AFRICAN DEVELOPMENT BANK
_________________________________________________
KINGDOM OF SWAZILAND
COUNTRY STRATEGY PAPER, 2009-2013
MID-TERM REVIEW
REGIONAL DEPARTMENT, SOUTH A (ORSA)
OCTOBER 2011
TABLE OF CONTENTS
ACRONYMNS AND ABBREVIATIONS ................................................................................... i
GENERAL MAP OF SWAZILAND .......................................................................................... ii
EXECUTIVE SUMMARY ......................................................................................................... iii
1.
INTRODUCTION ..............................................................................................................1
2.
COUNTRY CONTEXT, RECENT DEVELOPMENTS AND PROSPECTS .............1
2.1
Political and Governance Context .................................................................................... 1
2.2
Business Environment and Competitiveness ................................................................... 2
2.3
Recent Economic Developments ..................................................................................... 4
2.4
Regional Integration and International Trade Arrangements ........................................... 6
2.5
Social Developments ........................................................................................................ 7
3.
GOVERNMENT DEVELOPMENT STRATEGY, CHALLENGES AND
OPPORTUNITIES.............................................................................................................9
3.1
Swaziland’s Development Strategy ................................................................................. 9
3.2
Challenges and Opportunities ........................................................................................ 10
4.
BANK STRATEGY IMPLEMENTATION AND RESULTS 2009 - 11 .....................11
4.1
Bank’s Positioning in Swaziland ................................................................................... 11
4.2
Assessment of Results-Based Outcomes........................................................................ 11
4.3
Portfolio Performance Analysis ..................................................................................... 12
4.4
Aid Coordination/Harmonisation ................................................................................... 13
4.5
Lessons from the Implementation of the 2009 – 2013 CSP ........................................... 13
5.
6.
2011 - 2013 BANK STRATEGY .....................................................................................14
5.1
Rationale for Bank Intervention for the Remainder of the CSP Period ......................... 14
5.2
Strategic Pillars for Bank Support .................................................................................. 15
5.3
Deliverables and Targets ................................................................................................ 16
5.4
Monitoring and Evaluation............................................................................................. 19
5.5
Potential Risks and Mitigation Measures ....................................................................... 19
5.6
Country Dialogue Issues ................................................................................................ 20
CONCLUSION AND RECOMMENDATIONS ...........................................................20
LIST OF FIGURES
Figure 1. Governance Performance for Selected Countries.............................................................3
Figure 2. Swaziland Ranking in the Global Competitiveness Report (2010-201) ......................... 3
Figure 3. Swaziland Selected Macroeconomic Indicators...............................................................5
Figure 5. Sectorial Distribution of Portfolio as at September 2011...............................................12
Figure 6. Portfolio Comparison .....................................................................................................12
LIST OF BOXES
Box 1: Regional Integration ............................................................................................................ 7
Box 2. Economic Recovery Strategy ............................................................................................ 10
Box 3. Developmental Impacts of On-going Bank Interventions................................................. 11
Box 4: Fiscal Adjustment Roadmap ............................................................................................. 13
LIST OF TABLES
Table 1. Social Sector Budget Allocation (percent of total)..........................................................18
Table 2. Indicative Pipeline, 2011 – 2013.....................................................................................18
LIST OF ANNEXES
Annex I: Swaziland CSP Result-Based Framework (2009 - 2013)
Annex II: Selected Macroeconomic Indicators
Annex III: Comparative Socio-Economic Indicators
Annex IV: Progress toward Achieving the Millennium Development Goals
Annex V: Matrix of Donor Support to Swaziland
Annex VI: Indicative Bank Program at the Start of the 2009 - 2013 CSP 2009 - 2013
Annex VII: Sectorial Distribution of Portfolio as at September2011
Annex VIII: Swaziland - Mo Ibrahim Governance Index 2011
Annex IX: Portfolio Performance Challenges
Annex X. Comparative Social Indices in SACU
CURRENCY EQUIVALENTS
(September 2011)
National Currency
=
Lilangeni (SZL)
UA 1.00
=
USD 1.60
UA 1.00
=
SZL 10.77
USD 1.00
=
SZL 7.04
WEIGHTS AND MEASURES
Metric System
GOVERNMENT FISCAL YEAR
April 1- March 31
This CSP Mid-Term Review was prepared following a consultative mission to Swaziland held from 27 June – 6
July 2011. The review was prepared by a team led by Mr. Albert Mafusire, Senior Country Economist (ORSA);
and it included Mr. Boniface Aleobua, Principal Water Engineer (OWAS); Mr. Frank Boehane, Senior
Education Specialist (OSHD); Ms. Imen Chorfi, Consultant (ORSA); Mr. Joseph Coompson, Chief Agricultural
Economist (OSAN); Ms. Nana Beth Kgosidintsi, Senior Health Specialist (OHSD); Ms. Delenia McIver,
Principal Legal Counsel (GECL); Ms. Susan Mpande, Governance Officer (OSGE); Mr. Victor Ndisale, Chief
Governance Officer & Macroeconomist (OSGE) and Ms. Eva Ruganzu, Principal Country Program Officer and
Officer In-Charge (ZAFO). Questions on the document should be addressed to Mr. Ebrima Faal, Director
(ORSA).
ACRONYMNS AND ABBREVIATIONS
ADB
ADF
AIDS
ARVs
ASYCUDA
AWF
CIFA
CMA
COMESA
CPIA
CPPR
CSP
DPs
EPA
ERS
ESW
EVERS
EU
FAR
FDI
GDP
GNI
GOS
HDI
HIV
ICT
IMF
MDGs
MIC(s)
MTR
MTS
NDS
NEPAD
NGOs
PFM
PPP
RISP
RMF
SACU
SADC
SMEs
SMP
SZL
UNDP
USD
VAT
WB
WTO
African Development Bank
African Development Fund
Acquired Immunity Deficiency Syndrome
Antiretroviral drugs
Automated System for Customs Data
African Water Facility
Country Institutional and Fiduciary Assessment
Common Monetary Area
Common Market for Eastern and Southern Africa
Country Policy and Institutional Assessment
Country Portfolio Performance Report
Country Strategy Paper
Development Partners
Economic Partnership Agreement
Economic Recovery Strategy
Economic and Sector Work
Enhanced Voluntary Early Retirement Scheme
European Union
Fiscal Adjustment Roadmap
Foreign Direct Investment
Gross Domestic Product
Gross National Income
Government of Swaziland
Human Development Index
Human Immuno-deficiency Virus
Information and Communication Technology
International Monetary Fund
Millennium Development Goals
Middle Income Country (Countries)
Medium Term Review
Medium Term Strategy
National Development Strategy
New Partnership for Africa’s Development
Non-Governmental Organizations
Public Financial Management
Public-Private Partnership
Regional Integration Strategy Paper
Results Measurement Framework
Southern African Customs Union
Southern Africa Development Community
Small and Medium Enterprises
Staff Monitored Program
Swaziland Lilangeni (plural E - Emalangeni)
United Nations Development Program
United States Dollar
Value Added Tax
World Bank
World Trade Organization
ii
GENERAL MAP OF SWAZILAND
iii
EXECUTIVE SUMMARY
1. The CSP mid-term review is a product of extensive consultations between the Bank and
the government of Swaziland, as well as other stakeholders. Additional information was
obtained from various government and other publications. This report assesses progress made in
the implementation of the Bank’s Mid-Term Country Strategy Paper (2009 - 2013 CSP) for
Swaziland. It also provides the context for the proposed strategy for the remainder of the CSP
period and the expected outcomes. This strategy proposes a modification of Pillar I of the current
Bank strategy to focus on removing structural bottlenecks to competitiveness and improving
public financial management. Pillar II of Swaziland’s 2009 – 2013 CSP will continue to focus on
enhancing health delivery and skills development.
2. Swaziland is facing the worst fiscal crisis in decades, which is threatening the
achievement of its national development objectives as stated in the Vision 2022 document.
The 2010/11 fiscal deficit reached 13.8 percent of GDP due to a 63 percent decline in Southern
Africa Customs Union (SACU) as well as historically high levels of expenditure. The
government has also not been able to raise sufficient financing for the previous and current fiscal
years.1 Continued to accumulation of payment arrears to local suppliers, which stood at about
E 1.5 billion (5.6 percent of GDP) at the end of September 2011 could reach E 2.5 billion
(8.5 percent of GDP) during the 2012/2013 fiscal year if no alternative financing is secured. The
country has also experienced lower growth, averaging 2 percent over a decade, which is almost
half that of its SACU peers. In spite of its lower middle income country status, Swaziland is
characteristically similar to Africa’s low-income countries, with 70 percent of its 1.2 million
people deriving their livelihood from agriculture and 63 percent of the population lives in
poverty and both output and trade are not diversified.
3. Additional economic challenges have emerged as a result of the impact of the global
financial crisis. Consultations during the CSP mid-term review mission revealed that mediumto- long-term development challenges facing Swaziland were similar to those identified at the
beginning of the current Bank Strategy. However, the economic environment has changed
drastically. Both internal and external balances are under serious strain. The current fiscal crisis,
which has become an economic and social crisis, could also lead to a sovereign debt challenge.
As the Bank pursues its development strategy for Swaziland, there is an urgent need to halt
further deterioration in macroeconomic conditions, restore private sector confidence, and
safeguard the welfare of vulnerable population.
4. While long-term development challenges remain unchanged, the unstable
macroeconomic environment has complicated government’s response. Undertaking
economic and structural reforms, set out in the Fiscal Adjustment Roadmap and the 2011
Economic Recovery Strategy have become a top priority for government. A significant
challenge, however, is the country’s limited institutional, financial and technical capacity to
implement the proposed reform measures.
5. Swaziland did not borrow from the Bank during the current CSP period. As at July
2011, the Bank’s portfolio comprised 7 operations with a total commitment of UA 19.6 million.
1
Fiscal year runs from 1st April to 31st March
iv
The Komati Downstream Development Project is the only on-going lending operation in the
country. The rest are non-lending water and sanitation, health, transport operations and multisectorial grants accounting for 13.8 percent of the commitment value.
6. The proposed Bank strategy for the remaining CSP period aims to strengthen the
foundations for strong, sustainable and shared growth. To ensure selectivity and
development impact, the Bank’s interventions will focus on:
 Building the government's capacity to use the budget as a development tool and better
manage public financial resources;
 Investments in irrigation infrastructure to ensure greater participation of the rural poor
population in commercial and other value addition activities in the sector.
