Journal Issue

The Economy of Swaziland 1

International Monetary Fund. Research Dept.
Published Date:
January 1970
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Structure of the Economy

Country and population

THE KINGDOM OF SWAZILAND, a former British protectorate, gained self-government in 1967 and independence on September 6, 1968. The country occupies an area of about 6,700 square miles in southeast Africa (see map on p. 391). Albeit a landlocked country, the eastern part of Swaziland lies within 40 miles of the Indian Ocean. The seaport of Lourenço Marques in Mozambique is 130 miles northeast of Manzini, which is the centrally located economic hub of Swaziland. Johannesburg is some 240 miles to the west.

There are four well-defined topographic regions extending north to south through Swaziland. The Highveld, the Middleveld, and the Lowveld are of more or less equal breadth, while the Lebombo is a narrow strip on the eastern border. The Highveld, with an area of 2,000 square miles (about 29 per cent of the total area of the country) and altitude varying between 3,500 and 5,000 feet, contains the capital of Swaziland, Mbabane, as well as the two major mineral operations, the Havelock Asbestos Mine and the iron ore mine at Ngwenya. Owing to steep slopes and marshlands, only about 30 per cent of the Highveld is arable. However, plentiful rainfall and the fact that the region falls in the mist belt render parts of it ideal for forestry. The Middleveld covers 1,800 square miles, and the altitudes vary between 1,500 and 3,500 feet. This region consists mainly of undulating terrain, with wide plains in the vicinity of Manzini. It has the greatest agricultural potential, and approximately 41 per cent of the country’s total population is found here cultivating maize, cotton, tobacco, pineapples, citrus fruit, bananas, other subtropical fruit, and rice. Dairying, beef production, and forestry are also part of the agricultural activities in this region. The Lowveld extends over almost 2,400 square miles, constituting 37 per cent of the country by area but accommodating only 25 per cent of the total population. The landscape is level or gently undulating, with heights of 500 to 1,000 feet and occasional higher hills and ridges. The level surfaces render more than 80 per cent of the Lowveld suitable for cultivation, but the rainfall is too unreliable for dry-land farming, and irrigation is therefore necessary. This region, characterized by a hot and humid climate and typical bushveld vegetation, was used originally mostly for cattle ranching and grazing, but in recent years there has been a considerable increase in irrigated cultivation of sugar cane, citrus fruit, rice, and other crops. In the Lebombo Plateau, along the eastern border, the altitudes average 1,800 feet. The region covers about 500 square miles, and good agricultural soil occurs only sporadically. Consequently, cattle farming is the dominant activity.


Swaziland is unusual among African countries in that most of its people are of the same ethnic origin. According to a census in 1966, the total population is about 375,000, of which 97 per cent are Swazis, 2 per cent are Europeans, and 1 per cent are of mixed origins. The rate of increase of the population is estimated at between 2.5 per cent and 3.0 per cent per annum. Against an average density of 56 persons per square mile for the country as a whole, the Swazi Nation areas (see The system of land tenure, pp. 394—96) have an average density of 75 persons. Some 85 per cent of the population lives in rural areas, which for the Swazis means in scattered “homesteads” (family settlements) rather than in villages. Mbabane and Manzini are the two main urban centers, with populations of about 10,000 each.

The system of government is a constitutional monarchy. The King, in addition to his position of Head of State, is also the Ngwenyama of the Swazi Nation, i.e., head of the traditional Swazi National Council, which has separate responsibilities and jurisdiction regulated by Swazi law and custom. In assessing literacy, the 1966 census set as its standard a minimum period of 4 effective years of schooling. The results showed that about 70 per cent of persons over 14 years of age were illiterate. There are signs, however, that the situation is improving, particularly in urban areas. Some of the population is Christian, but a majority follows traditional religious beliefs.

Gross national product and expenditure

National accounts estimates have been prepared only for the fiscal years 1965/66 and 1966/67. Some of the data are no more than rough estimates, in particular those relating to rural households and consumer expenditures. Work is now proceeding in the Swazi Department of Statistics to improve the collection of data and to prepare more up-to-date national accounts.

In 1966/67 gross national product was estimated to amount to R 45.7 million, $170 per capita (Table 1). The majority of the Swazis are still engaged in subsistence farming, while the more remunerative sectors of the economy are dominated by expatriates. Three sectors—agriculture, forestry, mining and construction—together account for almost 60 per cent of gross domestic product (GDP). In 1966/67 the manufacturing and the transport and communications sectors still accounted for less than 10 per cent each, but subsequently they are believed to have gained in significance. The contribution to GDP of rural households was estimated at 15 per cent, representing essentially the subsistence farming sector. In 1966/67, the only year for which figures by category of expenditure are available (Table 2), net exports of goods and services accounted for 9.5 per cent of GDP. In that year consumption (private and public) was estimated to account for 68 per cent of GDP; gross domestic investment was rather large and absorbed 27 per cent. This was due mainly to the development of the iron ore mine and to large investments in infrastructure in that year.

Table 1.Swaziland: Estimates of Gross National Product, 1965/66 and 1966/67
Sector1965/66ActualPercentage of GDP 1
Million rand
Rural households5.68.015.3
Mining and construction11.011.021.0
Retail trade3.12.75.1
Wholesale trade1.21.01.8
Transport and communications3.74.48.4
Ownership of dwellings0.40.40.7
Public administration3.43.46.5
Other services1.82.34.4
Gross domestic product47.952.4100.0
Less depreciation−4.1−4.3
Net income from abroad−7.6−6.7
National income36.241.4
Plus depreciation4.14.3
Gross national product40.345.7
Source: Department of Statistics, National Accounts of Swaziland, 1965/66 and 1966/67, December 1968.

Gross domestic product.

Source: Department of Statistics, National Accounts of Swaziland, 1965/66 and 1966/67, December 1968.

Gross domestic product.

Table 2.Swaziland: Use of Resources, 1966/67
Category of ExpenditureMillion RandPercentage of Total
Consumer expenditure20.839.8
Government current expenditure7.514.3
Gross fixed capital formation10.520.0
Of which
Change in stocks2.64.9
Exports less imports5.09.5
Rural households8.0115.3
Gross domestic product at market prices54.4103.8
Less indirect tax plus subsidies−2.0−3.8
Gross domestic product at factor cost52.4100.0
Source: Department of Statistics, National Accounts of Swaziland, 1965/66 and 1966/67, December 1968.

Some R 7.2 million of the total is considered expenditure for consumption; the remainder, R 0.8 million, was used for fixed capital formation and increase in stocks.

Source: Department of Statistics, National Accounts of Swaziland, 1965/66 and 1966/67, December 1968.

Some R 7.2 million of the total is considered expenditure for consumption; the remainder, R 0.8 million, was used for fixed capital formation and increase in stocks.

Agricultural production

The system of land tenure

The pattern of land ownership is complex. In 1902, when the United Kingdom assumed administrative responsibility for the territory, land apportionment was a major question, since concessions to most of the land had been given to expatriates by previous Swazi kings, without full realization of the consequences under the European system of freehold tenure. In 1907 this problem was partially solved by a proclamation under which one third of all land held by concessionaires had to be ceded, without compensation, to the Swazi Nation. Subsequently, and in particular since 1946, further land was repurchased under various programs, and by the end of 1963 some 52 per cent of the total land area was controlled by the Swazi Nation (Table 3). To date, the area reserved for occupation by Swazis has been further enlarged to about 56 per cent, mostly through official settlement schemes. Because of this historical development, this land is scattered throughout the country in many noncontiguous parcels. The land question continues to be a subject of intergovernmental negotiations. Early in 1969 a Land Mission was appointed jointly by the Governments of the United Kingdom and Swaziland to examine the problems and to make recommendations. The Mission completed its work in March 1969, and its recommendations have in principle been accepted by both countries. If put into effect, funds would be provided by the U.K. authorities to acquire a certain portion of the land now in non-Swazi hands, provided that the land thus acquired would be developed in a modern way for the benefit of Swazi farmers. The authorities are exploring the possibility of technical and financial assistance from other sources, including the International Bank for Reconstruction and Development (IBRD), to help in developing modern land-use programs in this context.

Table 3.Swaziland: Type of Land Tenure, 1963
Thousand AcresPercentage of Total
Land owned on freehold and concession title by individuals1,91844.7
Crown land and unallotted land1483.5
Swazi Nation Land2,22451.8
Of which
Lifa purchased 12686.2
Swazi settlement areas3167.4
Source: Department of Statistics, Annual Statistical Bulletin, 1968.

Land purchased by the Swazi Nation with the proceeds of a special tax on cattle in the late 1940’s and now used for subsistence agriculture and grazing.

Source: Department of Statistics, Annual Statistical Bulletin, 1968.

Land purchased by the Swazi Nation with the proceeds of a special tax on cattle in the late 1940’s and now used for subsistence agriculture and grazing.

In the existing Swazi Nation areas, a system of communal land ownership is practiced. The King is recognized as having over-all control of the land, but usually he defers to local chiefs in matters concerning rights of occupancy. In practice, it is the chief or the chief’s counsel that grants and deprives an individual of the right to use land. There is thus a close connection between control over land rights, political authority, and social order, and changes in the system of land tenure within the Swazi Nation area, which may be necessary to eliminate built-in impediments to increased productivity in agriculture, would tend to modify the entire social structure of the community.

Subsistence farming

Agricultural land in Swaziland is thus divided into individually held farms, referred to as Title Deed Lands, and Swazi Nation Land, which is farmed on an usufruct and communal basis. However, some Swazis are becoming involved in competitive farming for the market, especially through settlement schemes on recently purchased Title Deed Lands. At present there are about 130 Swazi farmers on a settlement scheme at Vuvulane run by the Commonwealth Development Corporation and about 40 Swazis who are independent commercial pineapple and/or sugar-cane growers or dairy farmers. The vast majority of Swazis, however, do not yet produce for the market.

For more than a century, maize has been the staple food crop in the subsistence sector; previously, sorghum was grown more widely. Today these two crops are grown on about 90 per cent of the cultivated Swazi Nation Land (Table 4). A variety of other crops, including beans, sweet potatoes, groundnuts, and pumpkins, are cultivated mainly to supplement the staple diet. Hence, the production of maize may be regarded as an indication of self-sufficiency. On average, some 800,000 bags (each bag contains 200 pounds) are consumed annually, of which 200,000 bags had to be imported in 1968. The aim of the authorities is to make Swaziland self-sufficient in this important crop. However, a problem is that maize is grown mainly on nonirrigated land, and production therefore tends to fluctuate considerably as a function of changes in weather conditions. A large increase in the acreage devoted to dry-land maize farming would therefore not seem prudent. On the other hand, if irrigation could be provided for maize cultivation, only about 10,000 additional acres would be needed to produce enough to replace imports. The average yield on irrigated land is about 20 bags per acre, while the national average for Swaziland is only 2 bags at present.

Table 4.Swaziland: Estimates of Major Crop Acreages and Production on Swazi Nation Land, 1967/68 Season1
CropAcresPercentage of totalProduction (short tons)
Wattle bark (dried)380
Source: Data provided by the Swaziland Ministry of Agriculture.

These are rough estimates, as there has been no census of Swazi Nation Land.

Source: Data provided by the Swaziland Ministry of Agriculture.

These are rough estimates, as there has been no census of Swazi Nation Land.

Production and acreages on the Swazi Nation Land have not yet been the subject of a comprehensive statistical inquiry, but an expert in agricultural statistics from the Food and Agriculture Organization has been in Swaziland since July 1969. His program of work entails pilot and regional surveys in preparation for a comprehensive survey covering the whole country, envisaged for 1971/72. Not until then will reliable and detailed information on the subsistence sector be available on which projections and policies could be based. The estimates given in Table 4 are based on preliminary reports by field offices and indicate only rough orders of magnitude.

Productivity on the Swazi Nation Land appears to be low. Improvement is hampered by such factors as inadequate education and training, insufficient credit facilities, and weak marketing arrangements for many products. The communal land tenure system causes a fragmented pattern of land utilization, which retards the mechanization of agriculture, and the absence of freehold tenure inhibits borrowing on security and longer-term planning by the farmers. Although a number of grazing areas have been fenced as part of the authorities’ rural development programs, there is relatively little fencing of arable land, which is thrown open for grazing within certain periods. These traditional rules prevent the cultivation of long-term crops as well as the application of rotational grazing.

According to the Post Independence Development Plan, the Government’s “main objective in the agricultural sector is to improve the standard of living of the people.” To this end, the improvement of productivity through the application of better agricultural practices in the traditional sector is a major objective. The Swazi farmer is not unreceptive to new methods, as witness the widespread adoption in the 1940’s of contour plowing to minimize soil erosion. Water resources could be exploited with better results if more storage dams were built. At present there are mostly diversion dams where water becomes available only during the rainy season. In 1965 the Swaziland Credit and Savings Bank was founded with the purpose, among others, of helping to finance Swazi farmers, and credit from this source has been used increasingly to finance purchases of implements, seeds, and fertilizers. The share of Swazi farmers in certain cash crops, such as cotton and sugar, is increasing gradually, and the use of fertilizers by Swazis is rising at an average rate of 20 per cent per annum. Nevertheless, the general pattern of farming on Swazi land has changed only marginally in recent years.

Current policies of the agricultural authorities are directed mostly toward improving the existing lines of production by means of extension work, education, and irrigation. There are, however, some experts who consider that this policy will not yield the best results because efforts are being spread too thinly over the country, and sociological impediments of the tribal society in Swaziland do not allow sufficiently rapid progress. They believe that large-scale settlement schemes would offer a better return on capital invested. Workers trained on these schemes could subsequently take over the land as independent farmers, and they might be expected to form the basis for a more prosperous Swazi farm community.

Cash crop farming

Private non-Swazi farmers operate most of the Title Deed Lands and produce the bulk of the cash crops. The average size of the individual Title Deed holding is about 1,400 acres, compared with a mean per family unit on Swazi Nation Land of just over 8 acres cultivated and about 6 acres temporarily fallow, with 50 to 60 acres of communal grazing. The main cash crops are sugar cane, cotton, rice, citrus fruit, pineapples, tobacco, and, to a smaller extent, maize (Table 5). On Swazi Nation Land, cotton and tobacco are also produced for the market in appreciable quantities. Statistics of crop acreages and production on Title Deed Lands are available only for 1967/68, the first year for which the Department of Statistics has carried out a survey. Year-by-year comparisons are therefore not possible at present.

Table 5.Swaziland: Crop Acreages and Production on Title Deed Lands, 1967/68 1
Area Cultivated
CropAcresPercentage of totalAcres IrrigatedAcres HarvestedProduction (short tons)
Sugar cane35,70044.235,70026,0001,130,700
Citrus fruit5,1006.35,1004,60057,800
Beans, field8001.0200700400
Sorghum7000.9400 2400
Other crops7700.9230720
Source: Department of Statistics, Census of Title Deed Agriculture, 1967/68, August 1969.

This table does not include any allowance for crops grown on Swazi Nation Land.

The remaining acres of sorghum were used for grazing.

Source: Department of Statistics, Census of Title Deed Agriculture, 1967/68, August 1969.

This table does not include any allowance for crops grown on Swazi Nation Land.

