Post COVID-19 Kingdom of Eswatini Economic Recovery Plan

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Carving the path to a private sector-led economy

Post COVID-19

Kingdom of Eswatini

Economic Recovery Plan

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The Government of Eswatini (GoE) recognises that the COVID-19 pandemic is not just a health crisis but also an economic crisis. Before COVID-19, the Kingdom of Eswatini was already experiencing key economic challenges and so the pandemic has exacerbated an already fragile economic situation.

In the 2019-2022 Economic Outlook provided by the Ministry of Economic Planning and Develop- ment, growth in Eswatini has indeed declined from 2.4 percent in 2018 to 1.3 percent in 2019 due to a slowdown in economic activity in the primary and tertiary sectors of the economy. Another key factor contributing to subdued economic growth in Eswatini is Government’s large footprint as the key driver of the economy. As a result of many businesses/economic activities being dependent on Government, the current fiscal challenges have constrained public expenditure and limited ability of the economy to create employment and opportunities for growth. While economic growth forecasts for 2020 had given prospects for economic recovery with a projection of more than 2 percent growth, the global outbreak of COVID-19 has resulted in a downward revision of the growth projections so that in the next coming months, the Eswatini economy is expected to experience a significant contraction in economic activities.

Noting the looming economic contraction and potential negative spillovers it would have on the different sectors of the economy, the GoE found it necessary to draw up a national economic recovery plan to save the economy and livelihoods. On the 27^thof April, 2020, His Excellency The Right Honourable Prime Minister assembled a team of Cabinet Ministers and tasked them to develop a Post COVID-19 Economic Recovery Plan to address the impacts of COVID-19 on the economy by creating opportu- nities for income generation and wealth creation in key priority sectors of the economy. The purpose of the Plan is to resuscitate the economy and reignite economic growth through high impact private sector-led projects that will be implemented as soon as the country comes out of the COVID-19 state of emergency.

The Recovery Plan does not replace Eswatini’s current Development Plans and Strategies towards achievement of the country’s Development Vision 2022. These include: The Kingdom of Eswatini Stra- tegic Roadmap 2019-2022; The National Development Strategy (NDS); and the National Development Plan (NDP) 2019-2022; The Strategy for Sustainable Development and Inclusive Growth (SSDIG), among others. Instead, the Post COVID-19 Economic Recovery Plan is a short-term but very high impact economic stimulus that will resuscitate the economy by igniting a large number of productive economic activities as soon as the COVID-19 pandemic subsides. In other words, it is meant to boost the number of viable and profitable economic activities within 18 months after launch as well as accelerate the implementation and delivery of the National Development Programmes in order for Eswatini to gain significant strides towards achieving Vision 2022 and implantation of the strategic room.

The Post COVID-19 Economic Recovery Plan is necessary in order to generate sufficient momentum for the Eswatini economy to come out of lockdown at a high speed of economic production and productivity. It will trigger profitable/high impact projects that will in the medium and long-term overcome the social and economic losses that have been imposed by the pandemic since the wake of COVID-19 in January 2020. Through this Recovery Plan, the Government of Eswatini intends to increase employment opportunities, expand the tax base, and restore the viability and sustainability of the Eswatini economy. Much of the proposed projects will support the GoE’s goal to reverse the decline in economic activities, will enhance productive sectors of the economy, and will create jobs as well as restore the economy into a much higher level of production and productivity.

1. Introduction

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A core principle of the Recovery Plan is to mitigate the impacts of COVID-19 on the Eswatini economy as much as possible in the short-term in order to recover from the anticipated loss in GDP caused by the COVID-19 lockdown and loss of economic activities. Therefore, the country needs to deliberately endeavour on a much higher level of gross domestic production in the near term in order to catch-up on the losses incurred. The goal is to create the momentum to grow the economy at an even faster rate compared to the time before COVID-19 hit Eswatini.

This Post COVID-19 Economic Recovery Plan is based on three critical components of the Eswati- ni Strategic Roadmap 2019 -2022, which are:

• To grow the country’s GDP: in order to improve the overall macro-economic conditions.

• To Create Jobs: so that every liSwati finds opportunity to be productive in the economy.

This can fast-track poverty reduction and creation of sustainable livelihoods.

• To fast-track government revenue mobilisation: to improve the fiscal space, which in turn, will provide the resources to implement the National Development Plan 2019-2022.

Therefore, this Economic Recovery Plan is designed to be a catalyst of the Eswatini’s Strategic Roadmap. Put differently, the Post Covid-19 Eco- nomic Recovery Plan will become an Action Plan of the Eswatini Strategic Roadmap 2019-2022.

In order to set the economy into a path that will achieve the three critical elements of the Strategic Roadmap, the Post COVID-19 Recovery Plan will adopt the following core principles in its approach and implementation:

1.1.1. “Eswatini to be a private sector-led economy committed to economic reform”

The GoE through this Recovery Plan commits itself to create a conducive business environment that will unlock all the bottlenecks that have pre- vented/impeded the implementation of viable development projects with high returns on investment. The strategy is to resuscitate the economy and address the anticipated contraction in GDP through a project based approach that will

1.1. The Principles of the Post COVID-19 Economic Recovery Plan

production of goods and services will expand the economic base, boost Eswatini’s GDP, and jolt the economy into a much higher growth trajectory.

1.1.2. “A focus on Big Projects for faster and higher levels of growth”

Through this Recovery Plan, the GoE is empower- ing the private sector to engage in high value and high impact projects that will increase the economic base by creating jobs and increasing economic activities that will grow the country’s GDP. The plan is to stimulate the economy through “big projects” that can enable the private sector to expand and thrive beyond the current status quo. Govern- ment will also rollout the Recovery Plan through a “Marshall Plan” that will drive and monitor the implementation of the projects within an 18-month period. The Marshall Plan approach is necessary to integrate all the implementation of the projects into one pipeline of activity in order to ensure the necessary policy/legislative reforms are implemented for delivery of the Post COVID-19 Plan as a complete and successful package. This package of

“big projects” is aligned to the sectors of the economy identified as key growth sectors based on their ability to deliver high impact on GDP growth, job creation, and revenue mobilisation. The growth sectors as identified in the Eswatini Strategic Road- map 2019-2022 include: Agriculture, Manufactur- ing & Agro-processing, Tourism, Mining & Energy, and ICT & Education.

Therefore, to be a private sector-led economy, there are fundamental economic reforms that the country must embrace. There needs to be a shift away from Government as the central driver of the economy. Instead, Government needs to re-establish itself as the key enabler of growth across all sectors of the economy. In enabling the private sector, the GoE will focus on creating a conducive business environment that will improve the country’s ranking on the Ease of Doing Business. Overall, a focus on

“big projects” that will be driven by the private sector will stimulate the necessary economic reforms to allow the private sector to lead and expand the Eswatini economy for greater income generation

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1.1.3. “To attract high net-worth individuals and investment that can transform Eswatini into the ultimate head office destination for multi-national corporations”

The COVID-19 pandemic is presenting the country the opportunity to restructure the economy to capitalise on private sector-led investments to generate the maximum possible value out of every Lilangeni spent in the economy. For a while now, Eswatini has been struggling to attract and land investments onto its shores, on top of its weaken- ing external competitiveness that has kept growth subdued.