 Improving the business environment to attract the investments needed for output
diversification and private sector development, including investments in human capital
development; and
7. The government needs support in implementing the necessary measures to ensure fiscal
sustainability and a return to higher economic growth. The Bank will continue to dialogue
with the government to enable it implement the reforms necessary to ensure macroeconomic
stability and higher growth. The Board is invited to approve this strategy that is expected to
enhance the developmental impact of Bank support to Swaziland.
1
1.
INTRODUCTION
1.1
Swaziland is experiencing a crippling fiscal crisis, which is threatening to
undermine the Bank’s prospects of effectively implementing its current strategy. The Board
approved the Swaziland Country Strategy Paper (CSP) in February 2009. The pillars are:


Investing in infrastructure to increase productivity and competitiveness; and
Enhancing health delivery and skills development.
In its current form, the 2009 – 2013 CSP does not provide sufficient scope to respond to the
crisis facing the country. The crisis has exposed the country’s limited capacity to adequately
respond to its challenges without external assistance. Such assistance should be accompanied
with comprehensive policy and structural reforms to help support the recovery of the economy
and strengthen the foundations for future strong, sustained and shared growth.
1.2
The Medium-Term Review assesses the role the Bank could play to mitigate the
impacts of the fiscal crisis in the short-to-medium term, while providing strategic assistance
for long-term growth and development. It also assesses the Bank’s strategic priorities and
comparative advantage. The medium-term review of the 2009-2013 Swaziland CSP followed a
participatory approach to ensure extensive discussions and consultations with the government
and other major stakeholders, including Development Partners (DPs), private sector
organizations and civil society organizations Discussions with stakeholders focused on:
(i) The nature of Bank support to ensure fiscal sustainability in the short-to-medium term
period;
(ii) Swaziland’s current policy and development priorities;
(iii) The indicative project pipeline and its consistency with the proposed pillars;
(iv) Selectivity in relation to other DPs’ intervention areas during the remaining period
covered by the CSP; and
(v) The criteria for monitoring performance in the context of the Results Measurement
Framework.
2.
COUNTRY CONTEXT, RECENT DEVELOPMENTS AND PROSPECTS
2.1
Political and Governance Context
Swaziland’s political tensions reflect the long standing contradictions associated with
juxtaposing a bi-cameral Westminster-type constitution on the traditional monarchy
system.2 The 2005 Constitution provides for the separation of powers between the executive,
made up of the King as Head of State, the legislature and judiciary. In practice, however, this
separation of power is blurred, with ambiguities and overlaps in the policy and decision-making
processes. There is also friction between a highly devolved tinkhundla3 system and a more
2
Political parties are banned although informal political parties such as the African United Democratic Party,
Imbokodvo National Movement, Ngwane National Liberatory and People’s United Democratic Movement are
known to exist.
3
Administrative sub-divisions (55 in total) based on a traditional governance system.
2
Centralized government system, hence the challenges faced in policy formulation, approval, and
implementation.
2.1.1 In spite of the prevailing peace, the complex political system inhibits political and
governance reforms. Trade union and civil society groups have become highly critical of the
suppression of political pluralism. Expressions of public discontent through demonstrations have
become more frequent since the beginning of 2011. Specifically, public discontent has arisen
from a perception that the lack of checks and balances in the governance system has supported
non-responsive and corrupt political elites. Indeed, during the presentation of the 2011-2012
budget, the Ministry of Finance estimated that corruption costs the government about 3.5 percent
of GDP annually. In this context, trade unions and civil society groups are exerting pressure for
political and governance reforms. Calls for reform are directed at making the government more
accountable and efficient in the use of resources.
2.1.2 Swaziland fares relatively well and ranks above most sub-Saharan African countries
on most of the governance indicators. In contrast, it does not do so well when compared to
other middle income countries in the region. Botswana and Mauritius are ranked higher on all
indicators (Figure 1).4 Swaziland’s worst performance is on voice and accountability, where
almost 87 percent of the countries covered in the World Bank's 2011 Worldwide Governance
Indicators survey are ranked higher than it. The Mo Ibrahim Governance Index ranks Swaziland
at 46th out 53 countries in Africa on participation and human rights (Annex VIII). Also,
Swaziland’s political stability and regulatory quality in 2011 are worse than those in 2000.
2.1.3 In view of this poor standing, government acknowledges the urgency for reform as a
prerequisite for growth and sustainable development. Indeed, the government’s Vision 2022,
National Development Strategy and the Economic Recovery Strategy (ERS) of 2011 highlight
the importance of good governance. The ERS further states that weak institutional structures and
limited capacity to implement reforms is negatively affecting public service delivery and does
not bode well for stamping-out corruption. These weaknesses are also observed in the
government’s slow implementation of many of the international conventions it has signed. It has
taken eight years for the cabinet to ratify the African Charter on Human Rights and People’s
Rights of Women in Africa.
2.2
Business Environment and Competitiveness
2.2.1 Swaziland’s business environment has improved but weak governance has impeded
private sector development. Creating a conducive business environment is critical for
stimulating private sector investments. For foreign direct investment (FDI) location-specific
factors are important as they determine the level of risk and operational costs associated with an
investment project.5 The country’s ranking in the "2011 Ease of Doing Business Report" dropped
to 126 in 2011 from 123 in 2010. The current deterioration in macroeconomic conditions and
rising social tensions may reduce Swaziland’s relative attractiveness to FDI in the Southern
Africa Customs Union (SACU). Overall, the three most problematic factors for doing business
are the high levels of corruption, government bureaucracy, and limited access to finance. The
4
The World Bank categorizes these into six broad indicators: (i) Voice and accountability, (ii) Political stability, (iii)
Government effectiveness, (iv) Regulatory quality, (v) Rule of law, and (vi) Control of corruption.
5
These factors include both hard and soft infrastructure such as availability of human capital, rule of law, economic
and political stability, security, and quality of financial markets and trade policy.
3
2010 FinScope Survey revealed that only 9 percent of adults in Swaziland used banks or nonbank financial institutions to access credit and only 45 percent of the Swazi population had
access to financial services.6 This has affected the nascent small and medium enterprises (SME)
that are liquidity constrained due to non-payments by government for services provided by them.
Figure 1. Governance Performance for Selected
Countries
90
80
70
60
50
40
30
20
10
0
78.3
69.7
59.7
65.6
75.6
67.5
76.6
67.5
79.9
73.2
74.9
67.8
52.6
42.9
37.9
36.4
Figure 2. Swaziland Ranking in the Global
Competitiveness Report (2010-2011)
Starting a
Business
153
Closing a
Business
Dealing with
Construction
Permits
28.2
12.8
63
Enforcing
Contracts 170
40
156
Registering
Property
46
Trading
Across
Borders
Swaziland
Botswana
Source: Worldwide Governance Indicators
Mauritius
52
147
Paying Taxes
Getting
Credit
120
Protecting
Investors
Source: World Economic Forum: Global Competitiveness Index 2010-2011
2.2.2 Swaziland’s ranking in the Global Competitiveness Index (GCI) has deteriorated,
falling from 128 out of 139 countries in the 2009/10 to 134 out of 142 countries in 2011/12
rankings. The country’s global competitiveness is being held back by weak institutions, a lack
of efficiency drivers, including a small domestic market, lack of technological readiness and
poor outcomes in tertiary education and skills training. The macroeconomic environment has
also deteriorated, while the innovation and sophistication factors are almost at the same level as
those for Lesotho.
2.2.3 The institutional and capacity weaknesses are also reflected in the government’s
ineffectiveness in fiscal and public financial management and a non-conducive private
sector environment. The Bank’s Country Policy and Institutional Assessment (CPIA) shows no
improvement between 2009 and 2010, with an overall rating of 3.67 (moderately weak). The
CPIA indicates the worst performance regarding measures on social protection. Likewise, the
World Bank’s Country Integrated Fiduciary Assessment (CIFA) of 2010 confirms the existence
of substantial fiduciary risk. This risk is mainly due to a lack of adequate expenditure controls, a
poor commitment system, weak oversight and accountability arrangements, inappropriate payroll
systems and fiscal planning framework, and inefficient tax institutions. The government is
slowly taking some steps to address these weaknesses: a new Public Financial Management
(PFM) Bill is being prepared and the Procurement Bill was passed by parliament and acceded to
by the King in August 2011. In addition, the Swaziland Revenue Authority was operationalized
at the beginning of 2011, and will be implementing a Value-Added Tax (VAT) system in 2012.
2.2.4 In response to the deteriorating business environment, the government has finalized
the ERS where reforms have been identified as critical for economic recovery. The ERS
6
FinScope is a FinMark Trust initiative that focuses on consumers’ perceptions of the financial services sector in a
country.
4
aims to lift economic growth to 5 percent and create at least 30 thousand jobs by 2014. These
targets are by no means easy to achieve unless the government takes hard steps to implement the
necessary economic and structural reforms. These reforms are needed to enhance efficiency in
public resources allocation and utilization, as well as improve the business environment in
support of private sector development. The government made efforts to reduce the backlog of
legal instruments in parliament that would expedite implementation of the much-needed reforms.
The government acknowledges the risks of not taking corrective measures to reverse the
deteriorating economic conditions. Such measures include reductions in government
expenditures and enhancing resource mobilization, including external resources, which are
needed to close the fiscal financing gap.
2.3
Recent Economic Developments
2.3.1 Unlike its regional peers in Southern Africa, Swaziland has experienced sluggish
growth in the last two decades, averaging just over 2 percent per year. The global financial
and economic crisis cut Swaziland’s growth by halve to 1.2 percent in 2009 compared with 2.4
percent in 2008. Growth has remained subdued, only recovering to 2 percent in 2010. The
persistently low growth reflects a lack of competitiveness, due to an overvalued real exchange
rate; low investment, and high cost of doing business (see Section 2.2). Moreover, growth has
been driven largely by public consumption, raising questions about its sustainability in spite of
the relatively good performance of the agricultural sector. The government initially reduced its
expenditure in the 2011/12 budget compared with 2010/11 and presented a revised budget that
would cut expenditures by a further 2 percent. Despite signs of recovery in the export and
manufacturing sectors, real output is expected to increase by a mere 0.3 percent, reflecting lower
public consumption (Fig. 3). The nascent private sector has also scaled down its activities,
shedding about four thousand jobs due to government’s inability to pay for goods and services
provided by them.
