 2017

36%28%

25%24%

18%16%

15%13%

12%12%

11%11%11%11%11%

10%10%

9%

0% 5% 10% 15% 20% 25% 30% 35% 40%

CompetitionRegulatory Framework

Utilities Cost and ReliabilityDrought

Lack of Skilled PersonnelSlow Economic Growth

Access to FinanceExchange Rate Volatility

Barriers to TradePoor Communications Infrastructure

High CostsInfrastructure

LegislationOther

Tax IssuesBorder Issues

Budget ConstraintsDelay in Payments by Government

Challenges Facing Businesses in Swaziland in 2016

31%28%

27%25%25%

22%15%

14%13%

11%11%

10%10%10%

0% 5% 10% 15% 20% 25% 30% 35%

Utilities Cost and ReliabilityLack of Skilled Personnel

Regulatory FrameworkAccess to Finance

CompetitionTax Issues

CorruptionLegislationHigh Costs

Government IssuesPoor Communications Infrastructure

Border IssuesLand Tenure

Slow Economic Growth

Challenges Facing Businesses in Swaziland in 2015

Box 1: Evolution of Challenges reported by Companies in the past 3 years



Challenges in the Manufacturing Sector: The manufacturing sector is a main contributor of growth in the economy. A summary of the discussions shows that challenges faced by this manufacturing sector take a 24 percent share of the challenges recorded in 2016 and are placed at the top of the list. Companies in the manufacturing sector were highly concerned with the high costs of utilities, especially the escalating electricity prices and the unreliable supply. In 2015, challenges with regards to utilities were placed second on the list of challenges faced by the sector with competition cited as a major challenge due to the growing presence of Asian businesses. Problems around taxes and border issues have, in 2016, been prevalent in the discussions as companies complained around issues related to late payments of refunds and delays at the border that often times affects their turn- around time. The poor communications infrastructure was seen as a barrier to the growth of the manufacturing sector with slow internet connectivity reportedly being a great concern for businesses as paper work for border clearances is now submitted online. This has resulted in some further delays at the border. Low on the list are issues related to the lack of skilled personnel and land tenure.

Figure 1: Challenges in the Manufacturing Sector

Some of the major challenges that have plagued companies are discussed below.

Regulatory Framework: About 43 percent of the challenges reported under this category are linked to the financial services sector. Non-bank financial institutions are said to pose unfair competition to the banking industry as they compete for the same pie but have a different set of regulations. Banking industry is also squeezed by mobile money platforms; however these are susceptible to money laundering due to lack of adequate monitoring.

Manufacturing companies reported being burdened with data requests by regulators. On the other hand, other sectors such as the wholesale and retail sector complained about the lack of regulation in the industry which also brings unfair competition. The agricultural sector suffers the lack of reliable laws to promote trade, and laboratories for the testing of imported cattle feed and in 2016 this led to the loss of animal life to the detriment of farmers.

Challenge 1: Regulatory Framework


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squeezed by mobile money platforms; however these are susceptible to money laundering due to lack of monitoring. Manufacturing companies reported being burdened with data requests by regulators. On the other hand, other sectors such as the wholesale and retail sector complained about the lack of regulation in the industry which also brings unfair competition. The agricultural sector suffers the lack of reliable laws to promote trade, and labs for the testing of imported cattle feed and in 2016 this led to the loss of animal life to the detriment of farmers.

Challenge 1: Regulatory Framework

Tax Issues: On issues related with tax, business cited issues around the ease of doing business which was said to hinder business. One company even had to reallocate one of its shops to South Africa as it became very difficult and time consuming to export without having a sister company in SA. The graph below shows that the manufacturing sector reported more challenges in this regard followed by the agriculture and wholesale & retail sectors. Companies in the agricultural sector view the tax authority as a stumbling block to business progress, citing bureaucratic red tape and delays in VAT refunds. The authority is also said to fail at handling tax queries by companies well while charging very high penalties for non-compliance. Companies feel that they spend a lot of time attending to the tax authority’s queries and less time focusing on operations.

Financial Services43%

Manufacturing11%

Construction11%

Wholesale & Retail7% Real Estate

7%Agriculture

7% Mining3%

Transport3%

Tourism4%

Marketing Board4%

Other14%



Tax Issues: On issues related with tax, business cited issues around the ease of doing business which was said to hinder business. One company even had to reallocate one of its shops to South Africa as it became very difficult and time consuming to export without having a sister company in SA. The graph below shows that the manufacturing sector reported more challenges in this regard followed by the agriculture and wholesale & retail sectors. Companies in the agricultural sector view the tax authority as a stumbling block to business progress, citing bureaucratic red tape and delays in VAT refunds. The authority is also said to fail at handling tax queries by companies well while charging very high penalties for non-compliance. Companies feel that they spend a lot of time attending to the tax authority’s queries and less time focusing on operations. Challenge 2: Tax Issues

High Costs: This challenge was mostly reported in the manufacturing and tourism sectors. Accommodation establishments raised the issue of huge increases in other bank charges following the scrapping of bank charges raising the cost of doing business in the country. Costs are also exacerbated by the increasing number of regulatory authorities or institutions as they also impose levies from companies to finance their operations. Increases in interest rates in 2016 are said to have negatively affected the banking sector. It has affected the affordability of debt, particularly mortgage and it is evident by the sudden increase in the sale of houses (as the mortgage becomes unaffordable). According to discussions the high costs related to increases in interest rates are also making people more cautions of taking out new loans. Although, it is beneficial for non-interest income, banks are more concerned by the risk of an increase in non-performing loans.

Challenge 3: High Costs

Government Inefficiency: About 21 percent of the challenges reported by companies, representing all sectors of the economy, were related to government inefficiencies. Interestingly, the graph shows that 28 percent of these challenges were raised by marketing boards. Discussions highlighted that government needs to adopt a strategy of commencing with a project once it has sourced funding and work within its means. Funds for projects are sometimes diverted and this has a negative bearing on the cash flows of contractors. Government can also


26

Challenge 2: Tax Issues

High Costs: This challenge was mostly reported in the manufacturing and tourism sectors. Accommodation establishments raised the issue of huge increases in other bank charges following the scrapping of bank charges raising the cost of doing business in the country. Costs are also exacerbated by the increasing number of regulatory authorities or institutions as they also impose levies from companies to finance their operations. Increases in interest rates in 2016 are said to have negatively affected the banking sector. It has affected the affordability of debt, particularly mortgage and it is evident by the sudden increase in the sale of houses (as the mortgage becomes unaffordable). According to discussions the high costs related to increases in interest rates are also making people afraid of taking out new loans. Although, it is beneficial for non-interest income, banks are more concerned by the risk of an increase in non-performing loans.


Government Inefficiency: About 21 percent of the challenges reported by companies, representing all sectors of the economy, were related to government

Manufacturing44%

Agriculture16%

Wholesale & Retail16% Transport

8%

Construction8%

Education4%

Health4%

Other16%

Tourism22%

Manufacturing22%


Marketing Board9%

Agriculture9%

Health9%

Construction4%

Wholesale & Retail4%

Government4%

Other12%


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Challenge 2: Tax Issues

High Costs: This challenge was mostly reported in the manufacturing and tourism sectors. Accommodation establishments raised the issue of huge increases in other bank charges following the scrapping of bank charges raising the cost of doing business in the country. Costs are also exacerbated by the increasing number of regulatory authorities or institutions as they also impose levies from companies to finance their operations. Increases in interest rates in 2016 are said to have negatively affected the banking sector. It has affected the affordability of debt, particularly mortgage and it is evident by the sudden increase in the sale of houses (as the mortgage becomes unaffordable). According to discussions the high costs related to increases in interest rates are also making people afraid of taking out new loans. Although, it is beneficial for non-interest income, banks are more concerned by the risk of an increase in non-performing loans.


Government Inefficiency: About 21 percent of the challenges reported by companies, representing all sectors of the economy, were related to government

Manufacturing44%

Agriculture16%

Wholesale & Retail16% Transport

8%

Construction8%

Education4%

Health4%

Other16%

Tourism22%

Manufacturing22%


Marketing Board9%

Agriculture9%

Health9%

Construction4%


Government4%

Other12%



consider implementing projects in phases with available funds instead of piling up debt which accrues lots of interest. Furthermore, the duplication of procurement regulations between the Ministries and Government’s procurement agency impacts negatively on service delivery. Organisations also see a dire need for commercial courts to cut the long legal processes businesses have to adhere to while competing with the general public for court dates.

Challenge 4: Government Inefficiency

5.2 OPPORTUNITIESDiscussions with companies further delved into factors that they view as potential opportunities for growth. These are factors that can either be in the control of the company, linked to developments/project in other sectors, government or determined by external forces. The survey results show that 35 percent of the opportunities are focused towards expansion of businesses. Companies in the manufacturing sector mainly the textile and food & beverages sub-sectors have realised opportunities for expansion of their businesses. The LUSIP II project is being one of the projects likely to benefit the sugar sector in the medium term. The survey also shows that different sectors of the economy stand to benefit from specific projects that are mostly government driven like the rail link project which is a joint venture between Swaziland and South Africa.

Figure 2: Major Opportunities highlighted by Businesses in Swaziland in 2017

Many of the entities are geared towards product diversification. Some companies in the agricultural sector are already venturing in new products like goat rearing, milk processing, fisheries and working towards prepacking. Tertiary education institutions are expanding into new fields that are in demand and also diversifying their mandate towards self-sustenance through commercializing some of its assets for income generation.


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inefficiencies. Interestingly, the graph shows that 28 percent of these challenges were raised by marketing boards. Discussions highlighted that government needs to adopt a strategy of commencing with a project once it has sourced funding and work within its means. Funds for projects are sometimes diverted and this has a negative bearing on the cash flows of contractors. Government can also consider implementing projects in phases with available funds instead of piling up debt which accrues lots of interest. Furthermore, the duplication of procurement regulations between the Ministries and Government’s procurement agency impacts negatively on service delivery. Organisations also see a dire need for commercial courts to cut the long legal processes businesses have to adhere to while competing with the general public for court dates.

Challenge 4: Government Inefficiency

5.2 OPPORTUNITIES

Discussions with companies further delved into factors that they view as potential opportunities for growth. These are factors that can either be in the control of the company, linked to developments/project in other sectors, government or determined by external forces. The survey results show that 35 percent of the opportunities are focused towards expansion of businesses. Companies in the manufacturing sector mainly the textile and food & beverages sub-sectors have realised opportunities for expansion of their businesses. The Lusip II project is being one of the projects likely to benefit the sugar sector in the medium term. The survey also shows that different sectors of the economy stand to benefit from specific projects that are mostly government driven like the rail link project which is a joint venture between Swaziland and South Africa.