The Recovery Plan will accelerate key economic reforms that will position Eswatini economy to land international investors and projects by increasing investor confidence in the Eswatini economy. This will be done through the local economic activity that will be generated by the “big projects” and reinvestment into the economy by local investors that are already operating in the country. In unlocking the key bottlenecks that will enable the delivery of the projects that will be the heartbeat of this Post COVID-19 Econom- ic Recovery Plan, Government will also endeavor to attract high net-worth individuals/investors to settle their business operations here in Eswatini.

The ultimate outcome of the Recovery Plan is to create the pathway for high value investment to settle in Eswatini so that the country can be Afri- ca’s most preferred host for high net-worth individuals and the head office capital for multi-corporations.

Basically, the Post COVID-19 Economic Recov- ery Plan is Eswatini’s economic stimulus that will protect and resuscitate the economy from the COVID-19 pandemic. It will jolt the economy into a much stronger and winning trajectory post COVID-19 compared to its counterparts in the region and the rest of Africa.

The Post COVID-19 Economic Recovery Plan is Eswatini’s

economic stimulus that will protect and resuscitate

the economy from the COVID-19 pandemic. It will

jolt the economy into a much stronger and winning

trajectory compared to its counterparts in the region

and the rest of Africa.

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The Post COVID-19 Economic Recovery Plan Task Team put together eight (8) sector work streams under the chairmanship of the Ministry of Economic Planning and Development to identify high impact private sector-led projects that would stimulate the economy and lift it out of decline.

The Task Team followed a consultative process to draw-up the Recovery Plan. Each sector formulated a committee of members led by representatives from the private sector to develop a recovery plan under the following framework:

• An overview of the key challenges the economy is experiencing due to COVID-19 pandemic;

• Identify project/opportunities that can be explored to stimulate productive economic activities;

• Key actions/policy/legislative changes to enable the delivery of the earmarked projects;

• Identify the resources/financing instruments for each project; and

• Draw up an Action Plan & Implementation Strategy for each project.

2. THE PRIORITY SECTORS FOR RECOVERY

01 02 03 04 05 06

Finance (MoF) Macro-Economic Framework (MEPD)

Business Agriculture Tourism &

Environment Mining,Energy,

& Water Infrastructure ICT &

Education

Post COVID-19 Economic Recovery Plan Priority Sectors

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-Access to Credit (Aﬀordability)

-Liquidity Management -Accumula�ng reserves -MP consistent with preserving Peg -Financial Stability

REAL ECONOMY

(Produc�on & Investment) MONETARY SECTOR

-Trade Facilita�on

-Foreign Direct Investment -Foreign ﬁnancing (grants, private placement oﬀshore) -Responding to external shocks

EXTERNAL SECTOR (TRADE)

-Fiscal Consolida�on to ensure stability and sustainability

-Improve quality than quan�ty of Spending in both recurrent and Capital

-Improve eﬃciencies -simplify tax policy and improve eﬃciency in tax administra�on

FISCAL

-Iden�fy Growth Sectors (historical) -Iden�fy poten�al growth sectors (futuris�c)

-Simplifying ease of doing business -Incen�vise domes�c investment -Support export-led and import-subs�tu�on produc�on/produc�vity

-Produc�vity (Labour, Technological Advancement)

-S�mulate demand

The Macro-Economic Framework provides an overview of the economy in terms of its performance as a result of the current state of emergency induced by COVID-19. It provides the economy-wide status of the economy in terms of GDP, price levels, inflation, rate of economic growth, and changes in unemployment. The Macro-Economic Framework consists of four (4) components of the economy which are; the real economy, fiscal, monetary, and external trade.

3. The Macro-Economic Context

Generally, before COVID-19, the GoE was already experiencing cash flow challenges. COVID-19 has only exacerbated a long existing and fragile fiscal challenge. The slowdown in economic activities is expected to reduce total government revenue, which means that implementing the approved 2020/21 budget as it is will be untenable. Govern- ment is facing pressure to increase expenditure on health and social protection to cushion citizens from the hardship of the pandemic.

The revenue losses will create an even bigger fiscal deficit and so continuing implementing government programmes without adjustment/realloca-

tion of the budget may lead to a situation where government will not able to pay civil servants salaries, let alone its suppliers. The challenge that the Recovery Plan has to address has to do with the fact that domestic tax revenue in 2022 will not be able to supplement the expected sharp fall in SACU revenue. On the other hand, Government spending keeps increasing annually at a much higher rate than revenue is generated. The Mac- ro-Economic situation is such that the country is facing a fiscal crisis, and without any significant reforms and adjustment in government spending, the economy will crash.

Source: MEPD

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The Macro-Economic Problem Created by COVID-19 in a nutshell

BEFORE COVID-19

• The economy was already challenged with sluggish growth and a fiscal crisis.

• GDP growth was 1.3% in 2019 and expected to recover slightly in 2020 at 2.8% mainly because of SACU receipts.

• The budget approved in February for the financial year 2020/21 stood at E24 billion in total expenditure and E21 billion in revenue.

• A budget deficit of E2.9 billion, which is equivalent to 4.3% of GDP.

• E1.5 billion of the deficit to be financed by borrowing from identified sources and remaining E1.4 billion ofborrowing not identified.

• Debt stock was at E22.5 billion (30 % of GDP) excluding arrears.

• The debt stock including arears was at E27.9 billion (38% of GDP).

• Arrears estimated at E5.1 billion at the 31^st March, 2020.

WITH COVID-19

• COVID-19 has added another dimension to the slow growth and fiscal crisis, demanding a quick, precise, and different approach.

• GDP growth is expected to fall by 6.7%

because of the lockdown and disruptions in economic activities.

• With lockdown, there is much less government revenue being collected. Overall, revenue is expected to fall by E2.7 billion to a total of E18.3 billion instead of E21 billion.

• If expenditures are maintained at E24 billion, the budget deficit will grow to E5.6 billion and to widen to 9.1% of GDP.

• As the deficit rises, financing needs will rise.

Government has to find an additional E4.1 billion of funding if expenditures remain as budgeted.

• Debt is expected to increase to 38% of GDP

• Debt servicing expected to increase by 5%

from current level of 10.2% to 15.2% of revenue because of the fall in exchange rate depreciation of 30% within a month.

• SACU revenue will decline in the next 2 years because of a huge drop in imports and effects of COVID-19 in 2021/22 and 2022/23, respec- tively.

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• Lower tax collection (reduced E2.7 billion)

• With expenditures unchanged the fiscal deficit widened by 9.2% of GDP

• Financing gap increased to E4.2 billion.