The remaining acres of sorghum were used for grazing.

The development of cash crops has been based primarily on the exploitation of water resources. The area under irrigation expanded from 29,000 acres in 1960 to about 70,000 to date. Under the Water Act of 1967, the Government is empowered to control the use of water. Currently the United Nations Development Program is financing a comprehensive survey of the country’s water resources in order to determine the over-all potential for irrigation and hydroelectric power and to make specific recommendations. This project is expected to be completed in 1970. It seems likely that production of pineapples and certain other fruits will be the first to be expanded on newly irrigated land. This will, however, depend partly on the expansion program for the local cannery at Malkerns, which has recently been taken over by a large international company (Libby), and partly on developing lines of production for which markets are available.

Sugar is the most important cash crop. About 5 per cent of the Title Deed acreage under sugar cane (Table 5) is cultivated by Swazi farmers. Total production of Swaziland is limited by export quotas under the International Sugar Agreement to approximately its present level (see also p. 401), and the Swaziland Sugar Board allocates sucrose quotas to the individual farmers. To have room for additional Swazi farmers who might wish to become sugar growers, part of the quotas presently allocated to non-Swazis is provisional. The production of sugar cane that began in 1957 is centered around two modern mills, each producing 85,000 short tons of sugar per annum, some 7 per cent of which is for the domestic market. The mills are not operating at full capacity, and the production could easily be expanded without major investment if market conditions permitted.

The most important cash crop cultivated under dry-land conditions is cotton (Tables 4 and 5). It is of particular importance in the southern region of Swaziland, which has tended to lag behind the rest of the country as far as economic development is concerned. The cotton grown in Swaziland is of high quality but subject to strong fluctuations in production owing to changes in the weather, since only about 2 per cent of the total area under cotton is irrigated. Abstracting from these temporary influences, we find that output has tended to rise appreciably in recent years. About 20 per cent of the total output is produced by Swazi growers, which makes cotton the main cash crop grown by Swazis. The Government aims at raising production by means of a controlled credit scheme operated by the Credit and Savings Bank and by providing better marketing facilities (see p. 402).

Unlike cotton, rice is grown in Swaziland only under irrigation and on large farms and estates. It is mostly exported to South Africa. At present, the Republic of China provides technical assistance in this field, and 17 Chinese operate a demonstration farm of 30 acres. They have achieved a higher output per acre than elsewhere in Swaziland, but it is still doubtful that their intensive methods can be adopted on a large scale.

Citrus fruit production in the Middleveld has been stagnating for a number of years as a result of a virus disease. In addition, during 1968 overseas marketing was particularly difficult, mainly as a result of the sterling devaluation late in 1967, and a portion of the high-quality crop had to be destroyed. Consequently, there has been no new planting and none is expected for the near future. As this industry is still fairly young, however, it can be expected that yields from existing trees in the Lowveld will increase without further investment. By 1970 output may well reach 92,000 short tons, which is twice that produced in 1966. Citrus fruit is grown solely by non-Swazi farmers on irrigated land.

Tobacco is grown mostly in southern Swaziland by Swazi farmers. Output declined from a peak of one million pounds of cured leaf in 1960 to a scant 134,000 pounds in 1965, but output has been rising again recently as a result of intensified extension work. The prospects for significant expansion of the tobacco crop are not promising, however, because profits are generally lower than for sugar or other crops cultivated on the main irrigation schemes.

The cultivation of pineapple is confined mainly to the area around the cannery in the Malkerns Valley, where it takes place largely under dry-land conditions. In 1967/68 some 14,600 short tons were produced, the bulk of which were canned for export to the United Kingdom. In 1965 a pineapple settlement scheme was begun, and about 30 Swazi growers are now established near Malkerns.

Marketing of crops

As indicated above, maize is the most important subsistence crop. About one third of the maize consumed in Swaziland is marketed under government controls exercised through the Swaziland Milling Company. This company is required to purchase all maize offered to it by Swazi producers at prices fixed by the Government. In return it has sole rights to import maize and maize products for sale at approved prices that are uniform throughout the country. In 1968 only 5,000 bags of maize were offered for sale to the central mill, compared with 100,000 bags in 1967. Most producers with surpluses had obviously been able to find a ready local market in 1968 at prices that were above the floor price. The farm price for maize grain was increased from R 3.65 per 200-pound bag in 1968 to R 3.85 in 1969. Information on the 1969 crop and on consumption and imports is not yet available. It is thought that yields were low owing to late spring rains and a shortage of good seed.

For many years South Africa played an important part in Swaziland’s sugar industry by providing know-how, capital, and markets. In 1964 a bilateral agreement was reached that no sugar from Swaziland would be sold in South Africa, and vice versa. At the same time, the Swaziland Sugar Association was established to administer the affairs of the industry, and in 1965 Swaziland was formally admitted to the Commonwealth Sugar Agreement. Under the terms of this agreement, about 95,000 tons (56 per cent of the 1968 production) may be sold to the United Kingdom and 45,000 tons (26 per cent) to Canada annually, at R 85 a ton. An additional quota for exports (7,119 tons at R 95 a ton) was obtained from the United States, and the authorities hope for an increase in this quota in the near future. This is of importance because exports to Zambia and Malawi, currently about 8,000 tons and 3,000 tons, respectively, are not expected to continue at this quantity owing to increased domestic production in those countries. Prices obtained under the Commonwealth Sugar Agreement are about double the free market price. The future expansion of the sugar industry in Swaziland will depend mainly on whether favorable new overseas markets can be found. Efforts made to supply the requirements of both Botswana and Lesotho have proved unavailing so far, since these countries can import sugar from South Africa at lower prices.

In the citrus industry, shipping and marketing are major problems. Until recently the Swaziland Citrus Cooperative was affiliated to the South African Citrus Board and all marketing was done through this channel. Between 60 per cent and 70 per cent of the production is exported. Fruit exported from Swaziland is transported to Durban or Lourenço Marques, from where it is shipped together with South African output to overseas markets, mostly the United Kingdom. The remaining production is either consumed or processed in the country, or exported to South Africa where most of it is processed in factories. In February 1969 a National Citrus Board was established, and new arrangements for marketing are being worked out to assure equality of treatment for Swazi growers. No major increase in production resulting from this organizational change can be expected, and Swazi growers will continue to be dependent mainly on citrus policies designed in South Africa. However, it is hoped that the local cannery, under its new management, will engage increasingly in processing those amounts of citrus fruit that are not absorbed by exports and local consumption.

The marketing problem for cotton is relatively less difficult. As a member of the Customs Union, Swazi growers enjoy free entry to the South African market, which absorbs approximately 200,000 bales annually (one bale weighs 480 pounds), more than half of which have to be imported. The prices paid to growers in Swaziland are highly favorable, about 65 cents a pound for first-grade seed cotton. Growers in other African countries (Malawi, for instance) receive on average considerably less, sometimes no more than half the prices obtained in Swaziland. There is scope for increasing production for the South African market by a further 30,000 bales a year. Currently, Swaziland’s output fluctuates around 20,000 bales. The affairs of the cotton industry are administered by the Cotton Board, which also serves as an advisory council to the Government. The ginnery operating in Swaziland is required to purchase and collect all cotton produced by small growers, while the large growers sell their cotton for better prices direct to ginners in South Africa. Consequently, the inducement for Swazi growers to increase production is less strong than for the large growers, and the local ginnery, which could process all cotton produced in the country, is operating unprofitably at only 50 per cent of capacity. A solution to these problems would be to introduce a compulsory one-channel marketing, with the ginnery as a focal point.

To some extent other crops are marketed through cooperatives, which include the Swaziland Tobacco Cooperative and the Swaziland Rice Cooperative. In general, however, the cooperative movement in Swaziland lacks a strong impetus, and activities in this field are limited.

Animal husbandry

Animal husbandry is the predominant activity in Swazi areas. Permanent grazing for cattle covers 73 per cent of the country’s total area, and the cattle population actually exceeds the number of inhabitants in the country (see Table 6). Some 80 per cent of the total number of cattle belongs to Swazis, but stock management is generally deficient. Because cattle are traditionally regarded more as an indication of wealth and prestige than as a commercial asset, numbers are considered more important than quality. Nevertheless, cattle and dairy products are the largest source of income for the Swazi farmer.

Table 6.Swaziland: Livestock Population, 1966-68(In thousands)
Source: Department of Statistics, Annual Statistical Bulletin, 1968.
Source: Department of Statistics, Annual Statistical Bulletin, 1968.

As in other countries where livestock are kept for their social rather than economic value, overgrazing of pastures and soil erosion have assumed serious proportions. Cattle diseases and periodic droughts cause stock losses every year. As indicated in Table 7, the number of cattle that die annually is higher than the number exported. The cattle population has increased from 417,000 in 1950 to 515,000 in 1968, in spite of the fact that soil erosion and increased plowing have reduced the available pasturage. In October 1969 there was an outbreak of foot-and-mouth disease in the eastern part of Swaziland. Because of the stringent control measures (quarantine, vaccination, cordoning off infected areas) enforced by the Government, the disease was contained in a small area and only about 7,500 cattle were infected out of a cattle population of 540,000. The clinical end point occurred on December 20, 1969. Assistance from outside sources (South Africa and the United Nations) was made available, but some R 260,000 had to be provided through the Central Government budget to finance the countermeasures.

Table 7.Swaziland: Number of Cattle that Died, Were Slaughtered, and Were Exported, 1960 and 1964-68(In thousands)
Source: Department of Statistics, Annual Statistical Bulletin, 1968.
Source: Department of Statistics, Annual Statistical Bulletin, 1968.

The Swazi authorities hope to raise productivity in animal husbandry by disease control, extension work, and education. Since 1965 the Ministry of Agriculture has operated two presale, fattening ranches of about 25,000 acres each for use by stockowners. The value of cattle kept on these holding grounds rises by about 20 per cent in one grazing season. A management fee of R 0.75 is charged per head of cattle per month. So far the grounds have not been stocked to capacity. It is thought that the fairly good state of the cattle market in South Africa in recent years may have influenced Swazi owners to send their cattle over the border for sale to abattoirs or for further grazing.

Cattle to be slaughtered for export, as well as a large part of those destined for the local market, are handled by the Swaziland Meat Corporation at Matsapa. The abattoir was established in 1965 and is associated with a South African company. It can handle about 25,000 head of cattle per annum and has facilities for slaughtering, deboning, chilling, freezing, canning, and for the processing of animal residue products. In 1966 some 17,700 cattle were slaughtered, while capacity was reached in 1967 when 25,411 were slaughtered, of which 6,129 were imported from South Africa. In 1968 and 1969 the abattoir went through a difficult period because rising prices for meat on the hoof in South Africa coincided with declining prices of canned meat in the United Kingdom, the major market. This situation has eased somewhat lately, but a more permanent solution to the industry’s problems seems to require the establishment of one-channel marketing. However, a number of cattle owners appear to be opposed to this proposal.

Other livestock are of relatively minor importance, and only scanty information is available. Figures given in Table 6 are not very reliable, especially as far as goats and sheep are concerned.


Large parts of western Swaziland combine relatively high rainfall with deep and fertile soil, which renders it ideal for forestry. The rate of growth of conifers is among the highest in the world, and pulpwood can be grown on a 15-year rotation, compared with 40 years in northern Europe. Of the 235,000 acres afforested at the beginning of 1968, about 80 per cent was under coniferous trees and the remainder under wattle and eucalyptus. New forests are still being planted, particularly in the neighborhood of a sawmill established recently in southern Swaziland. Wattle trees are declining in importance, reflecting reduced demand for products made from wattle bark. (See Table 8.)

Table 8.Swaziland: Output of Forestry Industry, 1964-68
Unit (In thousands)19641965196619671968
Sawn lumberCubic feet1,639.01,372.0335.31,655.01,206.1
WoodpulpShort tons80.0101.097.9
PolesCubic feet250.0225.2583.7894.2507.0
Mine propsCubic feet1,297.6876.9891.7332.2
BlockboardSquare feet379.0667.0779.4958.8
Wattle barkLong tons4.
Eucalyptus oilGallons2.53.6
Source: Department of Statistics, Annual Statistical Bulletin, 1968.
Source: Department of Statistics, Annual Statistical Bulletin, 1968.

Experimental afforestation started at the beginning of this century, when certain Swazi chiefs and settlers began planting trees in a small way (35,000 trees by 1906). Large-scale afforestation began in the early 1940’s when one company, Swaziland Timbers, Ltd., began investing capital for long-term developments. Another private company, Peak Timbers Ltd., followed a few years later, and in 1949 the Commonwealth Development Corporation began large plantings in the vicinity of the Great Usutu River. At present it is estimated that more than 90 per cent of the total area under cultivated trees belongs to private companies.

The Commonwealth Development Corporation and Courtaulds, Limited, operate the Usutu Pulp Company in partnership. The factory has a capacity of about 100,000 short tons of kraft pulp a year. This level of production was first attained in 1965, and the company began writing off earlier losses. Lately, profits have been made and the Government hopes for increasing revenue from this industry. There are two companies in the northwest of the country that operate sawmills producing a variety of products mostly for the South African market. Other smaller sawmills serve the local market or produce mining timber for South Africa.

The woodpulp produced is mostly sold overseas, and prices obtained at present are good. The export of timber, and products made of timber, is relatively less important. Exports of lumber to South Africa are hampered by certain limitations on truck deliveries within South Africa that are designed to protect the South African Railways. It was hoped that these limitations would be eased by March 1970 with the enactment of the new Customs Agreement (see pp. 437-40). A further boost to timber exports could be expected if the Swaziland Railway were to be linked up with the South African network.

Mineral production

Since independence, existing mining legislation has become largely obsolete. The ownership of mineral rights is now vested in the King, in trust for the Swazi Nation, with the exception of areas totaling 900 square miles that were granted previously to various concessionaires. These concessions are due to lapse at various times up to 1987. The King has appointed a Minerals Committee to advise him on the granting of new prospecting rights and mining leases. The Commissioner of Mines acts in an advisory capacity to this Committee. Some 22 applications have been received since independence, all of which are still under consideration.

Known mineral resources include deposits of iron ore, asbestos, coal, pyrophyllite, diaspore, barites, kaolin, metallic tin, gold, and silver. However, only iron ore and asbestos are produced in large quantities, and in 1968 their production was valued at R 11.8 million and R 6.0 million, respectively. The value of all other mineral production together was about R 0.5 million (Table 9).

Table 9.Swaziland: Mineral Production, 1966-68(In thousands of short tons and millions of rand)
Chrysolite asbestos36.
Iron ore1,754.010.31,921.911.32,260.211.8
Other minerals0.10.00.2
Total value15.517.418.3
Source: Swaziland Government, Post Independence Development Plan, July 1969.
Source: Swaziland Government, Post Independence Development Plan, July 1969.

Since 1964 iron ore has been produced at Ngwenya, 16 miles northwest of Mbabane and close to the western border. The mine is operated by the Swaziland Iron Ore Development Company (SIODC), which is controlled by Anglo-American Corporation; SIODC is under contract to supply 15 million tons of iron ore at a fixed price over a ten-year period (1964-74) to Japanese steel companies. The ore is shipped to Lourenço Marques by a railway especially constructed for this purpose. Production was fairly low in the early years of operation of the iron ore mine, but the level reached in 1968 is likely to be maintained for a number of years so that by 1974 the amount contracted for will have been produced. Considerable additional ore reserves appear available. The contract with Japanese companies will probably be extended and mining operations will continue on a substantial scale after 1974.

