MBABANE – The African Development Bank’s (AfDB) 2025 Country Focus Report has cautioned that Eswatini’s fiscal position is highly vulnerable due to its heavy reliance on SACU receipts.
The Southern African Customs Union (SACU) receipts account for about 45 per cent of government revenues.
The report explains that through SACU’s revenue-sharing formula, any slowdown in regional trade volumes can shrink the customs pool and reduce Eswatini’s allocation. In particular, the bank highlights that reduced Chinese exports to South Africa and neighbouring states, together with wider US–China tariff disputes, pose a risk to the stability of Eswatini’s fiscal accounts. Falling oil prices, while easing inflationary pressure, are also reported to suppress customs collections, further narrowing fiscal space.
Reached for comment, the Minister for Finance Neal Rijkenberg said the country had been warned since time immemorial about the over reliance on SACU. “The new risk is that new tariffs result in lower growth, but are not indicating recessions. So the risk is that SACU does not grow, not that it gets reduced,” stated the minister.
Although the AfDB projects that Eswatini’s GDP will rebound to 6.5 per cent in 2025, driven by dam construction, new mining activity and energy investments, it emphasises that this outlook is fragile. The fiscal deficit, the report states, which narrowed to 0.1 per cent of GDP in 2024, could widen again if SACU transfers decline.
The report also notes that official development assistance remains a key support pillar, with 94 per cent of aid coming from the United States. “Any reductions in US support would directly affect critical programmes, including HIV treatment for over 230 000 people and funding for women’s enterprises,” further states the report.
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Governance, social challenges hinder capital mobilisation
MBABANE – The African Development Bank’s (AfDB) 2025 Country Focus Report has raised concerns over governance weaknesses and social challenges.
The bank said these challenges continue to hinder Eswatini’s ability to mobilise capital for long-term development.
According to the report, governance indicators have declined in recent years. Eswatini fell from 85th place in 2017 to 130th in 2023 on Transparency International’s Corruption Perceptions Index, while its performance on the Ibrahim Index of African Governance also slipped.
The AfDB observes that weak institutions, opaque procurement systems and delays in implementing the Fiscal Adjustment Plan have raised fears with policymaking perceived as benefitting a narrow group rather than the broader population.
This governance environment has undermined domestic resource mobilisation. The bank calculates that tax revenue stood at 29.4 per cent of GDP in 2024, well below the 13.2 per cent annual growth required to meet development goals by 2030. With nearly 62 per cent of the workforce employed in the informal sector, broadening the tax base remains a significant challenge.
According to the report, at the same time, State-owned enterprises continue to drain the fiscus, receiving transfers equivalent to 3.5 per cent of GDP while contributing little in return.
The report also highlights that unemployment is estimated at 37.6 per cent, with youth unemployment at an alarming 65 per cent. More than half of Eswatini’s population lives in poverty, while inequality remains entrenched with a Gini index of 54.6.
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