Figure 2: Major Opportunities highlighted by Businesses in Swaziland in 2017

Marketing Board28%

Manufacturing24%

Tourism9%

Government9%

Transport5%



Education5%

Construction5%

Health5%

Other20%


28

Many of the entities are geared towards product diversification. Some companies in the agricultural sector are already venturing in new products like goat rearing, milk processing, fisheries and working towards prepacking. Tertiary education institutions are expanding into new fields that are in demand and also diversifying their mandate towards self-sustenance through commercializing some of its assets for income generation. On the promoting efficiency for the achievement of economies of scale, marketing boards are in favour of bulk buying of fertilizers and other agricultural amenities with the hope of reducing costs for farmers. By farmers being discussed to reduce costs. Other sectors are confident that the entry into the market of a new mobile network will introduce cheaper communication tariffs. The graph below shows the list of opportunities according to their order of importance.

Table 3: Main Opportunities highlighted by Businesses in Swaziland Opportunity Description

Expansion Some Municipalities are moving towards PPP agreements with the private sector for property development in the city. SIDC is trying to build business cases for a few industrial spaces and plans to buy land once special economic zones are made

Diversification The sugar industry is focusing on diversifying into fuel ethanol and renewable energy Co-ops have an opportunity to venture into some businesses to grow their investments.

Efficiency Oil reserve: will hold 90-days fuel stock for the country and likely to benefit all players. Companies, as major stakeholders for this development, have not been engaged/involved by government on how the reserve will be operated upon completion. Raleigh Fitkin Memorial Hospital: the absorption of staff to government payroll is going to improve service delivery and there will be less transfers to government hospitals because the terms of service will be the same.

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

ExpansionDiversification

EfficiencyNew Markets

Project Specific OpportunitiesMarketing

New LegislationCapacity Building

OtherProduct quality

50% asset requirementCompetitiveness

PPPsRegulation

Trade agreement



On promoting efficiency for the achievement of economies of scale, marketing boards are in favour of bulk buying of fertilizers and other agricultural amenities with the hope of reducing costs for farmers. Other sectors are confident that the entry into the market of a new mobile network will introduce cheaper communication tariffs. The graph below shows the list of opportunities according to their order of importance.

Table 3: Main Opportunities highlighted by Businesses in Swaziland

Opportunity Description

Expansion

Some Municipalities are moving towards PPP agreements with the private sector for property development in the city.

SIDC is trying to build business cases for a few industrial spaces and plans to buy land once special economic zones are made

DiversificationThe sugar industry is focusing on diversifying into fuel ethanol and renewable energy

Co-ops have an opportunity to venture into some businesses to grow their investments.

Efficiency

Oil reserve: will hold 90-days fuel stock for the country and likely to benefit all players. Companies, as major stakeholders for this development, have not been engaged/involved by government on how the reserve will be operated upon completion.

Raleigh Fitkin Memorial Hospital: the absorption of staff to government payroll is going to improve service delivery and there will be less transfers to government hospitals because the terms of service will be the same.

New Markets

New markets are constantly explored, Saudi Arabia, the EU standards being adopted will open opportunities. The SADC-EU EPA presents new market opportunities.

The Consumer Credit Bill will provide new opportunities for financial institutions as it will reduce the prevalence of shylocks or informal money lenders

Project Specific Opportunities

Construction related businesses are closely watching developments on several large projects such as PSPF projects, SRA HQ, Woodlands Mall and Township, and proposed Mall in Manzini, which will require lots of building materials and skills sharing.

The rail project whose construction is expected to commence in the Second quarter of 2019, is expected to increase Swaziland Railway’s tonnage from 8 million tons to 20 million tons.

Marketing

The tourism authority is doing well with marketing the country and with its continued efforts the country’s tourism is bound to improve.

Businesses are focused on marketing products to increase sales. The internet avails an opportunity to reach more clients in the domestic and external markets.

New Legislation

The sectional title deed will allow the purchase and ownership of a part of a building and or property. Although it is expected to be slow at first due to the Swazi culture dynamics, this presents massive opportunities for sales and development of such properties.

The application for a multiyear tariff is a new strategy applied by SWSC that started in 2016. The intention is to combat the challenge of late approvals of tariff applications by Government. The Corporation is currently operating on the basis of a 3-year tariff, this will reduce the loss in revenues and allow for the ease of forecasting, especially with regards to budgeting and corporate planning.



6. CONCLUSIONS

Company surveys provides the GDP forecasting team with an understanding of the factors underlying the performance in the public and private sector. Results from this exercise are used as a major input for forecasting macro-economic trends and give feedback to stakeholders regarding business performance. This report contains findings of surveyed companies which reveal that performance was varied across sectors. Analysis suggests that the effects of the drought which negatively impacted economic growth in the previous year (particularly agriculture and agro-processing) has since tapered.

On employment trends, it was noted that most sectors recorded improved figures supported by continuation of construction activities, recovery from drought and plant expansions. The report also covered responses from companies on investments undertaken in 2016 and planned investments for 2017. Results show that in 2016 companies continued investments on a large scale which included the expansion of existing projects, acquisition of replacement equipment and new processing plants and construction of new buildings.

Furthermore, the report highlights some of the challenges faced by industry in different sectors of the economy. Most of the surveyed companies sighted regulatory framework, tax issues, utilities costs and reliability, Government inefficiency and legislation as the top challenges that affect doing business in the country. Moreover, border issues, access to finance, delay in Government payments and slow economic growth were also among the major highlighted challenges.

Companies also highlighted a number of opportunities for growth. Some companies indicated opportunities for expansion of their businesses particularly for the manufacturing sector. In addition, opportunities for product diversification were also identified especially by companies in the agriculture sector. Some companies highlighted that there were ongoing efforts to explore new markets, with finalization of SADC-EU-EPA regional trade agreements to provide impetus while other opportunities would come from implementation of major government linked projects.



Annex 1: Swaziland GDP ProjectionsThe Macro Forecasting Team, using existing GDP figures, national accounts data, qualitative and quantitative information and data collected during 2017 Company Survey, and further employing statistical methods, produced GDP estimates for 2016 and projections for 2017 to 2020 as shown below.

Table 1A: GDP Projections 2015-2020

2015 2016 2017 2018 2019 2020Agriculture and forestry 4.1 -2.7 -0.3 4.5 1.4 2.5

Growing of crops -1.3 -19.4 12.5 15.4 1.6 2.6

Individual tenure farms 1.8 -13.9 3.3 17.8 1.9 3.0

Swazi Nation Land -19.3 -60.4 162.2 0.3 -0.5 -0.5

Animal production 10.7 7.5 -9.3 -1.0 1.0 2.8

Support activities to agriculture -5.1 -25.6 33.1 2.1 0.5 1.3

Forestry -1.3 3.1 4.2 2.6 2.0 1.6

Mining and quarrying -86.3 18.2 9.4 8.6 4.7 4.5

Primary sector -3.5 -2.4 -0.1 4.6 1.4 2.5

Manufacturing 2.5 -1.3 2.2 3.5 2.8 2.6

Electricity supply 11.6 -4.6 4.2 5.0 3.0 3.0

Water and sewerage; waste collection -2.9 -3.1 4.6 2.1 2.2 2.2

Construction 4.4 5.6 -7.2 2.7 0.3 5.9

Secondary sector 2.8 -0.8 1.5 3.5 2.6 2.9

Wholesale and retail trade -7.5 6.7 -0.4 3.4 2.9 3.1

Transportation and storage -4.4 2.9 -0.1 7.9 2.4 3.0

Accommodation and food service activities -0.8 16.5 -5.8 1.2 2.1 5.6

Information and communication 1.9 0.4 3.4 4.2 2.9 2.9

Financial and insurance activities 3.7 4.8 -5.1 0.0 1.0 1.9

Financial service activities, except insurance 1.9 5.9 -6.4 -0.8 0.9 2.2

Insurance and pension funding 2.6 2.0 -1.9 1.8 0.9 0.5

Activities auxiliary to financial services 35.9 0.1 2.0 3.4 3.6 3.6

Real estate activities 14.5 3.1 2.8 -3.3 0.9 0.9

Real estate activities, market 23.4 4.2 3.7 -5.6 0.8 0.7

Owner-occupied dwellings 1.2 1.2 1.2 1.2 1.1 1.1

Professional, scientific and technical activities 5.3 -0.5 1.5 3.9 2.6 3.1

Administrative and support service activities 7.0 2.8 2.7 0.8 1.5 3.0

Public administration and defense; compulsory social security

2.1 1.8 1.5 1.5 1.5 1.5

Education 1.5 2.5 -5.4 1.0 2.0 2.5

Human health and social work activities 4.3 8.6 1.0 0.5 0.5 2.0

Arts, entertainment and recreation -2.9 0.7 0.7 0.7 0.7 0.6

Other service activities 1.6 1.2 1.2 1.2 1.1 1.1

Tertiary sector 1.3 3.7 0.3 1.8 2.0 2.5

Financial services indirectly measured (FISIM) 4.3 5.7 -8.7 -1.7 0.3 2.2

Total value added at basic prices 1.2 1.4 0.8 2.7 2.2 2.6

Taxes on products 6.4 -0.3 4.7 6.0 4.7 3.8

GDP at constant 2011 prices 1.5 1.3 1.0 2.9 2.3 2.7

Source: CSO, CBS-MEPD Macro forecasting team



2016 Projections

2017 Projections

2016 2017 2016 2017Agriculture & Forestry 11.3 -11.2 -2.7 -0.3

Mining & Quarrying -11.2 4.0 18.2 9.4

Primary Sector -10.7 9.3 -2.4 -0.1

Manufacturing 1.0 2.5 -1.3 2.2

Construction -19.4 -9.1 5.6 -7.2

Secondary Sector -2.0 1.8 -0.8 1.5

Wholesale & Retail 4.5 -0.5 6.7 -0.4

Public administration 0.0 2.0 2.8 2.7

Financial & Insurance Services -1.3 -3.2 4.8 -5.1

Tertiary Sector 1.7 0.4 3.7 0.3

FISIM -2.3 -4.5 5.7 -8.7

GDP at Factor Cost -0.8 1.7 1.4 0.8

Taxes on Products 2.4 1.0 -0.3 4.7

GDP Growth Rates -0.6 1.7 1.3 1.0

The GDP projections prepared in 2017 present an improved position when compared to those prepared in the previous year. The contraction in economic activity anticipated in 2016 assumed severe effects of the El Niño induced drought and fiscal challenges. However, actual data reveal that the impact of the drought was much less severe than previously expected, especially on the primary and secondary sectors. On another note, an observed expansionary fiscal policy improved overall performance in 2016 especially in construction activity and the tertiary sector.

In the medium term, growth is projected to be weaker in 2017, before picking up in the outer years. Despite recovery in the primary and secondary sectors from the drought, overall growth will be dampened by negative influences from the ongoing fiscal challenges and weak economic activity in South Africa (where most output is exported). Slower growth is mainly expected in the tertiary sector particularly wholesale and retail and financial services, where output is expected to be negatively affected by the spill over effects of the fiscal challenges.



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Ann

ex 3

: Ch

alle

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rep

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Com

pani

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for

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tabl

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se c

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e po

licy

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rven

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s in

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pip

elin

e.