• Massive depletion of reserves and no cushion- ing buffer

• Increasing threat to the peg with the Lilangeni to the Rand

• Government struggling to pay its suppliers and services dysfunctional

• Capital programme running to a halt whereas contractors increasingly charging penalties

• Uncontrollable accumulation of arrears

• Salaries paid through domestic borrowing LOW GROWTH TRANSLATES INTO:

► Government has to set a balanced and fully financed budget: Need to revise the current budget to make the necessary cuts/reallocations. Cuts/Expenditure ad justments beginning in the current budget 2020/21 for the next 3 years to amount to total savings of E3.334 billion (E2.564 billion savings from recurrent expendi ture and E770 million savings from capital account):

► The reallocation/adjustment of expenditures has to start in the current financial year. The COVID-19 pandemic is an opportunity to kick-start and speed up the process of fiscal adjustment and consolidation. Accumulatively in the next three (3) years, Government must achieve the following:

To mitigate the impacts of the COVID-19 pandemic on the macro-economy and to save the economy from further collapse, the following recommendations need to be implemented:

GDP GROWTH PROJECTION

Due to the scope for domestic financing being limited, efforts for external budget support have been deemed necessary. In dialogue with multilateral loan-providing institutions, accessing external budget support has been proved conditional on fiscal consolidation. The required scope of fiscal consolidation has been set to 6.5% of GDP up until financial year 2023/24. The requirement originates from the risk of defaulting on awarded loan repay- ments due to unsustainable Government finances.

Expenditure Adjustments

–Wage bill to be cut by E903 million over a period of 3 years (Through Hiring freeze, if given Cola below inflation, alternative service delivery, EVERS)

–Transfers to be cut by E815 million (stream- lining and merging of state owned enterprises)–Good and Services to be cut by E846 (Clos- ing of trading accounts and improve on commitment system, efficiency in procurement) –Capex to be cut by E770 (Rationalization)

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► To sustain operations, Government to engage Multilateral Development Institutions for financial relief:

̛ Afri-Exim Loan for Arrears clearance set at E2 billion (already signed, awaiting disbursement)

̛ Prospect for World Bank Budget Support US$200 million (i.e. E3.6 billion)

̛ IMF can offer up US$100 million (about E1.8 billion)

̛ US$6 million loan for Health response to COVID-19 (already disbursed)

► Settling of government’s arrears will be a key output of the Recovery Plan to induce healthy cash flow at all levels of the economy. The settling of arrears will boost government cash flow through the payment of taxes and provide a cash stimulus to the business sector, especially MSMEs.

In the absence of fiscal adjustment there are several fiscal risks to Government that need to be considered. A lack of fiscal adjust- ment translates to persistent high fiscal deficits over the medi- um-term leading to further accumulation of domestic arrears, hampering economic recovery and growth. It further implies an erosion of international reserves and undermines the ability to repay awarded loans and poses a threat to the Lilangeni Peg to the Rand. It is therefore of outmost importance that Government’s fiscal accounts are brought back to a sustainable path, which can only be achieved by extensive fiscal consolidation measures.

However, it should be noted that this fiscal adjustment does not wipe away all arrears as financing gap is still prevalent in the ad- justment period, but the size and growth of arrears is declining.

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The private sector (business) is a critical compo- nent and cornerstone of this Post COVID-19 Eco- nomic Recovery Plan because Government seeks to empower this sector to drive the required productive economic activities to lift the economy out of decline. To induce the necessary activity, the business sector will focus on the following fundamental reforms to enable the implementation of high impact projects post the COVID-19 lockdown;

The Business strategy will focus on reposition- ing the private sector to be the key driver of the economy while Government re-establishes itself to focus on creating a conducive business environment to enable business to thrive. Improving Eswatini’s ranking on the Ease of Doing Business (EODB) will form the basis for all the key policy/

changes that need to take place in order to allow the private sector to expand and thrive. The key reforms that the country needs to focus on under

4. THE “BIG PROJECTS” FOR RECOVERY

Adopt a single integrated reform package for stakeholder engagement, approv- al, financing, and

implementation

Improving the Ease of Doing Business will

underpin all policy changes to fast-track

production and productivity Establish Government

as a key enabler of growth across the

economy

A shift away from Governemnt as the central driver of the

economy

Develop a "Marshal Plan"

with a 18 months implementation period. To be formulated and implemented to ensure the

necessary policy/legislative changes that can enable the implementation and delivery

of "big projects."

the EODB include enforcement of contracts, improving the electricity sector, improving the time it takes to start a business and to register property, and access to credit. Each project listed under the Recovery Plan includes a list of the key legislative/policy bottlenecks that need to be addressed to ensure that every project gets implemented to achieve the desired outcomes for expanding the economic base and launching the economy into a higher growth trajectory.

Business Sector Strategy to Implement the “Big Projects”

for Recovery

1.

2.

3.

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Eswatini’s Ranking on The Ease of Doing Business

Source: Doing Business 2018

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The goal is simple: To get existing companies in Eswatini to commit a percentage of their bal- ance sheet to be re-invested in the economy to drive and enhance local value chains. By doing so the economy will be retaining investors already established in the economy and growing their businesses to stimulate and create value in the different sectors of the Eswatini economy. This way, the Recovery Plan will enable local investors to expand their footprint in the private sector and will in turn create the much needed confidence in the Eswatini economy to attract foreign direct investment (FDI).

Moreover, this substantial investment is expected to trickle down to benefit micro, small, and medium enterprise (MSME) sector to create multipliers in the various sectors of the economy.

At the same time, it is important to note that while the Recovery Plan will be implemented through a “Marshal Plan” driven by the top performing sectors of the economy, the implementation of the projects will provide many economic and social opportunities for the youth, women, and aspiring entrepreneurs and MSMEs to change their economic situation for the better.

The goal of the Recovery Plan is to at- tract private sector-led investment to stimulate economic activities for great- er GDP production. The private sector companies will commit to invest in the Eswatini economy under the following 2020 Corporate Pledge:

‘‘A E20 billion re-investment to

stimulate the economy’’

Ensuring that Eswatini Leaves No-One Behind

In implementation of the Recovery Plan, the GoE will ensure that no sector of the economy is left behind. To achieve the goals under GDP growth, job creation, and revenue mobilisation, requires full participation of every sector of the economy and segment of the population in productive economic activities.

Specifically, Eswatini is facing a monu- mental challenge in creating opportunities for its youth. Youth unemployment is high, with almost one in every two young people being unemployed. The goal of this Recov- ery Plan is to generate enough economic activities that can begin to create opportunities for young people to participate in the economy. Besides a focus on the youth, the implementation of the “Big Projects”

will create innumerable opportunities for MSMEs to link-up with the “big companies” so they can also benefit. By doing so, young people will be able to start and run their own MSMEs to take advantage of the economic activities that will be created through the significant investments that will come with the Recovery Plan.