2.3.2 Since the first quarter of 2010, inflation had been kept below 5 percent compared to
the recent peak of 12.6 percent recorded in 2008. This notwithstanding, and in sync with
regional trends, inflation edged upwards, rising from 5.5 percent in March to 7.1 percent in May
2011. Since then inflation has slowed down to 6.4 percent in June 2011 and is expected to end
the year within these levels which are higher than 2010 average. Inflation has been largely driven
by food and fuel prices (Figure 3). Despite the built-up of inflationary pressures, the policy
interest rate has been kept at 5.5 percent. Interest rates, however, could be raised in the near
future if inflationary pressures persist, despite the sluggish growth. The strong lilangeni, which is
pegged at par to the South African rand has also helped in moderating inflation.
2.3.3 Swaziland recorded fiscal surpluses in the period leading to the global financial
crisis due to windfalls in SACU revenue transfers. The fiscal balance has deteriorated over the
last two years following a sharp decline in SACU revenues, which account for about 60 percent
of total government revenue. The fiscal surplus of 6.4 percent in 2008/09 turned into a deficit of
7.1 percent of GDP in 2009/10. The fiscal deficit nearly doubled in 2010/11 to about 13.8
percent. Going forward, urgent measures that include expenditure cuts are required to avoid
further deterioration of the fiscal balance and ensure fiscal sustainability. Expenditure cuts are
required given the limited potential to enhance domestic revenue mobilization over the short-to
medium-term.
5
Figure 3. Swaziland Selected Macroeconomic Indicators
Inflation edges upwards, as food and fuel prices increase
Swaziland's growth has averaged just over 2 percent
since 2000
14
9.5
12
10
5.5
%
8
6
3.5
4
2
1.5
1.1
Swaziland
Africa
Southern Africa
IMF Projection
Swaziland
Revenues decline sharply in 2010 and is expected to be
worse in 2011
10
45
Jul-11
May-11
Jan-11
Mar-11
Nov-10
Jul-10
Sep-10
Mar-10
May-10
South Africa
Namibia
Fiscal deficit worsens as expenditure adjustments fall far
short of revenue decline
9
6
40
5
3
2
1 2
0
0
30
4 4
3
35
0
25
%
%
Jan-10
Nov-09
-2.5
Jul-09
2003 2004 2005 2006 2007 2008 2009 2010 2011
Sep-09
Jan_09
-0.5
May-11
0
0.3
Mar-09
%
7.5
20
-3
-5
15
-2
-2
-3
-3
-5
-3
-5
-6
-7 -7
-7
-10
10
5
-15
0
2003
2004
2005
2006
2007
2008
Total Revenue (excl. grants) % GDP
2009
2004
Public sector debt rising and could threaten sustainability
2007
2008
2009
Southern Africa
2010
Africa
5
25.3
17.9
16.9
-1.4
-2.8
-5
15
2.6
1.3
0.9
18.9
18.1
17.3
17.1
3.3
2.6
2.5
2.4
0
-4.6
-4.6
-6.7
13.6
-10
10
5
2006
Government uses foreign reserves to finance fiscal deficit
25
20
2005
Swaziland
Grants %GDP
30
-14
2003
2010
-12.0
3.9
1.7
1.9
2.0
2.8
2.5
2.8
0
-15
-16.6
-20
2000
2005
2006
Public debt % GDP
2007
2008
2009
2010 (e) 2011(f)
Debt Service % exports
2000
2005
2006
2007
2008
2009
2010 (e)
External Reserves months of imports
Current Account Balance % GDP
Source: ADB Statistics Department Databases; World Bank: World Development Indicators; UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country
Reports.
6
2.3.4 The loss of confidence by the private sector is making it difficult for the government
to raise domestic financing. The financial sector has lost its appetite for long term government
paper and the government is now in a net paying position on short-term outstanding debt. On the
other hand, short term financing costs are rising. The government is engaged in negotiations with
bilateral and multilateral partners to secure the external resources needed to close its financing
gap of about E 3 billion (11.2 percent of GDP) in the 2011/12 budget. This includes a request for
budget support to the Bank and the 2.4 billion rand South African loan facility. Only about 10
percent of the financing gap is expected to be financed domestically. External debt could
therefore rise sharply from 12 percent of GDP in 2010 to about 26.5 percent in 2012.
Swaziland’s external debt level is still expected to remain below the debt distress threshold of 40
percent of GDP.
2.3.5 In the wake of the current fiscal crisis, the government of Swaziland has opened up
to and is engaged in intensive dialogue with Development Partners. Swaziland agreed to
implement the International Monetary Fund (IMF) Staff Monitored Program (SMP) in April
2011. Slow implementation of reforms led to the unsatisfactory performance under the first SMP
and negotiations for a new SMP are on-going. The main thrust of the SMP is to support the
implementation of the Fiscal Adjustment Roadmap (FAR). The FAR was developed with
technical assistance from the Bank. However, the risk of Swaziland’s failure to implement policy
and structural reforms remains. To mitigate this risk, the Bank approved a MIC grant for
technical assistance in public financial management reforms, which are also being supported by
other development partners.
2.3.6 A strong rand, to which the lilangeni is pegged at par, has reduced the
competitiveness of Swaziland’s non-SACU exports. The lilangeni appreciated by an average
12.7 percent year-on-year to June 2011 against the US dollar. As a result, imports grew much
faster than exports, widening the current account balance from 14 percent of GDP in 2009/10 to
18.5 percent in 2010/11. Some recovery in exports and projected lower imports in 2011 due to
slower growth in GDP and the recent depreciation of the lilangeni are expected to lead to an
improvement in the current account balance to 13.6 percent of GDP in 2011/12. Reflecting the
worsening external balance and the government’s recourse to financing deficits, foreign reserves
have fallen by 18.5 percent over the year to September 2011. Foreign reserves stood at 2.2
months of import cover in September 2011, compared with 4.7 months at the end of 2009
(Figure 3). Securing external financing, therefore, is critical for the maintenance of the lilangeni's
parity to the rand.
2.4
Regional Integration and International Trade Arrangements
2.4.1 To circumvent its land-locked nature, small domestic market and erosion in trade
preferences, Swaziland needs to develop a new strategy to increase exports. The country
benefits from the EU, the Africa Growth Opportunity Act (AGOA) and other regional
preferential trade arrangements. It is actively involved in the Common Monetary Area (CMA),
SACU, the Southern African Development Community (SADC) and the Common Market for
Southern and Eastern Africa (COMESA). Given the gradual liberalization in global trade,
preferences are being eroded. Swaziland needs to enhance its trade competiveness, diversify
exports and target markets if it is to increase its share in global trade. Both the end of the multifiber protocol and the end of apartheid in 1994 resulted in foreign firms relocating to South
7
Africa and elsewhere leading to job losses and lower growth. The end of AGOA in 2015 could
have similar effects. The economy urgently needs to diversify its output, in addition to sugar and
wood products. Also, experience from the sugar industry has shown that expanding and moving
up the value chain and export market diversification are critical for developing competitive
advantages. This process could be supported by improvements in trade facilitation (Box 1).
2.4.2 Swaziland is among the top ten most open economies in the world and this presents
opportunities for growth, but also increases vulnerability to external shocks. The country’s
openness, calculated as a ratio of the sum of exports and imports to GDP stood at 194 percent in
2010. Trade concentration is a challenge, as over 90 percent of Swaziland’s imports emanate
from South Africa, which is the destination for about 70 percent of the country’s exports.
Therefore limited output and market diversification leaves the country vulnerable to external
shocks.
Box 1: Regional Integration
In response to Africa’s need for greater integration into the regional and global economies, the African
Development Bank (AfDB) is assisting African countries develop ‘National Aid for Trade Strategies’. The
strategy is aimed at identifying trade related investment priorities and activities to address trade-related
constraints. It will respond to the question: What priorities should be accorded to trade development in
Swaziland’s economic growth strategy?
One such priority is trade facilitation, as noted in the Southern Africa Regional Strategy Paper (RISP).
Arguably, the most binding constraint for the region is trade facilitation as demonstrated by various metrics.
According to the World Bank’s Trading Across Borders category of the 2011 Doing Business Report,
Swaziland is ranked 147th, six points up from its 2010 ranking. On average, it takes 18 days for cargo exported
from the country and 27 days for cargo to be imported. In addition, it costs an average of US$1,754 to export
and US$1,849 to import a 20-foot container of non-sensitive goods, with an average of 9 documents being
required for exports and 10 for imports.
Source: Adapted from the Southern Africa RISP & Aid for Trade Strategies Concept Note, AfDB
2.5
Social Context
2.5.1 Swaziland’s total population was estimated at 1.2 million in 2010 and has remained
almost unchanged in the last five years despite a high annual birth rate of 28.3 births per
1000 people. This outcome is due to high mortality rates (52 per 1000 births, 73 per 1000 for
under 5s and 7000 AIDS related deaths per year). About 40 percent of the population is under 15
years of age, resulting in a relatively high dependency ratio. Furthermore, 23 percent of the
country’s population comprises of orphans and vulnerable children. In the absence of a
comprehensive social security system and given the country's large number of orphans due to
HIV and AIDS, the government assumed the responsibility for providing grants for education
and basic health, in addition to elderly grants.
Poverty
2.5.2 In spite of Swaziland being classified as a lower middle income country, it is
characteristically similar to Africa’s low-income countries. About 70 percent of the
population depends on agriculture. As reported in the 2010 Swaziland Household Income and
Expenditure Survey, about 63 percent of the population lives in poverty, down from 69 percent
in 2000 (Figure 4). The fiscal crisis, however, could reverse these gains as social expenditures
have not been spared despite the government’s assurances to ring-fence such expenditures.
Swaziland’s Integrated Labor Force Survey of 2010 reports overall unemployment at 45.6
8
percent. Also, growth during the last decade has not been pro-poor, as rural unemployment and
poverty rates are the highest.7 Income inequality remains high, with a Gini coefficient estimated
at 0.5.8 The high poverty incidence and widespread unemployment, especially among the youth,
in a situation of low economic growth pose serious policy challenges. Poor policy coordination
and lack of access to basic productive resources such as land, water and finance account for this
outcome. The absence of a formal legal framework to address the land issue continues to hamper
efforts to economically empower rural households, especially women.