Swaziland’s second important mine is the Havelock Asbestos Mine, which is operated by New Amianthus Mines (controlled by Turner & Newall Ltd. of the United Kingdom). The mine is close to the western border in the north of the country, and the asbestos is shipped about 12 miles by aerial ropeway to the South African Railways railhead at Barberton. The bulk of it is subsequently transported to Lourenço Marques via South African Railways for shipment to the United Kingdom, which is the major market. It has proven difficult to determine the total asbestos reserves, but it is certain that the present level of production at the Havelock Mine can be kept up for a number of years. In the vicinity of the Havelock Mine, further high-quality asbestos deposits have been discovered, and a second large asbestos mine producing about 10,000 short tons annually may be opened soon.

The existing coal mining operations are much less important. The coal produced at Mpaka is absorbed mostly by the railway and other domestic consumers; minor quantities are exported to Mozambique and Kenya. However, major deposits of low-grade coal have been discovered in the Bushveld, adjacent to plentiful water supplies. Agreement has been reached with the U.K. Government to finance a survey to establish the exact extent of these coal reserves, with a view to ascertain their suitability for use in power generation (see also pp. 410-12).

Manufacturing and construction

The principal manufacturing industries in Swaziland are engaged in the processing of local agricultural, livestock, and forestry products. Some of the factors that facilitate the establishment of enterprises in Swaziland include the country’s diversified natural resources, easy access to the South African and other international markets, and well-developed utility services.

In July 1969 the Swazi Department of Statistics released its report on the first census of industrial production. The inquiry was restricted to units employing ten or more persons in the mining, manufacturing, construction, electricity, and water supply industries. In terms of both gross output and persons employed, the manufacturing sector accounted for about half of the total operations of the industrial sector in 1967 (Table 10). The construction sector employed about one fourth of the labor force but contributed only 7.3 per cent to total gross output. In spite of its relative importance, Swaziland’s manufacturing sector is still at an early stage of development. The more important and longer-established units, such as the pulp mills, the pineapple cannery, and the sugar mills, are engaged mostly in processing agroforestry products. They are frequently vertically integrated, with large estates producing the raw materials.

Table 10.Swaziland: Summary of Industrial Sector’s Operations, 1967 1
Number of UnitsPersons EmployedOutputPayments to Employees
Million rand
Mining and quarrying62,46918.516.01.8
Of which
Food and beverages101,65515.84.61.2
Wood and wood products62,5427.63.72.1
Source: Department of Statistics, Swaziland Census of Industrial Production, 1967, July 1969.

Restricted to units employing ten or more persons.

Five of these are public companies, including the Swaziland Electricity Board.

Source: Department of Statistics, Swaziland Census of Industrial Production, 1967, July 1969.

Restricted to units employing ten or more persons.

Five of these are public companies, including the Swaziland Electricity Board.

In the future, the hub of industrial development will be situated at the government-run Matsapa Industrial Estate opened in 1964, which is adjacent to the paved transterritorial highway. It is 140 miles away from the Lourenço Marques harbor and offers to potential investors fully serviced sites ranging in size from one-fourth acre to 10 acres, both on and off rail. Existing industries established on the estate include a cotton ginnery, an abattoir and meat works, a brewery, a confectionery factory, and the country’s main gasoline, petroleum, and lubrication depots.

To attract industry, Swaziland provides considerable financial incentives. While company tax rates are somewhat lower than those in South Africa, other incentives are more or less in line with those generally applied there. Early in 1968 South Africa enacted the Physical Planning Act, which aims at the promotion of decentralization and the development of Bantu homelands. Industries that wish to establish or to expand operations in border areas now enjoy special tax concessions, investment allowances, liberal granting of import permits, and financial assistance from a government-sponsored institution, the South African Industrial Development Corporation. Swaziland would find it difficult to match these special incentives. Nevertheless, it is the intention of the Swazi authorities to provide further incentives to industrialists. These may include tax holidays up to a maximum of five years, which will be granted by the Ministry of Finance on the recommendation of an appropriate board.

It is also hoped to promote large-scale industrial development by means of an industrial development corporation, which would bring together public and private capital. This project is still at a preliminary stage. The authorities intend to discuss it with the IBRD. South African investment banks have already shown some interest in acquiring a participation in the share capital.

A plan to assist the development of small-scale industries is in a more advanced stage. The purpose of the project is to promote small-scale industries among Swazi entrepreneurs and craftsmen through a Small Enterprises Development Corporation (Sedcor), which would be owned partly by the Government and partly by the Credit and Savings Bank. It is envisaged that Sedcor would provide factory shells and workshops for small Swazi entrepreneurs. Some 50 applications for such premises had been received, of which only 14 were likely to be satisfied in the near future. It is further envisaged that Sedcor would help in establishing small industries, such as pottery, tanning, woodwork, weaving, and various handicrafts. When a particular industry thus created becomes economically viable, it would be turned into either a producers’ cooperative or a separate Swazi-owned company. Legislation for the creation of Sedcor has been prepared but has not been approved by the Cabinet. Approximately R 277,000 would be needed as initial capital. It is envisaged that commercial banks would provide R 200,000 and the Credit and Savings Bank the remaining R 77,000. However, there would remain a need for additional low-interest funds, viz., R 109,000 in the second year of operation and R 43,000 in the third year. The total funds requested over a three-year period amount to R 429,000. According to the plans as drafted, a primary aim of this project is to establish industries outside the main urban areas to provide employment for rural people.

Commerce and tourism

While non-Swazi businessmen dominate Swaziland’s import and export trade, a large number of Swazi traders play an important part in the internal distribution system. Even the most remote areas are being serviced by them. It appears that some 500 Swazi dealers also import direct from South Africa. The Department of Statistics is currently engaged in developing more reliable statistics on commerce.

It is certain that the internal distribution system requires improvement, particularly in the rural areas. The products bought by Swazi consumers frequently have passed through several wholesale and retail dealers and are therefore unnecessarily expensive. The authorities, therefore, aim at establishing trading posts throughout the country that would serve retail dealers directly. The Swaziland Sugar Association has already begun to establish a distribution system along these lines and is eventually going to operate five distribution centers. Negotiations with a large South African wholesale dealer engaged in consumer commodities have been held, and it seems likely that the services of this organization will be used in Swaziland.

The tourist industry has good prospects for the future. It is estimated that already 100,000 tourists visit the country annually. Most of these come from South Africa and Mozambique, but the share of visitors from overseas is increasing steadily. A casino near Mbabane provides an added tourist attraction. A serious shortage of hotel accommodations has become apparent, and the authorities are considering special inducements to encourage the speedier construction of new hotel facilities. Successful negotiations have been held with Portugal and South Africa on cooperation in developing the tourist industry in southeast Africa.

Communications and energy

Swaziland obtains about 90 per cent of its imports through South Africa, but there is no rail line to provide transport facilities between the two countries. As far as internal traffic is concerned, neither the sugar mills nor the wood-processing industries are situated directly on a rail line. Road transport is therefore of paramount importance, and the authorities have attached great importance to an improvement of the road network. Approximately 840 miles of main roads and 760 miles of secondary roads were available by 1968. An intensive ten-year period of road construction came to an end in 1965, and efforts are at present directed mainly toward improving standards. Between 1955 and 1965, R 8.8 million was spent for road construction, financed by Commonwealth Development and Welfare grants, U.K. loans, and a development credit from the International Development Association (IDA). A long-term road development plan has been prepared by the Ministry of Works, Power, and Communications, and it is envisaged that Manzini will be the focal point of the main road network. In the capital budget for 1969/70 about R 170,000 is provided for road construction.

The 136-mile Swaziland Railway Line was opened in 1964 to transport iron ore to the coast. As the Ngwenya mine was situated in the western part of the country, the line had to traverse the country from west to east to join the Mozambique Railway System. It passes by the country’s only coal mine at Mpaka, which provides 36,000 tons of coal annually to the railway. The traffic on the line is controlled by the Mozambique Railway Organization, which owns the locomotives. Other rolling stock and the rail track are owned by the Swaziland Railway, a statutory body, operating on commercial lines. Some R 20 million was invested in the construction of the rail line and the initial rolling stock. This amount was financed by loans provided mainly by the Commonwealth Development Corporation, Anglo-American Corporation, Rand Selection Corporation, and South African Mutual Life Assurance Society. The bulk of these loans will be repaid by 1974. Gross operating revenues are larger than operating expenditures, and with the prospect of the extension of iron ore mining operations beyond 1974 and other industries making increasing use of the railway services,2 serious financial problems are not expected in the future. A special feature of the financial arrangements is that all the income tax and 50 per cent of the minerals tax paid by the SIODC (together R 1.4 million in 1968/69) is applied toward the amortization of the Railway’s indebtedness. In this way a liability to the Government is being accumulated, which by the time the agreement expires in 1974 can be expected to exceed 50 per cent of the Railway’s capital. At that time a new agreement will have to be entered into to determine whether the accumulated government “contribution” should be converted into a fixed capital investment of the Government in the Railway or whether it should be repaid over a period of time.

The possibility of a rail link between Swaziland and South Africa has been under study for some time. This would represent an investment of about R 10 million, involving construction of tracks over less than 100 miles, most of which would be in South Africa. Technical discussions have reached an advanced stage, and feasibility studies on various routes have been made. It is envisaged that, after completion of technical and exploratory talks between the two railway administrations, a joint report will be submitted to the Governments concerned for further consideration. Since transport requirements between South Africa and Swaziland for many years to come cannot be expected to exceed 400,000 tons annually (requiring the running of one train a day), economic considerations alone would not seem to justify the building of a new line.

The Swaziland Electricity Board was established in 1962 as a statutory body. In 1964 the first electricity was generated in a hydroelectric station on the Usutu River. The quantity of electricity sold rose from 17 million kilowatt-hours (kw-h) in 1964/65 to 64 million kw-h in 1968/69. Approximately 70 per cent of the total was generated in hydroelectric power plants and the rest in diesel plants. During the year ended on March 31, 1969 total revenue from sales of electricity amounted to R 1.2 million, an increase of 34 per cent over the previous year. During the same period costs increased by only 28 per cent, resulting in a further increase in the return on capital invested to 10.6 per cent.

The Electricity Board’s investments have been financed largely by the IBRD but to a considerable extent also from the Board’s own revenue surpluses and from commercial loans. There is no government subsidy. Currently the Board is engaged in a four-year (1967/68-1970/71) development program under which R 3.3 million will be invested to meet the sharp increase in demand for power. By 1970/71 a total of about R 9 million will have been invested.

A large thermoelectric power project is now under active consideration. It is hoped that a station using coal deposits (recently discovered in the Lowveld) and water supplies could be built mainly to supply electricity to South Africa. The project could not be completed before 1979. Engineering and economic aspects of building this thermal power station will be covered in a survey, which will be completed in 1970. If the results of this feasibility study are favorable, the next step to be taken by the Swazi authorities would be to obtain firm assurance as to the purchase of power by South Africa. Work on the construction of this station would commence as soon as financing is obtained. The realization of this project would add substantial momentum to the economy of Swaziland.

Employment, wages, and prices

According to the 1966 population census, 183,000 persons were in the working age group of 15 to 64 years. As indicated in Table 11 the larger firms employed 31,000 persons, and total wage employment at that time was estimated at 48,300. Employment does not seem to have increased in recent years, while on average 2,500 men alone are added to the labor force every year. This would imply a rise in unemployment. However, as in all countries with a large subsistence sector, it is difficult to determine exactly the employment status of the population. If unemployment were defined as relating to persons genuinely willing to obtain paid employment but unable to find it, there were 9,000 unemployed persons at the end of 1966, according to the census.

Table 11.Swaziland: Number of Persons Employed, December 1966-December 19681(In thousands)
Agriculture and forestry17.619.617.518.416.5
Mining and quarrying2.
Source: Department of Statistics, Annual Statistical Bulletin, 1968.

Information has been collected by the Swaziland Manpower Information Unit and is based on returns received from about 400 firms with more than ten employees. All government employees are excluded.

Source: Department of Statistics, Annual Statistical Bulletin, 1968.

Information has been collected by the Swaziland Manpower Information Unit and is based on returns received from about 400 firms with more than ten employees. All government employees are excluded.

The South African labor market provides some outlet for Swaziland’s labor force, and in 1968 about 7,800 Swazis were recruited to work mostly in gold and coal mines. The total number of Swazi absentees by mid-1969 was estimated at 27,900, of which 18,200 were males between the ages of 15 and 64 years. About one third of the employed labor force is working abroad temporarily.

The 1969/70 budget provides for 5,400 established posts in the civil services, which include 1,400 teachers. This represents an increase of 11 per cent over fiscal 1968/69, and salary expenditures rose by 14 per cent, to R 5.9 million, in 1969/70. In addition, there are 6,000 to 8,000 workers who are paid by the day. Annual salaries in the public sector range from R 300 to R 1,000 for the lower grades, R 1,500 to R 3,000 for accountants and technical personnel, and from R 3,000 to R 5,000 for professionals and top administrative people. The superscale for executives begins at R 5,000 and may go up to R 7,000.

The government salary levels and structure are similar to those in the United Kingdom as a result of historical developments. A substantial proportion of the civil service, particularly at the middle and top levels, is filled by expatriates. The last civil service salary revision took place in April 1968 and affected mostly the lower and middle salary levels. Lately there have been widespread wage and salary increases in South Africa, and it is likely that this will put pressure on the authorities in Swaziland to review salaries at all levels.

There are few wage statistics available relating to the private sector, largely as a result of the failure of past employment surveys to distinguish between the various levels of skill in the labor force. If the figures given in Table 12 are compared with South African figures relating to African laborers, it appears that the level of wages in Swaziland tends to be somewhat lower; for instance, in the construction sector they are lower by about 6 per cent. In addition, prices of certain consumer goods, especially those imported from or through South Africa, would tend to be higher in Swaziland. The discrepancy in real wages is therefore even wider.

Table 12.Swaziland: Average Hours of Work and Earnings 1 in Selected Industries, September 1968
Average Weekly Hours of WorkAverage Hourly Earnings (cents)Average Weekly Earnings (rand)Average Weekly Value of Fringe Benefits
Mining and quarrying49.817.18.701.520.08
Repair of motor vehicles43.137.616.28
Source: Department of Statistics, Annual Statistical Bulletin, 1968.

Gross earnings before deductions, including overtime and regular bonuses.

Source: Department of Statistics, Annual Statistical Bulletin, 1968.

Gross earnings before deductions, including overtime and regular bonuses.

Relations between employers and employees are generally good in Swaziland, and industrial unrest is exceptional. The operation of labor associations is governed by the Trade Unions and Employers Organization Law of 1966. There are several labor unions operating in the country but none of them is very active. The Employment Proclamation of 1962 as amended in 1965 lays down regulations governing service contracts, protection of wages, employment of women and children, recruiting, care and welfare, and problems of jurisdiction. The Wages Proclamation of 1964 provides for the establishment of wages councils, and so far three have been set up. These councils provide a machinery for voluntary joint bargaining within certain sectors of the economy. Legislation passed in 1966 provides for the creation of a Labor Advisory Board consisting of equal numbers of representatives of employers and employees together with two persons who are not public officials. Its terms of reference include consideration of and advice on existing and proposed labor and social security legislation and the organization of the employment services.

