ESWATINI CALLED TO PRIORITISE TRADABLE SECTORS

MBABANE – The main objective of policymakers in Eswatini is generally to create maximum jobs, given the exceptionally high structural unemployment rate.

In order to curb the high unemployment, the World Bank Group has called for the country’s policy to prioritise labour–intensive and tradable sectors, globally competitive sectors and sectors with high-projected regional and global demand.  According to the recent report issued by the World Bank Group titled ‘Country Economic Memorandum: In search of the drivers of inclusive growth’, sectors with the highest content of tradability should also be prioritised as the labour productivity gains are often two-three times bigger than in non-tradables.
Some of the findings of these reports were presented on Friday during the World Bank and Business Eswatini private sector engagement attended by the Vice President of the World Bank for Eastern and Southern Dr Victoria Kwakwa and her delegation.

Opportunities

According to the report, the first priority sector is digital services. According to the World Bank, digital services offer a range of opportunities for growth and leapfrogging, as recognised by recent strategies and the establishment of the Royal Science and Technology Park (RSTP). One of the challenges faced by the digital services sector is that the small market size and landlocked geography are both hindering factors for wide broadband adoption and growth of the digital economy. The biggest barrier to development of digital platform and affordability of digital services is limited market competition in the international connectivity and the middle miles of broadband value chain.

The World Bank noted that another constraint noted in this sector was  the limited development of e-commerce platforms, due to unaffordability of data and digital devices, lack of digital skills and low uptake of digital financial services by users (two thirds of people who are covered by broadband networks are not using the internet). Insufficient supply of intermediate and advanced digital skills (lack of graduates in ICT and STEM related subjects) was noted as another constraint.  The World Bank proposed solutions to address the challenges faced by the digital services sector. These solutions include restructuring of the incumbent telecom operator Eswatini Posts and Telecommunications Corporation (EPTC) to increase competition.

Solution

Another proposed solution is the drive of entrepreneurship ecosystem growth through enhanced local/regional linkages and expand market opportunities through the regional integration of digital markets. The second priority area is the tourism sector, as it has potential to contribute more in Eswatini. Currently, it contributes around 2.5 per cent to the gross domestic product (GDP). The potential is high with the Eswatini’s low crime rates in comparison to neighbouring countries, serene landscapes, game parks, festivals and cultural richness.

The World Bank noted that while the number of visitors is relatively high (800 000 per year), the gains for the local economy are relatively small. It was noted that this sector has low job multiplier at the local level and it has limited contribution to foreign earnings, due to low spending in the country. The global lender noted that constraints with the tourism sector was that there was little diversification, with heavy reliance on visitors from South Africa, insufficient quality of hospitality infrastructure and services and quality of local suppliers not at par with international standards. As solutions to the challenges of the tourism sector, the World Bank called for Investment in tourism infrastructure, including internet connectivity, road access and simplified border entry.

Priority

The third priority area that the World Bank suggested should be prioritised is the agriculture and agribusiness sector. Currently, the agriculture contributes about 8.1 per cent of GDP and 12.4 per cent respectively. Due to its labour intensity and potential competitiveness, it is an important source of income and jobs for rural communities and a source of export revenue for the country. Eswatini’s agriculture faces multiple challenges, which disproportionately affect small rural farmers, while agribusiness development is excessively concentrated around the sugar industry.

Key constraints noted to be hindering growth of the agriculture sector, includes the limited access to finance due to limited possibilities to provide guarantees and use de-risking instruments. Another constraint is that smallholder farmers are not well-integrated into agricultural value-chains, contributing only 10 per cent of the agricultural output, due to low productivity, inconsistent quality of products and fragmentation of producers. Proposed solutions by the World Bank include enhancing the capacity of the newly established Agricultural Development Fund (ADF): develop better models for co-financing, derisking mechanisms and blended financing options.

The World Bank further proposed strategic and transformative investments to improve farmers’ resilience to climate - change induced shocks: irrigation infrastructure, market access infrastructure through the National Agricultural Investment Programme (NAIP). Another proposed for the agriculture sector is the value - chain development for strategic commodities (horticulture, grains and livestock/beef), through strengthening smallholder farmers organisation and partnerships – to raise productivity and quality of produce and address fragmentation of producers. The three labour–intensive, tradable, globally competitive with high-projected regional and global demand sectors:

• Digital services
• Eco-toursim
• Agriculture/agribusiness

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