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leng

e (B

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as f

or Im

prov

emen

t

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ulat

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fram

ewor

k: T

his

chal

leng

e w

as n

oted

in

dif

fere

nt s

ecto

rs a

nd w

ith

vary

ing

dyna

mic

s ra

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g fr

om la

ck o

f re

gula

tion

in s

ome

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ors

to

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orit

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spec

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ter

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re i

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lice

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edit

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it c

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tuto

ry b

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anks

and

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ldin

g so

ciet

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verl

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can

be o

bser

ved

from

thi

s ar

rang

emen

t.

In M

arch

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he F

inan

cial

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tor

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t Im

plem

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an (

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n an

d di

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for

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lopm

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gal

and

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of d

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truc

tion

Sec

tor:

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sta

tes

that

all

cont

ract

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to

pay

an a

nnua

l re

gist

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on f

ee.

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act

also

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ws

the

Coun

cil

to im

pose

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vies

on

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rson

(s)

enga

ged

in

cons

truc

tion

in

dust

ry.

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ober

20

16,

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n co

llect

ing

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tion

pro

ject

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evy

(as

stip

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ed

by t

he l

aw)

for

all

regi

ster

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roje

cts.

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lev

y is

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rged

at

0.5%

fo

r pr

ojec

ts w

orth

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ve E

15 m

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n an

d 0.

8% f

or p

roje

cts

valu

ed

betw

een

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10 m

illio

n.

The

act

also

sti

pula

tes

that

a f

orei

gn c

ompa

ny c

anno

t be

con

trac

ted

unle

ss it

is w

orki

ng in

par

tner

ship

or

join

tly

wit

h a

dom

esti

c fir

m.

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coun

cil

has

host

ed t

wo

big

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bas

show

ing

the

effe

cts

of l

ate

paym

ents

by

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over

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t;

trai

ning

s;

inno

vati

on;

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ing;

un

fair

co

mpe

titi

on;

and

corr

upti

on.

Real

est

ate:

No

regu

lati

on c

urre

ntly

exi

sts

Fina

ncia

l Se

ctor

: Th

ere

is n

eed

to

iron

out

the

ove

rlap

s be

twee

n th

e CB

S an

d FS

RA.

Also

the

hig

h co

st o

f re

gula

tion

has

to

be a

ddre

ssed

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SDP

can

be u

sed

as a

fram

ewor

k to

ad

dres

s th

e re

gula

tory

fra

mew

ork

issu

es d

urin

g it

s im

plem

enta

tion

.

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truc

tion

: Is

sue

of

levy

co

sts

has

to

be

addr

esse

d in

te

rms

of

the

cost

s se

t by

th

e Co

unci

l as

pe

r th

e re

gula

tion

. Th

e Co

unci

l al

so h

as t

o m

axim

ise

the

bene

fits

to

the

indu

stry

pl

ayer

s in

clud

ing

diss

emin

atio

n of

inf

orm

atio

n th

at

is d

eem

ed u

sefu

l by

the

ind

ustr

y pl

ayer

s.

Real

Est

ate:

Nee

d to

reg

ulat

e th

e se

ctor

par

ticu

larl

y pr

oper

ty s

ales

.



Chal

leng

e (B

ackg

roun

d)Cu

rren

t St

atus

Are

as f

or Im

prov

emen

t

Mar

keti

ng

Boar

ds:

Mai

n co

mpl

aint

w

as

the

slow

ad

just

men

t pr

oces

s on

reg

ulat

ed p

rice

s.M

arke

ting

Boa

rds:

Inc

reas

es i

n re

gula

ted

pric

es d

o te

nd t

o be

del

ayed

.

Tax

issu

es:

Man

y co

mpa

nies

hig

hlig

hted

issu

es s

uch

as l

ate

paym

ent

of r

efun

ds w

hich

bec

ome

a bu

rden

to

bus

ines

s op

erat

ions

. O

ther

com

plai

nts

cent

red

on

fear

s ab

out

the

poss

ible

ret

urn

of t

he c

apit

al g

ains

ta

x; s

ome

impo

rted

dru

gs b

eing

tax

exe

mpt

whi

ch

disc

rim

inat

es a

gain

st lo

cal s

uppl

ies;

SRA

’s a

ggre

ssiv

e ap

proa

ch i

n de

alin

g w

ith

com

pani

es n

ot b

eing

goo

d fo

r th

e ec

onom

y.

Tax

refu

nds:

Acc

ordi

ng t

o th

e SR

A, T

ax r

efun

ds a

re

norm

ally

don

e w

ithi

n th

e 90

day

s as

pro

vide

d fo

r in

th

e le

gisl

atio

n. H

owev

er,

late

pay

men

t of

ref

unds

ca

n on

ly

occu

r w

hen

ther

e ar

e ce

rtai

n m

issi

ng

docu

men

ts f

rom

the

ent

ity’

s si

de.

Capi

tal

gain

s ta

x: t

his

bill

is s

till

wit

h pa

rlia

men

t,

how

ever

, th

ere

is n

o ne

ed f

or p

anic

as

the

legi

slat

ion

once

it

is p

asse

d w

ill n

ot b

e as

str

ict

as t

he o

ne

appl

ied

in S

outh

Afr

ica.

Exem

ptio

n on

M

edic

atio

n:

The

curr

ent

tax

legi

slat

ion

prov

ides

for

zer

o ra

ting

of

pres

crib

ed

med

icat

ion

impl

ying

tha

t an

y m

edic

atio

n pr

escr

ibed

by

a r

egis

tere

d an

d qu

alifi

ed m

edic

al p

ract

itio

ner

will

not

att

ract

tax

SRA

Aggr

essi

ve

appr

oach

: W

ith

rega

rds

to

aggr

essi

ve a

ppro

ach

the

tax

auth

orit

y sh

ould

ens

ure

that

ser

vice

sta

ndar

ds t

hat

gove

rn t

he c

ondu

ct o

f al

l st

aff

tow

ards

ens

urin

g qu

alit

y se

rvic

e de

liver

y by

the

Aut

hori

ty a

re e

ffec

tive

ly a

dher

ed t

o by

all

empl

oyee

s.

Hig

h Co

sts:

Ab

out

a qu

arte

r of

al

l co

mpa

nies

co

mpl

aine

d ab

out

high

cos

t of

doi

ng b

usin

ess.

Thi

s in

clud

es r

isin

g pr

ices

of

inpu

ts,

but

also

oth

er f

ees

and

levi

es t

hat

have

bee

n in

trod

uced

. So

me

also

co

mpl

aine

d ab

out

the

high

cos

ts o

f co

mpl

ianc

e w

ith

the

regu

lato

rs.

Oth

ers

also

rep

orte

d hi

gh c

osts

of

insu

ranc

e an

d lo

ans

(due

to

high

inte

rest

rat

es)

Hig

h co

sts o

f inp

uts e

spec

ially

from

the

prim

ary

sect

or

owe

a lo

t to

the

dev

asta

ting

dro

ught

tha

t th

e co

untr

y an

d th

e w

ider

reg

ion

wer

e fa

ced

wit

h. H

owev

er,

com

pani

es h

ave

also

com

plai

ned

abou

t is

sues

wit

h le

gisl

atio

n co

ncer

ning

land

pro

cure

men

t w

hich

hav

e hi

nder

ed

them

fro

m e

nter

ing

into

pro

duct

ion

of

crop

s lik

e m

aize

. Co

nstr

ucti

on c

ompa

nies

esp

ecia

lly

have

rep

orte

d th

at t

he h

igh

cost

s of

com

plia

nce

in

term

s of

lev

ies

is s

quee

zing

the

ir m

argi

ns a

nd t

hus

thei

r ab

ility

to

expa

nd.

Oth

er c

ompl

aint

s ab

out

high

in

sura

nce

cost

s m

ainl

y en

com

pass

non

-inc

lusi

on o

f ce

rtai

n ca

tego

ries

whi

ch r

esul

ts in

hig

her

prem

ium

s.

Hig

h in

tere

st r

ates

hav

e m

eant

a h

ighe

r bu

rden

of

repa

ymen

t or

sim

ply

defe

rrin

g of

pro

ject

s

Land

: Th

e G

over

nmen

t ca

n en

gage

co

mpa

nies

, es

peci

ally

tho

se i

nter

este

d in

cro

p pr

oduc

tion

lik

e m

aize

whi

ch i

s th

e m

ain

inpu

t, t

o fa

cilit

ate

the

proc

urem

ent

of l

and.

Com

mer

cial

pro

duct

ion

can

also

go

a lo

ng w

ay in

the

ens

urin

g fo

od s

ecur

ity

Regu

lati

on o

f Le

vies

: In

as

muc

h as

the

reg

ulat

or

may

be

rece

ntly

est

ablis

hed

and

bene

fits

may

yet

to

com

e th

roug

h, i

t ca

n be

ens

ured

tha

t th

e le

vies

ch

arge

d ar

e no

t hi

nder

ing

the

grow

th o

f bu

sine

ss

sinc

e th

is m

ay b

e co

unte

r-pr

oduc

tive

Incl

usiv

e In

sura

nce:

As

busi

ness

m

odel

s ev

olve

, in

stru

men

ts l

ike

insu

ranc

e ne

ed t

o ta

ke t

his

into

co

nsid

erat

ion

and

prov

ide

incl

usiv

e so

luti

ons.

Hed

ging

Ris

ks:

Hed

ging

of

risk

s by

com

pani

es n

eeds

to

be

enco

urag

ed t

o av

oid

incu

rrin

g hi

gher

cos

ts



Chal

leng

e (B

ackg

roun

d)Cu

rren

t St

atus

Are

as f

or Im

prov

emen

t

Uti

lity

Cos

t an

d R

elia

bili

ty:

The

cost

of

utili

ties

(e

lect

rici

ty a

nd w

ater

) is

hig

h an

d th

is i

ncre

ases

op

erat

ion

cost

s fo

r co

mpa

nies

. El

ectr

icit

y is

not

re

liabl

e, w

ith

freq

uent

pow

er o

utag

es/s

urge

s w

hich

da

mag

e eq

uipm

ent

and

mac

hine

ry,

part

icul

arly

in

the

man

ufac

turi

ng i

ndus

try.

Dom

esti

c po

wer

sup

ply

is s

usce

ptib

le t

o dr

ough

t si

nce

it is

mai

nly

hydr

o an

d im

port

s ar

e ge

ttin

g m

ore

cost

ly a

s ta

riff

s in

crea

se in

So

uth

Afri

ca.

Tari

ffs

are

set

by t

he r

egul

ator

(SE

RA f

or e

lect

rici

ty)

or p

rovi

der

(SW

SC f

or w

ater

) in

con

sult

atio

n w

ith

all

rele

vant

st

akeh

olde

rs,

and

appr

oved

by

th

e G

over

nmen

t fo

r im

plem

enta

tion

.

Tari

ff S

truc

ture

: Th

e st

udy

reve

als

that

the

cur

rent

pr

icin

g st

ruct

ure

does

not

pro

mot

e ef

ficie

nt u

se o

f el

ectr

icit

y. C

ross

sub

sidi

sati

on o

f do

mes

tic

and

larg

e ir

riga

tion

cus

tom

ers

by i

ndus

tria

l an

d co

mm

erci

al

cust

omer

s w

ho p

ay a

hig

her

tari

ff a

dver

sely

aff

ect

thei

r co

mpe

titi

vene

ss.

