INDUSTRY DIVERSIFICATION

This year domestic growth is likely to be driven by strong government spending, inducing a bigger multiplier effect trickling in through the economy.

To that end, we expect the private sector to stand ready to receive the capital expenditure and the common goods purchases to bolster growth. The economy is projected to posit positive growth in the next coming year. The risks are eminent in the economy, as the cost of living pressure continues to mount and the risks of stagnation. The domestic economy has been stagnant for the past two decades with signs of shored up growth in 2021 and modest growth in 2022. The economy is wanting of new sources of growth and industry diversification is a potential source for growth.

Sources of growth

Sources of growth for the country need to be identified in line with the constraining factors both regionally and domestically. Industry diversification is one of the key sectors of sources of growth. Indications going into 2024 show that there is a vigorous drive towards the deepening of the mining sector and diversification of same. This is a potential source for growth, however, sustained industry diversification and reaping the growth potential of the sector requires an ardent zeal for beneficiation. I will circle back to the issue of beneficiation later in the article. There is need to diversify the manufacturing sector, the agricultural sector and the tech sector. Such strategic investments will shore up the short-term, medium-term and long-term growth prospects of the kingdom. Value addition coupled with import substitution and export promotion are the key strategies that the kingdom needs to focus on.

Beneficiation of minerals

Potent mineral extraction as a driver of growth ought to have been preceded by a proper beneficiation of minerals policy and a review of the Minerals Act. Extraction of the raw materials, which we kept in the ground ever since independence, has to drive broad-based growth and all emaSwati must benefit from the extraction process. The main problem faced by developing countries is that of exporting raw materials at a lower cost and buying improved or enriched products at a much higher price. The model only provides an ounce of the profit to developing countries and the bulk of the profit is retained in the global north.

The country ought to go out there and seek investors who would invest in the beneficiation infrastructure domestically or push a very strong indigenisation policy so that locals lead the extraction, ensuring that the benefits are kept domestically. The most extreme push would have been that of publicising the sector, which means having government leading the sector. Eswatini cannot fall into this very cycle after decades of preserving raw materials. Also, there has to be clear guidelines on how the proceeds from the mines will be shared and used to beef up the country’s fiscus and sustaining growth.

Value addition

The country’s agricultural sector has potential to drive further growth; this sector has not reached its capacity yet. In my view it is capacity constraints that bind the sector’s potential for growth. There is a glaring need to transition the sector into a manufacturing house, and this can be done through value addition into our agricultural products. There is scope in improving the food processing sector in the economy; all this requires is the right investments into the sector and the appropriate policies to grow it. This can be attained through import substitution policies and export promotion policies.

Import substitution ensures improved domestic demand for the commodities, while export promotion, on the other hand, opens up markets for domestic products. This has to be done within the confines of WTO rules and guarding against uncompetitive behaviour in the economy. The country also needs to improve on the utilisation of the investments in Royal Science and Technology Park (RSTP) to lead growth in the tech sector and also the diversification of the economy into pharmaceuticals and bio-technology. There have been plans in the pipeline to produce generic drugs through RSTP and to venture into bio-technology. I believe it is time to expedite the implementation of those plans. Investment in the production of generic drugs is requisite for lowering costs in the health sector and improving the lives of emaSwati.

Support to industry

The fiscal space prognosis for this year is a better and deeper fiscal space with breath to support the manufacturing sector. The support granted to the manufacturing sector through subsidised factory shells is critical, however, this year we can afford to go one better. EIPA can offer lower rates on rentals or completely subsidise the rentals for the sector. The sector needs relief to deal with the high cost of inputs and the supply side constraints in the Red Sea and Durban Port. There are marked demand side constraints as well; the advent of load-shedding in the country’s main export destination has had significant dampening effects on demand. Support has to be given for the sector to stay afloat and attain a better spread between costs and revenues, ensuring that more jobs are created and sustained. It is imperative that the fiscal space promotes growth this financial year.

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