ABOVE AVERAGE IMPORTS COVER FOR ESWATINI

MBABANE – Eswatini has been ranked among many African countries that confidently boasted import covers of over three months in 2023, while some fall well short.

According to the Afreximbank’s African Trade Report 2024, continued capital inflows, fuelled by Greenfield projects, global and regional development financing organisations, and bilateral partners, as well as increased tourist arrivals and remittances, helped bolster the continent’s reserve position. According to this report, Eswatini boasted an import cover of 3.2 months in 2023, increasing from the import cover of 2.5 months recorded in 2022.

Zimbabwe and Ethiopia both had the lowest months of import cover while having the highest import cover of 34.1 months, followed by Algeria with 16.5 months of import cover.
A high amount of import coverage acts as a buffer against economic volatility. It sends a message to investors, creditors and foreign trade partners that government is capable of upholding its international responsibilities, especially during times of economic hardship. This confidence can attract foreign direct investment (FDI) and enhance the country’s credit rating, lowering borrowing costs and allowing for more affordable funding for development projects. A strong import cover is critical for African economies, which are especially vulnerable to commodity price changes, political instability and external debt pressures.

Reserves

According to the Afreximbank, Eswatini’s gross official reserves grew by 14.1 per cent to reach E0.6 billion in 2023. Meanwhile, when delivering the annual integrated report of 2023/24, the Governor of the Central Bank of Eswatini Dr Phil Mnisi, on August 28, indicated that the country’s gross official reserves accelerated to reach E10.7 billion in July 2024, covering 2.8 months of imports from E8.2 billion in July 2023.

Reserves

He said this development was attributed to higher SACU receipts during the 2023/2024 and 2024/25 fiscal years, as well as the ongoing strategies implemented by the bank to continually build reserves. Dr Mnisi highlighted that as of August 16, 2024, gross official reserves stood at E10.4 billion, equivalent to 2.7 months of imports. “In the short to medium-term, the reserves position is expected to remain high, owing to an 11.2 per cent increase in SACU receipts in the 2024/25 fiscal year,” he said. It was worth noting that the country’s imports also increased in the first seven months of 2024, amounting to E21.3 billion, compared to E19.1 billion for the same period in 2023. Growth was recorded in imports of animal and vegetable products, machinery and electric equipment and vehicles.

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