Some lucky women - still working in a garment factoryStill reeling from blows to its major industries, Swaziland's economy is set to come to a grinding halt unless government initiates reforms and aggressively pursues foreign investment, economists warn.
According to a Central Bank of Swaziland analyst: "Ten years ago, we put all our eggs into one basket – garment and textile manufacturing. Tens of thousands of jobs opened up. But the contraction has been just as dramatic. We need to court investors in all fields."
The strong South African rand, to which the Swazi lilangeni currency is linked, has made Swazi garments more expensive and less competitive internationally. That, combined with the entry of low-priced garments from larger developing countries like China, has left the Swazi garment industry devastated.
Ironically, most owners of the clothing plants in Swaziland come from Chinas political foe Taiwan. Just last week, the latest Taiwanese-owned clothing shop closed suddenly, leaving workers with unpaid salaries and vanished pensions.
"We are technically not in recession, because there is some marginal growth, though far from the double digit growth of the 1980s and 1990s. The population continues to grow, so people are getting poorer," said bank economist Charles Dube.
Tens of thousands of jobs in the garment industry have disappeared since the downturn began in 2003. At the time, Swaziland's gross domestic product (GDP) growth stood at 3.6 percent, swallowed by a population increase of 3.9 percent. For this year and next, the Central Bank of Swaziland predicts 1 percent GDP growth, which is expected to fall again in 2008.
Yet Swaziland, which was once a net exporter of food to Southern Africa and was a key supplier of tin to Great Britain and iron ore to Japan, has the potential to perform better.
The Swaziland Chamber of Commerce has called upon the government to follow IMF recommendations on economic reform. The recommendations include halting unproductive, treasury-draining projects and downsizing a bloated civil service that currently employs more people than the private sector.
Business leaders have urged the government to consolidate its 18 ministries after yet another one, devoted to youth affairs, was added this year.
Nathie Dlamini, Director of Foreign Direct Investment for the Swaziland Investment Promotion Authority (SIPA), an agency responsible for luring foreign investment, said, "We are going after all kinds of investment. The favourable trade agreements Swaziland has with the European Union and the United States are not restricted to garments made here. All goods produced in Swaziland qualify."
In terms of restoring external competitiveness, "there is nothing much that Swaziland can do when it is such a small economy," said Seamus Vasey, Global Market Research Analyst for Standard Bank South Africa. "But when the South African economy is performing well, Swaziland should be in a position where it can be boosted by the South African economy."
Reproduced with the kind permission of IRIN
Copyright IRIN 2006
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