Leaving no-one behind is an empower- ment concept of the Recovery Plan that seeks to address issues of marginalisation among the youth, women, the elderly, people living with disabilities, the informal sector, among many others. The Recovery Plan is geared to create high impact projects that can trickle down to every sector of the economy to improve the social and economic prospects of all emaSwati in their different corners of the economy.

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Lack of opportunity is the greatest barrier for Youth and MSME

participation in the economy

Consultations with the youth sector (Ministry of Sport Youth and Culture, Youth Enterprise Development Fund, and Eswatini National Youth Council) revealed that Eswatini’s youth lack business ideas in order to participate in the economy. The proposed “big projects” need to deliberately make provisions for the youth and their businesses to be part of the value/supply chains. The Government of Eswatini needs to also create a conducive public procurement system that can create opportunities for young people to participate in the different value chains of the projects.

• Set provisions in public procurement projects to encourage youth participation as well as to expand the number of viable businesses created through the Youth Enterprise Revolving Fund. For example, grass-cutting tenders could be set aside for MSMEs owned by the youth. Construction of simple infrastructure requiring low skill such as sub-stations, the rehabilitation of roads and buildings could be done by youth enterprises in their communities. The Es- watini Public Procurement Regulatory Authority (ESPPRA) is currently developing an online platform to enable easy access to the procurement system by various stakeholders such as the youth and MSMEs.

• Create special industrial zones for specific industries in cities where youth MSMEs can take advantage of manufacturing opportunities, green economy projects (such as recycling and renewable energy), local tourism and indigenous retail shops.

• Develop a mind-set change programme to support a paradigm shift among the youth so that a majority of Eswatini youth can shift away from being job seekers into job creators. The country has to invest in technical and vocational education and training (TVET) to make it attractive to the youth and to support industrialisation.

• Fast-track enactment of the National Youth Policy and National Youth Bill to facilitate the effective engagement of youth in social and economic development.

• Rehabilitate Tinkhundla Centres to provide a one-stop-shop for the youth to access information on services, public procurement processes, funding opportunities, and all other development opportunities/information.

• The Ministry of Commerce, Industry and Trade has set up a E45 mil- lion Revolving Fund as a cash injection to support MSMEs.

• The Ministry of Commerce, Industry and Trade is also recali- brating/adjusting the requirements for the Loan Guarantee Scheme under the Central Bank of Eswatini to increase access to credit and participation of MSMEs in the economy.

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The Post Covid-19 Recovery Plan is about resus- citating the economy and putting an action plan to the Eswatini Strategic Roadmap 2019-2022. It is deliberately designed to create abundant opportunities for the different components of the Es- watini economy, particularly, the MSME sector so that it can actively participate in the economy for higher GDP production. MSMEs are considered the backbone of many economies: they are cru- cial for growth and employment creation as they account for nearly 86% of employment opportunities in developing countries.

The Government of Eswatini recognises that while the “big projects” will provide the much needed investment to stimulate economic activities, the MSME sector has a critical role to anchor that growth into the different local value chains that make up the different sectors of the economy.

In other words, the “big projects” are about “big investment” that can create the required business/

market opportunity that can drive and develop Eswatini’s MSME sector. As much as possible, the Recovery Plan is setting the platform for “big business” to partner and collaborate with MSMEs to enable economic growth that is anchored on the domestic value chains. The GDP production that will follow from the different economic activities that will be spurred by the Recovery Plan will supply the local economy but also transform Eswatini into an export-led economy that takes advantage of the country’s trade agreements that are already in place.

The 2017 FinScope MSME Survey estimates a total of 59,283 business owners employing approx- imately 93,000 people, which is about 21% of the workforce. The MSME sector is also expected to play an important role in the economic inclusion of the youth (15-34 years), which make up 37.5%

of Eswatini's population. About 27% of the local MSMEs are owned by the youth (age between 18- 34 years) and MSME ownership decreases with higher age categories. This implies that most MSME owners are young entrepreneurs but have limited business experience, and so the Recovery Plan will provide the necessary business opportunities to stimulate and grow MSME owned by the

5. A FOCUS ON BENEFITS TO THE YOUTH & MSME SECTOR

youth. Only 8% of the total of MSMEs operating in Eswatini are small and medium enterprises % while the rest are micro-enterprises earning monthly incomes less than E5,000. About 75% of these businesses are not licensed with any profes- sional body. In terms of operational experience and maturity, a majority (36%) of the MSMEs are in the start-up phase (0-2 years of existence).

In 2018, The World Bank Ease of Doing Business Index ranked Eswatini 112 out of 190 countries.

The 2017 FinScope MSME Survey identifies marketing, accounting, financing, business environment, and limitations in training and development as factors hampering the entrepreneurial spirit of MSMEs. About 43% of the MSMEs in Eswatini are least developed - meaning that they have low cell-phone ownership and are not licenced, do not pay taxes, do not use electricity, and most of all do not keep any business records.

On the contrary, 42% of the MSMEs are emerging enterprises, focusing on repeat business, have a cell-phone, and are aware of where to get business advice. The remaining 15% are most developed MSMEs, which are licenced, have a bank account, know how to market their businesses.

This calls for a concerted effort by the Govern- ment and private sectors to develop the MSME and work with them to identify the opportunities contained in the Recovery Plan in addition to translating to opportunities into viable businesses. Investing in MSMEs will help Eswatini in its quest to attain most of the Sustainable Develop- ment Goals (SDGs) such as SDG 1: No Poverty by channelling every liSwati to productive economic activities; SDG 2: Zero Hunger; SDG 8: Decent work and economic growth; and SDG 9: Industry, innovation, and infrastructure development.

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► Ensuring MSME Access to Opportunities

Therefore, in terms of Emalangeni value, there is E23 billion that will be invested into the economy through big business and another E7 billion through government/capital projects out of which a minimum of E5 billion will be absorbed by the MSME sector. The MSME sector will get a share of the E30 billion investment through the intermediate demand/inputs of production they will be supplying to the “big projects”. For example, during the implementation of the Projects, MSMEs will be sub-contracted in the construction of roads, dams, malls, office spaces, residential estates, among other infrastructure Projects.

At the same time, MSMEs will also play a critical role in supplying raw materials and intermediate services (financial, technology, etc.) to the various ‘big projects” for the production of final goods and services that will launch the economy into a higher growth trajectory.

It is worth noting that big business cannot exist without the MSME sector and the MSME sector cannot exist without big business. Both are part of the same fabric that makes up the economy. Overall, part of the E30 billion investment will come as a cash-injection to the MSME sector through the settlement of arrears in the amount of E2 billion and the other part will come through the different supply chains that will link big businesses and MSMEs. Therefore, the MSME sector stands to benefit a minimum of E5 billion out of the total E30 billion investment contained in the Recovery Plan. With this cash-stimulus, the MSME sector will be positioned to take advantage of the following opportunities:

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Sector of the

Economy MSME Opportunities from the Post COVID-19 Economic Recovery Plan

1. Tourism • Shuttle/transportation services to tourist destination areas

• Supply of single-use hand towels, cutlery, menus, etc.