The

stud

y re

com

men

ds t

hat

tari

ff s

truc

ture

be

base

d on

blo

cks

of c

onsu

mpt

ion

and

affo

rdab

ility

, an

d th

at i

ndus

tria

l/co

mm

erci

al

cust

omer

s be

pro

tect

ed b

y pr

ovid

ing

elec

tric

ity

at

affo

rdab

le r

ates

.

New

pro

ject

s: S

ever

al IP

Ps a

re g

ener

atin

g el

ectr

icit

y fo

r in

tern

al c

onsu

mpt

ion

and

som

e su

pply

the

exc

ess

to t

he n

atio

nal

grid

. Th

ese

incl

ude

USL

, RS

SC a

nd

KaLa

nga

Sola

r PV

. Se

vera

l w

ater

sup

ply/

trea

tmen

t pr

ojec

ts h

ave

also

bee

n un

dert

aken

in

rece

nt y

ears

to

impr

ove

wat

er s

uppl

y.

Impl

emen

tati

on o

f N

ew T

arif

f St

ruct

ure:

Tim

ely

appr

oval

and

im

plem

enta

tion

of

reco

mm

enda

tion

s of

the

tar

iff

stud

y w

ould

hel

p ea

se t

he b

urde

n on

in

dust

rial

cus

tom

ers.

Pow

er P

roje

cts:

To

redu

ce r

elia

bilit

y on

im

port

s,

the

coun

try

need

s to

exp

lore

mor

e po

wer

gen

erat

ion

proj

ects

. Se

vera

l ar

e al

read

y in

the

pip

elin

e w

hile

pr

opos

als

are

bein

g m

ade

for

othe

rs i

n th

e fo

rm

of P

PPs.

The

se i

nclu

de L

avum

isa

Sola

r PV

, Lo

wer

M

agud

uza

Hyd

ro,

Ngw

empi

si

Hyd

ro

and

Lubh

uku

Ther

mal

. Th

ere

is

inte

rest

in

th

e ge

nera

tion

of

bi

omas

s po

wer

by

maj

or c

ompa

nies

suc

h as

Mon

tign

y fo

r bo

th i

nter

nal

cons

umpt

ion

and

supp

lyin

g to

the

gr

id.

Wat

er

Proj

ects

: M

ore

proj

ects

ar

e ne

eded

to

ex

pand

the

sup

ply

of c

lean

wat

er.

Inve

stm

ent

is

requ

ired

in

wat

er h

arve

stin

g pr

ojec

ts t

o co

unte

r ef

fect

s of

dro

ught

and

min

imiz

atio

n of

wat

er l

osse

s in

SW

SC s

yste

ms.

Poor

Tel

ecom

mun

icat

ions

Infr

astr

uctu

re:

Inte

rnet

con

nect

ion

is s

low

and

unr

elia

ble

due

to

limit

ed b

andw

idth

siz

e w

hich

dis

rupt

com

pany

op

erat

ions

. M

oreo

ver,

inte

rnet

is e

xpen

sive

in t

he

coun

try

and

this

incr

ease

s co

mpa

ny c

osts

.

Reg

ulat

ion:

The

reg

ulat

or,

SCCO

M,

was

est

ablis

hed

to a

dvan

ce t

he t

elec

om i

ndus

try

thro

ugh

cons

umer

pr

otec

tion

, ad

dres

sing

co

mpe

titi

on

issu

es,

and

regu

lati

ng t

he o

pera

ting

ent

erpr

ises

.La

unch

ing

of a

thir

d pl

ayer

in th

e te

leco

mm

unic

atio

ns

indu

stry

, an

d th

e ap

prov

al o

f te

chno

logi

cally

neu

tral

lic

ence

s fo

r th

e tw

o m

ajor

exi

stin

g pl

ayer

s al

low

ing

them

to

oper

ate

in b

oth

the

fixed

and

mob

ile s

pace

is

expe

cted

to

brin

g m

ore

com

peti

tion

, the

reby

dri

ving

do

wn

pric

es a

nd im

prov

ing

effic

ienc

y. S

imila

rly,

the

in

crea

se in

the

num

ber

of In

tern

et S

ervi

ce P

rovi

ders

fr

om 4

in

past

yea

rs t

o 12

in

2016

/17,

whi

ch w

ill

incr

ease

com

peti

tion

, ac

cess

ibili

ty o

f se

rvic

es a

nd

effic

ienc

y in

the

indu

stry

.

Unb

undl

ing

of S

PTC:

The

pro

cess

of

unbu

ndlin

g of

SP

TC n

eeds

to

be e

xped

ited

by

SCCO

M a

nd r

elev

ant

stak

ehol

ders

by

reso

lvin

g im

pedi

ng is

sues

.Le

gisl

atio

n:

Gov

ernm

ent

need

s to

pr

iori

tise

th

e en

actm

ent o

f leg

isla

tion

in th

e IC

T in

dust

ry fo

r SCC

OM

to

und

erta

ke it

s m

anda

te f

ully

and

eff

ecti

vely

.



Chal

leng

e (B

ackg

roun

d)Cu

rren

t St

atus

Are

as f

or Im

prov

emen

tTh

e un

bund

ling

of S

PTC

into

thr

ee s

epar

ate

and

inde

pend

ent

enti

ties

, on

ce c

ompl

ete,

will

libe

raliz

e th

e in

dust

ry a

s th

e te

leco

mm

unic

atio

ns e

ntit

y w

ill

com

pete

wit

h ot

her

play

ers

in t

he fi

xed

and

mob

ile

spac

e w

itho

ut o

wni

ng t

he in

fras

truc

ture

.

Pric

ing:

Pri

cing

in th

e in

dust

ry is

regu

late

d by

SCC

OM

to

av

oid

unco

mpe

titi

ve

beha

viou

r,

by

regu

lati

ng

the

who

lesa

le

pric

e at

w

hich

th

e ow

ner

of

the

infr

astr

uctu

re (

whi

ch is

als

o a

com

peti

tor)

is s

ellin

g to

the

oth

er p

laye

rs.

Thi

s sh

ould

tra

nsla

te t

o an

ov

eral

l red

ucti

on in

the

pric

e of

tele

com

mun

icat

ions

.SC

COM

ha

s co

nduc

ted

a be

nchm

ark

stud

y to

de

term

ine

tari

ffs

in

the

indu

stry

an

d a

new

pr

icin

g st

ruct

ure

was

exp

ecte

d by

Apr

il 20

17 a

fter

re

sult

s sh

owed

th

at

the

coun

try’

s pr

icin

g is

on

th

e hi

gher

sid

e w

hen

com

pare

d to

oth

er c

ount

ries

in

the

reg

ion.

How

ever

, to

ach

ieve

som

e of

the

se

reco

mm

enda

tion

s, m

ore

inve

stm

ents

are

nee

ded

to

impr

ove

exis

ting

infr

astr

uctu

re.

Gov

ernm

ent

Inef

fici

ency

: A

num

ber

of c

ompa

nies

ac

ross

all

sect

ors

of t

he e

cono

my

repo

rted

tha

t th

ey

face

d ch

alle

nges

re

late

d to

go

vern

men

t in

effic

ienc

ies.

D

iscu

ssio

ns

high

light

ed

that

go

vern

men

t nee

ds to

ado

pt a

stra

tegy

of c

omm

enci

ng

wit

h a

proj

ect

once

it h

as s

ourc

ed f

undi

ng a

nd w

ork

wit

hin

its

mea

ns.

Fund

s fo

r pr

ojec

ts a

re s

omet

imes

di

vert

ed a

nd t

his

has

a ne

gati

ve b

eari

ng o

n th

e ca

sh

flow

s of

con

trac

tors

. G

over

nmen

t ca

n al

so c

onsi

der

impl

emen

ting

pr

ojec

ts

in

phas

es

wit

h av

aila

ble

fund

s in

stea

d of

pi

ling

up

debt

w

hich

ac

crue

s lo

ts o

f in

tere

st.

Furt

herm

ore,

the

dup

licat

ion

of

proc

urem

ent

regu

lati

ons

betw

een

the

Min

istr

ies

and

Gov

ernm

ent’

s pr

ocur

emen

t ag

ency

im

pact

s ne

gati

vely

on

serv

ice

deliv

ery.

Publ

ic

Proc

urem

ent:

Th

e Sw

azila

nd

Publ

ic

Proc

urem

ent

Regu

lato

ry

Agen

cy

(SPP

RA)

was

es

tabl

ishe

d to

fo

ster

di

vers

e pr

ivat

e se

ctor

pa

rtic

ipat

ion,

pro

mot

e co

mpe

titi

on,

build

eco

nom

ic

capa

city

, en

sure

eff

ecti

ve u

se o

f pu

blic

res

ourc

es

in p

ublic

pro

cure

men

t an

d pr

omot

e re

gion

al a

nd

inte

rnat

iona

l tr

ade

thro

ugh

impl

emen

tati

on o

f th

e Pr

ocur

emen

t Ac

t of

201

1.

How

ever

, th

ere

have

be

en c

halle

nges

wit

h th

e im

plem

enta

tion

of

the

Proc

urem

ent

Regu

lati

ons

of 2

008

curr

entl

y in

use

, he

nce

thei

r re

view

is c

urre

ntly

und

erw

ay.

Publ

ic F

inan

ce M

anag

emen

t: T

he G

over

nmen

t is

cu

rren

tly

enga

ged

in P

ublic

Fin

ance

Man

agem

ent

(PFM

) re

form

s w

ith

the

over

all

aim

of

achi

evin

g sh

ort

term

fisc

al s

usta

inab

ility

lea

ding

to

long

ter

m

sust

aina

ble

econ

omic

gro

wth

. Ag

ains

t th

e ba

ckdr

op

of it

s fis

cal c

halle

nges

, G

over

nmen

t is

in t

he p

roce

ss

of s

tren

gthe

ning

bud

get

plan

ning

, an

d fo

rmul

atio

n w

hich

will

am

ong

othe

r ou

tput

s le

ad t

o ef

fect

ive

budg

et a

lloca

tion

and

exe

cuti

on.

Fina

lisat

ion

of t

he r

evie

w w

ill e

nsur

e th

at t

here

is

alig

nmen

t of

the

Reg

ulat

ions

wit

h th

e Pr

ocur

emen

t Ac

t N

o. 7

of

2011

an

d he

nce

impr

ove

the

best

pr

acti

ces

and

proc

edur

es i

n pu

blic

pro

cure

men

t.

Furt

herm

ore,

th

e Sw

azila

nd

Publ

ic

Proc

urem

ent

Regu

lato

ry A

genc

y (S

PPRA

), i

s al

so i

n th

e pr

oces

s of

bui

ldin

g st

akeh

olde

r ca

paci

ty o

n ef

ficie

nt a

nd

effe

ctiv

e im

plem

enta

tion

of

the

Proc

urem

ent

Act

whi

ch w

ill e

limin

ate

som

e of

the

maj

or o

bsta

cles

fa

ced

by G

over

nmen

t an

d in

dust

ry in

pro

cure

men

t.