Health
2.5.3 Swaziland's health system faces severe human resources constraints, which are
further exacerbated by the high burden of disease due to HIV and AIDS, poverty, migration
of skilled health workers and inefficient health management systems. The country’s health
sector is based on the concepts of primary health care and decentralization. Currently, there is no
functional referral system for the rationalization of service delivery at various levels. The
country's health management systems, including financial management and budgeting systems
are considered to be too centralized, inefficient and unresponsive to new needs. These factors
contribute to Swaziland having the highest proportion of government health spending dedicated to
curative services in all of sub-Saharan Africa. Given the fiscal challenges, possibilities for the
government to raise its budget allocation to the health sector to meet the 2001 Abuja target of 15
percent from the current level are limited (Table 1). The country has no health insurance system for
the majority of its citizens, including civil servants.
Education
2.5.4 Swaziland has one of the highest enrollment and literacy rates on the continent but
the quality of education and training remains poor despite government allocating the
largest share of its budget to this sector. The Orphaned and Vulnerable Children’s initiative
launched in 2002 and the State Funded Primary Education Program that started in 2009 had, by
2010, contributed to a 10 percent increase in primary school enrolments. Also, the net enrolment
ratio has gone up from 72 percent to 86 percent. Swaziland has also made impressive
achievements in overall literacy rates, recorded at close to 90 percent for all adults and that for
youths at more than 95 percent. Given the fiscal crisis, ensuring that these programs continue is a
challenge. Even more challenging is ensuring that primary school completion rates increase in
tandem with enrolment ratios.
2.5.5 At the tertiary level, there is a mismatch between labor market requirements and
the skills generated. Swaziland, however, has the potential to reap the demographic dividend of
a young and productive workforce. Almost 52 percent of its population is under 20 years, but
more than half of these are neither formally employment nor adequately equipped to engage in
productive activities in the informal sector. In addition, without improvements in the quality of
skills development, the planned implementation of the Enhanced Voluntary Early Retirement
Scheme (EVERS) could throw thousands of people, most of whom are women, into poverty.
2.5.6 Progress towards MDGs: The country is on track to meet five out of the eight
Millennium Development Goals (MDGs).The three MDGs that may not potentially be attained
7
8
Source: 2009/2010 Swaziland Household Income and Expenditure Survey (SHIES), February 2011.
The Gini coefficient ranges between 0 (complete equality) and 1 (complete inequality).
9
by 2015 are: (i) Goal 1 (Eradicate extreme poverty and hunger); (ii) Goal 6 (Combat HIV/AIDS,
Malaria and other diseases) and (iii) Goal 7 (Ensure environmental sustainability). The Human
Development Index (HDI) stood at about 0.5 in 2010, ranking the country at 121st out of 169
countries, and average life expectancy, at 47.0 years, is one of the lowest in the world.9Also, in
spite of the commitment and progress made towards gender equality and respect for human
rights thus far, lack of progress in implementing the 2005 Swaziland Constitution is likely to
pose challenges given the strong patriarchal traditions in the country (Annex III & X).
3.
GOVERNMENT DEVELOPMENT STRATEGY, CHALLENGES AND
OPPORTUNITIES
3.1
Swaziland’s Development Strategy
3.1.1 The country’s development agenda is set out in its long-term Vision 2022, the
National Development Strategy (NDS) whose implementation has been carried out through
medium-term oriented action programs. Since the launch of the NDS in 1997, three such
programs have been implemented:
(i) The Millennium Action Program of 2002 focused on poverty alleviation, with emphasis
on rural development, employment creation, HIV/AIDS, efficiency and costeffectiveness in the public service;
(ii) The Smart Program on Economic Empowerment and Development, which began in 2004
aimed at achieving a sustainable economy, regional development, public service reforms,
human capital development and poverty reduction; and
(iii)The 2007 Poverty Reduction Strategy and Action Plan that was designed to focus on
measures to reduce poverty.
The government has recently developed the Economic Recovery Strategy, which is a mediumterm response to the macroeconomic challenges facing the country (Box 2).
3.2
Challenges and Opportunities
Challenges
3.2.1 The government is facing macroeconomic instability and a contracting economy, in
addition to the development challenges that existed prior to the current fiscal crisis.
Economic growth has been low, which could be explained by the low investment levels,
declining productivity in the face of the HIV/AIDS impact as well as policy and institutional
weaknesses. Also, Swaziland risks reversing some of its past social gains. A large proportion of
the Swazi population is not participating in the mainstream economy. Economic growth is not
pro-poor; unemployment remains high and restrictions on land ownership in rural areas limits
inclusiveness of government policies, especially women. Therefore, development-oriented
institutions need further strengthening to ensure sustainable long-term progress. A framework for
closer donor coordination will help in this process.
9
Since the first case of HIV was diagnosed in the country in 1986, prevalence increased sharply from 3.9 percent in
1992 to an all-time high of 42.9 percent in 2004. As at end 2007, adult HIV prevalence declined to an estimated 26.3
percent. Nonetheless, approximately 190,000 people in Swaziland are HIV positive, including 15,000 children under
the age of 15. Of these affected, 69,000 are on ARV treatment.
10
Box 2. Economic Recovery Strategy
The prevailing economic and fiscal situation has compelled Government and the nation at large to embark on the
Economic Recovery Strategy. The strategy is produced out of Government’s desire to implement decisive reforms
against the backdrop of the serious socio-economic challenges that the country faces. The development of the ERS
will pave the way for a shared, equitable and participatory approach to sustainable development, social and
economic growth by addressing the current challenges and constraints taking into account, existing and potential
opportunities and improving prospects for the socio-economic prosperity of future generations.
The overall objective of the ERS is to achieve a growth rate of 5 percent and create at least 30, 000 jobs by 2014. It
seeks to set a clear direction on the actions and measures to be taken to restore macroeconomic stability and shared
economic growth for poverty reduction and sustained economic development.
This ERS further articulates how the global financial crisis has impacted on Swaziland, what major setbacks have
resulted and what could be done to counter adverse effects. The main thrust of the recovery program is to
strengthen macroeconomic management, restore investor and consumer confidence, undertake structural reforms,
infrastructure development (increasing pro-poor and pro-growth investment), invest in human capital and empower
the poor to generate income. The Government is expected to design and implement appropriate fiscal policy as well
as adopt relevant monetary policy instruments that provide an enabling environment for the private sector to thrive.
Source: Extracts from the Economic Recovery Strategy, GoS 2011.
3.2.2 The slow pace of reform implementation threatens fiscal and debt sustainability and
poses serious challenges to the structural and economic transformation of Swaziland. These
challenges may further weaken the country's growth prospects. The country has, over the last
decade, experienced low growth relative to its peers in the region. The lack of a conducive
business environment also continues to constrain private sector development. In addition, the
government faces serious capacity constraints due to the high turnover of experienced staff and
outdated curricula in educational and training institutions. Budget outlays, especially for
education and health, should be made more efficient and effective. There is also a need for
improvements in governance and fiduciary areas, as proposed in the FAR.
3.2.3 Limited economic diversification, the country’s geographical location, trade
dependence on South Africa, and volatility in SACU revenue transfers present additional
challenges. The economy relies on sugar, cotton and pulp as major exports. Internal revenue
sources are limited due to constraints on private sector development while SACU revenues are
volatile. These factors, including institutional weaknesses, make the achievement of
development objectives less likely.
Opportunities
3.2.4 The government has engaged development partners in its efforts to respond to
emerging challenges despite the slow reform implementation. It has started implementing
some of the reforms proposed in the FAR:
 The Swaziland Revenue Authority became operational at the beginning of 2011;
 The 2010 Public Procurement Bill into law in August 2011;
 A new Companies Act was passed in 2010, and
 The Investor Roadmap was reviewed.
More effort, however, is required to improve the business environment and to attract private
sector investments in existing and new projects. Opportunities for Bank financing of private
sector entities or through public-private partnership arrangements are likely to emerge as the
11
business climate improves. The Bank could play a critical role to ensure implementation of the
reform program through Policy-Based Operations (PBOs), especially given Swaziland’s
relatively low debt levels.
4.
BANK STRATEGY IMPLEMENTATION AND RESULTS 2009 - 2011
4.1
Bank’s Positioning in Swaziland
4.1.1 Bank support during the first half of the CSP has been aligned to the country's
national development objectives as specified in the country’s long term Vision 2022 and the
Poverty Reduction Strategy and Action Program. The 2009-13 CSP aimed to address some of
the development challenges facing the country by exploiting opportunities where the Bank has
comparative advantages. It identified two main intervention pillars: Pillar I – Investing in
Infrastructure to Increase Productivity and Competitiveness, and Pillar II – Enhancing Health
Delivery and Skills Development. These pillars reflected the views of all stakeholders and took
into consideration the Bank’s 2008-2012 Medium Term Strategy and the Framework for
Enhancing Bank Operations in MICs.
4.2
Assessment of Results-Based Outcomes
4.2.1 Swaziland has not borrowed from the Bank over the last three years, reflecting in
part, the buoyant SACU revenue inflows in the three years to 2008.10 Nonetheless, three
MIC grants for studies worth UA 1.84 million were approved. The impact of the MIC grant
financed projects cannot be assessed as there has been little progress in their implementation. An
assessment of outcomes from recently completed or projects carried over from the previous CSP
demonstrate the developmental impact of Bank interventions in the country (Box 3).
Box 3. Developmental Impacts of On-going Bank Interventions
The Komati Downstream Development has contributed to reducing poverty through increased household
income, enhanced food security, and improved access to social and health infrastructure. The project has so far
cultivated 4,475 ha out of the total of 5,200 ha envisaged at appraisal. This brings the level of implementation to
86 percent. While sugar is the dominant crop, occupying 90 percent of the cultivated land, food crops
production has also increased. In addition, beneficiaries under this project now have access to electricity;
34.5 km of gravel roads together with five river crossings have also been constructed. By March 2011, the
number of homesteads with clean drinking water in the project area stood at 2,262, which translates to 15,834
people who have access to clean drinking water. Furthermore, 2,816 homesteads have benefited from improved
sanitation facilities, up by 554 homesteads between November 2010 and March 2011.
Through MIC grants the Bank has supported the establishment of the Swaziland Revenue Authority, which
became operational in January 2011 and is expected to enhance revenue collection. The Bank’s support for the
development of a Geospatial Information System (GIS) has also enabled the National Emergency Response
Council on HIV/AIDS (NERCHA) to improve the analysis of information and enhanced decision making with
regards to HIV/AIDS interventions.
