MBABANE – The World Bank has called for urgent structural reforms to address long-standing constraints holding back private sector development, job creation and economic diversification in the kingdom.
Through the recently launched Eswatini Economic Update report presented last Thursday at the UN House, the World Bank highlights a difficult business environment, inefficiencies in public sector operations and limited access to finance as key barriers to sustainable growth.
The World Bank warns that the private sector, especially micro, small and medium-sized enterprises (MSMEs), is being ‘crowded out’ by an unequal playing field, with State-owned enterprises (SOEs) and a handful of dominant operators enjoying disproportionate advantages. It notes that starting a business in Eswatini remains significantly more expensive and time-consuming than in comparable regional economies.
According to the report, start-up costs are equivalent to around 10 per cent of gross national income (GNI) per capita, while the procedures to establish a business take much longer than the regional norm.
“Such regulatory bottlenecks discourage entrepreneurship, limit formal sector growth, and keep many potential businesses in the informal economy,” the report states.
Unlike some neighbouring countries, Eswatini has yet to implement an online business registry, meaning companies cannot register or obtain licenses digitally. However, the report points to ongoing plans to develop a world-class digital registry in partnership with New Zealand, which would allow entrepreneurs to register and receive licenses via mobile phones.
The World Bank argues that this single reform could dramatically cut costs, reduce delays and encourage more start-ups.
The introduction of a National Payment Switch system is also identified as a game-changer for improving the ease of doing business.
The proposed platform would facilitate digital payments between the government, businesses and individuals, especially for retail transactions. “Digitising payments can lower transaction costs, expand access to financial services and integrate more businesses into the formal economy,” the report highlights.
Access to finance remains one of the most pressing constraints for MSMEs. Citing the 2023 FinScope survey, the World Bank reveals that only about 15 per cent of MSMEs in Eswatini have access to loans from banks and formal financial institutions. This lack of financing stifles growth and undermines job creation.
To address the gap, the report recommends a comprehensive redesign of public credit guarantee schemes, placing them under an independent and supervised legal entity to ensure transparency and sustainability. It also urges government to implement a modern secured transactions framework, including an online movable collateral registry, to reduce legal risks and make lending to small businesses more attractive to both banks and non-bank financial institutions.
Full article available in our paper.
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