Ther

e is

nee

d to

fast

-tra

ck th

e im

plem

enta

tion

of t

he

PFM

Act

to

impr

ove

on t

imel

y an

d ef

ficie

nt a

lloca

tion

of

lim

ited

re

sour

ces.

Fu

rthe

rmor

e,

stre

ngth

enin

g of

bud

get

rela

ted

syst

ems

will

ens

ure

Gov

ernm

ent

deri

ves

valu

e fo

r m

oney

in

impl

emen

tati

on o

f it

s ac

tivi

ties

and

to

achi

eve

targ

eted

out

com

es.



Chal

leng

e (B

ackg

roun

d)Cu

rren

t St

atus

Are

as f

or Im

prov

emen

t

Legi

slat

ion:

Co

mpa

nies

co

mpl

aine

d of

di

ffer

ent

legi

slat

ive

issu

e. F

or in

stan

ce, c

ompa

nies

com

plai

ned

of n

eed

in c

hang

e to

leg

isla

tion

whi

ch w

as h

urti

ng

busi

ness

lik

e la

bour

is

sues

in

th

e co

nstr

ucti

on

indu

stry

, bi

osaf

ety

act

that

has

bee

n a

barr

ier

to t

he

use

of (

gene

tica

lly m

odifi

ed o

rgan

ism

s) G

MO

cot

ton

in t

he c

ount

ry.

The

Rati

ng A

ct o

f 19

67 i

s an

othe

r le

gisl

ativ

e bo

ttle

nec

k m

enti

oned

by

com

pani

es i

n th

e 20

17 a

nnua

l co

mpa

ny v

isit

s. S

ome

com

pani

es

com

plai

ned

abou

t de

lays

in

pa

ssin

g of

th

e ne

w

legi

slat

ion

like

the

sect

iona

l ti

tle

deed

bill

whi

ch i

s st

ill s

itti

ng w

ith

Parl

iam

ent.

Oth

ers

still

com

plai

ned

abou

t th

e la

ck o

f fle

xibi

lity

whe

re d

ata-

colle

ctio

n on

im

port

ant

aspe

cts

is

hind

ered

be

caus

e th

eir

role

is

not

clea

rly

defin

ed i

n th

e le

gisl

atio

n. W

ithi

n th

e fin

anci

al s

ecto

r, n

on-b

ank

finan

cial

com

pani

es

rais

ed a

con

cern

on

the

inab

ility

to

sour

ce l

icen

ces

as w

hole

sale

and

ret

ail

stor

es f

or t

he p

rovi

sion

of

cash

loan

s an

d in

sura

nce.

Rat

ing

Act

Bill

: Th

e am

ende

d Ra

ting

Act

Bill

was

su

bmit

ted

to P

arlia

men

t, h

owev

er i

t st

ill a

wai

ts

appr

oval

.

Fina

ncia

l Se

rvic

es:

The

idea

tha

t co

mpa

nies

in t

he

who

lesa

le a

nd r

etai

l sp

ace

are

unab

le t

o ve

ntur

e in

to c

ash

loan

s an

d in

sura

nce

prov

isio

n is

inco

rrec

t.

The

regu

lato

r co

nsid

ers

the

cons

umer

’s i

nter

est.

Th

e re

gula

tor

will

iss

ue l

icen

ses

on a

cas

e by

cas

e ba

sis.

If

the

regu

lato

r de

ems

a co

mpa

ny c

apab

le o

f pr

ovid

ing

cred

it e

xten

sion

to

clie

nts

and

insu

ranc

e pa

ckag

es a

s is

the

cas

e in

SA,

the

reg

ulat

or c

an g

rant

th

at li

cens

e to

tha

t W

hole

sale

and

Ret

ail c

ompa

ny.

GM

O

Cott

on:

In

2012

, th

e co

untr

y pa

ssed

th

e Bi

osaf

ety

Act

of 2

012

whi

ch h

as t

he s

ole

obje

ctiv

e to

pro

vide

for

the

saf

e ha

ndlin

g, t

rans

fer

and

use

of g

enet

ical

ly m

odifi

ed o

rgan

ism

s an

d ot

her

mat

ters

in

cide

ntal

th

eret

o.

Loca

l fa

rmer

s (e

spec

ially

co

tton

far

mer

s) h

ave

been

eag

er t

o ex

plor

e th

e G

M t

echn

olog

y an

d th

ey a

ppro

ache

d th

e Sw

azila

nd

Envi

ronm

ent

Auth

orit

y (t

hrou

gh

the

Swaz

iland

Co

tton

Boa

rd) a

s w

ell a

s po

tent

ial G

M s

eed

supp

liers

. So

far

the

SEA

has

not

rec

eive

d an

y ap

plic

atio

n fo

r ot

her

crop

s (M

aize

& S

oya

Bean

s).

Rat

ing

Act

Bill

: O

ther

am

endm

ent

to

the

Act

still

rem

ain

for

inst

ance

, ta

xes

by p

ensi

oner

s an

d or

phan

s, i

ssue

s ar

ound

max

imis

ing

wel

lbei

ng o

f th

e lo

wer

inc

ome

earn

ers

wit

hout

bur

deni

ng t

hem

too

m

uch,

and

issu

es a

roun

d pr

oper

ty t

ax.

Fina

ncia

l Se

rvic

es:

FSRA

ha

s a

web

site

w

here

th

eir

legi

slat

ive

fram

ewor

k in

clud

ing

FSRA

Ac

t,

The

Com

men

cem

ent

and

Cons

umer

Cre

dit

Act,

The

Se

curi

ties

Act

, Ins

uran

ce R

egul

atio

n Ac

t am

ong

man

y ot

her

acts

tha

t go

vern

the

ope

rati

ons

of t

he F

SRA

in t

he c

ount

ry i

s up

load

ed.

At t

he s

ame

tim

e, t

he

com

pany

can

do

mor

e se

nsit

isat

ion

of s

take

hold

er

thro

ugh

the

med

ia, m

akin

g st

akeh

olde

rs m

ore

awar

e of

whe

re t

hey

can

acqu

aint

the

mse

lves

wit

h th

e le

gisl

atio

n th

at g

over

ns n

on-b

ank

finan

cial

ser

vice

s pr

ovis

ion.

GM

O:

Gov

ernm

ent

has

ease

d re

stri

ctio

ns

whe

n it

com

es t

o G

MO

cot

ton,

the

se w

ith

tim

e co

uld

be

exte

nded

to

G

MO

m

aize

. Th

e Bi

osaf

ety

Act

amen

dmen

ts o

f 20

17,

still

sit

s w

ith

the

Parl

iam

ent

and

can

be e

xped

ited

.

Bord

er

Issu

es:

Thes

e is

sues

m

ainl

y in

clud

e th

e no

n-av

aila

bilit

y of

a 2

4-ho

ur b

orde

r es

peci

ally

for

O

shoe

k, a

nd d

elay

s fo

r cl

eari

ng a

t th

e bo

rder

24-h

our

Bord

ers:

The

iss

ue o

f ex

tend

ing

bord

er

tim

es t

o 24

hou

rs r

emai

ns a

n in

ter-

gove

rnm

enta

l is

sue

betw

een

Swaz

iland

and

Sou

th A

fric

a ou

tsid

e th

e co

ntro

l of

SRA

Net

wor

k in

terr

upti

ons:

SRA

has

a d

edic

ated

line

yet

cl

eari

ng a

gent

s ar

e us

ing

thei

r ow

n lin

es.

ASYC

UD

A w

hich

has

a p

re-c

lear

ing

mod

ule

allo

ws

trad

ers

to

clea

r th

eir

good

s be

fore

rea

chin

g th

e bo

rder

and

th

us r

educ

ing

dela

ys

The

coun

try

need

s to

int

ensi

fy e

ffor

ts t

o en

gage

w

ith

the

Sout

h Af

rica

n G

over

nmen

t w

ith

a vi

ew t

o ha

ve t

he O

shoe

k Bo

rder

bei

ng a

24-

hour

bor

der

SRA

shou

ld e

ngag

e cl

eari

ng a

gent

s so

tha

t th

eir

syst

ems

are

alig

ned

to t

he o

ne u

sed

by S

RA.

This

w

ould

en

sure

co

nsis

tenc

y an

d re

liabi

lity

and

to

redu

ce th

e do

wnt

imes

that

are

cur

rent

ly e

xper

ienc

ed

on t

he c

lear

ing

agen

ts’

side

.



Chal

leng

e (B

ackg

roun

d)Cu

rren

t St

atus

Are

as f

or Im

prov

emen

t

Acce

ss t

o Fi

nanc

e: C

ompa

nies

in

sect

ors

like

the

finan

cial

ser

vice

, co

nstr

ucti

on,

tour

ism

, an

d re

al

esta

te c

ompl

ain

abou

t th

e la

ck o

f fin

anci

al s

uppo

rt

requ

ired

to

en

sure

th

at

com

pani

es

mai

ntai

n a

com

peti

tive

edg

e. C

ompa

nies

als

o co

mpl

aine

d th

at

mos

t of

the

ban

ks i

n th

e co

untr

y ar

e So

uth

Afri

can

Bank

s,

mak

ing

the

proc

ess

of

gett

ing

finan

cing

ap

prov

als

long

sin

ce a

fter

a c

erta

in l

oan

thre

shol

d ap

prov

al h

as t

o be

sou

ght

in S

A.

Sove

reig

n ra

ting

for

Sw

azil

and:

In

Febr

uary

201

7 th

e Sw

azila

nd G

over

nmen

t en

gage

d M

oody

’s t

o ca

rry

out

disc

ussi

ons

and

gath

er in

form

atio

n fo

r as

sign

ing

rati

ng t

o Sw

azila

nd f

or t

he fi

rst

tim

e.

Loan

Gua

rant

ee S

chem

es:

Gov

ernm

ent

laun

ched

a

Nat

iona

l Co

-ope

rati

ve

Dev

elop

men

t Po

licy

Impl

emen

tati

on

Plan

in

Au

gust

20

17.

This

is

ge

ared

tow

ards

cre

atio

n of

em

ploy

men

t, r

esou

rce

mob

iliza

tion

, fin

anci

al

inte

rmed

iati

on,

wea

lth

crea

tion

an

d br

ingi

ng

abou

t so

cial

co

hesi

on.

A Lo

an G

uara

ntee

Fun

d is

als

o ho

used

at

the

CBS

to

enco

urag

e ba

nks

to i

ncre

ase

lend

ing

to S

MEs

by

redu

cing

the

fina

ncia

l ris

ks b

y th

ese

inst

itut

ions

.

Fore

ign

Bank

s: t

his

is n

ot u

niqu

e to

Sw

azila

nd a

s al

l fo

reig

n ow

ned

bank

s ar

e co

ntro

lled

at a

gro

up le

vel

whe

n it

com

es t

o ce

rtai

n lo

ans

thre

shol

d.