Source: Adapted from AfDB, SAP Project Summary, September 2011
10
The situation has since changed, with Swazi authorities requesting for budget support from the Bank at the end of
2009. The approval of the request has been put on hold pending satisfactory progress on structural and economic
reforms.
12
4.3
Portfolio Performance Analysis
4.3.1 As at July 2011, the Bank’s portfolio comprised 7 operations with a total
commitment of UA 19.59 million (Annex VII and Figure 4). The Komati Downstream
Development Project (KDDP) is the only on-going lending operation in the country and
accounts for 86.2 percent of the approved total portfolio amount, with the rest being non-lending
operations. These include one Africa Water Facility grant, three MIC grants in the health,
transport, and water and sanitation sectors, and two multi-sector MIC grants.
4.3.2 While comparison of the portfolio performance in Swaziland to the Bank-wide
situation is less informative, it is characterized by slow implementation. The following
observations were made:
 Average project age of the portfolio is 3.5 years,
 The KDDP is 8.64 years and the oldest project; it suffered disbursement suspension due to
non-compliance with the Bank’s financial management guidelines; has an implementation
progress and a developmental impact ratings of 2.2 and 3.0, respectively;
 Overall portfolio disbursement rate is 51.4 percent; and
 Two MIC grants have not disbursed due to signature, effectiveness and procurement
delays and two non-lending projects were cancelled due to unsatisfactory implementation.
Figure 4. Sectoral Distribution of Portfolio as at September 2011
(percent)
Water and Sanitation
2
Transport
2
Multi-sector
4
Health
1
Agriculture
91
Source: SAP Project Summary, AfDB September 2011
13
An assessment of the portfolio performance revealed several weaknesses that would require
remedial actions to be taken by both the Bank and the government (Figure 4 & 5 and Annex IX).
4.4
Aid Coordination/Harmonization
4.4.1 In spite of the large presence of donors active in Swaziland, there is no formal
coordination mechanism among donors and between them and the government (Annex V).
Information asymmetries on activities by development partners in the country make it difficult
for government to plan and budget, on the one hand, and for donors to harmonize their
interventions, on the other hand. Swaziland’s recent economic experiences and the resultant
fiscal crisis, requires increased donor coordination to avoid further deterioration of the economic
and social conditions. Cooperation among donors is increasing; it has to be formalized to
enhance strategic support to government’s development efforts. The government has shown its
intention to collaborate with the donor community and has initiated annual meetings (Donors’
Retreat). Further actions such as adoption of similar monitoring and evaluation systems,
reporting requirements and use of country systems as the fiduciary environment improves are
needed.
4.5
Lessons from the Implementation of the 2009 – 2013 CSP
4.5.1 While Swaziland has not borrowed from the Bank during the last three years, the
constant engagement with the government was instrumental to kick-start dialogue on
reforms. Following the decline in SACU revenues in 2009, the Bank provided technical
assistance to the Government of Swaziland to design the FAR, which has been backed by other
donors (Box 4).
Box 4: Fiscal Adjustment Roadmap
The Fiscal Adjustment Roadmap (FAR) is produced out of Government’s desire to implement decisive
immediate measures and reforms over the medium-term to deal with the challenges of the global financial
crisis, most notably, the sharp deterioration in the fiscal outlook elaborated in this year’s budget. One of the
fundamentals of this document is to bring the fiscal position to sustainable levels through revenue enhancement
and better expenditure control, particularly the relatively large wage bill, and create space for the Government’s
commitment to increase spending in the health and education sectors. The roadmap also focuses on efforts to
promote a robust private sector to complement the envisaged more efficient public sector in mobilizing
domestic and foreign investment, diversify the economy, and accelerate employment creation.
In order to address the challenges of the current fiscal situation, Government has to introduce immediate
measures to improve the fiscal balances, while pursuing complementary structural reforms to foster a more
robust economy. In the medium-term, fiscal consolidation and structural reforms should help improve the
business climate and promote private sector growth and employment. To support fiscal consolidation the PFM
system should be strengthened to ensure that resources are used efficiently and for the purposes they are
intended. The following strategies will be adopted to achieve this:
 Introduce fiscal reforms to broaden the tax base and tax collection whilst reducing the tax burden on the poor
and impediment to economic activity;
 Restructure, right-size, and improve the efficiency of the public expenditure and services;
 Improve governance so as to build investor confidence and allow for greater transparency and accountability;
 Improve the export base and facilitate increased participation of the SME sector in the international trade; and
 Attract FDI and provide support for the development and the involvement of domestic investors in the
manufacturing and other businesses.
Source: Adapted from Government of Swaziland, 2010
14
4.5.2 Project implementation has been slow reflecting in part the country's institutional
weaknesses. Delays in signing loan agreements, frequent movements of government task
managers and weak compliance with procurement and disbursement procedures are the main
causes for the slow implementation of projects. Slow implementation in some projects has also
been caused by the lack of government counterpart funding due to the fiscal crisis. In addition to
challenges in retaining experienced staff, the frequent intra-government movements of task
managers imply that training provided at the launch of the projects is not sufficient to ensure
satisfactory portfolio performance. It is therefore proposed that a programmatic approach be
adopted for MIC grants to ensure regular supervision and cost-effectiveness.
5.
2011 - 2013 BANK STRATEGY
5.1
Rationale for Bank Interventions for the Remainder of the CSP Period
5.1.1 Swaziland faces additional economic challenges as a result of the impact of the
global financial crisis. Consultations during the CSP mid-term review mission revealed that the
medium to long term development challenges facing Swaziland were similar to those identified
at the beginning of the current Bank Strategy. However, the economic environment has changed
drastically and likewise government priorities have changed. Swaziland faces an unstable
macroeconomic environment and a severe liquidity crisis. Both internal and external balances are
under serious strain. The current fiscal crisis could also lead to a sovereign debt challenge. As the
Bank pursues its development strategy for Swaziland, there is an urgent need to halt further
deterioration in macroeconomic conditions, restore private sector confidence, and support the
rural-poor to increase their participation in commercial agricultural activities.
5.1.2 The government needs to sustain the implementation of reforms, a process that
needs to be supported to build the momentum for quick and lasting impact. Political will to
implement the necessary reforms, especially public financial management reforms, is critical.
Government intentions in this regard are reflected in the ERS. It has signaled its desire for fiscal
consolidation, which will be achieved through cuts in expenditure and enhanced revenue
mobilization. The government has, however, avoided unpopular short-term measures such as
cutting the civil service wages, which is necessary for fiscal stability. This is one of main causes
of non-satisfactory performance of the SMP, reflecting some of the downside risks. The Bank
and other development partners could support Swaziland’s reform efforts by providing financing
resources that would simultaneously address the macroeconomic imbalances and allow
continuous monitoring of progress on agreed reforms. Domestic efforts, including the
privatization of SwaziBank and the issuing of a second mobile telecommunications license could
provide financing resources for the budget while increasing private sector participation in the
economy if they were to be pursued to finality.
5.1.3 Institutional capacity and skills constraints could adversely impact the extent and
speed of the reform process. In the short-term, technical assistance to the government is needed
and this should include institutional capacity building and the development of critical skills
required during the reform period and beyond. Overall, skills development has to be made more
relevant and dynamic to meet the country's manpower needs. In the short-term, addressing
technical and managerial skills shortages in the agriculture sector to ensure increased
productivity and viability is critical. Such skills will support recent government investments in
the sector and enhance incomes of the rural-poor population.
15
5.2
Strategic Pillars for Bank Support
5.2.1 The selection of the pillars for the remainder of the CSP period is based on the:
 Urgency to respond to the current challenges facing Swaziland in relation to its mediumto-long term development objectives;
 Need to leverage and complement support by other development partners;
 Overall Bank strategic framework as specified in the Medium-Term Strategy (MTS 20082012), the targeted strategic frameworks for enhancing support to MICs and the Southern
Africa RISP (2011-2015); and
 Lessons learned from implementing the current Bank strategy for Swaziland.
5.2.2 As a result of the crisis, the Bank has to adjust its strategic engagement to respond
to the drastic changes in government priorities. As noted in Sections 2.1.4 and 4.1, the
country’s long-term development goals are expressed in the National Development Strategy.
However, the medium-term goals were developed within the context of the medium-term action
programs and more recently as specified in the Fiscal Adjustment Roadmap and Economic
Recovery Strategy. The government’s primary focus is to implement economic and structural
reforms to strengthen the foundations for future development and safeguard the development
gains so far. Similarly, the Bank has to refocus its strategic support so that it aligns with
government priorities (Table 2). Also, timely and appropriately targeted instruments need to be
adopted in its implementation.
5.2.3 In its support to government priority areas, the Bank should remain selective,
relevant, and flexible and aligned to the 2008 – 2012 Medium-Term Strategy. The CSP midterm review proposes the modification of both pillars of the Bank strategy in Swaziland. The
modification to Pillar I seeks to explicitly refocus the Bank’s interventions in support of the
reforms process and the possibility of future policy-based operations. In Pillar II, the Bank would
focus on developing skills needed in the modernization of the agriculture sector. As a result of
these modifications, the proposed new pillars are as follows:
Pillar I:
Improving Public Financial Management, and
Pillar II: Enhancing Agriculture Development.
5.2.4 The proposed pillars for the remainder of the Bank’s strategy for Swaziland are
central to the country’s development agenda. They aim to address factors that have impeded
growth and diversification and also promote inclusiveness in the socio-economic sphere.
Through these pillars, Swaziland will be able to build economic resilience, which is critical for
sustainable development. Also, the Bank will be able to refocus its attention towards government
priority areas without diverting its focus from long-term development support to Swaziland.
Pillar I: Improving Public Financial Management
5.2.5 Swaziland's Authorities acknowledge that economic and structural reforms are
critical to addressing development challenges facing the country; growth and productivity
continue to be low, unemployment is high and there is food insecurity. Limited skills in
critical areas, poverty and low investment also contribute to the poor performance of the
economy. The HIV/AIDS pandemic, however, remains a major challenge. In response, the
16
government has made an undertaking to implement structural reforms to improve efficiency in
public resource allocation and utilization, improve the business environment, and protect the
vulnerable population. Government actions in this regard, include:
 Designing a PFM reform program, to be supported by development partners;
 Making efforts to enhance domestic revenue mobilization through the establishment of the
Swaziland Revenue Authority;
 Finalizing the investment policy and private sector development strategy; and
 On-going measures to commercialize and privatize some of the public enterprises.