• e-tourism to facilitate the export of handicraft products

• Graphic design and online marketing opportunities 2. Agriculture,

Forestry, &

Fisheries

• 27 farmer companies to be established through LUSIP 2

• Light manufacturing opportunities in production of egg trays, chicken coops/cages

• Supply of milk to be sold to dairy processing plant

• Production of baby vegetables to be exported to regional and world markets through KMIII Airport

• Production of maize, beans, rice, other grains for local processing and packaging

• Production of white and red meat for processing plants

• Trucking and logging through expansion of forestry Projects

• Forest management

• Bee keeping/expansion of honey industry

• New fish market/value chains to be established

• Increased access to credit through the soon to be established Farmers Bank

3. Infrastructure • Sub-contracting through civil projects (construction of roads, dams, malls, office spaces, residential estates, factory shells, railway lines, and rehabilitation of schools)

• Supply of building material to infrastructure Projects

• Maintenance of infrastructure

• Refrigeration & air-conditioning, architecture, plumbing, wiring, welding, painting, lighting, landscaping, carpentry, interior design, etc.

• Catering businesses to supply food to construction Projects

• Engineering Consultancies

• Supply of fixtures, furniture, computers, and other equipment and systems

4. Wholesale & Retail • Supply of “Made in Eswatini” products/commodities in the retails shops/

malls to be constructed

• Import and export of commodities for wholesale and retail

• Financials services for retail transactions

• Establishment of new brands and expansion of existing brands on household goods and clothing lines, coffee shops, eateries, etc.

• Transport for commuting shoppers and retail employees

• Shipping & logistics management

• Storage

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5. Manufacturing • Value addition through expansion of sugar industry/industrial park

• Supply of raw materials to manufacturing plants (fertilizer, dairy, recreational vehicles, pharmaceuticals, candy, crude oil, noodles and other food products, sugar, paper, industrial protective clothing, steel and metal recycling).

• Cleaning and maintenance services to factories/manufacturing plants

• Provision of security systems and security services

• Shipping & logistics management

• Import/Export

6. Energy • Construction of sub-stations

• Extension and maintenance of power lines

• Maintenance of solar plants (cleaning, landscaping, etc.)

• Security services

7. Textiles • Catering, accommodation, transport services

• Expansion of cotton industry through cotton production

• Expansion of cotton ginnery operations to

• Laundry services

• Ginning, spinning, weaving/knitting, dyeing, printing, finishing, fashion design

► Ensuring Access to Finance & MSME Business Development Support

MSMEs are a special group that needs special attention and care if they are to be effective drivers of innovation and growth in any economy. Other than a focus on providing opportunities for the MSME sector, the Recovery Plan is also deliberate in putting together the necessary structures to promote MSME participation and success in the economy. Government considers MSME business development support as a necessary ingredient that can encourage rapid economic development and sustainable growth. A range of policy options may be considered to promote sustained growth and competitiveness of MSME; however, the following support system is available to level the playing field for all MSMEs, so that they can reap the benefits that come with the Recovery Plan:

• Initial capitalisation of E45 million

• E5 million to be allocated to informal sector businesses

• Loan Guarantee Scheme (Guarantee capacity of around E160 Million)

• Initial capitalisation of E4 million

• ESWADE,

• NAMBoard, NMC, Dairy Board, and Cotton Board

• RSTP

• SEDCO Ministry of

Commerce MSME Revolving Fund:

Recalibrating screening criteria for Loan Guaran- tee Scheme:

Export Guarantee Scheme:

MSME

Incubation &

Business Development Services:

Financing:

• FINCORP, Eswatini Bank, and a E1 million interest free loan for MSMEs @FNB

• Inhlanyelo Fund

• Youth Enterprise Revolving Fund

• Regional Development Fund

• MSME Interest-free Loans (lending capacity E1 million)

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Structural Reform

Tax Reform Protect MSME

from collapsing due to COVID-19 pandemic

Enhance existing support mechanisms

01 02 03 04 05 06

Escala�ng presump�ve tax, must not be higher than South

Africa

Ensure Coordina�on

of MSME ac�vi�es

Ensure Access to Finance to take

advatage of opportuni�es provided by the

Recovery Plan

Also, increase lending ceiling under

each fund

Recalibrate screening criteria for

Loan Guarantee

Scheme

Extension of repayment period and/or payment holiday

during the current COVID-19

pandemic

► The Key Enablers for the MSME Sector

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6. ENABLERS FOR THE PATH TO RECOVERY:

• Liberalisation of the ICT industry by un-bundling EPTC.

• EPTC and EEC collaboration project -EPTC to utilise EEC’s optic. fibre infrastructure to provide network backbone infrastructure.

• ITU Wireless Broadband to schools project to provide free internet to rural schools.

• Cut the cost of communication (especially data) to be competitive within the region

• Integrated Government Services (one-stop-shop): Merging Government Com- puter Services (GCS) with RSTP to provide a single Centre of IT Excellence for Government.

• Process harmonisation, Systems integration, and Data Exchange: This is a one stop shop online platform for delivery of Government and State Owned Enter- prises (SOE) services to citizens and business.

• Linking government and public procurement (central & parastatals) to an auction type of platform in order to attract the best prices, and to promote buying local.

• Establishment of a reliable and robust IXP that ensures all local traffic between licensed providers (compulsory) and major content providers’ stays in-country.

• ESCCOM to compel all licensed operators to connect to IXP.

• Ministry of ICT to move ownership and co-ordination of the IXP to an entity like RSTP.

5. Establish National Payment Gateway 4. Establish IXP (Internet Exchange Point)

3. eProcurement 2. Leverage RSTP 1. Unbundle EPTC

To be a private sector-led economy, there are critical economic/institutional reforms that need to be implemented. Without these key enabling mechanisms in place, Eswatini will continue to trail behind on its rankings on the Ease of Doing Business, and as a result, private sector investment will continue to be stifled. One of these critical enablers that the country must address as a matter of urgency is the ICT sector.

► ICT Enablers;

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The ultimate goal is to attract and channel high value investments into the Kingdom of Eswatini. To achieve this goal, the country needs to make it easy for high net-worth individuals and quality FDIs to land and settle into the Eswatini economy. These kinds of investments can boost investor confidence as well as transform the Eswatini econ- omy to become the ultimate head office destination for multi-national corporations.

This requires an unwavering commitment on the key economic reforms that can make it easy for foreign and local investors to do business in Eswatini.

► Set-up a commercial bench/specialised courts to deal with complex financial and in ternational business matters:

◊ Align rules that govern companies with OECD requirements. Alignment of Eswatini’s legislation with the OECD rules might, in fact, create an opportunity to attract Southern African and other international businesses to establish properly staffed offices in Eswatini.