Ther

e sh

ould

be

di

ssem

inat

ion

of

info

rmat

ion

to

guid

e SM

Es

in

prep

arin

g vi

able

an

d ba

nkab

le

prop

osal

s to

acc

ess

the

Loan

Gua

rant

ee F

und

sinc

e ba

nks

have

re

port

ed

that

m

ost

appl

icat

ions

do

no

t m

eet

the

min

imum

sta

ndar

d re

quir

emen

ts f

or

finan

cing

Slow

ec

onom

ic

grow

th:

Of

the

tota

l nu

mbe

r of

co

mpa

nies

su

rvey

ed

13

perc

ent

flagg

ed

slow

ec

onom

ic g

row

th a

s a

maj

or c

onst

rain

t to

the

ir

busi

ness

gr

owth

. Th

ese

wer

e pr

edom

inan

tly

com

pani

es i

n th

e te

rtia

ry s

ecto

r, n

amel

y fin

anci

al

serv

ices

, w

hole

sale

an

d re

tail,

to

uris

m

and

tran

spor

t, b

ut a

lso

man

ufac

ture

s of

fina

l co

nsum

er

good

s. C

onst

rain

ts t

o bu

sine

ss g

row

th o

ppor

tuni

ties

w

ere

low

FD

I in

flow

, hi

gh u

nem

ploy

men

t an

d lo

w

hous

ehol

d di

spos

able

inco

me.

Econ

omic

Rec

over

y St

rate

gy (

ERS)

: ER

S, a

dopt

ed

in 2

011,

out

lined

unc

ondu

cive

bus

ines

s env

iron

men

t,

low

FD

I, s

low

pac

e of

im

plem

enta

tion

of

econ

omic

an

d le

gisl

ativ

e re

form

s,

inef

ficie

nt

publ

ic

expe

ndit

ure,

low

com

mer

cial

isat

ion

of a

gric

ultu

re,

undi

vers

ified

ex

port

s ba

sket

an

d m

arke

ts,

high

pr

eval

ence

of

HIV

/AID

S, v

ulne

rabi

lity

to e

xter

nal

shoc

ks (

e.g.

SAC

U)

as m

ajor

con

trib

utor

s to

slo

w

econ

omic

gro

wth

. In

im

plem

enti

ng

the

ERS,

an

ex

pans

iona

ry

fisca

l po

licy

was

ado

pted

to st

imul

ate

grow

th, w

ith

a ta

rget

of

at

leas

t 5

perc

ent

annu

al g

row

th b

y 20

15.

CSO

’s

esti

mat

es i

ndic

ate

that

ave

rage

ann

ual

grow

th i

n 20

12-2

015

was

on

aver

age

4.3

perc

ent,

thou

gh g

row

th

has

been

une

ven

thro

ugho

ut t

he p

erio

d. E

cono

mic

ac

tivi

ty i

n 20

16 w

as n

egat

ivel

y af

fect

ed b

y se

vere

dr

ough

t.

Mor

eove

r,

Gov

ernm

ent’

s ex

pans

iona

ry

polic

y, h

as r

ecen

tly

been

con

stra

ined

by

the

decl

ine

in S

ACU

rev

enue

s in

201

6/17

. Th

ese

deve

lopm

ents

ha

ve a

lso

led

to a

dec

line

in i

nter

nati

onal

res

erve

s an

d a

sign

ifica

nt a

ccum

ulat

ion

of p

ublic

deb

t.

Inve

stor

Con

fide

nce

to a

ttra

ct F

DI:

In

addi

tion

to

tax

inc

enti

ves

and

inve

stm

ent

in i

nfra

stru

ctur

e,

ther

e is

a n

eed

for

colla

bora

tive

eff

ort

betw

een

the

priv

ate

and

publ

ic s

ecto

r to

war

ds e

limin

atin

g le

gisl

ativ

e, r

egul

ativ

e an

d pr

oced

ural

bot

tlen

ecks

. Th

ese

bott

lene

cks

mak

e Sw

azila

nd’s

bu

sine

ss

envi

ronm

ent

unco

nduc

ive,

and

les

s at

trac

tive

for

FD

I co

mpa

red

to o

ther

cou

ntri

es i

n th

e re

gion

i.e

. SA

CU a

nd S

ADC.

Thi

s lo

ss o

f po

tent

ial

FDI

to o

ther

SA

CU a

nd S

ADC

coun

trie

s al

so m

eans

tha

t ef

fort

s to

pro

mot

e in

dust

rial

isat

ion

and

expa

nsio

n of

the

ex

port

bas

ket

are

dela

yed/

stal

led.



Chal

leng

e (B

ackg

roun

d)Cu

rren

t St

atus

Are

as f

or Im

prov

emen

t

Des

pite

tax

inc

enti

ves

for

fore

ign

priv

ate

inve

stor

s an

d th

e cr

edit

gua

rant

ee s

chem

e fo

r ex

port

ers,

FD

I in

flow

re

mai

ns

low

an

d Sw

azila

nd’s

m

erch

andi

se

expo

rts

are

still

dom

inat

ed b

y ex

port

s of

bev

erag

es,

suga

r an

d te

xtile

s w

hich

acc

ount

for

ove

r 70

per

cent

of

mer

chan

dise

exp

ort

earn

ings

. Si

mila

rly,

pro

gres

s on

soc

ioec

onom

ic c

halle

nges

of

pove

rty,

ine

qual

ity

and

unem

ploy

men

t ha

s be

en s

low

.

Inve

stor

Roa

d M

ap (

IRM

): I

RM w

as l

aunc

hed

in

2012

in

resp

onse

to

the

iden

tifie

d ch

alle

nge

of l

ow

FDI

in S

waz

iland

. It

aim

s to

im

prov

e th

e bu

sine

ss

envi

ronm

ent

wit

h re

gula

tory

, le

gisl

ativ

e,

and

proc

edur

al r

efor

ms.

Ac

cord

ing

to t

he W

orld

Ban

k D

oing

Bus

ines

s Re

port

Sw

azila

nd’s

ra

nkin

g im

prov

ed

betw

een

2013

an

d 20

17.

Mor

eove

r,

the

coun

try’

s ra

nkin

g ha

s be

en

abov

e Su

b-Sa

hara

n Af

rica

’s a

vera

ge r

egio

nal r

anki

ng

betw

een

2013

(Sw

azila

nd -

123

/185

, SS

A -

140/

185)

an

d 20

17 (

Swaz

iland

- 1

11/1

90,

SSA

- 14

3/19

0).

How

ever

, co

mpa

red

to

othe

r SA

CU

coun

trie

s,

Swaz

iland

’s r

elat

ive

posi

tion

slid

fro

m b

eing

sec

ond

last

in

2013

to

belo

w L

esot

ho i

n 20

17 (

Bots

wan

a,

Sout

h Af

rica

and

Nam

ibia

bei

ng a

head

). S

waz

iland

ra

nks

low

in

th

e ar

eas

of

Enfo

rcin

g Co

ntra

cts,

G

etti

ng E

lect

rici

ty a

nd S

tart

ing

a Bu

sine

ss.

On

the

othe

r ha

nd,

in t

erm

s of

eas

e of

tra

de a

cros

s bo

rder

s Sw

azila

nd h

as m

ade

grea

t st

ride

s, t

akin

g th

e le

ad in

th

e SA

CU r

egio

n.

Incl

usiv

e an

d Su

stai

nabl

e M

acro

-Fis

cal

Poli

cy:

Wit

h a

dete

rior

atin

g fis

cal

posi

tion

, th

ere

is

an

urge

nt

need

to

ra

tion

alis

e an

d pr

iori

tise

pu

blic

ex

pend

itur

e to

st

imul

ate

econ

omic

gr

owth

an

d ad

dres

s so

cio

econ

omic

ch

alle

nges

of

po

vert

y,

inco

me

ineq

ualit

y an

d hi

gh u

nem

ploy

men

t. J

anua

ry

2016

mar

ked

the

begi

nnin

g of

the

new

era

of

the

Sust

aina

ble

Dev

elop

men

t G

oals

(SD

Gs)

tha

t su

ccee

d th

e M

illen

nium

D

evel

opm

ent

Goa

ls

(MD

Gs)

. Th

e in

tegr

atio

n of

17

goal

s ac

cord

ing

to n

atio

nal p

rior

ity

in t

he N

atio

nal

Dev

elop

men

t Pl

an a

nd fi

scal

pol

icy

pres

ents

an

oppo

rtun

ity

to w

ork

tow

ards

ach

ievi

ng

incl

usiv

e an

d su

stai

nabl

e gr

owth

.



Chal

leng

e (B

ackg

roun

d)Cu

rren

t St

atus

Are

as f

or Im

prov

emen

tCa

paci

ty

Cons

trai

nts:

Th

ese

chal

leng

es

are

dive

rse.

In

th

e Ag

ricu

ltur

al

sect

or

cons

trai

nts

invo

lved

th

e la

ck

of

valu

e ad

diti

on

on

beef

, re

sult

ing

in t

he i

mpo

rtat

ion

of b

eef

prod

ucts

. Th

e av

aila

bilit

y of

a v

arie

ty o

f fr

esh

frui

t an

d ve

geta

bles

in

the

cou

ntry

was

ano

ther

con

stra

int

wit

h a

spec

ific

focu

s by

a c

ompa

ny o

n th

e de

clin

e in

the

sup

ply

of

Mar

sh g

rape

frui

t. I

n th

e Fi

nanc

ial

Serv

ices

sec

tor

the

cons

trai

nt o

f un

trai

ned

coop

erat

ive

head

s an

d m

embe

rs is

sti

fling

pro

gres

s in

tha

t ar

ea.

Agri

cult

ure:

Th

e co

untr

y ha

s a

com

pany

w

hose

bu

sine

ss

is

cent

red

on

beef

ex

port

atio

n an

d m

anuf

actu

ring

of

othe

r be

ef p

rodu

cts.

The

com

pany

do

es n

ot h

owev

er m

ake

any

valu

e ad

diti

on o

n th

e by

-pro

duct

s of

bee

f pr

oces

sing

suc

h as

hoo

ves

and

hide

s. T

he d

roug

ht s

itua

tion

in

the

coun

try

has

had

detr

imen

tal e

ffec

ts o

n th

e pr

oduc

tion

of

fres

h fr

uits

an

d ve

geta

bles

.

Fina

ncia

l Se

rvic

es:

Savi

ngs

and

Coop

erat

ives

are

no

w r

egul

ated

by

the

FSRA

. Th

e m

anda

te o

f th

e FS

RA is

to

ensu

re t

hat

the

non-

bank

fina

ncia

l se

ctor

is

pro

perl

y re

gula

ted

and

the

com

pany

doe

s no

t ha

ve a

man

date

to

capa

cita

te t

he i

nsti

tuti

ons

that

it

reg

ulat

es.

Agri

cult

ure:

The

re s

houl

d be

a g

reat

er e

ffor

t to

ad

d va

lue

in t

he b

y-pr

oduc

ts o

f be

ef p

roce

ssin

g to

in

crea

se c

apac

ity

and

reve

nues

. Re

cove

ry f

rom

the

dr

ough

t sh

ould

add

ress

mos

t of

the

oth

er c

onst

rain

ts

in t

he s

ecto

r.

