UPDATED FDI POLICIES TO BOOST INVESTOR CONFIDENCE

MBABANE – The Government of Eswatini is currently working on improving Financial Direct Investment (FDI) policies to enhance investor’s confidence in doing business with the country.

FDI is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. The policies are currently being updated to increase access to preferential markets, stable and free business environment and generous incentives including duty free importation of capital equipment, amongst others. The government noted with concern that the current FDI policies limit the investor’s potential to expand by providing time-based contracts. Time-Based contract means a contract under which the services are provided on the basis of fixed fee rates and payments are made on the basis of time actually spent.

Updating

This was mentioned by the Minister of Finance Neal Rijkenberg in an interview yesterday. The minister said government is currently working on updating the policies so that investors have confidence that their investments will be substantiated. He said one of the items that would be reviewed is the duration of the contract awarded to foreign investors in their quest to expand their business in the country. The minister said some are awarded contracts of two years which usually contributes to the agreements not being finalised. “Some are given two years which affects their confidence in doing business with country as they feel the time they have been allocated is little,” he said.The minister added that this is despite the fact that the contracts are renewable.

Agreement

He said they are also working on other factors that tend to affect the agreement process between the investor and the country. The Minister of Commerce, Industry and Trade Manqoba Khumalo in a statement, said the Kingdom of Eswatini has put in place fiscal and non-fiscal support measures to ensure the cost of establishment of businesses and initial operational costs are reduced drastically through a range of incentives. He said the implementation of the African Continental Free Trade Agreement (AfCFTA) will bring numerous trade opportunities and the policies have been streamlined in anticipation of a renewed interest of multinational companies to invest in the Kingdom of Eswatini.

Potential

“Already we have seen new companies that have great potential in various such as manufacturing and agro-processing, mining and energy, agriculture, information, communication and technology and tourism,” he said. The Commerce minister also added that the establishment of Kellogg Tolaram in the Kingdom of Eswatini reinforces the relationship between the two countries and has attributed to the competitiveness in doing businesses which has helped the country remain atop in Africa when it comes in the World Bank ranking.

His Majesty the King Mswati III in his remarks, underscored the importance of FDI to the growth of a country’s economy. He said to attract FDI a country needs to have the appropriate policies and provide a conducive environment for businesses to trade without a hassle. His Majesty also noted that the visit to Singapore was part of the strategic engagement termed ‘Peer Learning Opportunity for the Kingdom of Eswatini’.

Limit

Economist Sabelo Manana said FDI can be an effective way for one to enter into a foreign market, although some countries may extremely limit foreign company access to their domestic markets. “Acquiring or starting a business in the market is a means for you to gain access,” he said. Manana said FDI is imperative to Eswatini business; it reduces cost of production if the labour market is cheaper and the regulations are less restrictive in the target foreign market. He said it can be a tremendous source of external capital for a developing country like Eswatini, which can lead to economic development.

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