Prices are generally uncontrolled except for bread, butter, maize, and, temporarily, mark-ups on gasoline. The Swazi retail price index is designed to show changes in the cost of living of the lower-income Swazi family. When it was established in 1967, it was assumed that the pattern of expenditure would be the same as in neighboring countries. Since then, it has become obvious that there are sharp differences in the spending pattern, and the index used would seem to require substantial modification. As indicated in Table 13, the index rose by about 2.9 percent between mid-1968 and mid-1969. However, a rise of 7 per cent in “other items” is thought to be given too little weight, and the actual increase of the over-all index has probably been much higher. Both food and clothing prices have increased appreciably, while prices for fuel and light as well as drink and tobacco remained fairly stable. No index showing price movements affecting the better-paid Swazis and expatriates is available, but some indication may be obtained from consumer and wholesale price indices in South Africa; these give a reasonable guide because most goods sold in Swaziland are obtained from or through the Republic. Between April 1968 and April 1969 the South African consumer price index rose by 3.0 per cent and the wholesale price index by 2.5 per cent. These price increases seem moderate. A recently imposed sales tax in South Africa, however, is expected to result in a cost of living increase of 6 per cent once the effects have worked themselves through. This has given rise to concern on the part of the Swazi authorities, because wage demands might be engendered by such a change in price levels.

Table 13.Swaziland: Retail Price Index for Mbabane and Manzini, 1967-Second Quarter 1969(January 1967-100)
Quarterly AverageFoodFuel and LightDrink and TobaccoClothing and TextilesOther ItemsTotal Index
Source: Department of Statistics, Statistical News, No. 15, 1969.
Source: Department of Statistics, Statistical News, No. 15, 1969.

Development Planning

The Post Independence Development Plan

Since 1948 a series of development expenditure programs have been undertaken. Most of the programs have been financed from the United Kingdom’s Commonwealth Development and Welfare (CD&W) Fund and concentrated in the areas of public works, soil conservation, and education. In the program for 1965-68 development expenditures totaled about R 8.6 million (an average of R 2.1 million a year), the bulk of which was financed by U.K. grants.

In 1969 the authorities launched a R 23.1 million Post Independence Development Plan covering the five-year period 1969/70-1973/74. The Plan was prepared mainly under the supervision of a United Nations (UN) expert who has since left the country. A preliminary draft of it formed the basis for the annual aid negotiations held in London during November-December 1968. At that time, the United Kingdom undertook to provide development assistance up to R 1.8 million for the fiscal year 1969/70, and indicated that it might provide up to R 2.0 million a year for the following two years, subject to further negotiations and agreement upon specific projects. This smaller-than-expected tentative aid forecast led to an increase in the period over which the Plan’s projects were to be implemented to five years, from the four years originally envisaged. The annual rate of public investment envisaged over the Plan period is therefore about R 4.6 million, of which more than one half will have to be provided for from sources additional to the U.K. assistance presently projected.

The Plan provides specific targets for public development expenditures over the five-year period but does not project any breakdown on an annual basis (except for the 1969/70 capital budget figures, which are included in the total). Apart from the anticipated U.K. development aid, as indicated above, the Plan gives only general indications of the sources of the required financing. About R 5 million is expected to be financed outside the Government’s budget through the proposed new Industrial Development Corporation, the Electricity Board, and other public entities. It is hoped that the bulk of the remaining R 12.3 million will be provided by the United Kingdom and other bilateral and multilateral sources. The authorities hope to diversify their sources of assistance as much as possible during the Plan period. It is intended also to raise further commercial loans when the nature of the projects justifies such an approach. Another possibility is the floating of Swazi Government bonds on the South African market. The South African authorities have recently indicated agreement in principle to such issues, but details have yet to be worked out.

Table 14 indicates the major areas of expenditure, which are similar to those in previous programs except that relatively more attention is now given to education, which will receive 14 per cent of the total planned expenditures. Nevertheless, the allocation for roads is still the largest, absorbing 17 per cent of the total. Most of the projects included in the Plan are not as yet fully prepared. The planned development expenditures do not include major agricultural development programs that might come into effect as a result of the recommendations of the Land Mission concerning purchase of new land for the Swazi Nation (see pp. 394-96). A rough estimate of the annual cost of the recurrent budget of full implementation of the Plan’s projects is R 1.7 million, net of operating costs covered directly by increased revenues resulting from the projects.

Table 14.Swaziland: Summary of Investment Program, 1969/70-1973/74
Thousand RandPercentage of Total
Mining, industry, and commerce2,48210.8
Vehicles and equipment11,2005.2
Housing, utilities, and community development2,79012.1
Education, training, and broadcasting3,31014.3
Administration buildings7303.2
Judiciary, police, and prisons1,2745.5
Source: Swaziland Government, Post Independence Development Plan, July 1969.

Comprising equipment for road maintenance, soil conservation, and dam construction.

Source: Swaziland Government, Post Independence Development Plan, July 1969.

Comprising equipment for road maintenance, soil conservation, and dam construction.

The Plan covers private investment only in general terms, but it is indicated that the private sector will be expected to continue spearheading economic development in many sectors, and that the Government will encourage a continued inflow of foreign capital through appropriate incentives.

Administration of planning

The Plan can be regarded as somewhat provisional because the organization of the country’s administration, and in particular of the unit responsible for planning, has undergone major changes since independence. A large number of personnel in the Department of Economic Planning and Statistics has been exchanged during the past year. Since April 1, 1969 the Department has been attached to the Prime Minister’s office, and the responsibilities of the Ministry of Finance are now limited to financing projects under the annual capital budget and to long-term financial planning. Recently the planning department’s work has consisted mostly of processing aid applications for on-going projects so as to utilize as fully as possible the aid pledged by the United Kingdom. The authorities aim at restaffing the Department, and it is expected that an expert provided by or through the UN will assume responsibilities shortly as Chief of Planning. Subsequently, other vacancies will be filled, and in this way a planning machinery will be created gradually. It is envisaged to pool all economists available in the country in this Department and to make them available to ministries where their services are needed. Exact administrative structures, however, still remain to be worked out in detail.

Bearing the existing limitations in mind, and judging by the performance during the first year, it appears that major revisions of the Plan may be made, subsequent to the creation of a planning machinery and once priorities have been established on a political level.

Government Finance

Budgetary system and structure of the public sector

Swaziland’s budget year covers the period April 1 to March 31. Until April 1, 1968, the ordinary (“territorial”) budget included recurrent as well as some capital expenditures financed from local resources and U.K. budgetary grants-in-aid, while capital budgets that included some project-oriented recurrent expenditures were prepared separately for CD&W Fund expenditures and expenditures financed from loan funds. Starting with the fiscal year 1968/69, the budget and accounting system was revised to separate all current and capital expenditures into two distinct budgets. This change makes it difficult to compare past trends in current and capital spending, and the exposition of budgetary developments given below will therefore deal separately with the periods before and after April 1, 1968.

The Government’s cash transactions are handled through current accounts with Barclays Bank D.C.O. in Mbabane, into which locally collected revenues are paid, and with the Crown Agents in London, into which U.K. financial assistance and some externally collected tax revenues are paid. Both accounts may be drawn upon as required to meet budgetary payments. The Government has an overdraft facility with Barclays Bank, the size of which (R 1.8 million in 1969/70) must be voted annually by Parliament. The Government receives interest on its credit balances with Barclays Bank at a rate equal to the South African Reserve Bank rate 3 and pays an additional 1½ per cent over this rate for use of the overdraft facility. There is no treasury bill issue at present. The possibilities for developing a local market in short-term government securities seem limited, but the Government hopes to negotiate arrangements with the South African authorities that would permit the placing of some Swazi treasury bills on the South African market. Agreement has recently been reached in principle concerning the placing of longer-term Swazi Government securities in South Africa. An important issue yet to be determined is whether these securities can be approved for holding as liquid assets by South African insurance companies and other financial institutions.

The Central Government’s budget covers all but a small part of total government revenues and expenditures in Swaziland. A separate budget is prepared for the Swazi National Treasury (SNT) covering the financial operations of the traditional tribal government of the Swazi Nation. Until the present fiscal year, SNT was responsible, inter alia, for certain health and education services and received an earmarked portion of certain tax receipts, in addition to budgetary subventions from the Central Government and certain minor revenues of its own. In 1968/69 estimated total expenditures of SNT were about R 370,000, of which about R 275,000 (74 per cent) was financed by transfers from the Central Government’s budget. Starting in 1969/70 the health and education functions of SNT were taken over by the Central Government, and the earmarking of tax receipts for SNT was abolished, being replaced by straight grants from the Government’s recurrent and capital budgets determined annually on the basis of need. In 1969/70 budgeted total expenditures were reduced to R 307,000, and the subvention was budgeted at R 183,000 reflecting these changes. There are also Town Councils for the municipalities of Mbabane and Manzini, whose combined estimated expenditures amounted to about R 250,000 in 1968/69. About three fourths of this (R 190,000) was financed by local property taxes collected by the municipalities themselves and the remainder mainly by grants or loans from the Central Government. The total combined expenditures of the three local authorities (SNT and municipalities) therefore amounted to about R 620,000 in 1968/69 (about 3.7 per cent of total Central Government expenditures), of which somewhat over one half was financed by or through the Central Government and is reflected in the latter’s budgetary accounts.

The most important statutory bodies are the Swaziland Electricity Board, the Swaziland Railway, and the Swaziland Credit and Savings Bank. The first of these, with gross receipts from electricity sales of R 1.2 million in 1968/69, is financially self-supporting and receives no budgetary subvention from the Government. The Railway, with operating revenues of R 3.4 million in 1968/69, also operates on commercial lines. However, according to the agreements under which the construction of the Railway was financed originally, it receives through the Government’s budget an annual interest-free “contribution” equal to the total amount of income tax and 50 per cent of the minerals tax paid by the SIODC, the Railway’s major customer, which is applied to amortization of the Railway’s external indebtedness. The contribution was R 1.4 million in 1968/69, and the accumulated contribution at the end of that financial year totaled R 3.0 million. As a result of this procedure, it is expected that the Railway’s indebtedness will be largely paid off by 1974, when SIODC’s present ten-year contract to supply iron ore expires. Discussions will take place at that time concerning continuation of the status of the Railway’s accumulated liability to the Government. (Further details of the Railway and Electricity Board operations are given on pp. 410—12.) The operations of the Swaziland Credit and Savings Bank, described on pages 435-36, affect the Government’s budget only to the extent that U.K. loans on-lent to the Bank, and service thereon, appear on both the receipt and expenditure sides of the budgetary accounts. The Posts and Telecommunications system and various partially self-supporting departmental operations (e.g., hospitals, student hostels, and cattle holding and inspection stations) are included in the Central Government’s budget accounts.

Budgetary trends, 1963/64 to 1967/68

During the five years preceding independence, government budgetary operations expanded rapidly, with total expenditures rising by 81 per cent, to nearly R 15 million in the final year of the period (see Table 15). Most of the increase in ordinary budget expenditures, comprising in the main expenditures of a recurrent nature, was concentrated in 1964/65 and in 1967/68 and reflects the cost of increased responsibilities taken over by the Government in connection with self-government and independence. Capital budget expenditures, which include some expenditures of a recurrent nature, rose steadily after 1964/65 to R 4.2 million in 1967/68, about double the average in the first two years of the period. The sharp rise in the latter part of the period was due in part to construction of public buildings to house the new Government.

Table 15.Swaziland: Government Finance, Summary 1963/64-1967/68(In millions of rand)
Current revenues4.114.405.806.808.57
Customs and excise0.610.741.772.022.24
Income tax2.032.092.322.763.94
Current budget expenditures15.977.648.738.8310.59
Ordinary expenditures5.877.548.588.6510.38
OSAS expenditures0.
Current deficit1.863.242.932.032.02
Capital budget expenditures12.181.962.503.464.19
CD&W expenditures0.791.502.472.633.31
Loan expenditures1.390.460.030.830.88
Total expenditures8.159.6011.2312.2914.78
Over-all deficit=financing4.045.205.435.496.21
U.K. grant-in-aid1.713.253.022.401.76
OSAS contribution0.
CD&W grants0.731.542.502.633.31
Loan funds1.430.340.750.800.74
Other (residual)0.070.07-1.00-0.500.16
Source: Swaziland Treasury, Report on the Finance and Accounts for the Financial Year Ending 31st March 1968.

Both the ordinary and capital budgets during this period contained some current and some capital expenditures.

Source: Swaziland Treasury, Report on the Finance and Accounts for the Financial Year Ending 31st March 1968.

Both the ordinary and capital budgets during this period contained some current and some capital expenditures.

Current revenues also rose rapidly during the period but remained insufficient to cover ordinary expenditures. A sharp increase occurred in 1965/66 in receipts from customs and excise taxes, which, under the terms of an agreement dating from 1910, were collected by South Africa and paid over to the three High Commission Territories (Basutoland, now Lesotho; Bechuanaland, now Botswana; and Swaziland) in fixed proportion to South Africa’s total collections from these taxes. Under a revision of the agreement made in 1965, Swaziland’s share was raised to 0.53 per cent of total South African collections, compared with 0.15 per cent previously. This resulted in an additional amount of more than R 1 million becoming available to Swaziland in the fiscal year 1965/66, raising receipts from this source to R 1.8 million (31 per cent of total ordinary revenues) in that year. Aside from this change, revenues from customs and excise taxes continued to increase regularly over the period as a result of expansion of the tax base and, in 1966, of increased excise duties on manufactured liquors from South Africa and locally manufactured soft drinks, which from that year began to be collected by Swaziland. Collections from income taxes and other local taxes also increased steadily, in line with expanding economic activity.

These factors resulted in a decline in the annual deficit on the ordinary budget from a peak of R 3.2 million (42 per cent of ordinary budget expenditures) in 1964/65 to R 2.0 million (19 per cent) in 1967/68. This deficit was approximately covered each year by the annually negotiated grant-in-aid from the United Kingdom, which likewise declined after 1964/65, and by a small but rising contribution from the United Kingdom’s Overseas Service Aid Scheme (OSAS) toward the cost of expatriate personnel.

The financing of capital budget expenditures over this period depended mainly upon U.K. assistance. The CD&W Fund provided an increasing amount of grant assistance; this rose to R 3.3 million, 79 per cent of capital budget expenditures, in the fiscal year immediately preceding independence. Capital expenditures financed from loans fluctuated considerably from year to year, depending upon the availability of funds and projects. Exceptionally, more than half of the capital expenditures in 1963/64 were financed by loans, owing mainly to the utilization at that time of a loan of R 2 million from the IDA for roads—the only major loan from non-U.K. sources received directly by the Swazi Government. 4 From 1964/65 to 1967/68, loan-financed capital projects became of comparatively minor importance.

