Times Of Swaziland: USA SEES TRADE POSITIVES IN ESWATINI USA SEES TRADE POSITIVES IN ESWATINI ================================================================================ Mfanukhona Nkambule on 11/08/2024 15:59:00 MBABANE – The United States Department of State says foreign and domestic entities have a right to establish, own and dispose of interest in business enterprises in Eswatini. This is contained in the 2024 Investment Climate Statements on Eswatini, prepared by the United States (US) Government, specifically the US Department. According to the department, foreign and USA investors own several of Eswatini’s largest private businesses, either fully or with minority participation by Swati institutions. It is stated in the report that there are no limits on foreign ownership and control of companies, which can be 100 per cent foreign-owned and controlled. “The only exceptions to foreign ownership and control laws are in the mining sector and in relation to land ownership,” reads the report. In Eswatini, the USA said there were no sector-specific restrictions (except mining and land ownership). It is said that Eswatini does not prescribe investment levels, equity caps, governance or Board representation requirements, mandatory domestic joint venture partner rules, licensing restrictions, mandatory Intellectual Property (IP)/technology transfer requirements, local presence, or workforce requirements. However, the Mines and Minerals Act of 2011 requires that the King (in trust for the Swati Nation) be granted a 25 per cent equity stake in all mining ventures, with another 25 per cent equity stake granted to the Government of the Kingdom of Eswatini. Exclusions “There are also sector-specific trade exclusions that prohibit foreign control, which include business dealings in firearms, radioactive material, explosives, hazardous waste and security printing,” according to the US report. There are no discriminatory mechanisms applied against USA foreign direct investors. Through its membership in the Southern African Customs Union, its ratification of the African Continental Free Trade Agreement (AfCFTA) in 2019, and its participation in the work of the World Trade Organisation (WTO), Eswatini continues to pursue the importance of trade in development. In 2024, the Government of the Kingdom of Eswatini (GKoE) launched the AfCFTA Implementation Strategy as the most holistic policy review document on regional trade. This strategy articulates GKoE is plans for trade in the continent of Africa. The USA said Eswatini was actively seeking foreign investments to drive economic growth, improve international competitiveness and access foreign markets. Foreign direct investment (FDI) is one of the five stated pillars of its Sustainable Development and Inclusive Growth (SDIG) programme and is the intended means to drive the country’s economic growth, obtain access to foreign markets for its exports and improve international competitiveness. The United Nations (UN) Human Development Index (HDI) 2022, ranks Eswatini in the top 10 highest HDI in sub-Saharan Africa. The Heritage Foundation Index of Economic Freedom ranks Eswatini in the top 25 percentile in tax burden, monetary freedom, government spending and trade freedoms. This is the 15th highest ranking of the 48 countries measured in sub-Saharan Africa. All of these observations were done by the US Government. The Eswatini Investment Promotion Authority (EIPA) is the State-owned enterprise (SOE) charged with designing and implementing strategies for attracting desired foreign investors. Eswatini’s investment policy, which supports the business environment is online at https://investeswatini.org.sz/legal-and-regulatory-framework/ . USA states that EIPA is functional and helpful, but it is not yet a one-stop-shop for foreign investors. It is said that Eswatini traditionally does not have a unified policy on investment. Instead, individual ministries have their own investment facilitation policies, which include policies on Small and Medium Enterprises (SME), agriculture, energy, transportation, mining, education and telecommunications. More recent developments have resulted in the review of the EIPA legislation to create a one-stop-shop service facility that would streamline approval formalities for investors, currently handled by multiple government agencies, under one roof. This was said by the US Department of State. This is aimed at ensuring that business licensing functions, such as business registration, trading licenses and permit applications, among other functions, are offered by a single inter-ministerial and inter-agency entity under one roof and are offered expeditiously to investors. Investors There are no laws which differ significantly between USA investors and domestic investors. The Swati Constitution states that generally non-citizen companies and/or companies with a simple majority of non-citizen shareholders may not own land, unless they were vested in their ownership rights before the constitution entered into force in 2005. On the other hand, the Constitution’s general prohibition ‘may not be used to undermine or frustrate an existing or new legitimate business undertaking of which land is a significant factor or base.’ Furthermore, non-citizens and non-citizen majority- owned companies may hold long-term (up to 99 years) leases on title deed land and Swati Nation land. According to America, the GKoE continues its attempts to improve the ease of doing business in the country through the Investor Roadmap Unit (IRU). The IRU engages with businesses and government to review and report on the progress and implementation of the investor reforms through annual and biannual consultations. In September 2022, the World Bank Group published a country private sector diagnostics report, highlighting opportunities to strengthen the private sector to grow export markets and create jobs. The ‘creating markets’ report highlights Eswatini’s comparative advantage in sugar, beef, forestry value chains, textiles and apparel. It is said that both foreign and domestic private entities have a right to establish, own, acquire and dispose of interest in business enterprises. Foreign and US investors own several of Eswatini’s largest private businesses, either fully or with minority participation by Swati institutions. Agreement The USA reports that Eswatini has bilateral investment treaties in force with the United Kingdom, Taiwan and Germany. After Brexit in 2021, it is said that the government signed the African-Caribbean-Pacific (ACP) – EU Partnership Agreement. Eswatini also signed bilateral investment agreements with Egypt, Kuwait and Mauritius, but these have not entered into force. In August 2022, Indonesian President Joko Widodo and King Mswati III witnessed the signing of a memorandum of understanding (MoU) to strengthen bilateral cooperation between the two countries. In February 2023, Bangladesh and Eswatini signed a MoU on Establishment of Comprehensive Consultation Mechanism and a Memorandum of Agreement on Contract Farming and Agricultural Cooperation. In January 2023, Eswatini signed a visa waiver agreement with the Russian Federation for diplomatic and service passport holders. Eswatini does not have a bilateral investment treaty with the United States, but is currently negotiating a tax information exchange agreement with the United States. In 2020, the USA Department of Treasury engaged with Eswatini Revenue Services regarding a mechanism for exchange of tax information and money flows. In 2019, Eswatini amended its tax treaty with Mauritius on the assumption that once the treaty is ratified, the amendments will come into effect in January 2022. This has not yet occurred, states the Great Nation.