DOMESTIC PRODUCTION HINDERS ECONOMIC GROWTH

 MBABANE – Key challenges impacting negatively on Eswatini’s ability to benefit from global value chains are the existing constraints to domestic production.

A report, in the African Economic Outlook, has indicated that export-oriented businesses have been hamstrung by an unfavourable investment environment, regulatory restrictions, government distortions and the high cost of trade – while the service sector, which is one of the fastest growing sectors, especially telecommunications, is still to fully emerge out of a legislative bind that has impacted investments.

Also, limited export market diversification has cast a shadow of uncertainty regarding trade preferences in key products. Limited access to finance by local Small and Medium Enterprises (SMEs) in the face of declining Foreign Direct Investments (FDI), affects the extent that the country can exploit existing links into global value chains.

In the revised draft of the Eswatini SME policy, it was explained that membership to various regional and international trade arrangements remains important to promoting trade, a critical element of its development and the health of the economy, given its small size.

“Eswatini has made some progress in implementing regional commitments. It has, together with other Common Monetary Area (CMA) countries, fulfilled the conditions for participation in the cross-border electronic payments system that began in July 2013,” reads the policy in part.

As part of the Southern Africa Customs Union (SACU), the country meets most of the convergence criteria for the Southern African Development Community (SADC).
In the policy, government also made an undertaking to reduce taxes for Small and Medium Enterprises (SMEs).

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