Recent budgetary developments

Budgetary outcome in 1968/69

Actual government expenditures in 1968/69 totaled R 16.6 million (see Table 16), an increase of 12.3 per cent over 1967/68. Current expenditures increased from R 10.6 million to R 14.2 million—an apparent increase of 34 per cent. However, as mentioned earlier, this comparison is misleading because of changes in the classification of budget items under the new system introduced in 1968/69, which resulted in approximately R 2.3 million of current expenditures formerly included in the capital budgets being taken into the current expenditure account. In addition, a once-only item amounting to R 0.5 million for Swaziland’s share of the gratuities of expatriate civil servants who retired at the time of independence appeared in current expenditure figures for 1968/69. With these factors eliminated, the rise in recurrent expenditures in 1968/69 is reduced to about 7.5 per cent. Conversely, capital expenditures of R 2.4 million in 1968/69, when adjusted for the reclassification, show an increase of 26 per cent.

Table 16.Swaziland: Government Finance, 1968/69-1970/71(In millions of rand)

Original Budget,

Revised Estimates,

Tentative Estimates,

Current revenues19.9110.1215.0515.10
Customs and excise2.002.717.546.70
Income tax4.904.254.254.67
Current expenditures114.1613.9314.8415.49
Extraordinary items0.50
Current surplus or deficit−4.25−3.810.21−0.39
Capital expenditures2.411.931.622.13
Total expenditures16.5715.8616.4617.62
Over-all deficit=financing6.665.741.412.52
U.K. grant-in-aid3.293.26
OSAS contribution0.
OSAS loans0.360.160.230.20
U.K. development aid1.631.791.492.00
Research subventions—U.K. and local0.
Other (residual)
Sources: Swaziland, Recurrent Budget Estimates for the Financial Year 1969/70; information provided by the Swazi authorities; and the authors’ estimates.

Excludes “contingency fund” of R 700,000, which is included in the budget on both revenue and expenditure sides to provide authority for unexpected expenditures but is transferred to other accounts in the final accounting of actual budget results. Includes tax receipts from Swaziland Iron Ore Development Company, which are paid to Swaziland Railway, and contributions from public agencies toward debt service payments made through the budget.

Sources: Swaziland, Recurrent Budget Estimates for the Financial Year 1969/70; information provided by the Swazi authorities; and the authors’ estimates.

Excludes “contingency fund” of R 700,000, which is included in the budget on both revenue and expenditure sides to provide authority for unexpected expenditures but is transferred to other accounts in the final accounting of actual budget results. Includes tax receipts from Swaziland Iron Ore Development Company, which are paid to Swaziland Railway, and contributions from public agencies toward debt service payments made through the budget.

Ordinary revenues increased by 15 per cent, to R 9.9 million, in 1968/69. Receipts from customs and excise taxes actually declined slightly as a result of lower collections in the customs area as a whole. Receipts from income tax were, however, larger by 24 per cent, accounting for nearly one half of total revenue collections. This was partly the result of a switch to a pay-as-you-earn system for tax payments, but it also reflected to some extent an increase in taxable profit for some of Swaziland’s major taxpayers. The introduction during the year of a graded tax replacing the former Swazi and poll taxes also resulted in some improvement in collections (see pp. 428-30).

As a result of these developments, the over-all budgetary deficit rose only slightly in 1968/69, to R 6.6 million, 40 per cent of total budget expenditures. Approximately one half of this (about R 1 million less than the actual deficit on the current budget accounts) was financed by a considerably enlarged grant-in-aid from the United Kingdom, which rose from R 1.8 million to R 3.3 million. Part of the remaining current deficit was covered by OSAS contributions to the salaries and pensions of expatriate civil servants and by special loans from OSAS to cover part of the cost of gratuities related to retirements. Direct U.K. development assistance totaling R 1.6 million financed the major part of capital expenditures; since independence, this has been provided partly on a loan basis. The remaining deficit of about R 1.0 million was financed by various means, including an increase in the Government’s net indebtedness to Barclays Bank D.C.O. of approximately R 0.6 million during the financial year to cover temporary cash requirements.

The 1969/70 budget

The original budget estimates for the fiscal year 1969/70 envisaged relatively little change from the outcome of the previous year (see Table 16). Current revenues were expected to increase by 2.1 per cent, to R 10.1 million, the major changes anticipated being increases in receipts from customs and excise taxes and from the new graded tax, partly offset by a drop in income tax receipts. The annual aid negotiations with the United Kingdom resulted in continuation of the grant-in-aid at R 3.3 million, approximately the same as in the previous year, and agreement upon a figure of R 1.8 million for development aid for agreed projects, of which R 1.1 million was to consist of interest-free, 25-year loans. It was agreed, however, that the grant-in-aid figure would be renegotiated in the event of a revision of revenues from the Customs Agreement during the year. These limitations made it necessary to budget for total expenditures of R 15.9 million, approximately R 0.7 million less than in the previous year. Allowing for the nonrepetition of some independence year current expenditures, but providing for additional recurrent costs of R 182,000 connected with development programs, this meant a slight decline in total current budget expenditures and a virtual standstill in most expenditure items. As is customary in Swaziland, capital expenditures were budgeted only to the extent that financing from the United Kingdom and other sources was reasonably assured, resulting in a figure of R 1.9 million, about R 0.5 million less than actually expended in the previous year.

Revised budgetary prospects for 1969/70

The financial situation in 1969/70 and the prospects for subsequent years were altered significantly by the successful conclusion of the customs union negotiations in December 1969. The revenue-sharing provisions of the new Agreement (described fully on pages 437-40) take effect retroactively from the beginning of the fiscal year 1969/70. Swaziland’s share in revenues from customs and excise taxes under the new Agreement totals R 7.5 million in 1969/70,5 compared with only R 2.7 million provided for in the original budget estimates. The increment of R 4.8 million that will thus accrue includes about R 0.5 million that is attributable to the shifting of South Africa’s quarterly contributions from a payment-in-arrears to a payment-in-advance basis under the new Agreement and will not recur in future years. This figure for receipts under the Customs Agreement in 1969/70 is a firm one, since under the new system the amount to be paid by South Africa for each fiscal year is committed in advance. Taking account also of some minor adjustments in the estimates of other revenues, the revised estimate of total current revenues for 1969/70 is R 15.0 million—nearly 50 per cent above the original estimate.

Revised estimates of current budget expenditures have also been prepared. Current expenditures on items included in the original budget estimates have been raised by approximately R 0.4 million (3 per cent), mainly because of a decision to start providing regular annual funding for gratuities payable to contract officers, which hitherto had been charged wholly to the year of payment. Certain other items in the original expenditure estimates were also adjusted, both upward and downward, with relatively minor net effect. In addition, the Government intends to provide in 1969/70 for certain extraordinary expenditure commitments totaling about R 0.5 million that were not included in the original budget estimates. These include about R 0.16 million for final settlement of the operations of the Malkerns cannery, which until its purchase by Libby’s in October 1969 was being run on a temporary basis by the Government; up to R 0.25 million for expenditures connected with the outbreak of foot-and-mouth disease in 1969 (in addition to R 0.16 million already provided for this purpose in the revision of the budget estimates); and certain additional provisions to cover previous deficits and contingencies. Taking all these increases into account, the revised estimate of current spending in 1969/70 is R 14.8 million—6.5 per cent above the original budget estimate but only 4.8 per cent above actual spending in the previous budgetary year. Thus, in place of the originally expected deficit of R 3.8 million, a small current surplus of R 0.2 million is now anticipated.

Revised estimates of the capital budget for 1969/70 made in October 1969 suggest that capital expenditures will be about R 0.3 million below original estimates, owing mainly to late approval and lagging implementation of certain projects. In accordance with the United Kingdom’s aid procedures, the undisbursed portion of the capital aid provision will lapse at the end of the fiscal year and cannot be carried forward; the corresponding financing item is therefore reduced similarly.

It appears therefore that, under these new circumstances, the over-all budget outcome may yield a small cash surplus in 1969/70, even without any U.K. grant-in-aid assistance. Negotiations between Swaziland and the United Kingdom concerning the amount of the grant-in-aid for 1969-70 and total financial aid for subsequent years took place early in 1970. The result was an offer of R 10.9 million over a 3-year period beginning in 1970/71. Of this total, R 0.43 million is grant-in-aid, while most of the remainder will be interest-free development loans for 25 years with a 7-year grace period. The total also includes a grant for land purchase and development to settle Swazi farmers.

Prospects for 1970/71 and subsequent years

On the basis of tentative projections prepared by the Swazi authorities and estimates made by the authors, some preview may be given of the probable size of the next budget and of likely trends in current revenues and expenditures over the succeeding two financial years.

For 1970/71 the major fact affecting current revenues is that receipts under the Customs Agreement are expected to decline by about R 0.8 million (see Table 16). This is because (1) the effects of the acceleration in payments during 1969/70, referred to above, will not be repeated; and (2) the new revenue-sharing formula will include for the first time in 1970/71 the effects of the sales tax introduced by South Africa in 1968, which will result in a slight decrease in Swaziland’s share in the common revenue pool. Total receipts under the Customs Agreement are thus expected to be R 6.7 million in 1970/71. Income tax and other revenues are expected by the authorities to increase by R 0.4 million and R 0.6 million, respectively, above the previous year’s revenue, excluding tax receipts that are self-balancing with expenditures, i.e., SIODC taxes paid over to Swaziland Railway, and loan repayments and disbursements. Assuming that these self-balancing items remain at their 1969/70 levels, total current budget revenues in 1970/71 would be R 15.1 million, fractionally below the revised estimate for the current fiscal year. On the other hand, the authorities expect current budget expenditures (again excluding those that are self-balancing with receipts) to be at least 8 per cent above the revised 1969/70 estimates. On this basis, current budget expenditures would total R 15.5 million, and the current surplus of R 0.2 million projected for 1969/70 would be converted into a deficit of R 0.4 million in 1970/71.

Capital expenditures and receipts in 1970/71 cannot as yet be projected with any degree of certainty, since these will depend upon the availability of both projects and financing—the latter also being contingent upon the outcome of the aid talks with the United Kingdom referred to above. However, at the beginning of the fiscal year 1969/70, the United Kingdom gave Swaziland tentative indication that it could expect capital aid from the United Kingdom totaling about R 2.0 million a year in 1970/71 and 1971/72, and this figure is used for illustrative purposes in Table 16. On these indications, it appears that there is little prospect in 1970/71 for a relaxation of over-all budget stringency, and a repetition of the small current surplus projected for 1969/70 is not likely.

As to the prospects for the subsequent two years, the authorities expect receipts under the Customs Agreement to increase in the near future by an average of no more than 5 per cent a year, although this figure could, of course, fluctuate from year to year in the light of developments in both Swaziland and the common customs area as a whole. They further expect income tax receipts over the next three years to show an average growth rate of 10 per cent per annum, and the same rate of increase may be expected in other tax receipts. These assumptions suggest an average rate of growth in total current revenues of 7.25 per cent a year through 1972/73. The prospects for surplus or deficit in the current budget therefore depend largely upon whether the growth in current expenditures will be above or below this figure, which is much smaller than the actual rate of increase experienced in recent years and leaves little margin for new expenditures after the recurrent needs of development programs have been provided for. It should be noted that the scope for increasing current revenues through changes in tax rates is relatively small. Customs, excise, and sales taxes are determined essentially by South Africa, while it is the policy of the authorities to keep income tax rates slightly below those prevailing in South Africa so as to preserve a margin of incentive for investors. This leaves only about one third of revenues as presently structured that can be considered eligible for potential increases in tax rates. These considerations suggest that the current budget situation is likely to remain tight for several years to come.

Taxation and the structure of revenues and expenditures

In Table 17 a more detailed breakdown of current revenues and expenditures in the fiscal year 1969/70 is presented, based on the revised budget estimates.

Table 17.Swaziland: Structure of Current Revenues and Expenditures, 1969/701
Amount (million rand)Percentage of Total
Customs, excise, and sales taxes7.5450.1
Direct taxes4.7731.7
Income tax 24.2528.2
Graded tax0.523.5
Earnings of Departments1.509.9
Posts and Telegraphs0.734.8
Reimbursements and loan repayments0.211.4
Lands and minerals 20.241.6
Total revenues15.05100.0
Expenditures 3
Debt payments1.9013.5
Regular debt service0.876.2
Transfer to Swaziland Railway 21.037.3
Wages and salaries5.9141.9
Contract staff1.205.5
Pensions and gratuities0.825.8
Current pensions, gratuities, and compensation0.523.7
Finding for future gratuities0.302.1
Total expenditures 314.10100.0
Sources: Swaziland, Recurrent Budget Estimates for the Financial Year 1969/70; Department of Statistics, Annual Statistical Bulletin, 1968; and information provided by the Swazi authorities.

Based on revised budget estimates.

Tax payments by Swaziland Iron Ore Development Company (R 0.95 income tax and R. 0.08 minerals tax) transferred to Swaziland Railway for amortization of latter’s debt.

Excludes OSAS expenditures (R 0.24 million) and extraordinary items (R 0.50 million); see page 425.

Sources: Swaziland, Recurrent Budget Estimates for the Financial Year 1969/70; Department of Statistics, Annual Statistical Bulletin, 1968; and information provided by the Swazi authorities.

Based on revised budget estimates.

Tax payments by Swaziland Iron Ore Development Company (R 0.95 income tax and R. 0.08 minerals tax) transferred to Swaziland Railway for amortization of latter’s debt.

Excludes OSAS expenditures (R 0.24 million) and extraordinary items (R 0.50 million); see page 425.

Revenues under the new Customs Agreement will account for one half of total current revenues. A detailed description of the revenue-sharing formula under that Agreement is given on pages 439-40.

The second most important source of revenue is the income tax, which is expected to provide about 28 per cent of total revenues in 1969/70. Nearly one fourth of this is paid by the SIODC and is matched by a corresponding expenditure item for the payment to Swaziland Railway, as described earlier. Other income tax receipts include both company and personal income taxes. Income tax rates were raised slightly at the beginning of the fiscal year 1969/70, following tax changes in South Africa, and a tax on dividends paid to nonresident shareholders was introduced. The present income tax rates (with previous rates in parentheses) are as follows: Depreciation provisions in the existing tax laws are liberal, and a 30 per cent allowance is given on new machinery, plant, and buildings. There is no separate investment code, although the introduction of tax-holiday provisions for new investors is being considered.

Per cent
Mining companies: on first R 20,000 of taxable income27(25)
on additional taxable income37½(34)
Other companies: on all taxable income33½(30)
Persons: on taxable income of R 600
(unmarried person) to taxable income exceeding R 18,0007½-50(6)-(50)

The other important direct tax is the graded tax, which was introduced in January 1969 to replace two previous taxes of a per capita nature (Swazi tax and poll tax). The graded tax is payable by all persons residing in Swaziland at rates rising from R 4.20 a year on incomes not exceeding R 300 to R 18 on incomes exceeding R 600. For employees, the tax is collected by the employer. Revenues from this tax are expected to exceed R 0.5 million (3.5 per cent of total revenues) in 1969/70, compared with less than R 0.2 million collected under the poll and Swazi taxes in 1967/68.