5.2.6 To ensure the efficiency and effectiveness of government development measures, the
PFM framework requires significant reform. The Government of Swaziland’s request for
technical and financial support in this area has been granted. The Bank’s support, however, is
limited. In this context, the Bank will benefit from leveraging its support and complement efforts by
other development partners committed to supporting the government, financially and technically.
Through this pillar, the Bank’s interventions will focus on measures to improve public expenditure
control and domestic resource mobilization. It will also encourage the development of a conducive
business environment for private sector development.
Pillar II: Enhancing Agriculture Development
5.2.7 The government acknowledges the importance of investing in agriculture and
infrastructure as a poverty reduction action. Agriculture investments have the potential to
stimulate short term growth and positively contribute to poverty reduction. Irrigation infrastructure,
in particular, would increase productivity and support diversification of crop production, which will
improve food security. The rural population is the poorest and constitutes about 70 percent of the
country's total population. Improving the welfare of this population, especially that of rural women,
would have a big impact on poverty reduction. In addition, good nutrition and better health
outcomes positively impact productivity. Also, agriculture is increasingly becoming an important
sector in the generation of renewable energy, with two independent power producers having started
bar gas fired operation in 2011. The sector, therefore, has the potential to attract private sector
investments and thus improve economic dynamism.
5.2.8 Agricultural skills development is an important element of inclusive and sustainable
development. Whereas public sector skills development in support of the reforms are catered for
under Pillar I, technical and managerial skills needed to ensure increased productivity and the
viability of the agriculture sector are not readily available. Therefore, agriculture related skills
development under Pillar II aims to increase the efficiency of recent and potential future
investments within the context of the on-going modernization and commercialization of the sector.
Civil servants made redundant under Enhanced Voluntary Early Retirement Scheme could also
benefit from the re-skilling thereby ensuring the successful transition to alternative income earning
activities. Through these interventions, the Bank will provide the Swazis with an escape route from
the poverty trap.
5.3
Deliverables and Targets
5.3.1 Given Swaziland’s categorization as a middle income country, it has no access to the
concessional window of the Bank’s resources. The proposed pipeline is determined by the
17
sustainable lending limit available from the non-concessional window. The current limit of the
resource envelope available to Swaziland, up to the end of the current CSP, is UA133 million,
translating into about UA44 million per year.11 Depending on the financing needs of the country,
the available resources could be front-loaded.
5.3.2 Public financial management reforms are a top priority for the Swaziland government
to ensure fiscal consolidation, in the short-to-medium term, as specified in the Fiscal
Adjustment Roadmap and the Economic Recovery Strategy. The FAR focuses on improving
public sector efficiency in order to enhance revenue mobilization, enhance expenditure control, and
promote budget planning, reporting and transparency. It also aims to enhance fiscal accountability
as a basis for economic development and poverty reduction. During the CSP Mid-term review
mission, the government re-confirmed its commitment to implementing PFM reforms.
5.3.3 Given the limited capacity to implement the reforms, the Bank has approved technical
assistance for public financial management to ensure the implementation of comprehensive
reforms, which will be supported by other DPs. The Bank will assist in developing critical
capacity and skills in key economic ministries, including the Ministry of Finance. Expected
outcomes under PFM, which potentially opens the possibility for future policy-based operations in
the regional member country include:
 Strengthened capacity to undertake medium term budget planning through the re-introduction
of a Medium Term Expenditure Framework (MTEF);
 Improved transparency and accountability of the budget process;
 Enhanced oversight role of the Auditor General’s Office; and
 Strengthened procurement framework and the Parliamentary Budget sub-Committee.
5.3.4 The 2005 Agricultural Sector Policy’s thrust to enhance sustainable agricultural
development and its contribution to economic growth, poverty alleviation, food security and
sustainable natural resource management has been partially met. Over the last seven years the
sector’s contribution to GDP has fallen by about 2 percent to about 8 percent in 2010. The World
Food Program estimated that about one-quarter of the population was in need of food aid in 2010.
Given that about 70 percent of Swazi households depend on agriculture for their livelihoods, the
medium term contribution of the sector to poverty reduction has been minimal.
5.3.5 The non-availability of resources needed to accelerate agricultural diversification and
commercialization as proposed in the 2011 Cabinet Paper of the Ministry of Agriculture poses
a serious challenge. This is especially true for the small-holder farmers who constitute the bulk of
farmers. Small-holder farmers could play an important role in ensuring the sustainability of
commodity supplies. Key among the requirements is adequate agriculture infrastructure to expand
irrigable land area. Water shortage is a serious impediment to the intensification and diversification
effort. Increasing area under irrigation, particularly on Swazi national land, has been difficult.
Investments in water for irrigation and climate change mitigation are therefore considered important
in this regard.
5.3.6 The Bank is currently financing a feasibility study to replicate the positive
development outcomes under Phase I of the LUSIP project which has transformed rural
livelihoods (Box 3). Access to irrigation water by rural communities enables them to grow crops all
11
The sustainable lending limit is periodically reviewed on the basis of the country risk assessment.
18
year round thereby increasing their productivity and incomes. Communities will also have access to
clean and safe drinking water. In this context, the Bank is expected to contribute to efforts at
reducing water-borne diseases and make it possible to invest in modern sanitation facilities, leading
to better health outcomes. Financing for this project is expected in the final year of the current CSP.
5.3.7 The social sectors are expected to benefit from improved budgeting as a tool for
development planning to ensure full participation of the Swazi population in economic activities.
Social sector budget allocations have, to date, been highly volatile (Table 1). Education and health
budget allocation trends are not consistent with the requirements, in view of the increasing demands for
government support. The 2011/12 budget was supposed to ring-fence expenditures in education and
health, yet the vulnerable Swazi population has not been spared from the brunt of the fiscal crisis. The
Bank is expected to play a critical role in this area by targeting its interventions in skills development.
Table 1. Social Sector Budget Allocation (% of total)
Social Sector
2008
2007
Education and Training
20.3
21.4
Health
7.9
8.6
Social Protection
2.8
2.4
Housing and Amenities
1.6
1.8
Source: Budget Estimates 2010, Ministry of Finance, Swaziland
2009
16.7
7.3
6.8
1.3
2010
15.6
10.0
7.6
2.0
Table 2. Indicative Pipeline, 2011 – 2013
Project
Sector
Indicative Amount
(Within Swaziland
Sustainable Lending
Limit, UA million)
Co-financing
Indicative
Year
Lending Program
ECAP Development Budget Support Loan
Multi-sector
93 million
…
2011
Lower Usuthu Smallholder Irrigation Project Phase II
Agriculture
TBD
EU
2013
Higher Education
15 million
…
2013
Human Capital for Sustainable Development
Non-lending Programs (MIC Grants)
Higher Education
TBD
…
2012
Small and Medium-Scale Dams for Irrigation Master Plan
Agriculture
TBD
…
2012
Statistical Capacity Building for MDGs
Multi-sector
TBD
…
2011
Technical Assistance to the Ministry of Finance
Multi-sector
TBD
IMF, World Bank, EU
2011
Skills for Employability Study
Source: AfDB
5.3.8 Swaziland needs to provide appropriate skills needed in a modernizing agriculture
sector to enhance opportunities for employment or to engage in productive activities in the
informal sector. Technical and managerial skills required in the agriculture sector could also be
applied in other areas of economic activity. It is expected that Swaziland’s economy will experience
significant structural transformation, as reforms become rooted. Effectiveness and efficiency in
resource use requires that the skills development responds to the new labor market demands, with
particular focus on agriculture skills. The Bank will assist, under the higher education and science
and technology pillar, to enhance agriculture related skills development. The private sector could
also play an increasing role in this areas compared to the current situation.
5.3.9 Overall, the Bank strategy for Swaziland during the remainder of the CSP period will
be implemented through various instruments, supporting carefully designed and appropriate
programs to ensure maximum impact and the attainment of stated objectives. By improving
the business operating environment, developing skills and mitigating the impact of the current fiscal
19
crisis. Bank interventions will strengthen growth drivers, including economic diversification. The
interventions will also help bring social and economic inclusiveness. Bank lending operations will
be guided by Economic and Sector Work in the various areas of intervention. Potential studies to be
carried out from 2011 to 2013 are presented in Table 2. In addition, operations in Swaziland will be
complemented by regional projects, especially those focusing on deepening regional integration.
5.4
Monitoring and Evaluation
5.4.1 The monitoring framework will depend on several information and data gathering
systems, including the MDGs monitoring system and complemented by other national data
gathering systems (Annex I). The framework focuses on sector and national outcomes where Bank
interventions are expected. In addition, the Statistical Capacity Building program will help improve
data and information systems and strengthen the monitoring and evaluation framework. The Bank’s
annual Portfolio Performance Reviews (CPPR) and project completion reports will also be useful in
tracking progress towards the objectives of all interventions in the country. The establishment of the
Pretoria Regional Resource Centre will make it easier to monitor implementation of the strategy.
5.5
Potential Risks and Mitigation Measures
5.5.1 While the government has started addressing some of the risks identified at the beginning of
the current CSP, new risks have also emerged. These risks include, among other factors, an unstable
macroeconomic environment, including a severe liquidity crisis. Mitigation measures in place and
those that will be considered during the implementation of the strategy are detailed below.
5.5.2 Failure to fully implement the reform agenda: Swaziland has a poor track record in
implementing reforms. In addition to limited institutional capacity to implement reforms, political
reforms are also required. In the context of the division of labor, a stronger donors’ cooperation and
coordination framework to ensure effective monitoring of reforms has been put into place. Four
institutions “The Quartet”, which includes the African Development Bank, IMF, South African
Treasury and the World Bank, will monitor different components of the reform process. This will
enable the Bank to focus on economic and structural reforms while allowing the other partners,
especially the South African government, to leverage its position and existing agreements with
Swaziland to promote political reforms. The government’s willingness to engage with development
partners also provides a forum for dialogue on the reform agenda. Finally, under the ERS, an interministerial technical task force has been set-up to monitor reforms and assess progress.
5.5.3 Inadequate institutional capacity to implement reforms: The government has started
implementing the reform agenda, but there is evidence that it lacks sufficient capacity to push
through a comprehensive and challenging reform program and has been forthright in admitting this
potential risk. In view of this constraint, the Swaziland government has requested technical
assistance in the areas of public financial management, tax administration and the preparation of
legal instruments, such as the Public Financial Management Bill, that will help in the
implementation of the reforms. The Bank is processing its support in the form of a long term
resident advisor to the Minister of Finance.