◊ Establish easy-to-understand and easy-to-follow laws for the financial services sector (especially for funds and fund/asset managers) to attract international asset managers.

◊ Tighten anti-money laundering (AML) regulation so that it is robust enough to comply with international standards to allow cross border transactions, but sensible and condensed enough to attract and monitor foreign business transactions.

► Protect Private Property Rights – Do not approve the Farm Dwellers Bill. The key con cerns on this Bill stem from the following:

◊ Vagueness;

◊ Obligation of the farm owner;

◊ Procedure for the sale or purchase of a farm; and

◊ The relevant provision of the Eswatini Constitution.

► Government not to issue sovereign guarantees except for strategic projects such as dams, power plants, etc., that will eventually be owned by government.

► Tax Reform:

◊ Residency Tax Reform for big multinationational corporations to pay tax here in Eswatini.

◊ Establish/Conclude tax treaties with many jurisdictions as possible.

◊ Establish escalating presumptive tax for MSMEs and rate should be comparable to or lower than MSME presumptive tax in South Africa.

◊ Establish Special Tax Dispensation for the different industrial zones e.g. Finance, Textiles, Sugar, and Timber Industrial zones.

◊ Set-up separate fund for SRA to remit VAT, rebates/refunds, etc.

◊ Remove exemption on electricity to make it a VAT-able commodity based on the recommen- dation on the Study on the Potential Impacts of Introducing a VAT on electricity.

◊ Integrate Eswatini’s VAT system with Mozambique’s system. Mozambicans doing business in Eswatini must be able to claim their VAT as they are able to do so with South Africa. The VAT can be loaded in a card that can be used to shop in Eswatini.

OTHER ENABLERS:

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► Government needs to establish clear criteria for path to temporal or permanent residency:

◊ Cabinet to decide on issuance of Temporal Residence Permits and to clearly define the process for high net-worth individuals and investors.

◊ Remove discretion of Commissions on issuance of (TRPs) for high net-worth individuals and investors.

◊ Build in certain guarantees on TRPs: for example, one guaranteed TRP for every 40 jobs created.

◊ Set-up a Commission of Enquiry to investigate permits (PINs/IDs/) issued in the past ten years. Compare PINs/permits granted against the official list of citizenships granted. Revoke all documents found to be issued illegally.

◊ Enable foreign ownership of land, or a 99-year lease option for foreigners.

◊ Limit operation of foreign-owned businesses on SNL.

► Ensure Eswatini’s self-reliance on power:

◊ Power Purchasing Agreements (PPAs) between Eswatini Electricity Company (EEC) and IPPs to be agreed based on current Eskom price + inflation as a baseline.

◊ Set-up EEC Guarantee Scheme (instead of sovereign guarantees) to enable the utility to pro- cure power from Independent Power Producers (IPPs).

◊ Ensure that IPP investment is not subject to requirements that are not based on law.

̛ The Competitive Bidding Process is stifling investment into the power sector.

The regulator is prescriptive on the following; Local content requirements for Debt (yet to syndicate cross-border finance deals is costly), Equity and EPC (engineering, procurement, and construction) (cross-border engineering certifi cation is costly and unnecessary). This makes deals much costlier, complex, and expensive to put together and finance. Applying localisation requirements to a local company is another hindrance.

̛ Ideally, the Regulator should control price, quality, and sufficiency of power and leave the investment process to the investor.

► Stop legislating through gazettes: formulate policies from which legislation can be drafted.

► Cabinet to trigger Joint Border Cooperation Agreement between Eswatini and South Africa to explore 24-hour operation of Ngwenya, Mahamba, and Lavumisa borders.

► Ministry of Foreign Affairs & International Co-operation to re-engage South Africa and Mozambique on the Joint Bilateral Commission for Cooperation to improve trade relations and arrangements between the countries.

► Prioritise the Mining Sector to boost economic activity.

► Stop over-regulating the economy: Focus on improving the Ease of Doing Business.

► Launch the State-Business Relations Programme: it is part of the Eswatini Strategic Roadmap 2019-2022.

► Monitor the implementation of the Recovery Plan so that it is responsive to the needs of the private sector as it implements the “Big Projects”.

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TOURISM PROJECTS

Tourism is one of the hardest hit sectors of the economy due to the COVID-19 pandemic. The sector is requesting a E20 million stimulus package from the Government of Eswatini to keep businesses afloat. The sector is also committing to stimulate activities through product enhance- ment to attract tourists when the pandemic subsides and through an “Eswatini Unlocked Cam- paign” that will encourage locals to participate in domestic travel for leisure to support and grow the tourism industry. In terms of the big projects, the tourism industry will attract investment across the country, which includes an amusement park in Buhleni, an aquarium at Maguga lodge, trails and backpackers in Mhlambanyatsi, and an Eco-lodge in Malkerns. Total investment into this sector will amount to E466 million and will create at least 345 job opportunities.

Although Eswatini has a small tourism sector, the NDP underlines the potential contribution this sector can make towards economic recovery.

The NDP emphasises that the tourism sector has potential and needs full exploitation and infrastructure/amenities for the development of tourism products. However, there has been a lack of a clear and comprehensive national tourism strategy to guide the sector over the long-term, particularly taking into consideration these uncertain times. This might be a reason the sector is most affected in this COVID-19 pandemic as there are no strategies to cushion the sector in cases of national emergencies.

The good news: the newly proposed tourism projects provide an ultimate solution to the existing dilemma. The project “Eswatini Unlocked Cam- paign” that will encourage locals to participate in domestic travel for leisure through social media platforms amongst other things, provides a good platform to resuscitate the tourism industry.

The Tourism Campaign, will not only create job by growing domestic tourism but will also boost biodiversity conservation efforts and strengthen eco-systems management. Therefore, Eswatini would be working towards achieving the SDG 15, which aims to protect, restore and promote sustainable use of terrestrial ecosystems, sustainably

manage forests, combat desertification, and halt and reverse land degradation, and halt biodiversity loss.

However, Eswatini's tourism sector has for a long time relied on the hospitality industry as the major driver of growth in this sector. This is despite the NDP highlighting the need for the country to investigate opportunities to increase non-hospitality focused tourism. Hence, the newly proposed Buhleni Fun City provides an opportunity to create 195 jobs in rural Eswatini and provide a recreational facility especially for the unemployed youth in the Buhleni vicinity. This fast-growing town is in the Hhohho region whose youth spends its income in South Africa for recreational services. Therefore, the new project will not only benefit the youth but also the economy as consumer spending will now be contained in the country.

AGRICULTURE, FORESTRY, AND FISHERIES PROJECTS

Eswatini is already witnessing the devastating impacts of the COVID-19 pandemic on the economy.

This pandemic came at a time when the country is nursing an ailing economy characterised by slow economic growth.