Nearly 10 per cent of total revenues consists of fees for services rendered by government departments, most importantly Posts and Telegraphs, and another 1.4 per cent consists of repayments and reimbursements to the Government by local authorities and other public entities, a part of which is earmarked for debt service expenditures. The remaining revenue (about 7 per cent) comes from a large number of relatively minor taxes, licenses, fees, etc.

On the expenditure side, no detailed functional breakdown of the current budget by economic categories is available, but certain significant items can be singled out from the budget accounts and are shown in Table 17. Payments related to debt service, including payments to the Railway from income and minerals tax, which are made in connection with the Railway’s debt, account for 13.5 per cent of current budget expenditures. Direct wage and salary payments account for 42 per cent, and pensions and gratuities for another 6 per cent. Current expenditures of the principal operating departments are as follows: education, 17.5 per cent; public works, 9.5 per cent; agriculture, 9.5 per cent; health, 7.3 per cent; police, 5.8 per cent. There is no army, and overseas diplomatic missions are maintained only in Washington, New York, and London.

In the capital budget for 1969/70, before the mid-year revisions, the principal categories of expenditure were as follows: agriculture, 23 per cent; education and training, 20 per cent; administrative buildings, 13 per cent; roads, 9 per cent; police and prisons, 9 per cent; housing, 5 per cent.

Public debt

Public debt outstanding at the beginning of the fiscal year 1969/70 totaled R 23.1 million (see Table 18). Of this amount, more than one half consisted of external loans received by the Government on behalf of the Swaziland Railway and the Swaziland Electricity Board, who are directly responsible for their repayment. The remaining R 10.6 million consists of loans received by the Government that are serviced through the Government’s budget,6 of which about 60 per cent came from official U.K. sources and the remainder from commercial banks and other local sources. Since all the intercolonial and exchequer loans are denominated in pounds sterling, the 1967 devaluation of sterling resulted in a reduction of 14.3 per cent (roughly R 0.9 million) in the rand value of these obligations at that time. The figures given above and in Table 18 do not include loans received directly by statutory bodies and guaranteed by the Government: these contingent liabilities, mainly on account of external bank and suppliers’ credits received by the Railway and the Electricity Board, totaled R 6.6 million on March 31, 1968. A projection of total contractual service commitments on the Government’s present debt (excluding the contribution to the Railway) is given in Table 19.

Table 18.Swaziland: Public Debt on March 31, 1969 1(In millions of rand)
Type of Loan and Date ConcludedPrincipal Outstanding
U.K. Intercolonial Loans, 1953-560.51
Development Loan, 1963 (Barclays Bank D.C.O.)21.40
Telecommunications Loans, 1961 (Standard Bank Limited)20.38
Housing Loans, 1962-64 20.21
U.K. Exchequer Loans, 1960-686.10
IDA Road Loan, 19622.00
Swaziland Railway9.71
U.K.-CDC Loan, 19621.71
U.K.-CDC Loan, 1962 36.00
Anglo-American Corporation2.00
Swaziland Electricity Board2.83
IBRD, 19632.78
IBRD, 19670.05
Sources: Swaziland, Post Independence Development Plan, July 1969, and Report on the Finance and Accounts for the Financial Year Ending 31st March 1968.

Includes only debts serviced through the Government’s budget.

Loans raised locally by the authorities.

Loan made through the Swaziland Development Corporation, a wholly owned subsidiary of the Commonwealth Development Corporation (CDC).

Sources: Swaziland, Post Independence Development Plan, July 1969, and Report on the Finance and Accounts for the Financial Year Ending 31st March 1968.

Includes only debts serviced through the Government’s budget.

Loans raised locally by the authorities.

Loan made through the Swaziland Development Corporation, a wholly owned subsidiary of the Commonwealth Development Corporation (CDC).

Table 19.Swaziland: Projection of Contractual Debt Service Payments, 1969/70-1978/79 1(In millions of rand)
YearPayable in RandPayable in SterlingTotal
Source: Swaziland Government, Post Independence Development Plan, July 1969.

On Swazi Government debt totaling R 10.6 million, as shown in Table 18; excludes debts of Railway and Electricity Board, and contingent liabilities.

Source: Swaziland Government, Post Independence Development Plan, July 1969.

On Swazi Government debt totaling R 10.6 million, as shown in Table 18; excludes debts of Railway and Electricity Board, and contingent liabilities.

It is not feasible to separate principal and interest payments in this projection because a considerable part of the debt is amortized on an equated annuity basis. Interest rates on the Government’s outstanding debt are as low as 4 per cent on some of the early U.K. loans and range up to 8 per cent on certain recent exchequer loans. However, some of the exchequer loans received recently for certain special purposes (i.e., for on-lending to the Swaziland Credit and Savings Bank) have been interest free.

Money and Banking


Swaziland uses the currency of South Africa—the rand, with a par value of R 1 = US$1.40—as its domestic circulating currency and legal tender. There is no written agreement with South Africa concerning the shared currency. Apart from a small issue of gold commemorative coins at the time of independence, there has been no domestic issue of notes or coinage in Swaziland. South African notes and coins are imported as needed by commercial banks for circulation within Swaziland and can move freely between Swaziland, South Africa, and the other countries sharing the same currency (Botswana and Lesotho). As a consequence of these arrangements, no records are available to show the amount of currency in circulation in Swaziland. A rough estimate made in 1968, based on the ratio of currency to bank deposits found in other countries at a similar stage of development, suggests a figure within the range of R 4-10 million, with the most probable actual figure about R 8 million.

Banking institutions

There is no central bank. The two commercial banks operating in Swaziland—Barclays Bank D.C.O. and the Standard Bank Limited—are branches of banks incorporated in the United Kingdom, although in practice their operations are supervised mainly by their regional head offices in South Africa. They are not, however, subject to South African or British regulations concerning their day-to-day operations in Swaziland. The Minister of Finance is empowered to authorize any bank that is incorporated in South Africa or the United Kingdom to do business in Swaziland. Reporting requirements for the banks are laid down in a proclamation passed in 1893, but the provisions are not enforced. The Government is presently studying the advisability of introducing more comprehensive banking legislation in the future. Both of the commercial banks in Swaziland at times lend more than their deposits, and they draw additional resources from their parent banks abroad as needed. The maximum amounts that can thus be drawn are determined by the policies of the banks themselves and are not subject to specific official limitations in either South Africa or the United Kingdom. The two banks maintain a total of 12 branches and 16 agencies in various parts of Swaziland. Barclays Bank D.C.O. acts as banker to the Government.

A third banking institution is the Swaziland Credit and Savings Bank, an official institution established in 1965 to provide credit to agriculture, housing, and small industry, with particular emphasis on the Swazi sector. Its initial nonrepayable capital (R 400,000) was provided from the U.K. Commonwealth Development and Welfare Fund and by the U.S. Agency for International Development. Its total advances accounted for roughly 16 per cent of all bank lending in Swaziland on March 31, 1969.

Other financial institutions operating in Swaziland include one building society with assets of about R 500,000 on March 31, 1969 and several foreign insurance companies. There is no requirement on the latter to invest any portion of their assets in Swaziland. Building societies and insurance companies are regulated in general terms by proclamations passed in 1954, 1961, and 1964. There is also a small hire-purchase company providing credit for purchases of vehicles and machinery.

The extent to which Swazi residents obtain credit direct from South African sources is not known, but it may be significant, particularly that credit obtained by expatriate farmers and large industrial enterprises whose output is sold mostly in South Africa. There is also believed to be a substantial outflow of savings generated in Swaziland that are invested directly in South Africa (see Over-all balance of payments, p. 446).

Banking operations

Data on certain assets and liabilities of the three banks operating in Swaziland are collected by the Department of Statistics and consolidated semiannually. These data, together with an indication of the magnitude of government deposits and advances with the banks, are shown in Table 20. No over-all breakdown of advances or deposits by economic sector is available. It is planned to introduce more comprehensive reporting by banks at quarterly intervals, starting in 1970.

Table 20.Swaziland: Selected Assets and Liabilities of the Banking System(In millions of rand)
Cash on hand0.
To Government1.
To others11.912.011.312.69.79.9
Of which
Government deposits(0.6)(0.2)(1.0)(0.3)(0.4)(0.4)
Other liabilities (net)
Government borrowing (net)
Source: Data provided by the Swazi authorities.

Difference between assets and liabilities shown above, consisting principally of borrowing by commercial banks from head offices abroad and of capital and borrowing of the Swaziland Credit and Savings Bank.

Difference between advances to Government and government deposits.

Source: Data provided by the Swazi authorities.

Difference between assets and liabilities shown above, consisting principally of borrowing by commercial banks from head offices abroad and of capital and borrowing of the Swaziland Credit and Savings Bank.

Difference between advances to Government and government deposits.

These statistics are not necessarily reliable as indicators of trends because of the infrequency of the reporting dates and the irregular influence of occasional large transactions with a few major customers or with banks abroad. They suggest that over the 18-month period ended in September 1968 there was only a small increase in total advances (5 per cent) and virtually no increase in total deposits. (The 18-month period is used here because the September 1967 figures show an unexplained and perhaps unrepresentative peak in deposits. No appreciable seasonality is shown in the available over-all banking statistics.) During that period, total advances exceeded total deposits by a margin varying between R 0.8 million in September 1967 and R 4.0 million in September 1968. Allowing for the fact that capital and borrowing of the Swaziland Credit and Savings Bank rose from R 0.4 million to about R 1 million over the period (see pp. 435-36), this suggests that total liabilities of the two commercial banks to their parent banks abroad may have averaged about R 2 million over this period.

Over the most recent one-year period, September 1968 to September 1969, bank advances fell by some 18 per cent, with an even sharper drop being registered in the first six months of this period. This occurred despite the fact that two large corporations (sugar mill and pulp mill), which had obtained overdraft facilities direct from London following the devaluation of the pound sterling, switched their borrowing back to local banks during this period. The drop in advances appears to reflect a slowdown in economic activity and a wait-and-see attitude on the part of investors in the immediate postindependence period. The same conclusion may be drawn from the accumulation of deposits—especially time deposits—over the period. As a result of these developments, the banks collectively were able to reduce their other liabilities from R 4.0 million in September 1968 to only R 0.5 million one year later—suggesting that the commercial banks had over this period paid off their borrowing from head offices abroad.

Banking sources in Mbabane expect a revival in the demand for credit in the next few years as business confidence returns and new private investors implement present plans. For example, commercial farming is expected to receive new impetus when operations of the cannery commence under the new management, and further demands for credit are expected from the brewery, the pulp mill, and other established enterprises. The commercial banks do not appear to have had much difficulty until now in obtaining funds from abroad to support their operations when suitable lending opportunities were available in Swaziland; but the cost of such borrowing is high, and there is no certainty that such funds would be readily available in the future if requirements were to increase sharply. For these reasons, the banks are endeavoring to increase the volume of savings deposited with them, through improving facilities for depositors and conducting savings campaigns.

Operations of the Swaziland Credit and Savings Bank

Balance sheet figures indicating the activities of the Swaziland Credit and Savings Bank since the end of its first full year of operation are given in Table 21. Loans outstanding increased from R 0.5 million to R 1.8 million over the two-year period ended in March 1969. Since the amount of grant capital of the Bank remained virtually unchanged over the period, the resources to cover this increase in lending activities came mainly from borrowing, which took the form of interest-free, 25-year U.K. exchequer loans on-lent by the Government. The use of these loans rose from nil in March 1967 to R 820,000 in March 1969. Savings deposits with the Bank more than doubled during the period, reaching R 720,000 at the end of March 1969. To handle these deposits, the Bank uses post offices throughout Swaziland as its agents: this arrangement started in 1966 when the post offices ceased to act as agents for the South African Post Office Savings Bank and existing balances were transferred to the Swaziland Credit and Savings Bank. Under its statutes, the Bank is allowed to use up to 50 per cent of its savings deposits in its normal lending operations, and the remainder must be placed in investments approved by the Minister of Finance. The Bank also accepts call-money deposits from commercial banks and other financial institutions, notably the Building Society, and has an overdraft facility with a commercial bank (maximum R 750,000 in 1968/69), which, however, involves interest payments at commercial rates and is therefore relatively little-used. The Bank incurred losses during the early years of its operations that accumulated to about R 150,000 at the end of March 1969. However, during 1968/69 the annual loss was reduced to small proportions, and it is expected that a small profit will be shown on operations during 1969/70.

Table 21.Swaziland: Selected Assets and Liabilities of the Swaziland Credit and Savings Bank(In millions of rand)
End of March
Current assets0.050.090.13
Secured loans 10.481.361.78
Grant capital0.380.420.42
Exchequer loans0.460.82
Savings accounts0.300.560.72
Call money0.060.300.43
Bank overdraft0.040.090.04
Other items (net)
Sources: Swaziland Credit and Savings Bank, Annual Report, 1966-69.

Less provision for doubtful debts.

Sources: Swaziland Credit and Savings Bank, Annual Report, 1966-69.

Less provision for doubtful debts.

Most of the Bank’s lending is to the agricultural sector. A relatively small amount of individual loans for construction of low-cost housing (maximum R 2,500) has been made, but it is hoped to expand this activity by the granting of block loans through the municipality of Mbabane for financing purchases of land and building materials. During 1969 the Bank also made a few small loans to Swazi businessmen; these loans are expected to be taken over eventually by the proposed Small Enterprises Development Corporation (see p. 409). Of the total value of loans outstanding on September 30, 1969, about 27 per cent consisted of loans to Swazi farmers or entrepreneurs; however, in terms of the number of individual loans outstanding, Swazi loans accounted for 1,224 out of 1,310. The average size of agricultural loan applications approved dropped from R 1,855 in 1966/67 to R 355 in 1968/69, illustrating the increasing use of the Bank’s facilities by small Swazi farmers.

The Bank is seeking additional low-cost capital with which to continue expanding its loan operations. Preliminary discussions with the IBRD have been held, and detailed proposals are in the course of formulation. The authorities are also contemplating exempting from income tax the income earned on savings deposits with the Bank, as a measure to encourage the growth in this source of funds.

Interest rates

The structure of interest rates corresponds closely to that prevailing in South Africa. The minimum rate for commercial bank lending to the Government is 1½ per cent above the South African Reserve Bank rate, i.e., 7 per cent in October 1969. Interest rates on bank loans to private customers range from 8 per cent to 10½ per cent, with the average in the range of 9 per cent to 9½ per cent. The Swaziland Credit and Savings Bank charges 10½ per cent on all loans, less a rebate of 2 per cent for prompt repayment. The rates paid by all banks on deposits range from about 4 per cent (demand savings deposits) to 7 per cent on 12-month time deposits.

External Trade and Payments

Customs Union Agreement

Background to the new Agreement

Until recently, trade relations between Swaziland and South Africa were governed principally by the Customs Agreement of 1910, which applied also to Botswana and Lesotho.7 This Agreement provided for free interchange of products and manufactures within the customs area and for the uniform application of South African customs and excise tariffs, with exceptions principally for liquor, beer, and certain wines manufactured within the area that could be taxed locally. All revenues from customs and excise duties (with the exceptions noted above) were pooled by South Africa, and a fixed share totaling 1.32 per cent was returned to BLS. Until 1965 Swaziland’s share under this arrangement remained unchanged at 0.15 per cent of the total collections. In that year the British Government reallocated the 1.32 per cent over-all share among the three countries more in proportion to their relative economic positions at the time, and Swaziland’s share then rose to 0.53 per cent.8 The payments by South Africa were made quarterly in arrears, adjusted each time in the light of actual collections in the preceding period. The 1910 Agreement made only very general provision for the coordination of trade and general economic policies between the signatories.

