NEAL: ECONOMIC GROWTH SURPASSES PROJECTIONS

MBABANE – The private sector, having confidence in the country, is set to grow the economy beyond the current five per cent, says the Minister of Finance, Neal Rijkenberg.

Rijkenberg said the economy of the country is on an upward trajectory, as it has surpassed previous projections. The minister said his personal opinion was that the economy could surpass seven or eight per cent in the medium term. Rijkenberg said the genesis of the economic growth was based mostly on the country’s taking a stance to fight corruption, as per the submissions of the members of the People’s Parliament during Sibaya. In dealing with corruption, the minister said they are exposing everything through forensic investigations and also engaging in internal investigations.

Expansions

He said this had brought confidence to the private sector, which  is in turn engaged in expansions. Rijkenberg said this meant that the private sector believes that corruption is under control and the people in positions are doing the right thing. “The growth is coming from the private sector and not through massive investment by government, which means that we are on the right track,” he said. The minister said the investments in infrastructure by government were also bound to yield positive spins and ensure that economic growth is also felt by the public. Rijkenberg, in his budget speech in February, said the country could be the leader on the continent, regarding gross domestic product (GDP) growth and this, in turn, would deal with unemployment and poverty.

The minister highlighted that the current growth is around five per cent, but if the country would use a conservative three per cent as a baseline and then add the possible growth percentages of the projects that they are doing and planning to do, then one would notice that it is possible for the country to reach a growth rate of 10.2 per cent by the end of term in 2028. The budget deficit for the financial year 2024/25 is projected at 1.96 per cent of GDP, equal to E1.84 billion. He added that government revenue, excluding grants in the 2024/25 fiscal year, is projected to reach E26.99 billion, which is 28.8 per cent of GDP, an increase of 1.1 per cent in 2023/24. It is worth noting that Rijkenberg, in his budget on February 24, 2024, said government was in the process of constructing the Mpakeni Dam, which will provide water for irrigation and other developments, mainly in the Shiselweni Region.

Loan

He also tabled a loan bill to provide for the construction of a canal from the dam. The minister said unlike previous bulk water infrastructure projects, for this project, government was constructing the dam, canal and in-field infrastructure at the same time, so that when the dam is complete, the holistic project can start supplying water to farmers right away. “This project should unlock a growth of 0.25 per cent of GDP in 2026, 0.5 per cent in 2027 and 2 per cent in 2028. The LUSIP II project has also been allocated a budget of E417 million to bring it to completion, so that the nation starts to realise real returns from its utilisation and feed into the overall growth imperative in the medium term. As these projects roll out, it should give us 0.5 per cent growth in 2024, 0.5 per cent growth in 2025 and 0.75 per cent growth in GDP in 2026,” he said. Also, the World Bank states that Eswatini’s economic prospects for 2024 are favourable, partly because of higher Southern Africa Customs Union (SACU) revenues.

Projects

The World Bank projected that an increase in government expenditure would support economic activity and external funding for major capital projects such as the Mkhondvo-Ngwavuma Dam, which would boost both demand and supply.“The wholesale and retail, construction and public administration sectors are all expected to benefit from higher public spending. The tourism sector is expected to continue its recovery and remittances are picking up,” the World Bank projected. However, it was stated that difficulties in the external and domestic environments constrain the country’s growth potential, although real GDP growth is expected to continue to grow at 4.1 per cent in 2024, global turmoil and a slowdown in the economy of the major trading partner, i.e., South Africa, are likely to dampen economic activities.

Despite this, according to the World Bank, Eswatini faces multiple development challenges to ensure inclusive, sustainable and resilient economic growth. Central among these, the World Bank stated, was Eswatini’s unsustainable public sector-driven growth model, which had trapped the country in a low growth and high poverty and inequality equilibrium and crowded out investments in productive sectors and private sector development.

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