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E333M ACTION PLAN TO IMPROVE ECONOMY

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mfanukhona@times.co.sz


MBABANE – Eswatini could realise economic prosperity if an annual action programme to be financed from the European Development Fund (EDF)’s E333.83 million could be taken seriously.


The annual action programme 2019 addresses priorities under the agriculture focal sector of the 11th EDF National Indicative Programme (NIP) for Eswatini through two dedicated Actions: support to agriculture value chains via sustainable and inclusive energy investments in Eswatini; Eswatini livestock value chain development programme.


It is stated that farmers and agro-businesses are exposed to power cuts/too low voltage in rural areas, long time to connect when launching new businesses and high costs of power with tariff increases of 12-15 per cent/year during the last five years.


Power is reportedly representing 14-16 per cent of sugar cane production costs in 2012, rising to 24-27 per cent in 2018.
Firms with a capacity to access finance have invested to protect their competitiveness. These are Royal Eswatini Corporation (RES) (65.5 MW, bagasse self-use), Ubombo Sugar Limited (USL) (41.5 MW, bagasse, self-use and on-grid), USA Distillers (2.2 MW, coal-based, self-use), United Plantations (1.5 MW, solar PV, self-use).

vulnerable situations


It is stated in the summary of the programme that smallholders, SMEs, women, youth, and people/groups living in vulnerable situations do not have access to finance or information to equally benefit from renewables or energy efficiency to develop their business.


Current tariff projections indicate that renewable energy production will be cost competitive in a few years (even without purchasing power agreements PPA).
It has been stated that despite 80 per cent of rural households owning cattle and goats, for cultural, economic and social reasons, Eswatini is not meeting its allocated quotas for beef exports to international markets.


Domestic meat demand is met by large imports from South Africa, it is noted.
The livestock value chain currently supports around 62 000 jobs.
 Eswatini exports of meat and leather products are of small volume but high quality, it is noted in the action programme.


On a positive note, local banks are reportedly showing interest to provide loans to agri-businesses diversifying from sugar cane.
It is said that the project will improve livestock production, marketing, investment capacities to unlock this potential.


Pertaining to livestock value chain development, it must be said that recent lessons learnt from ongoing programmes in the agriculture sector show that it is necessary to plan for rangeland management beyond the project lifetime to improve productivity in a sustainable manner.


The document states that pilots for smallholder beef fattening have shown that locally available feed resources can be used to viably improve Eswatini Nation Land production.
It is spelt out that new approaches are needed to improve the herd as the direct supply of quality, drought tolerant animals (Nguni) and the government farms (breeding Sisa ranches) are not cost-effective.


To develop marketing, it is fundamental to integrate local kraal owners as key livestock decision makers on Eswatini Nation Land and to realise that dip tank site is where farmers meet.


The document further states that the action will also link with 11th EDF interventions in agriculture: for the use of crop residues for feedstock production, build the livestock marketing information system (LMIS) on the agriculture management information systems (AMIS), and use climate-smart agriculture practices.
It will build on chiefdom development plan (CDP), community mobilisation, public-private sector dialogue and trade facilitation activities of 11th EDF bilateral and regional actions covering Eswatini.

Exports


According to the document, exports are an engine of growth for Eswatini but have been declining in the 2000s by 1.5 per cent/year, with a significant decline of 12 per cent in 2018.
It is stated that trade is highly dependent on South Africa (81 per cent of imports against 67 per cent of exports).


This information was sourced from World Bank.  Sugar manufactured goods, wood, honey and meats account for 80 per cent of exports, the document states.
It must be said that few large firms do most exports, especially in sugar. A few small and medium enterprises (SMEs) are also exporting from EU cooperation in horticulture and trade facilitation.

Significance of action


The annual action programme aims at strengthening the development of key agriculture value chains in Eswatini (sugar cane, horticulture, livestock), which are the essential sources of growth and jobs for rural areas where the poverty is concentrated.


The document mentions that the action does so by addressing one major weakness of these value chains: inefficient and costly energy access, as this weakness is not covered by other actions to boost these value chains’ growth and if unaddressed this weakness could undercut the benefits of other actions developing these value chains. It will thus enable sustainable and inclusive energy investments to strengthen key agriculture value chains in Eswatini.


It aims at consolidating the sustainability and the positive impact of other EU interventions in the agriculture sector of Eswatini, which are developing key value chains: horticulture (11th EDF High value crop and horticulture programme HVCHP; water harvesting, small and medium earth dams project WHDP), livestock (11th EDF Eswatini livestock value chain development programme (ELVCDP)
Sugar cane (EU budget sugar accompanying measures DCI-SUGAR) and EU aid for trade for Eswatini to seize the benefits of SADC-EU Economic Partnership Agreement (EPA) and of regional integration.


The document states that all these actions are coordinated to create business and jobs opportunities for small-holders farmers, women, youth, people/groups living in vulnerable situations, especially in rural areas, encourage investment in agriculture, seize the export potential of Eswatini agriculture, and thereby address growth poverty and inequality challenges.


That would be done in line with the vision of the Strategic Road map and the National Development Plan 2019-2022.
In this way, getting involved or benefitting from self-generation of renewable energy and energy efficiency investments would enable smallholder farmers, women, youth and people/groups living in vulnerable situations to stay competitive in their current agri-business.


They will develop new agri-businesses and get new income and jobs. The action will unlock investment in Eswatini’s renewable energy and energy efficiency potential for agriculture value chains through:  improving the business environment, building capacity of all relevant stakeholders and encouraging a lively public-private dialogue in this field; enabling access to finance for relevant projects through creating an Eswatini country window for blending and technical assistance, capacity strengthening and ‘integrating’/’catalysing’ business ideas on the ground will facilitate the emergence of a pipeline of projects and accompany the public and private stakeholders in implementing the investments backed by the blending component.

Climate-smart practices


The action will mainstream climate-smart agriculture practices and circular economy approach to ensure the best possible benefits for the environment. According to the document, the action recognises that women, youth and people/groups living in vulnerable situations are facing higher barriers to investment and agri-business opportunities.


It, therefore, includes specific objectives and activities to ensure it (action) is transformative for women, youth and people/groups living in vulnerable situations.
It is worth mentioning that the action will be guided by the agriculture steering committee to enable synergies with the agriculture value chain development strategies and programmes.


Government and stakeholders will guide the actions through the Ministry of Agriculture and its parastatals involved in sustainable and inclusive development of commercial agriculture, the Ministry of Natural Resources and Energy, the Eswatini Energy Regulatory Authority (ESERA), the Eswatini Electricity Company (EEC), the Ministry for Commerce, Industry and Trade, the Eswatini Sugar Association and private sector representatives, including local financial institutions, representatives of the right holders especially women, youth and people/groups living in vulnerable situations.
Bongani Masuku, Principal Secretary in the Ministry of Agriculture, mentioned in an interview that water was very important for agriculture to boost the economy.
He said government was supportive of programmes that aim to improve agri-business and economy as a whole.

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