A new Customs Union Agreement between the four countries was negotiated during 1969 and signed on December 11, 1969. It entered into force on March 1, 1970, but its revenue-sharing provisions were retroactive to April 1, 1969. The new Agreement retains many of the basic principles of the old, i.e., generally free interchange of locally manufactured and imported goods within the area, uniform application of South Africa’s tariffs, excise, and sales duties throughout the area, and the pooling of revenues from these duties for redistribution among the members. However, there are a number of important differences, particularly with respect to protection of industries in BLS and the revenue-sharing formula. Unlike the old arrangement, the new contains certain special concessions to BLS, is much more specific with regard to details, and makes provision for consultations between the members. The main points of difference in the new Agreement are summarized below, covering first the commercial and then the fiscal provisions.

Commercial and trade provisions

Under the new Agreement, BLS will for the first time be able to afford some degree of protection to certain of their industries from competition originating in other parts of the common customs area (CCA). It is provided that, after appropriate consultations, they may levy special additional duties on imports into their areas from other parts of the CCA, for a maximum period of eight years, for the purpose of protecting new industries. Where this is done, the special additional duties must apply equally to the same goods imported directly from outside the CCA, and revenues therefore must be paid into the common pool. BLS may also “specify” industries of major importance to their economies, in which case South Africa undertakes to maintain the existing level of customs duties on competing imports from outside the CCA for a specified period, and further to give “sympathetic consideration” to requests for protective increases in such tariffs, and/or reductions in tariffs on imported inputs of the specified industries. Where excise duties also apply to the products of “specified” industries, South Africa undertakes that these shall not be adjusted in such a way as to offset the margin of protection provided for by tariffs.

More generally, South Africa undertakes to provide opportunity for consultation with BLS before introducing changes in any of the external duties of the area, except under certain specified circumstances of minor importance. There is provision also for unilateral prohibition or restriction of imports from one member of the area into another for social, cultural, or economic reasons—excluding specifically protective reasons—and any party that feels itself injured by goods produced in and imported from another may call for consultations at any time.

Various additional provisions affecting BLS include the prohibition of rate discrimination on road and rail traffic between members of the CCA. This is of considerable importance to Swaziland, since the South African Railways’ road service, which transports a large part of the imports of the country, has hitherto charged a higher tariff for its deliveries into Swaziland. It is also provided that agricultural marketing arrangements shall be coordinated between members of the CCA, and, where such marketing arrangements exist, they shall apply equally to commodities produced in the territories of other members. Trade agreements may be entered into individually by members with other countries outside the CCA, provided that any tariff concessions granted shall apply only to imports consumed in the territory of the member concerned.

Revenue-sharing provisions

One of the most important changes in the new Agreement concerns the revenue-sharing formula. In place of the fixed percentage of the pool distributed hitherto, the new formula makes the annual payment dependent upon the relative movements of imports and actual collections from customs, excise, and sales duties in the territories of the member countries. The new formula is expressed thus in the Agreement:

The cost-insurance-freight value at border of goods from all sources imported during the financial year into the area of each party, plus the value of excisable and sales duty goods produced and consumed in such area during such year, plus the excise and sales duties paid thereon during such year shall be expressed as a percentage of the cost-insurance-freight value of the goods imported during the financial year into the common customs area, plus the customs and sales duties paid thereon during such year, plus the value of excisable and sales duty goods, produced and consumed during such year in the common customs area, plus the excise and sales duties paid thereon during such year. The amount calculated by the application to the common revenue pool of the percentage so obtained, enhanced by a multiplying factor of 1.42, shall represent the share of each of the three countries in respect of that financial year.9

This can be expressed algebraically as follows:

whereA=value of Swaziland’s imports c.i.f.
B=value of Swaziland’s production and consumption of excisable and sales duty goods
C=excise and sales duties paid on B
D=value of the CCA imports c.i.f.
E=customs and sales duties paid on D
F=value of excisable and sales duty goods produced and consumed in the CCA
G=excise and sales duties paid on F
H=the common revenue pool.

The multiplier of 1.42 in the formula is intended to represent compensation from South Africa to BLS for the disadvantages of being in a customs union with a more developed partner. In effect, the strictly proportionate share that would emerge from using the variables in the formula above is raised by 42 per cent on this account.

As an illustration of the working of the formula, the following are the actual figures used in the calculation for the year 1969/70:

The calculations each year under this formula will normally be made on the basis of actual data relating to the financial year two years earlier, adjusted successively for overpayment or underpayment in previous years. Transitional provisions are made for the first three years of operation, 1969/70 to 1971/72, where certain estimates have to be used in lieu of actual data. An important element of the new formula is that the amount to be paid for each fiscal year is fixed in advance, thus providing a firm figure upon which to base each year’s budget estimates. It is envisaged that the parties to the Agreement will normally meet during the last quarter of each year (October-December) to agree upon figures to be used in the calculations for the next fiscal period and adjustments for the previous periods. Payments by South Africa are to be made quarterly, resulting in a once-only addition to cash revenues of about R 0.5 million in the first year of operation (1969/70), as described on page 425.

Foreign trade

Over-all trade position

Since the Customs Union Agreement provides for the free exchange of goods between its members, Swaziland maintains customs posts only along its border with Mozambique. For this reason, the collection of data on external transactions is rather difficult; in particular, the import statistics in the past have been subject to a considerable margin of error. However, in both Swaziland and South Africa attempts are now being made to improve the comprehensiveness of data on trade with each other. In fact, the new Customs Agreement calls for regular quarterly compilation of import figures, to be available within six months of each quarter’s end.

As indicated in Table 22, the total value of exports in 1968 amounted to R 42.1 million, representing an increase of only 1.2 per cent over the previous year. In both 1966 and 1967 the increase in exports was substantially larger, and the 1968 figure reflects the effects of the devaluation of sterling in November 1967, which resulted in a marked decline of the value of sugar exports in terms of rand (Table 23). Imports also ran low in 1968 at R 34.1 million and were in fact 2.6 per cent lower than in the previous year, reflecting mainly uncertainties relating to independence. Previously, imports had increased substantially, but the figures are not always comparable and no trend can be discerned accurately. The figures for 1967 and 1968 are fairly reliable, however, and it appears that in each of these years a trade surplus was attained, amounting to R 6.6 million in 1967 and R 8.0 million in 1968. Information on developments in 1969 indicates that both imports and exports rose appreciably, but figures are not yet available.

Table 22.Swaziland: Foreign Trade, 1966-68
Value (million rand)Percentage Change over Previous Period
Trade balance12.36.68.0−46.321.2
Source: Department of Statistics, Annual Statistical Bulletin, 1968.

Including small Swazi traders, private shoppers, and migrant workers.

Source: Department of Statistics, Annual Statistical Bulletin, 1968.

Including small Swazi traders, private shoppers, and migrant workers.

Table 23.Swaziland: Exports of Selected Commodities, 1966-68
Value (million rand)Percentage Change over Previous Period
Iron ore8.511.311.854.532.94.4
Forest products8.−15.823.2
Meat and meat products1.31.92.3146.221.1
Citrus fruit1.21.41.833.416.728.6
Total exports38.441.642.
Source: Department of Statistics, Annual Statistical Bulletin, 1968.

A meat factory was opened in October 1965, and 1966 was the first full year of operation. Previously, meat was exported on the hoof.

Source: Department of Statistics, Annual Statistical Bulletin, 1968.

A meat factory was opened in October 1965, and 1966 was the first full year of operation. Previously, meat was exported on the hoof.


Because a major part of Swaziland’s exports originate from relatively few producers, export statistics are relatively easy to obtain. Until recently, however, no information has been included in the published statistics on such items as postal traffic, goods bought in Swaziland by tourists, and goods sent abroad directly by small businesses. A small proportion of the increase in exports observed in recent years therefore has to be regarded as reflecting gradual improvements in statistics.

The main exports of Swaziland are iron ore, forest products, sugar, and asbestos, which in 1968 accounted, respectively, for 28 per cent, 20 per cent, 19 per cent, and 14 per cent of the total value of exports (Table 23). Except for sugar, they have all shown increases over 1967. Other major exports include meat, citrus fruit, rice, and cotton.

Exports of iron ore have now reached a level at which they will be sustained for a number of years, possibly until 1974. Subsequently, the level of iron ore exports will depend on new contracts to be negotiated with Japan or other customers interested in lower-grade ores. Fluctuations in world ore prices will not affect the value of exports, because until 1974 all ore is exported to Japan at fixed prices. Woodpulp is the second most important export. It is sold largely overseas at world market prices, which at present are quite favorable but have in the past shown erratic changes. An increase of 23 per cent was achieved in 1968, and prospects are that exports will rise further. The bulk of the sugar is exported under the Commonwealth Sugar Agreement. Since prices are defined in terms of sterling, owing to the devaluation of sterling in 1967, the value of sugar exports declined by 7 per cent in 1967 and by 18 per cent in 1968. At the present level of about R 8 million a year, exports of sugar can be sustained and may gradually increase over the years, depending on market developments. Exports of asbestos have risen steadily since 1967. The U.K. market absorbs most of the output, and prospects are that the current level of exports will at least be sustained. A second mine may be opened within a year, in which case exports would subsequently rise significantly. Prior to 1966 meat was exported mostly on the hoof, reaching a peak of R 1.6 million in 1963. But late in 1965 a meat factory was opened in Swaziland and a tax was put on the export of live cattle, with the result that exports of cattle dropped to R 0.3 million in 1968 while exports of meat and meat products rose every year and reached a total value of R 2.3 million in 1968. This does include an element of re-export, however, because, in order to fully use the capacity of the meat factory, cattle are imported from South Africa. Exports of citrus fruit accounted for only 4.3 per cent of total exports in 1968 but have risen at rates of 17 per cent to 33 per cent over the last three years, and further increases are expected.

In recent years major changes have taken place in the direction of Swaziland’s exports (Table 24), and in 1968 Japan emerged as the major customer, absorbing 28 per cent of all exports followed by the United Kingdom, which took 24 per cent and South Africa with a share of 16 per cent, if allowance is made for the fact that citrus fruit (R 1.8 million) is not exported to but through South Africa. Previously, the United Kingdom had been by far the major market for Swaziland’s products.

Table 24.Swaziland: Direction of Exports, 1966-68(In millions of rand)
South Africa7.56.38.5
United Kingdom15.113.810.2
Other countries7.310.211.6
Source: Swaziland Government, Post Independence Development Plan, July 1969.
Source: Swaziland Government, Post Independence Development Plan, July 1969.


Import statistics, in contrast to those on exports, have to be compiled from a relatively large number of sources, viz., returns made by traders, industrialists, farmers, missions, and government departments. Continuous efforts have been made to improve the collection of data, and in 1965 the services of a UN statistical expert were obtained to begin a systematic collection of data. Subsequently, the Swazi Department of Statistics tried to extend the coverage of the statistics, and from 1967 certain groups of imports that had previously been omitted were included, viz., direct imports by small Swazi traders (usually bought from traveling wholesale dealers based in South Africa), direct imports by Swazi residents from shopping trips into South Africa, postal imports, and imports by migrant workers. Estimates on these groups of imports are now included in the published import data (Table 25). Figures are obtained by sending questionnaires to those Swazi traders whose location is known and to a sample of automobile owners asking for the value of goods bought in South Africa and brought into Swaziland. For postal traffic the estimate is based on the number of items recorded by the post office. Imports by migrant workers are estimated to amount to R 100,000 per annum, allowing that there are 20,000 workers who might import an average of R 5 worth of goods each year. Obviously, the methods of collection of data require further refinement, and the authorities are considering the institution of checks along the South African border as soon as possible.

Table 25.Swaziland: Value and Origin of Imports, by Commodity, 1967-68(In millions of rand)
19671968From South Africa1From Other Countries
Food and live animals4.
Beverages and tobacco1.
Crude materials0.
Mineral fuels and lubricants3.
Animal and vegetable oils and fats
Manufactured goods, classified chiefly by material6.
Machinery and transport equipment8.810.08.61.4
Miscellaneous manufactured articles5.
Postal traffic0.
Migrant workers’ imports
Source: Department of Statistics, Annual Statistical Bulletin, 1968.

Including goods purchased from wholesalers in South Africa that may have had their origin in other countries.

Separate information on this group was not collected in 1967, when it was recorded under item, “Food and live animals.”

Rough estimate.

Source: Department of Statistics, Annual Statistical Bulletin, 1968.

Including goods purchased from wholesalers in South Africa that may have had their origin in other countries.

Separate information on this group was not collected in 1967, when it was recorded under item, “Food and live animals.”

Rough estimate.

Two classes of imports are still excluded from the statistics (apart from those omitted by international convention), namely, (1) equipment imported by nonresident construction companies and (2) goods sent abroad for repair and subsequently sent back to Swaziland. All these factors would tend to indicate that in spite of the more comprehensive coverage introduced in 1967 there may still be some underreporting of imports.

The main commodity groups of imports are shown in Table 25. The major item on the import list, accounting for 29 per cent of total imports in 1968, is machinery and transport equipment. It is the only item that showed any major increase over 1967, while all other groups more or less stagnated or even declined, resulting in a decrease of almost 3 per cent in total imports. This may have been a reflection of uncertainties engendered by independence.

In 1968 only 8.8 per cent of total imports did not come from or through South Africa. About half of the imports coming from outside the CCA was accounted for by machinery and transport equipment, which is provided mostly by U.K. companies in connection with the U.K. aid programs. The figures as given in Table 25, however, do not give the true origin of imports, because many goods are only shipped through South African marketing channels and do not actually originate there.

Other current transactions

Data on other current external transactions of Swaziland are scanty, in particular those pertaining to the private sector. As the tourist industry has developed rapidly in recent years, Swaziland now appears to be a small net earner of foreign exchange from tourism. External payments of interest, profits, and dividends, on the other hand, are substantial. By 1966 payments were officially estimated to have exceeded R 7 million. Comprehensive figures on investment income and payments are now being collected by the Department of Statistics on the basis of returns from individual firms. No insurance companies are centered in Swaziland. To obtain figures in this field, foreign insurance companies that operate there have recently been asked to complete a questionnaire on premiums collected and claims paid on various types of policy. Other services include management and consultant fees and construction activity on which information is also being collected.

Because a large number of foreigners reside in Swaziland, there is a sizable but unrecorded volume of transactions in remittances, mostly to the United Kingdom and South Africa. On the other hand, Swazi citizens living and working abroad transfer part of their income to Swaziland; this is estimated to amount to about R 0.5 million a year.

Capital transactions

No statistics have yet been collected on the capital account of the balance of payments. Details on official foreign assistance are given on pages 418-31. The United Kingdom has hitherto been the principal source of foreign assistance. In the private sector it appears that the two commercial banks (which also engage in financing long-term investments) have generally imported capital, since deposits from local residents do not cover advances made. On the other hand, there is a considerable outflow of private capital directed toward foreign financial markets. Private capital inflow mostly takes the form of direct investment. At this time it is not possible to form a reliable judgment as to whether there was a net capital outflow in the past two years, but as a reflection of uncertainties engendered by the process of gaining independence in conjunction with an extended boom on the South African stock market, this may well have been true.