5.5.4 Vulnerability to external shocks: Swaziland is a small, highly open and landlocked
economy. Its high dependence on a limited number of exports and undiversified markets present
further risks. Swaziland’s membership in CMA and SACU has provided relative stability. The
pegging of the lilangeni to the rand has, in particular, been an important cushion to the country’s
financial sector. Support from the international community will provide further confidence in the
20
economy. The Bank is currently supporting a study on Economic Diversification, leading to a
strategy to build economic resilience and increased private sector activity.
5.5.5 Debt and fiscal sustainability: The depth of the fiscal crisis in Swaziland will inevitably
lead to a rise in the country’s debt position. This risk has been recognized by the government. In
this context, a debt management unit has been proposed to ensure that this risk is well managed.
The Bank is also undertaking a study on fiscal sustainability that would inform government on
policy options to avoid a debt crisis.
5.6
Country Dialogue Issues
5.6.1 Dialogue in the country will be centered on three main issues, namely; economic and
structural reforms, including good governance; donor coordination; and regional integration.
Finally, the likelihood of increased Bank operations in Swaziland requires that portfolio
performance issues are addressed.
5.6.2 Reforms: The reform agenda to which the government has committed itself is critical for
achieving the objectives of the FAR and has been widened to include political reforms as agreed to
within the context of the South African loan to Swaziland. The momentum gained to date needs to
be supported through consistent dialogue. This will, in turn, assist in the successful implementation
of the Bank’s strategy and promote better governance and prospects for the success of government
programs as well.
5.6.3 Donor coordination: The current informal coordination among donors needs to be
formalized to ensure systematic engagement with the government. The DPs and government need to
build on work that has started in this direction. This process will enable individual donors to focus
on areas of their comparative advantage and therefore improve the effectiveness and impact of their
programs.
5.6.4 Regional Integration: Efforts towards deeper regional integration are being intensified.
Given its economic context and geographical location, Swaziland will benefit from the development
of a strategic trade policy that enhances the competitiveness of its current and potential exports. The
outcomes of the Economic Diversification Study and the country’s Aid-for-Trade Strategy that are
being supported by the Bank will be used to anchor dialogue in this area.
6
CONCLUSION AND RECOMMENDATIONS
6.1
The government’s reform effort provides an excellent opportunity for Swaziland to build the
foundations for economic competitiveness and long term growth and development. Yet, there is a
possible risk- the political will to forge ahead with reforms could wane. Timely support from
development partners is needed to ensure that the reform momentum is maintained. This strategy
acknowledges government efforts to date, but also notes that more still needs to be done for the
achievement of national development objectives.
6.2 This strategy aims to enhance the economy’s growth drivers, which would help move
Swaziland to a higher growth trajectory. It proposes a refocusing of the Bank’s strategy towards
those areas that enhance productivity. Also, it addresses weaknesses in public financial
management, especially using the budgeting process as a development tool. In addition, the
proposed structural reforms will help improve the business climate and the attractiveness of the
country as an investment destination.
21
6.3 In this context, the Board of Directors is requested to consider and approve the modification in
the pillars as proposed for the remainder of the 2009 - 13 strategy for Swaziland.
Annex I: Swaziland CSP Result-Based Framework (2009 - 2013)
Country
Development
Goals
Improving the
business
operating
environment,
public
financial
management
Constraints
on achieving
desired
outcomes
Poor
institutional
performance
and an
unattractive
business
climate.
and growth
Final
outcomes by
2013
Improved
business
climate and
budget
processes
Safeguard
social
expenditures
Reducing
food
insecurity
Food
insecurity
Mid-term
outcomes by
2011
Pillar I: Improving Public Financial Management
Increased
Private sector
private sector
investment
investment
increase by >5
percent
Improved
revenue
Ratio of tax to
mobilization
GDP increases by
1 percent
Improved
MDGs
Data available for
monitoring
MDGs monitoring
Enhanced GDP
growth
Lack of access
to irrigation
water
Final outputs by
2013
CPIA rating for
business
regulatory
environment rises
to 4
Enhanced
institutional
efficiency and
growth
Strategy for
economic
diversification
GDP growth 2.5
percent
Maintain budget
allocations to
social sectors at
2010 level
Pillar II: Enhancing Agriculture Development
Enhanced
Project launch,
productivity
(Land under
and food
irrigation in
Detailed project
security in
LUSIP II
design.
project area
increase by 46
percent at end of
project)
Increased food
Reduce food
security
population to <15
percent of total
Mid-term
outputs by
2011
Bank deliverables
during the
remainder of the
CSP period (ongoing and proposed)
SRA
operational
 ECAP
Development
Budget
Support
Loan
Ratio of tax to
GDP 13.8
percent
Approval of
Bank support
for statistical
capacity
building
CPIA Business
regulatory
environment
rated 3.0
 Statistical Capacity
Building for MDGs
 PFM
Technical
Assistance to the
Ministry
of
Finance
Study launched
GDP growth 1.9 percent
 Economic
Diversification
Study
Social sector
allocation 35
percent of total
budget
New designs for
the irrigation
project
completed
Food insecure
population 20
percent of total
 Project Designs of
LUSIP Phase II in
2011/12
 Proposed LUSIP
Phase II Project
starts
23
Improving the
efficiency of
education and
skills training
Inconsistent
budgetary
allocations for
human capital
development.
High levels of
poverty, and
income
inequalities
Increased
employment
levels
Skills needs
identified
40 percent
Unemployment
Reduced poverty
Reduce poverty
by 1 percent
Reduced
poverty
Studies completed
Poverty rate 63
percent
 Skills for
Employability
Study
Annex II: Selected Macroeconomic Indicators
Indicators
National Accounts
GNI at Current Prices
Unit
2000
2005
2006
2007
2008
2 009
2010(e)
Million US $
1523.8
2702.3
2683.7
2990.9
2832.6
2874.4
…
GNI per Capita
US$
1550.0
2260.0
2360.0
2540.0
2560.0
2470.0
…
GDP at Current Prices
Million US $
1489.7
2523.8
2947.9
3053.8
3019.8
3161.3
3894.1
GDP at 2000 Constant prices
Million US $
1489.7
1653.4
1708.0
1767.8
1809.5
1831.2
1868.8
Real GDP Growth Rate
Real per Capita GDP Growth
Rate
Gross Domestic Investment
percent
10.2
2.5
2.9
3.5
2.4
1.2
2.1
percent
8.4
1.6
2.2
2.2
0.9
-0.3
0.6
percent GDP
18.5
15.4
12.8
12.3
11.0
10.3
10.0
Public Investment
percent GDP
5.7
8.1
6.8
6.5
5.8
5.5
5.7
Private Investment
percent GDP
12.8
7.3
6.1
5.8
5.2
4.8
4.3
percent GDP
13.8
11.8
7.2
14.7
11.2
9.7
2.3
percent
local
currency/US$
percent
12.2
4.8
5.3
8.1
12.7
7.5
4.5
6.9
6.4
6.8
7.0
8.3
8.5
7.3
-6.6
9.6
25.3
21.5
15.4
19.0
…
percent
20.1
21.6
21.7
24.5
24.4
27.0
…
percent GDP
27.5
32.1
32.3
39.4
36.1
37.9
34.2
percent GDP
28.9
37.7
35.7
30.6
33.4
38.1
40.9
percent GDP
-1.4
-5.5
-3.4
8.8
6.4
-7.1
-13.7
percent
-6.8
-17.4
-4.0
-4.0
-21.1
9.4
0.2
Imports Volume Growth (Goods)
percent
-3.4
9.7
0.6
-4.7
-15.0
2.4
2.4
Terms of Trade Growth
percent
2.6
8.6
1.9
8.1
13.2
-13.1
1.3
Current Account Balance
Million US $
-68.2
-34.4
-196.6
-139.7
-85.0
-380.1
-647.6
Current Account Balance
percent GDP
months of
imports
-4.6
-1.4
-6.7
-4.6
-2.8
-12.0
-16.6
2.4
0.9
1.3
2.5
2.6
3.3
2.6
Gross National Savings
Prices and Money
Inflation (CPI)
Exchange Rate (Annual Average)
Monetary Growth (M2)
Money and Quasi Money as
percent of GDP
Government Finance
Total Revenue and Grants
Total Expenditure and Net
Lending
Overall Deficit (-) / Surplus (+)
External Sector
Exports Volume Growth (Goods)
External Reserves
Debt and Financial Flows
Debt Service
External Debt
Net Total Financial Flows
Net Official Development
Assistance
Net Foreign Direct Investment
percent
exports
percent GDP
3.9
1.7
1.9
2.0
2.8
2.5
2.8
21.1
17.2
15.0
16.6
14.9
16.8
14.6
Million US $
35.5
50.9
37.9
54.6
53.7
40.0
…
Million US $
13.1
46.7
34.8
50.7
69.9
58.0
…
Million US $
105.8
-45.9
121.0
37.5
105.7
65.7
…
Source : ADB Statistics Department; IMF: World Economic Outlook, October 2010 and International Financial Statistics, April
2011;
ADB Statistics Department: Development Data Platform Database, April 2011. United Nations: OECD, Reporting System
Division.
25
Note: ... : Not Available, (e) Estimations
Annex III: Comparative Socio-Economic Indicators
Year
Swaziland
Africa
Developing
Countries
Developed
Countries
Basic Indicators
Area ( '000 Km²)
17.4
30322.6
80976.0
54658.4
Total Population (millions)
2010
1.2
1031.5
5658.7
1116.6
Urban Population (% of Total)
2010
25.5
39.9
45.1
77.3
Population Density (per Km²)
2010
69.2
34.0
69.9
20.4
GNI per Capita (US $)
2009
2470.0
1525.4
2967.6
37989.9
Labor Force Participation - Total (%)
2010
39.1
40.1
61.8
60.7
Labor Force Participation - Female (%)
2010
43.6
41.0
49.1
52.2
Gender -Related Development Index Value
2007
0.6
0.4
0.7
0.9
Human Develop. Index (Rank among 169 countries)
2010
121.0
...
...
...