The agricultural sector as the backbone of the economy has proposed 21 projects worth E5.361 billion. These projects will create employment opportunities for 6,040 Emaswati. These projects will include the various agricultural value-chains such as the staple food maize, dairy, forestry, baby vegetables, citrus, banana, poultry, and the fisheries industry. Most importantly, the agriculture sector projects will address the food insecurity problem by ensuring the following:

◊ An increase in local white maize production for an additional 40,000 metric tonnes (MT).

◊ An increase in local yellow maize production to meet an immediate target of 25 000 MT and gradually increase to 100,000 MT.

◊ An increase in local production of fer-

7. SUMMARY OF PROJECTS

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tile eggs and day old chicks for broiler chickens.

◊ An increase in beef production by an additional 40,000 MT.

◊ An increase in legumes by an additional 2,000MT to meet local demand. The agriculture sector will develop tunnels for baby vegetable production and a packaging facility.

Eswatini is committed to the implementation of SDG 2, which requires investments to end hunger and achieve food security on top of improving nutrition and promoting sustainable agriculture. In- vestments that contribute to improved food security and ending hunger in Eswatini’s households are quite key because the prevalence of stunting among children under 5 years of age is currently at 19.9%. As it stands, the country is food insecure at the household level, yet 70% of the population is involved in agriculture. Lack of irrigation systems and extension services are the major contributing factor to low agriculture production and productivity, consequently leading to low food security and poor nutrition. Therefore, there is a need to cut dependency on rain-fed agriculture and improve irrigation systems. This will not only benefit the agriculture sector but also the population at large, surviving on rainwater and poorly sani- tised drinking water.

The NDP states clearly that there is a need to improve management and administration access to land for investors and communities, provision of water for agriculture purposes, and provision of renewable sources of energy and adapt to climate change conditions. Additionally, investment in agriculture production in the Lubombo region will also help the achieve SGD11 and 13 aiming to promote sustainable cities and communities, and compact climate change impacts, respective- ly. The Lubombo region is described as the most vulnerable area to the impacts of climate change, because of its very dry conditions limiting vegeta- tion growth. Thus, the proposed post-COVID-19 Projects will accelerate the implementation of the

Agri-zone baby vegetable production to benefit communities in rural Eswatini. These projects will not only help achieve SDG:8 of productive employment and decent work for all, but also the SDG 2 of ending hunger and improved nutrition and promote sustainable agriculture. Increased total production within the agriculture sector will increase local food production, which will cushion food prices, and increase income generating activities for smallholders and rural communities.

Most importantly, as the country capacity to produce within the agriculture sector, there will be significant reduction in agricultural imports and with more production of maize, avocados, citrus, baby vegetables, fish, poultry and red meat, agricultural exports will increase, thus increasing the contribution of the agriculture sector to GDP.

The Post-COVID-19 Recovery Projects in the agriculture sector are in line with the NDS because they will diversify the economy within agriculture (through high-value crops & livestock) and support the other sectors of the economy such as manufacturing to spur industrialisation. On the other hand, the aquaponics projects will help improve the fisheries sector's contribution to the GDP, which currently is almost non-existent. In the process, this will assist in improve emaSwa- ti’s culinary habits, nutrition, as well as improve many business opportunities for the youth to mechanise the agriculture sector, leverage technology to improve productivity, and make the agriculture sector attractive to youth by opening up opportunities beyond on-the-farm jobs.

INFRASTRUCTURE PROJECTS

Infrastructure development is important to stimulate economic growth and to alleviate poverty.

Quality infrastructure also attracts Foreign Direct Investment (FDI). In light of these benefits, this sector proposes 16 infrastructure projects worth E4.016 billion that will facilitate trade and enable the private sector growth. A total of 2,191 construction and permanent jobs will be created within 12 months. These projects range from construction of earth dams, corporate head offices, railway in-

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The NDP articulates the need for strategic investment in key infrastructure that can improve public and private sector activity and trade. Howev- er, NDP further states that the existing physical infrastructure does not respond to the prioritised needs of the country to achieve social and economic goals in improving access to health, education, and water and sanitation amongst others.

Therefore, there is a need for the private sector and the public to invest in infrastructure development. The proposed Centricity: Mixed-use Com- mercial/ Retail/ Education project to be developed in the Ezulwini valley is much in line with the NDP’s to provide economic infrastructure for development of skills among Eswatini’s youth.

Eswatini’s youth current unemployment status is very high, standing at 32.4%. The youth will not only benefit through skills development but also the implementation of the project will create 250 jobs.

More infrastructure development projects will be implemented particularly to increase water and sanitation projects. This is in line with the SDG 6 articulating the need for increased portable water supply coverage to 'leave no one behind'. The Pov- erty Reduction Strategy states that 60.5% of the population uses an improved source of drinking water, with 39.5% using unimproved water sources. The situation in the Lubombo region is con- siderably worse than in other regions; only 53.5%

of the population in this region gets its drinking water from an improved source while 46.5% use unprotected water sources. In the Manzini region, 63% of the population uses drinking water that is protected. This is much less to the SDG:6 target aiming to ensure availability and sustainable management of water and sanitation for all. Thus, the water and sanitation projects including the Eswatini Water and Sanitation, Rural Sanitation, and the Manzini Region water supply projects will help improve household access to safe drinking water. Water is a basic need for humans, and improved access to water widens opportunities households to also use water for non-consumption such as backyard gardens which can improve their food security status and cut expenditure on food. The availability of water on-premises is as- sociated with greater use, better family hygiene,

and better health outcomes. The NDP encour- ages investment in the health sector to increase life expectancy at birth from 58.3 to 60 years and reduce new-born deaths from 20 to 15 per 100 live births. Non-communicable diseases such as cancer have been the leading cause of deaths not only in Eswatini but globally. The 2019 National Can- cer Prevention and Control Strategy posits that Between 2016 and 2017 about 2,077 new cancer cases recorded among emaSwati in 2016-2017 and only 52.6% were diagnosed locally in the Mba- bane Government Hospital. The Government hospital is the only national referral hospital ca- pacitated with an oncologist, the most surgeons, and the national referral laboratory which links with Lancet for further diagnosis. But this is not enough considering the number of cancer cases recorded per year.

The Poverty Reduction Strategy also concurs that access and uptake of health and health-related services remains a challenge for the country, because of many barriers, prime amongst being the capacity for the health sector to provide a comprehensive health service through the life course.

Therefore, the investment in the Manzini Oncol- ogy Clinic, The National Referral Hospital, and the FLAS Mbabane Clinic will help control the number of deaths resulting from this global ep- idemic. Cervix Uteri is the most leading cancer type which affects women, hence there is need for government and private sector to invest in health systems to combat the disease.

Investment in health services will assist in the im- provement of Eswatini’s human resource, which is a prerequisite for economic growth. Moreover, this will cut the costs for patients travelling to South Africa for oncology services. The government will also benefit through cost reduction as it often covers health expenses through Phalala Fund for cancer patients treated in South Africa.