Fina

ncia

l Ser

vice

s: T

he D

epar

tmen

t of C

oope

rati

ves

- Min

istr

y of

Com

mer

ce, I

ndus

try

and

Trad

e, n

eeds

to

wor

k ha

nd in

han

d w

ith

SASC

CO t

o en

sure

tha

t th

ere

are

form

al t

rain

ing

init

iati

ves

that

are

org

anis

ed f

or

peop

le t

hat

are

inte

rest

ed in

sta

rted

coo

pera

tive

s.

Lack

of

Skil

led

Pers

onne

l: T

his

rem

ains

a s

erio

us

chal

leng

es f

or c

ompa

nies

in

the

diff

eren

t se

ctor

s w

ithi

n th

e co

untr

y. F

or i

nsta

nce,

the

sho

rtag

e of

te

chni

cian

s th

at a

re s

kille

d in

the

ser

vici

ng a

nd

fixin

g of

sow

ing

mac

hine

s in

the

gro

win

g te

xtile

in

dust

ry,

lack

of

valu

ator

s to

ser

vice

rea

l es

tate

sa

les,

sho

rtag

e of

doc

tors

aff

ecti

ng h

ealt

h se

rvic

es

amon

g ot

her

thin

gs.

Text

ile:

The

cou

ntry

is

fund

ing

stud

y pr

ogra

mm

es

such

as

indu

stri

al e

ngin

eeri

ng.

Rea

l Est

ate:

The

val

uati

on in

dust

ry is

an

unre

gula

ted

indu

stry

. Ac

cord

ing

to

the

Dee

ds

of

Regi

stra

tion

of

fice

ther

e ar

e 10

reg

iste

red

valu

atio

n co

mpa

nies

in

the

pri

vate

sec

tor,

wit

h 2

bein

g Sw

azi

owne

d.

Thes

e ar

e re

gist

ered

und

er t

he r

atin

g ac

t.

Ther

e ar

e ef

fort

s be

ing

chan

nelle

d to

war

d w

orki

ng o

n th

e re

gula

tion

of

the

indu

stry

.

Text

ile:

W

ith

a bo

omin

g te

xtile

in

dust

ry,

the

Min

istr

y of

Lab

our

and

Soci

al S

ecur

ity

mus

t en

list

Gov

ernm

ent

fund

ed c

ours

es r

elev

ant

to s

ervi

cing

th

e ec

onom

y.

Rea

l Es

tate

: Ex

pedi

tion

in

the

form

ulat

ion

of t

he

legi

slat

ion

by t

he R

egis

trat

ion

of D

eeds

offi

ce a

nd

its

appr

oval

can

hel

p re

solv

e so

me

of t

hese

iss

ues.

Th

e of

fice

is a

lso

wor

king

on

havi

ng a

n as

soci

atio

n.

If t

his

bill

is s

ubm

itte

d, t

hen

this

cou

ld b

e gr

ound

s fo

r pr

oper

reg

ulat

ion

of t

he in

dust

ry.

Fisc

al C

risi

s: G

iven

the

rol

e pl

ayed

by

gove

rnm

ent

in

the

dom

esti

c ec

onom

y,

the

fisca

l cr

isis

ha

s af

fect

ed a

num

ber

of b

usin

esse

s di

rect

ly t

hrou

gh

non-

paym

ent

of

wor

ks

and

serv

ices

pr

ovid

ed

by

com

pani

es.

Furt

herm

ore

subv

ente

d en

titi

es

part

icul

arly

reg

ulat

ory

boar

ds a

nd o

ther

par

asta

tals

ha

d th

eir

budg

ets

cut

sign

ifica

ntly

af

fect

ing

the

oper

atio

ns o

f su

ch e

ntit

ies.

The

fisca

l cr

isis

em

anat

es f

rom

the

dec

line

in t

he

coun

try

larg

est

reve

nue

sour

ce

(SAC

U

rece

ipts

) w

hich

fel

l by

24

perc

ent

in 2

016/

17 fi

scal

yea

r.

Des

pite

the

im

prov

emen

t in

201

7/18

, w

here

SAC

U

rece

ipts

gr

ew

by

37

perc

ent,

th

e ex

pans

iona

ry

fisca

l po

licy

in

2016

/17

have

re

sult

ed

in

cash

-flo

w c

halle

nges

and

acc

umul

atio

n of

arr

ears

. Th

e G

over

nmen

t is

com

mit

ted

to p

ayin

g su

pplie

rs a

nd

is e

nsur

ing

the

clea

ring

of

arre

ars

wit

h pa

ymen

ts

prio

riti

sed

acco

rdin

gly.

Gov

ernm

ent

is a

lso

wor

king

on

is

suan

ce

of

infr

astr

uctu

re

bond

to

ea

sy

the

sque

eze

on r

even

ues

and

cont

inua

l im

plem

enta

tion

of

cap

ital

pro

ject

s.

A fis

cal

cons

olid

atio

n ne

eds

to i

mpl

emen

ted

i.e.

re

duci

ng e

xpen

ditu

res

and

dive

rsif

ying

the

rev

enue

ba

se.

Gov

ernm

ent

has

iden

tifie

d st

rate

gies

tha

t w

ill

ensu

re r

educ

ed r

elia

nce

on S

ACU

rec

eipt

s, w

hich

ha

ve b

een

high

ly v

olat

ile i

n th

e re

cent

per

iods

. O

n th

e ex

pend

itur

e si

de,

impl

emen

tati

on o

f th

e Pu

blic

Fi

nanc

e M

anag

emen

t Ac

t w

ill a

ssis

t in

tig

hten

ing

of

expe

ndit

ure

cont

rols

th

roug

h th

e id

enti

fied

refo

rms.

Gov

ernm

ent

is a

lso

enco

urag

ed t

o de

velo

p a

stab

iliza

tion

fun

d to

be

utili

sed

peri

ods

of w

indf

all

gain

s (p

arti

cula

rly

in S

ACU

rec

eipt

s) f

or s

avin

gs.



Ann

ex 4

: Se

ctor

Spe

cific

Cha

lleng

es

Sect

orCh

alle

nge

Type

Des

crip

tion

Agri

cult

ure

Budg

et C

onst

rain

ts

Gov

ernm

ent’

s bu

dget

allo

cati

on t

o ag

ricu

ltur

e fo

r FY

201

7/18

dec

lined

by

E100

mill

ion

com

pare

d to

the

pr

evio

us y

ear.

The

bud

get

mai

nly

cove

rs r

ecur

rent

exp

endi

ture

s, a

ffec

ting

the

im

plem

enta

tion

of

proj

ects

in

the

ind

ustr

y su

ch a

s th

e Ag

ricu

ltur

e Ce

nsus

, fe

ncin

g at

bor

ders

to

keep

out

str

ayin

g an

imal

s th

at m

ay

tran

smit

dis

ease

s. T

he b

udge

t co

nstr

aint

s al

so m

ake

it d

iffic

ult

to r

etai

n sk

illed

sta

ff.

Capa

city

Con

stra

ints

Ther

e is

litt

le v

alue

add

itio

n, e

spec

ially

in t

he m

eat

proc

essi

ng in

dust

ry,

due

to la

ck o

f sk

ills.

Cons

truc

tion

Com

peti

tion

Smal

ler

play

ers

in t

he i

ndus

try

face

unf

air

com

peti

tion

, es

peci

ally

in

gove

rnm

ent

proj

ects

, as

aw

ardi

ng o

f te

nder

s is

not

tra

nspa

rent

. Ev

en w

ith

the

inte

rven

tion

of

CIC,

com

pany

bel

ieve

s th

e si

tuat

ion

may

im

prov

e on

ly in

the

aw

ard

of t

ende

rs in

the

pri

vate

sec

tor.

Regu

lato

ry F

ram

ewor

kTh

e in

trod

ucti

on o

f th

e re

gula

tor,

CIC

, ha

s ra

ised

cos

ts f

or c

ompa

nies

wit

h lit

tle

bene

fits.

The

CIC

has

als

o m

ade

it d

iffic

ult

to g

et f

orei

gn c

ompa

nies

to

com

e an

d w

ork

in S

waz

iland

eve

n fo

r hi

ghly

spe

cial

ized

wor

k.

Smal

l mar

ket

size

The

cake

in t

he d

omes

tic

econ

omy

is t

oo s

mal

l; c

onst

ruct

ion

proj

ects

are

not

eno

ugh

to s

usta

in a

ll pl

ayer

s.

Gov

ernm

ent

Inef

ficie

ncy

Gov

ernm

ent

need

s to

wor

k w

ithi

n it

s m

eans

thr

ough

ado

ptin

g a

stra

tegy

of

com

men

cing

wit

h pr

ojec

ts w

hen

fund

s ar

e av

aila

ble.

Fun

ds f

or p

roje

cts

are

som

etim

es d

iver

ted

and

this

has

a n

egat

ive

bear

ing

on t

he c

ash

flow

of

cont

ract

ors.

Educ

atio

n

Lack

of

Skill

ed P

erso

nnel

The

pool

of

skill

ed s

taff

in t

he c

ount

ry is

lim

ited

nec

essi

tati

ng h

irin

g of

for

eign

ers

whi

ch is

exp

ensi

ve.

Gov

ernm

ent

Inef

ficie

ncy

Ther

e is

no

fund

ing

form

ula

for

gove

rnm

ent

fund

ed t

erti

ary

inst

itut

ions

mak

ing

thei

r pl

anni

ng p

roce

sses

di

fficu

lt.

Inst

itut

ions

may

dev

elop

str

ateg

ies

only

to

find

that

the

re a

re n

o fu

nds

for

impl

emen

tati

on.

Lack

of

Cohe

rent

Pol

icy

Ther

e is

no

cohe

rent

edu

cati

on p

olic

y in

the

cou

ntry

to

guid

e te

rtia

ry i

nsti

tuti

ons

in d

esig

ning

new

cou

rses

th

at c

an b

e of

fere

d to

enh

ance

the

dev

elop

men

t of

a s

tron

g la

bour

for

ce w

ith

rele

vant

ski

lls.

Mun

icip

alit

y

Hig

h D

efau

lt R

ate

Def

ault

in r

ates

pay

men

t is

hig

h m

ainl

y fr

om g

over

nmen

t an

d re

side

ntia

l pay

ers.

Gov

ernm

ent

Inef

ficie

ncy

Publ

ic in

stit

utio

ns d

o no

t fo

llow

pro

cedu

re a

nd a

ssum

e th

ey a

re e

xem

pt f

rom

bui

ldin

g ap

plic

atio

n pr

oces

ses.

D

elay

s by

gov

ernm

ent

in a

ppro

val o

f to

wn

plan

ning

sch

emes

del

ays

proj

ects

and

dev

elop

men

t of

tow

ns.

Infr

astr

uctu

reSo

me

tow

ns a

re o

ld a

nd r

iddl

ed w

ith

prob

lem

s re

late

d to

agi

ng in

fras

truc

ture

.