Over-all balance of payments

A condensed balance of payments statement was published in the official national accounts report for the fiscal year 1966/67. However, it was derived from a rather weak statistical base. Furthermore, because of the free and unrecorded movement of funds within the common monetary area, information on external private capital transactions and on monetary movements was excluded. This fact rendered the over-all balance inconclusive, and it is therefore not reproduced in this report. Details of it are given in the previous sections. As indicated above, attempts are now being made by the Swazi Department of Statistics to improve the comprehensiveness of data on external transactions with the object of producing a more meaningful over-all balance of payments statement in the future.

In this context, by the nature of the monetary arrangements in force, Swaziland cannot have either a surplus or deficit on its over-all balance of payments, as conventionally defined, for more than a brief period. Any tendency toward external disequilibrium is absorbed through monetary contraction or expansion unless offset by special balance of payments assistance.

The restrictive system

Swaziland’s currency is the South African rand, the par value of which is 1.24414 grams of fine gold per rand or R 1=US$1.40. Exchange rates are based on South Africa’s fixed rates for sterling against rand and the London market rates for sterling against other currencies.

Transactions within the common monetary and customs area comprising Swaziland, Lesotho, Botswana, and South Africa are uncontrolled. In relation to other countries, Swaziland operates exchange and trade control regulations similar to those of South Africa, except for capital transactions within the sterling area, of which Swaziland is a member and within which a greater freedom of movement of funds is allowed by Swaziland than by South Africa. Generally, Swaziland is regarded as being part of a single exchange control territory; however, by virtue of the Securities Control Regulations of South Africa, for purposes of control over transactions in securities, residents of Swaziland are not regarded as residents of South Africa. Payments for current transactions, whether within or outside the sterling area, are subject to control but are not restricted. Outward transfers of capital within the sterling area are generally permitted but require the approval of the Swazi exchange control authorities, i.e., the Ministry of Finance. Transfers outside the sterling area are tightly controlled. Inward capital transfers from outside the common exchange control territory require exchange control approval, but certain types of such transfer are permitted freely by open general licenses.

Swaziland operates its own import licensing system for imports arriving through Mozambique, which is based on the South African regulation. In 1968 this involved only about 9 per cent of total imports, but the relative importance of imports arriving through Mozambique may rise in future. All importers of goods requiring import licenses must be registered with the Ministry of Finance. Most licenses allow the importation of a range of commodities, but they are, in general, to be used for goods of the same type previously brought in by the importer. Import licenses are valid for imports from any country. Imports free of license include all goods imported from Botswana, Lesotho, or South Africa.

The South African import control regulations for 1970 10 contain only three basic categories of imports for purposes of control: (1) goods that may be imported without import permits; (2) goods that may be imported against import permits granted upon application to bona fide merchants and manufacturers to meet their full reasonable requirements; and (3) goods that may only be imported against import permits under specific quotas determined from time to time. There no longer is a restricted list.

Provided that licensing regulations are respected and upon presentation of the necessary consignment documents to his bank, an importer is granted exchange to pay for the import.

Swaziland maintains trade agreements with Kenya, Malawi, Tanzania, Uganda, and Zambia. All these agreements were concluded in 1969. They are fairly general agreements of the commercial treaty type that aim at expanding trade between the countries concerned in order to accelerate economic developments and diversify the economies. Some of the agreements have indicative lists of goods attached, the trade of which should be expanded in the first place, but do not contain quotas. Generally, the contracting parties accord each other unconditional most-favored-nation treatment consistent with their obligations under the General Agreement on Tariffs and Trade. Another feature common in the agreements is the setting up of procedures in case of trade disputes. None of the agreements provides for special payments or trade-licensing arrangements.

L’économie du Swaziland


Le Swaziland est devenu indépendant en septembre 1968. Bien qu’ayant des dimensions plus restreintes et une population plus faible que le Botswana et le Lesotho, il dispose de ressources naturelles variées et possède une économie relativement diversifiée. L’agriculture de subsistance et l’élevage font vivre la majorité de la population, mais le secteur moderne de l’économie a rapidement progressé au cours des vingt dernières années et il englobe maintenant l’industrie minière, l’agriculture commerciale, l’exploitation forestière et un certain nombre d’usines de traitement et de petites industries manufacturières. Pendant cette période, le Swaziland a perdu peu à peu son isolement grâce à la construction de routes et à l’amélioration des moyens de communication. Le développement économique du Swaziland est lié étroitement à celui de l’Afrique du Sud; toutefois, l’ouverture en 1964 d’une liaison ferroviaire entre le Swaziland et le Mozambique a permis l’établissement de nouveaux échanges commerciaux avec ce pays.

Bien que les investissements semblent avoir marqué un temps d’arrêt ces deux dernières années, les perspectives s’annoncent favorables. Les principaux projets actuellement à l’étude portent sur des activités minières, notamment le minerai de fer et l’amiante, ainsi que sur la construction d’une importante centrale thermique qui fournira de l’électricité à l’Afrique du Sud. La possibilité de raccorder la ligne de chemins de fer (Swaziland Railway) au réseau sud-africain est également étudiée. La récente acquisition d’une conserverie et son exploitation par une importante société internationale devrait fournir de nouveaux débouchés à l’agriculture commerciale. L’Etat étudie également la possibilité de racheter des terres insuffisamment utilisées sur lesquelles les agriculteurs swazis seraient installés et initiés aux méthodes culturales modernes. D’autre part, pour encourager les investissements privés dans l’industrie et le tourisme, les autorités envisagent diverses mesures—y compris des dégrèvements fiscaux—et la création d’une société industrielle de développement.

Un récent événement d’une profonde importance pour le Swaziland a été la signature d’un nouvel accord douanier avec l’Afrique du Sud, le Lesotho et le Botswana. Tout en étant semblable dans ses grandes lignes à l’ancienne union douanière, le nouvel accord autorise pour la première fois le Swaziland à adopter certaines mesures destinées à protéger ses industries locales. Les dispositions de cet accord quant au partage des recettes douanières entre les pays membres vont également amener des changements importants dans le budget de fonctionnement lequel avait dû être équilibré jusqu’à présent par d’importantes subventions du Royaume-Uni. Etant donné que le Swaziland recevra maintenant un pourcentage considérablement plus élevé des recettes communes provenant des taxes et des droits fiscaux, des négociations ont eu lieu au début de 1970 avec le Royaume-Uni en vue de déterminer les subventions budgétaires et autres formes d’aide financière qui seront nécessaires par la suite. Il est toutefois probable que la situation budgétaire demeurera difficile au cours des prochaines années étant donné que les mesures destinées à augmenter les recettes auront une portée limitée tandis qu’il sera de plus en plus difficile de ralentir la progression des dépenses courantes.

Un plan de développement récemment publié prévoit un accroissement sensible du niveau des investissements publics au cours des cinq prochaines années. Jusqu’à maintenant, les budgets d’investissement ont été financés presque entièrement avec l’aide du Royaume-Uni. Les pouvoirs publics espèrent avoir accès à l’avenir à des sources d’aide financière plus diversifiées; ils étudient également la possibilité d’émettre des obligations d’Etat sur le marché sud-africain. Toutefois l’élaboration du Plan est ralentie par le manque de personnel spécialisé dans la planification du développement et peu de projets qui y figurent sont à un stade avancé de préparation.

Le Swaziland n’a pas de banque centrale et utilise comme unité monétaire le rand sud-africain. Le montant de monnaie en circulation au Swaziland n’est pas connu. Le système bancaire se compose de deux banques commerciales et d’un établissement de crédit qui exerce principalement ses activités dans le secteur agricole. Dans l’ensemble, le système bancaire a été un importateur de capitaux, les avances qu’il consent localement dépassant généralement les dépôts de la clientèle locale.

On ne dispose pas de statistiques sur la balance globale des paiements et, étant donné que les paiements sont libres à l’intérieur de la zone monétaire commune aux quatre pays, il serait difficile d’établir des données sur les transactions invisibles et en capital. Ces dernières années, le Swaziland a enregistré d’importants excédents commerciaux, dus principalement à l’exportation du minerai de fer, de la pâte à papier et du sucre. Il semble toutefois qu’il existe d’importantes sorties nettes compensatrices au titre de paiements de services, de transferts et de mouvements privés de capitaux.

Le système de la réglementation des changes et celui qui régit l’octroi des licences d’importations sont semblables à ceux de l’Afrique du Sud. Le Swaziland a récemment conclu avec des pays africains limitrophes un certain nombre d’accords commerciaux qui offrent des possibilités de développement des relations commerciales à l’avenir.

La economía de Swazilandia


Swazilandia obtuvo la independencia en septiembre de 1968. Aunque es un país más pequeño que Botswana y Lesotho, tanto en superficie como en población, posee gran variedad de recursos naturales y una economía relativamente diversificada. La mayor parte de los recursos del pueblo swazi proviene de la agricultura de subsistencia y de la cría de ganado, pero el sector moderno de la economía ha experimentado en el curso de los dos últimos decenios una rápida expansión y ahora comprende minería, agricultura a escala comercial, silvicultura, diversas industrias elaboradoras y varias industrias fabriles pequeñas. Durante este período, el aislamiento en que se hallaba Swazilandia se ha reducido mucho gracias a la construcción de caminos y a la mejora de los medios de comunicación. El desarrollo económico de Swazilandia está estrechamente relacionado con el de Sudáfrica, pero la inauguración en 1964 de un ferrocarril que lo enlaza con Mozambique ha servido para establecer nuevas relaciones comerciales.

Aunque aparentemente se ha producido una pausa durante los dos últimos años en las actividades de inversión, las perspectivas que ofrece el futuro parecen presentar un cariz favorable. Entre los proyectos principales que actualmente están en estudio se hallan la ampliación de las operaciones de extracción de mineral de hierro y de asbesto, y la construcción de una gran central de energía térmica que permitirá exportar electricidad a Sudáfrica. También se está estudiando la posibilidad de empalmar el Ferrocarril de Swazilandia con el sistema ferroviario sudafricano. Se espera que la mayor productividad de la fábrica de conservas que recientemente ha adquirido en Swazilandia una importante compañía internacional ofrecerá nuevas oportunidades a la agricultura comercial. Se están estudiando planes asimismo para la adquisición de tierras que no están siendo suficientemente aprovechadas, con el fin de que sean explotadas por agricultores swazi de acuerdo con métodos agrícolas modernos. Las autoridades están considerando la adopción de diversas medidas, entre ellas la exoneración temporal de impuestos y el establecimiento de una corporación de fomento industrial, con el objeto de estimular la inversión privada en la industria y el turismo.

Un hecho reciente que ha revestido gran importancia para Swazilandia ha sido la firma de un nuevo Convenio Aduanero con Sudáfrica, Lesotho y Botswana. Aunque el nuevo Convenio retiene las características fundamentales de la anterior unión aduanera, permite por otra parte a Swazilandia establecer por vez primera una cierta protección a sus industrias nacionales. Las disposiciones de este Convenio relativas a la distribución de los ingresos contribuyen también de modo importante a mejorar el presupuesto ordinario del Estado, que hasta ahora se había nivelado gracias a fuertes subvenciones concedidas por el Reino Unido. Dado que Swazilandia recibirá ahora una proporción bastante mayor del fondo común formado por los ingresos aduaneros y las recaudaciones de los impuestos al consumo, a comienzos de 1970 se celebraron negociaciones con el Reino Unido relativas al curso futuro de la ayuda presupuestaria y otro tipo de ayuda financiera. No obstante, lo más probable es que la actual situación presupuestaria difícil se prolongue durante los próximos años, especialmente si se tiene en cuenta que las posibilidades de aumento de los ingresos son limitadas mientras, por otra parte, se intensifica la necesidad de efectuar mayores gastos ordinarios.

En un plan de desarrollo recientemente preparado se proyecta un aumento considerable en el ritmo de las inversiones públicas durante el próximo quinquenio. Hasta ahora, los presupuestos de capital del Gobierno han sido financiados casi totalmente mediante la ayuda del Reino Unido. Las autoridades esperan poder diversificar en el futuro sus fuentes de ayuda; asimismo están estudiando la posibilidad de lanzar una emisión de valores públicos de Swazilandia en el mercado de Sudáfrica. No obstante, la escasez de personal competente en materia de planificación del desarrollo constituye un estrangulamiento serio, y son pocos los proyectos del Plan que se hallan en una etapa avanzada de preparación.

Swazilandia carece de banco central y utiliza el rand sudafricano como moneda; se desconoce el monto de la misma que se halla en circulación. Hay dos bancos comerciales y una institución de crédito de propiedad estatal, que se especializan principalmente en el sector agrario. En conjunto, el sistema bancario ha solido ser importador de capital, ya que sus anticipos locales han superado por lo general a los depósitos locales.

No se dispone de estadísticas relativas a la balanza de pagos global y, a causa de la libertad de pagos que existe dentro de la zona monetaria común, sería difícil recoger datos sobre las transacciones invisibles y de capital. En los últimos años, Swazilandia ha logrado superávit comerciales sustanciales, debido principalmente a la exportación de mineral de hierro, pulpa de madera y azúcar. Parece, sin embargo, que hay cuantiosas salidas netas compensadoras por concepto de pagos por servicios, transferencias y movimientos de capital privado.

El control de cambios y los sistemas de licencias a la importación son semejantes a los que rigen en Sudáfrica. Swazilandia ha suscrito recientemente varios acuerdos comerciales con países africanos vecinos que ofrecen buenas oportunidades al desarrollo futuro de las relaciones comerciales.

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  • Components of tables may not add to totals shown because of rounding.

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This paper is based on information collected in October and November 1969; therefore, it surveys essentially developments in the economy up to that time. Some figures were updated subsequently.

Of the 2.9 million tons moved in 1968/69, materials other than iron ore accounted for 17 per cent; in 1967/68, 2.7 million tons accounted for 16 per cent.

From 1966 to early 1968, 6.0 per cent; subsequently, 5.5 per cent.

However, other non-U.K. loans have been made to the Swaziland Credit and Savings Bank, Swaziland Railway, and the Swaziland Electricity Board; see pages 430-31.

The calculation of this figure is described on pages 439-40.

About R 0.9 million of this amount has been on-lent to other statutory bodies, such as Town Councils and the Swaziland Credit and Savings Bank, which contribute to the Government’s budget annually in the amount of the service due.

The abbreviation “BLS” will be used subsequently for Botswana, Lesotho, and Swaziland.

Because South Africa was not a party to this revision of the Agreement, it continued to pay the original shares to each country, and Swaziland received the difference from Lesotho, whose final share was reduced correspondingly.

“Customs Union Agreement Between the Governments of Swaziland, Botswana, Lesotho and South Africa,” Article 14(2), Legal Notice No. 71 of 1969, Mbabane, December 11, 1969, p. S 7.

For further details on exchange and trade controls applied in the common control territory, see the section on South Africa in the Twenty-First Annual Report on Exchange Restrictions, International Monetary Fund (Washington, 1970), pp. 436-42.

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