WHOLESALE & RETAIL PROJECTS

The Wholesale and Retail Sector will pursue 6 projects worth E2.206 billion in various parts of the country including Mbabane, Ezulwini, Man- zini, Nhlangano, Mhlambanyatsi, and Bhunya. A E2 billion investment will go into the construction of a shopping mall in Manzini and the bal-

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ance of the total investment will be channelled towards the construction of three filling stations, and a shopping centre in Pine Valley, Mbabane.

In total, 1,870 jobs will be created through these projects.

Just like the Tourism Sector, Wholesale and Retail has been adversely affected by the COVID-19 pandemic through the disruption of supply chains and depressed consumer spending. With increased investment in retail businesses, more jobs will be created especially for low skilled labour currently relying on COVID-19 relief grants. The E2 billion Mall in Manzini alone will provide jobs to 1,000 people. This is will be very beneficial to Emaswati considering the high number of people who have recently lost their jobs to the COVID-19 pandemic. More retail businesses have been liq- uidated, and the existing local and multinational chain stores are barely surviving. Hence, having new retail outlets especially in the busy Manzini town will assist to create jobs and increase local money circulation, as consumers will now have a variety of products to choose from locally and not look out of the country. Building more shops will increase economic activities and provide opportunities for MSME to supply locally manufac- tured commodities to these chain stores and in the long-run will boost employment and stabilise prices, which have been skyrocketing since lockdown. The 2017 FinScope Survey states that MS- MEs have less involvement in wholesale and retail sectors which are dominated by independent entrepreneurs who make less revenues compared to the highly specialised sectors. Hence, there is a need to implement projects that will consider MSME growth.

MANUFACTURING PROJECTS

Manufacturing is another important aspect of the economy that has been prioritised by the Strate- gic Roadmap to drive innovation and growth. The 22 projects proposed under this sector will ex- pand existing manufacturing companies as well introduce new products that can be consumed locally as well as exported to increase GDP.

further asserts that a well-developed manufacturing sector increases productivity. Likewise, the Strategic Road Map also prioritises the manufacturing as a sector that can drive innovation and growth. However, the average annual growth rate of the manufacturing sector in Eswatini is at 3.2%, which is very low when considering that this sector is expected to be key in promoting economic growth. The NDP states that the size of the manufacturing sector as a percentage of GDP is 32%. The manufacturing sector projects planned in the post-COVID-19 strategy will play an important role in increasing the country’s economic productivity and contribute expansion of the economic base, increasing local production of goods, stimulation of foreign exchange earnings, and stimulating MSME growth.

Manufacturing investment will amount to E6.537 billion creating 4,610 jobs. These manufactur- ing projects include, but not limited to expanding the sugar industry for value addition to produce various sugar products, manufacture of pharmaceuticals through RSTP, production of fridge components, and a Kellogg’s factory to manufacture noodles and other food products, leather factory for the manufacture of industrial protective clothing, the refurbishment of former Swazi Paper Mills for the manufacture of craft paper, cardboard, etc., and a Lubombo Industrial Park for the manufacture of soap, pharmaceutical, and assembly of cars as well as an ethanol enrichment plant. It is worth noting that the manufacturing sector will benefit from the largest share of investments out of the Recovery Plan, so that the sector will be well-positioned to drive the country’s growth as per the objectives of the Eswatini’s Strategic Roadmap 2019-2022. A majority of these projects will take place in Matsapha – the industrial hub of Eswatini.

The manufacturing projects are in line with the NDP which emphasises the development of a dy- namic private sector supporting sustainable and inclusive growth. Specifically, the manufacturing sector will contribute to the achievements of

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ment; increased employment; and stimulating investment and fostering entrepreneurial activity. One of the planned projects is already operational, and that is the Kellogg’s Tolarum Eswati- ni PTY LTD manufacturing noodles. The project will contribute over E6 billion to the country's GDP. This project alone will boost the economy in many ways. Particularly, MSMEs will benefit, as they will be supplying the inputs needed for pro- ducing noodles, e.g., flour. Despite, the sector’s potential to serve MSMEs, 13% of MSMEs operate in the manufacturing sector according to the 2017 FinScope Survey. Manufacturing sector investment such as the Kellogg’s factory, manufacture of fertilizer, pharmaceuticals, recreational vehicles, computer components, tissue, industrial protective clothing, etc., Eswatini would be mak- ing the much needed investments for industrial innovation and improving local capacity to manufacture goods for export. At the same time, the manufacturing sector presents immense opportunities to absorb Eswatini’s youth, particularly those engaged in technical vocational education and training (TVET). Moreover, this is a huge opportunity for skills development and skills trans- fer especially in high tech industries that will be manufacturing products.

Worth noting, the manufacturing sector will benefit from the largest share of investments out of the post-COVID-19 Recovery Plan so that the sector will be well-positioned to drive the country's growth as per the objectives of the Eswatini's Road Map 2019-2022. The manufacturing sector projects implementation contributes to the achievement of SDG:8 which allows the promo- tion of sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all. The target for the least developed countries like Eswatini for this goal is to achieve at least a 7% growth in per capita gross domestic product (GDP) per year. However, according to the World Bank calculations, Eswatini requires a minimum growth rate of 23% per an- num in real per capita GDP to reduce poverty and inequality. With an expansion of the manufacturing sector, Eswatini would be creating enumera- ble opportunities for both skilled and unskilled youth including women, to close the inequality

gap and further reduce poverty.

ENERGY PROJECTS

A limited energy supply can adversely affect the development of a country and if not taken into consideration can limit growth prospects of the different sectors of the economy. Energy is a key source of economic growth as many production and consumption activities involve energy as basic input. The energy sector is one of the most important inputs for economic growth. Since economic activity will be increasing in other sectors, a sustainable supply of energy is neccessary. This sector proposes 9 projects worth E3.747 billion that will provide the much needed energy security to stimulate economic growth. These projects mainly consist of solar plants (varying in size), a biomass Energy Plant, Refinery, and an oil re- serve. In total, 750 jobs will be created through these energy projects.

The NDP states that the Kingdom of Eswatini ac- knowledges that natural resources management is an essential aspect of socio-economic development and for ensuring that future generations have a foundation for their prosperity. However, there is a heavy reliance on imported energy in the Kingdom of Eswatini. The Eswatini Electric- ity Company in its 2015 report reveals that there is an inadequate supply of electricity in Eswatini.

This is despite the heavy investment Rural Elec- trification Programme which has contributed to the increase in access to electricity nationally increased from 69% in 2014 to 78% in 2018. Eswati- ni’s business sector has been complaining about the high electricity charges which compromise their profits, and this has had adverse effects on the country’s ease of doing business. It is therefore important for the Kingdom of Eswatini to implement robust initiatives that will ensure improved ease of doing business in the country through access to locally produced energy.

With good investment in the energy sector, Es- watini will be able to achieve SDG:7 of the Sus- tainable Development Goals, articulating the need to ensuring access to affordable, reliable, sustainable, and modern energy for all. Imple-