Economy

MBABANE – Gross domestic product (GDP) figures mean nothing to the average businessman who is living ‘hand-to-mouth’, trapped by debt and struggling to keep staff employed.

This financial stress is captured by the Central Bank of Eswatini (CBE) data, which confirms that credit extended to the private sector and small firms, is falling sharply.

Eswatini Contractors Association (ECA) said the economic growth is not translating to the local construction sector, with domestic contractors systematically excluded from major infrastructure works.

The ECA said while donor-funded and nationally financed projects continue to expand, the exclusion of Swati contractors from meaningful participation undermines national development goals, equity and economic empowerment. A recent African Union (AU) study found only 16 per cent of large projects involve domestic private contractors.

Critical infrastructure growth in the country has largely relied on foreign contractors, with domestic contractors effectively sidelined by procurement rules and practices.

Major donor-funded works, including the MR14/MR21 roads, the Mkhondvo-Ngwavuma water project and the Central Bank expansion, have exposed systemic procurement constraints.

Domestic contractors cite rigid bond and security requirements as a major constraint. The ECA is a representative trade body dedicated to advancing, protecting and promoting the interests of contractors across Eswatini. The ECA actively advocates for the recognition and participation of local contractors as prime implementers on national projects.

This concern was formally articulated in a press statement issued on September 7, 2025, which underscored the systemic exclusion of Swati contractors from donor-funded construction projects.

Mongezi Mnyani emphasised the imperative for local benefit in a recent interview and said: “As Africans, we can’t treat investors like they are doing us a favour. They invest because they will get a return on their investment in due course. Ensuring maximum benefit for local economies, communities must be structured into investment agreements”.

The struggle is embodied by businessman Mxolisi Mabuza of Waxola Investments, who said the sectors he trades in (freight, public transport, health and hospitality) are struggling and he is hardly breaking even.

The slump in business started at the height of COVID-19 and has not recovered.

“We are living hand-to-mouth, where any monthly sales satisfy salaries, cost overheads and debts from suppliers. Whenever a payment is received, it is transferred to pay off a debt and as such, our business expansion is limited at the moment,” he said.

The financial pain felt by entrepreneurs like Mabuza comes despite the Central Statistical Office (CSO) reporting that the country’s economic growth hit 3.4 per cent in the second quarter of this financial year.

The quarterly GDP report shows this seasonally adjusted real GDP reflects a notable improvement from the 0.6 per cent growth recorded in the second quarter of 2024. According to the CSO, the rebound was largely supported by strong performances in the secondary and tertiary sectors, which outweighed the slowdown in primary industries such as agriculture, forestry and mining.

The secondary sector, which includes manufacturing, electricity, water and construction, expanded by 6.7 per cent year-on-year. Growth was driven mainly by manufacturing (6.1 per cent), electricity supply (6.6 per cent), water supply (4.1 per cent) and a robust 12 per cent rise in construction.

The tertiary sector, which remains the backbone of the economy, contributing over half (52.6 per cent) of total output, grew by 3.7 per cent.

Key drivers included information and communication (17.5 per cent), professional services (15.1 per cent), financial and insurance activities (4.1 per cent), transport (3.1 per cent) and wholesale and retail trade (2 per cent).

A number of sectors claimed they could not feel the growth, reporting that their businesses were experiencing a declining period over several years, despite the World Economic Outlook also projecting the country’s growth at 4.3 per cent.

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Business closures signal growing private sector stress

MBABANE – Business closures, property auctions and rising liquidation cases signal stress in the private sector, even though these numbers are not yet officially aggregated by Business Eswatini (BE).

BE Head of Trade and Commerce Musa Maseko said at present, his entity has not formally documented a significant volume of member feedback explicitly stating that the gross domestic product (GDP) growth numbers conflict with business reality (e.g., businesses are failing despite growth).

That said, he said from informal engagement, they were cognisant that there is a strong narrative that growth in GDP alone is not translating into job creation or household income improvements at the pace required.

“Therefore, the business closures, auctioning of property and increased liquidation cases being reported, while not yet aggregated under BE’s umbrella, signal stress in the private sector. This may reflects a few realities, including cyclical downturns, structural shifts caused by changes on technology or even spill overs from geopolitical volatility,” he said.

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Business loans drop

MBABANE – Central Bank data confirms business owners’ pain as credit to the private sector and small firms falls sharply.

Official figures from the Central Bank of Eswatini (CBE) capture the claims made by local business owners regarding the tough economic conditions.

Credit extended to the private sector totalled E21.2 billion in August 2025, showing a 1.4 per cent monthly drop, though it still registered a 5.4 per cent annual increase.

The monthly fall was driven by reduced lending to businesses and other sectors, though loans to households registered an increase.

Credit to sectors outside of business and households fell sharply by 19.4 per cent monthly to E904.8 million.

This decline included a significant 27.7 per cent fall in credit extended to other financial firms (E423.3 million) and a 14.1 per cent decrease for parastatals (E392.8 million). Lending to local government, however, grew by 10.6 per cent to E88.8 million.

Lending to the core business sector stood at E11.5 billion, contracting by 1.5 per cent in August.

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Delayed payments fuel contractor liquidity crisis

MBABANE – Delayed government payments and a lack of preferential financing are triggering a liquidity crisis that undermines the stability of local contractors.

Eswatini Contractors Association (ECA) said weak enforcement of local participation requirements in infrastructure planning is a direct consequence of systemic delays and inconsistencies in government payments on domestically funded projects.

This financial irregularity, they said, severely undermines the competitiveness and stability of local contractors, who already struggle to compete with foreign entities possessing superior financial resources.

ECA said the imbalance is exacerbated by internal liquidity challenges, mainly stemming from poor cash flow and government’s failure to honour certified payment certificates in a timely manner.

Contractors, the organisation said, often wait months for disbursements, forcing them to rely on high-interest loans to sustain operations.

They said the inability to repay these loans leads to defaults, business liquidation and long-term financial damage.

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Domestic preference policy fails in practice

MBABANE – Despite policies allowing up to 15 per cent domestic preference, Eswatini’s public procurement system rarely applies the regulation in practice, says Eswatini Contractors Association (ECA).

Eswatini has established a public procurement framework, including the Public Procurement Act of 2011 and the creation of the Construction Industry Council (CIC) under the 2013 Act. The country’s procurement regulations expressly allow for a margin of preference for local firms, commonly referred to as domestic preference.

Under the Public Procurement Regulations 2020, procuring entities are empowered to apply a price preference ranging from five per cent to 15 per cent in favour of Eswatini-registered businesses.

However, this domestic preference is rarely applied in practice. This gap between policy and implementation limits opportunities for local contractors to compete effectively, especially in donor-funded and large-scale infrastructure projects.

*Full article available in our publication.

Gross domestic product (GDP) figures mean nothing to the average businessman who is living ‘hand-to-mouth’, trapped by debt and struggling to keep staff employed. (Pic: Facebook/Central Bank of Eswatini)