Hea

lth

Lack

of

Skill

ed P

erso

nnel

Spec

ializ

ed s

ervi

ces

are

not

done

in

the

coun

try

due

to l

ack

of s

kills

and

equ

ipm

ent,

for

cing

pat

ient

s to

go

abro

ad w

hich

is a

loss

of

reve

nue

for

inst

itut

ions

.

Gov

ernm

ent

Inef

ficie

ncy

Gov

ernm

ent’

s fa

ilure

to

guar

ante

e ti

mel

y pa

ymen

t fo

r se

rvic

es r

ende

red

thro

ugh

PPP

arra

ngem

ents

aff

ect

cash

-flow

s in

pri

vate

hos

pita

ls.

Tax

Issu

esSo

me

impo

rted

dru

gs a

re t

ax e

xem

pt w

hich

dis

crim

inat

es a

gain

st lo

cal s

uppl

ies

whi

ch a

re n

ot.



Man

ufac

turi

ng

Impa

ct o

f U

ncer

tain

ty in

SA

Polit

ical

and

eco

nom

ic u

ncer

tain

ty in

the

reg

ion,

esp

ecia

lly in

Sou

th A

fric

a, a

ffec

t cu

rren

tly

exis

ting

mar

kets

.

Labo

ur A

vaila

bilit

yU

nski

lled

labo

ur (

for

cane

cut

ting

and

fru

it p

icki

ng)

is b

ecom

ing

scar

ce in

Sw

azila

nd b

ecau

se t

hey

are

bett

er-

paid

in S

outh

Afr

ica.

Labo

ur Is

sues

Ther

e ar

e te

nsio

n, a

nd o

ccas

iona

l str

ikes

, ov

er w

ages

in m

ost

fact

orie

s af

fect

ing

prod

ucti

vity

.

Mar

keti

ng B

oard

Clim

ate

chan

geYi

elds

are

dec

linin

g du

e to

infe

stat

ion

of p

ests

and

dis

ease

s w

hich

are

som

etim

es d

rive

n by

err

atic

wea

ther

/cl

imat

e.

Unf

air

Prac

tice

sAs

the

num

ber

of d

airy

far

mer

s in

crea

se,

ther

e is

a n

eed

to e

nsur

e th

at t

here

is

mor

e th

an o

ne b

uyer

(p

roce

ssor

) in

the

indu

stry

to

avoi

d m

onop

oly.

Min

ing

Land

Issu

esTh

e cu

rren

t m

inin

g gr

ound

for c

oal i

s af

fect

ing

prod

ucti

on d

ue t

o ge

olog

ical

con

stra

ints

. Thi

s w

as e

xace

rbat

ed

by t

he d

elay

in r

enew

al o

f th

e le

ase

and

crow

n la

nd c

reat

ing

unce

rtai

nty

for

the

com

pany

.

Real

Est

ate

Land

Issu

esLa

ck o

f ava

ilabi

lity

of t

itle

dee

d la

nd is

con

trib

utin

g to

hig

h pr

ices

in T

DL.

Mor

eove

r, t

he p

roce

ss o

f pur

chas

ing

prop

erty

by

fore

igne

rs i

n th

e co

untr

y is

ext

rem

ely

cum

bers

ome,

whi

ch a

cts

as a

det

erre

nt f

or i

nves

tors

ad

ding

to

the

nega

tive

per

cept

ion

the

coun

try

suff

ers

on t

he e

ase

of in

vest

ing.

Acce

ss t

o Fi

nanc

eM

ost

bank

s in

the

cou

ntry

are

for

eign

ow

ned,

mak

ing

the

proc

ess

of g

etti

ng fi

nanc

ing

appr

oval

s lo

ng f

or

cert

ain

loan

thr

esho

lds

whi

ch r

equi

re a

utho

risa

tion

fro

m h

eadq

uart

ers.

Regu

lato

ry F

ram

ewor

kTh

ere

are

only

4 a

ppro

ved

or r

egis

tere

d va

luat

ors

in t

he c

ount

ry m

akin

g th

e pr

oces

s le

ngth

y an

d co

stly

. M

oreo

ver,

the

re is

no

clea

r m

etho

dolo

gy t

o be

fol

low

ed b

y va

luat

ors.

Regu

lato

ry f

ram

ewor

kTh

ere

is n

o re

gula

tion

in

this

sec

tor,

mak

ing

it v

ulne

rabl

e to

fra

ud a

nd d

iffic

ult

to w

ork

in;

prac

tica

lly

ever

yone

is a

llow

ed t

o op

erat

e in

thi

s sp

ace.

ICT

Lack

of

Info

rmat

ion

Perc

epti

on f

rom

the

gen

eral

pub

lic i

s th

at t

elec

omm

unic

atio

n se

rvic

es a

re e

xpen

sive

in

Swaz

iland

; cl

ient

s co

mpa

re S

waz

i ope

rato

rs w

ith

SA o

pera

tors

pri

cing

yet

the

mar

ket

size

and

dyn

amic

s ar

e di

ffer

ent.

Capa

city

Con

stra

ints

OTT

s ha

ve b

ecom

e a

chal

leng

e in

the

com

mun

icat

ions

sec

tor

due

to l

ack

of l

ocal

con

tent

suc

h as

app

s to

co

unte

r th

e ou

tflow

of

fund

s to

pay

for

the

se s

ervi

ces.

Tour

ism

Budg

et C

onst

rain

tsG

over

nmen

t su

bven

tion

s ar

e lo

w a

nd o

nly

cove

r re

curr

ent

expe

ndit

ures

lea

ving

lit

tle

fund

s fo

r pl

anne

d pr

ojec

ts.

Lack

of

Info

rmat

ion

Swaz

iland

’s d

igit

al m

arke

ting

pre

senc

e is

qui

te lo

w in

soc

ial m

edia

pla

tfor

ms

such

as

Face

book

and

Tw

itte

r.

Tran

spor

tCo

mm

odit

y pr

ices

Com

mod

ity

pric

es a

re v

olat

ile a

nd t

his

affe

cts

busi

ness

gro

wth

in t

he r

ail i

ndus

try.

Corr

upti

onTr

ansp

orta

tion

of

illic

it g

oods

usi

ng c

ompa

ny v

ehic

les

and

siph

onin

g of

fue

l fro

m t

ruck

s is

rif

e.

Uti

litie

sFi

scal

Cri

sis

Gov

ernm

ent

expe

cts

divi

dend

pay

men

ts f

rom

par

asta

tals

yet

the

y al

so n

eed

fund

s fo

r in

vest

men

t in

in

fras

truc

ture

.

Who

lesa

le &

Re

tail

Barr

iers

to

trad

ePa

rent

com

pani

es in

SA

do n

ot p

rior

itiz

e Sw

azi d

eale

rshi

ps le

adin

g to

sto

ck s

hort

ages

in t

he lo

cal m

arke

t.

Unf

air

com

peti

tion

Lack

of

regu

lati

on in

the

sec

tor

has

mea

nt t

hat

com

pani

es f

ace

unfa

ir c

ompe

titi

on f

rom

che

aper

, an

d of

ten

low

er q

ualit

y, im

port

s



Annex 5: 2017 General Questionnaire

Swaziland Company Survey 2017 General Questionnaire

IntroductionThank you for taking part in the Swaziland Company Survey 2017 organized by the Ministry of Economic Planning and Development and the Central Bank of Swaziland.

The questionnaire is divided into 7 sections and we would appreciate if you could answer all the fields either electronically or in print. If your company participated in the survey in 2016, some fields may have been completed with the information provided last year. Feel free to amend any of the information if it has changed since then. If you need further assistance do not hesitate to contact us.

We appreciate that some or all of the information provided might be confidential. For that reason all the data provided is kept secure and confidential. The data is used solely for the purpose of assessing the state of Swaziland economy and to inform estimates and forecasts of economic aggregates.

Section 1. General Information

Q.1.1. Company Name: Q.1.3. Please indicate whether the questionnaire is being answered according to the company’s financial year or the calendar year:

Q.1.2. Financial Year End (Month):

__ Financial Year __ Calendar Year

Section 2. Ownership Structure

Q.2.1. Please indicate the ownership structure of the company:

Shareholder Name Nationality Share (%)

Please add rows as required

Q.2.2. Please indicate any subsidiaries (if any) within and outside Swaziland with the associated percentage shareholding:

Subsidiary Name Share (%)




Section 3. Production and Sales

Q.3.1. Please identify the company’s main product lines and their units of measurements:

No. Unit of Measurement Product Description

1

2

3


Q.3.2. Please indicate the company’s production levels for each product line above:

No. 2015 2016 2017 2018 2019

1

2

3


Q.3.3. Please indicate the company’s turnover for each product line above (E Million):

No. 2015 2016 2017 2018 2019

1

2

3


Section 4. Total Revenue and Profits

Q.4.1. Please indicate the company’s total revenue, net rental income, net interest income and pre-tax profit (E Million):

2015 2016 2017 2018 2019

Total Revenue

Net Rental Income

Net Interest Income

Pre-Tax Profit

Section 5. Employment

Q.5.1. Please provide details of employment levels:

Type 2015 2016 2017 2018 2019

Permanent

Temporary

Total



Q.5.2. Please indicate the total amount of remuneration (E Million):

2015 2016 2017 2018 2019

Section 6. Capital Expenditure

Q.6.1. Please provide details of capital expenditure and depreciation (E Million):

2015 2016 2017 2018 2019

Gross Book Value

Accumulated Depreciation

Current Depreciation

Total Capital Expenditure

Q.6.2. Please provide details on the capital structure:

2015 2016 2017 2018 2019

Liabilities (as % of Total Assets)

Overdrafts (as % of Total Liabilities)

Long-Term Loans (as % of Total Liabilities)

To Non-Residents (as % of Total Liabilities)

Equity (as % of Total Assets)

Reinvested Earnings (as % of Total Equity)

Of Non-Residents (as % of Total Equity)

Section 7: Trade

Q.7.1. Please state the sources of your inputs (as % of total input cost) and the markets in which you operate (as % of total revenue):

CountryInputs (% of total input cost) Markets (% of total revenue)

2016 2017 2016 2017

Swaziland

South Africa

Botswana, Lesotho and Namibia

Rest of Africa

United States

European Union

Rest of Europe

Rest of the World



Annex 6: 2017 Company Survey Team

Khanyisile Dube MEPDKhetsiwe Dlamini CBSMaqhawe Mnisi MEPDMvuselelo Mdluli MEPDNombuso Dlamini MEPDNomvula Ndwandwe MEPDNomvuyo Mabuza CBSNonhlanhla Simelane CBSPoorva Karkare MEPDSifiso Tshabalala MEPDSipho Skosana CBSVangile Dlamini MEPDVusi Khumalo CBSWelcome Nxumalo CBSWinile Dlamini MEPDZana Mabuza CBS



Central Bank of SwazilandMahlokohla Street P.O. Box 546

Mbabane, Swaziland

Tel: +268 2408-2243 Fax: +268 2404-0038Website: www.centralbank.org.sz

company survey report - 2017 - central bank of eswatini · another way of forecasting economic...

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