Popul. Living Below $ 1 a Day (% of Population)
2005-08
…
42.3
25.2
…
Demographic Indicators
Population Growth Rate - Total (%)
2010
1.4
2.3
1.3
0.6
Population Growth Rate - Urban (%)
2010
2.7
3.4
2.4
1.0
Population < 15 years (%)
2010
38.8
40.3
29.0
17.5
Population >= 65 years (%)
2010
3.8
3.8
6.0
15.4
Dependency Ratio (%)
2010
73.0
77.6
55.4
49.2
Sex Ratio (per 100 female)
2010
95.9
99.5
93.5
94.8
Female Population 15-49 years (% of total population)
2010
25.8
24.4
49.4
50.6
Life Expectancy at Birth - Total (years)
2010
47.0
56.0
67.1
79.8
Life Expectancy at Birth - Female (years)
2010
46.0
57.1
69.1
82.7
Crude Birth Rate (per 1,000)
2010
29.4
34.2
21.4
11.8
Crude Death Rate (per 1,000)
2010
15.1
12.6
8.2
8.4
Infant Mortality Rate (per 1,000)
2010
58.9
78.6
46.9
5.8
Child Mortality Rate (per 1,000)
2010
88.1
127.2
66.5
6.9
Total Fertility Rate (per woman)
2010
3.4
4.4
2.7
1.7
Maternal Mortality Rate (per 100,000)
2008
420.0
530.2
290.0
15.2
Women Using Contraception (%)
2005-08
…
…
61.0
…
Health & Nutrition Indicators
Physicians (per 100,000 people)
2004-09
16.0
58.3
109.5
286.0
Nurses (per 100,000 people)*
2004-09
411.7
113.3
204.0
786.5
Births attended by Trained Health Personnel (%)
2007
69.0
50.2
64.1
…
Access to Safe Water (% of Population)
2008
69.0
64.5
84.3
99.6
Access to Health Services (% of Population)
2005-08
…
65.4
80.0
100.0
Access to Sanitation (% of Population)
2008
55.0
41.0
53.6
99.5
Percent. of Adults (aged 15-49) Living with HIV/AIDS
2007
26.1
4.9
0.9
0.3
Incidence of Tuberculosis (per 100,000)
2009
1257.0
294.9
161.0
14.0
Child Immunization Against Tuberculosis (%)
2009
57.0
79.9
81.0
95.1
Child Immunization Against Measles (%)
2009
72.0
71.1
80.7
93.0
Underweight Children (% of children under 5 years)
2007
6.1
30.9
22.4
…
Daily Calorie Supply per Capita
2007
2292.3
2465.5
2675.2
3284.7
Public Expenditure on Health (as % of GDP)
2008
5.9
5.7
2.9
7.4
Education Indicators
Gross Enrolment Ratio (%)
Primary School
- Total
2007
107.9
102.7
107.2
101.3
Primary School
- Female
2007
103.8
99.0
109.2
101.1
Secondary School - Total
2007
53.3
37.8
62.9
100.1
Secondary School - Female
2007
50.5
33.8
61.3
99.6
Primary School Female Teaching Staff (% of Total)
2007
70.5
47.0
60.5
81.4
Adult literacy Rate - Total (%)
2008
86.5
64.8
80.3
98.4
Adult literacy Rate - Male (%)
2008
87.4
74.0
86.0
98.7
Adult literacy Rate - Female (%)
2008
85.6
55.9
74.8
98.1
Percentage of GDP Spent on Education
2008
7.8
4.6
3.8
5.0
Environmental Indicators
Land Use (Arable Land as % of Total Land Area)
2008
10.3
7.8
10.6
10.9
Annual Rate of Deforestation (%)
2005-09
…
0.7
0.4
-0.2
Annual Rate of Reforestation (%)
2005-09
…
10.9
…
…
Per Capita CO2 Emissions (metric tons)
2009
1.2
1.1
2.9
12.5
Sources : ADB Statistics Department Databases; World Bank: World Development Indicators;
UNAIDS; UNSD; WHO,
UNICEF, WRI, UNDP; Country Reports.
Note :
.... : Not Applicable and/or Data Not Available.
Annex IV: Progress toward Achieving the Millennium Development Goals
Goal 1: Eradicate extreme poverty and hunger
19901
20002
20103
Employment to population ratio, 15+, total (%)
54.2
51.6
50.4
Malnutrition prevalence, weight for age (% of children under 5)
…
9.1
6.1
Poverty headcount ratio at $1,25 a day (PPP) (% of population)
78.6
62.9
…
Prevalence of undernourishment (% of population)
12.0
22.0
…
…
92.9
94.7
Literacy rate, adult total (% of people ages 15 and above)
…
81.7
86.5
Primary completion rate, total (% of relevant age group)
62.0
60.7
72.0
Total enrollment, primary (% net)
74.3
73.6
82.8
Proportion of seats held by women in national parliaments (%)
4.0
11.0
13.6
Ratio of female to male primary enrollment
99.5
92.8
92.0
…
96.3
89.0
Immunization, measles (% of children ages 12-23 months)
85.0
70.0
72.0
Mortality rate, infant (per 1,000 live births)
68.0
78.3
58.9
Mortality rate, under-5 (per 1,000)
98.7
121.3
88.1
56.0
74.0
69.0
…
27.7
…
260.0
220.0
420.0
Goal 2: Achieve universal primary education
Literacy rate, youth female (% of females ages 15-24)
Goal 3: Promote gender equality and empower women
Ratio of female to male secondary enrollment
Goal 4: Reduce child mortality
Goal 5: Improve maternal health
Births attended by skilled health staff (% of total)
Contraceptive prevalence (% of women ages 15-49)
Maternal mortality ratio (modeled estimate, per 100,000 live births)
Goal 6: Combat HIV/AIDS, malaria, and other diseases
Incidence of tuberculosis (per 100,000 people)
267.0
1127.0
1257.0
Prevalence of HIV, female (% ages 15-24)
…
…
22.6
Prevalence of HIV, male (% ages 15-24)
…
…
5.8
Prevalence of HIV, total (% of population ages 15-49)
…
38.8
26.1
Goal 7: Ensure environmental sustainability
CO2 emissions (kg per PPP $ of GDP)
0.7
0.9
0.8
Improved sanitation facilities (% of population with access)
36.0
48.0
55.0
Improved water source (% of population with access)
43.0
62.0
69.0
Net total ODA/OA per capita (current US$)
62.0
22.3
48.9
Internet users (per 1000 people)
0.0
32.3
76.0
Mobile cellular subscriptions (per 1000 people)
…
130.0
553.6
39.9
37.1
Goal 8: Develop a global partnership for development
Telephone lines (per 1000 people)
15.7
Sources : ADB Statistics Department Databases; World Bank: World Development Indicators;
Note : … : Data Not Available and or Not Applicable
WRI, UNDP; Country Reports,
1
Latest year available in the period 1990-1995;
2
Latest year available in the period 2000-2004;
3
UNAIDS; UNSD; WHO, UNICEF,
Latest year available in the period 2005-2010
Sweden
X
UK
Italy
European Investment Bank
X
Japan
X
Taiwan
DBSA
Kuwait
X
CFTC
UNDP
X
UNICEF
WHO
UNAIDS
AfDB
BADEA
World Bank
X
EU
IFAD
Source: European Union and AfDB
Private Sector
Infrastructu
re
Community
Development
Environme
nt
Agriculture &
Forestry
Water &
Sanitation
Social
Services
Welfare
Health
Poverty
Reduction
Policy &
Management
Governance,
Education &
Training
Annex V: Matrix of Donor Support to Swaziland
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Annex VI: Indicative Bank Program at the Start of the 2009 - 2013 CSP 2009 - 2013
Program
Planned Board
Approval
Indicative Amount
(UA million)
Area(s) Covered
2010
2010
60.0
15.0
Manzini Region
National
2009
25.0
Lubombo
and
Shiselwenu Regions
Lending Operations
Transport
Manzini by-pass Project
Rural Feeder Roads (240km)
Water and Sanitation
Lavumisa-Matsanjeni-Nsalitje Water Supply
and Sanitation Project
Lower Usuthu Smallholder Irrigation Project II
Agricultural Sector Development Project
Sugar Cane Mini-Mill Project
Agriculture
2011
2011
2012
Social Sector
13.0
20.0
To be determined
Support to the Health Sector Strategic Plan –
2009
15.0
(Health II Project)
Education II Project
2010
10.0
Youth Employment Creation Project
2009
5.0
Non-Lending Assistance
Diversification and Competitiveness Study
2009
0.5
Transportation Sector Master Plan Study
2010
0.3
Water Resources Management Studies
To be determined
To be determined
National Monitoring and Evaluation System for
the NDS, PRSAP and MDGs
Institutional Capacity Building for gender
Mainstreaming
Sugar Cane mini-Mill Feasibility Study
Source: Swaziland CSP (2009-2013); AfDB
To be determined
To be determined
To be determined
To be determined
2010
MIC Grant
Lower Usuthu Basin
South Eastern region
Lower Usuthu Basin
National
National
National
National
National
National
National
National
National
Annex VII: Sectorial Distribution of Portfolio as at September 2011
Sectors
Lending operations
Agriculture
Komati Down Stream Development Project.
B. Non-lending operations
Approved Amount
(UA million)
11.94 (ADB)
4.95 (NTF)
percent
of
Portfolio
86.2
Cumulative percent
Disbursement.
91.2
Agriculture
Lower Usuthu Smallholder Irrigation Study.
Health
0.89 (AWF)
55.1
MIC Grant to Map HIV/AIDS Interventions
Water and Sanitation
0.3 (MIC)
97.6
0.46 (MIC)
28.7
0.35 (MIC)
0.0
0.21 (MIC)
0.0
0.49 (MIC)
87.2
19.59
51.4
13.8
WSS Study on Lavumisa-Nsalitje Corridor
Transport
National Transportation Master Plan
Multi-sector
Economic Diversification Study
Support to establish the Swaziland Revenue
Authority.
TOTAL/AVERAGE
Source: SAP Project Summary, AfDB September 2011
Annex VIII: Swaziland - Mo Ibrahim Governance Index 2011
Rank (of 53)
16th
13th
10th
33rd
21st
46th
49th
44th
30th
26th
31st
19th
13th
34th
14th
21st
16th
10th
26th
Category/sub-category
Safety and Rule of Law
Rule of Law
Accountability
Personal Safety
National Security
Participation and Human Rights
Participation
Rights
Gender
Sustainable Economic Opportunity
Public Management
Business Environment
Infrastructure
Rural sector
Human Development
Welfare
Education
Health
Overall
Source: Swaziland Country Summary 2011, Mo Ibrahim Foundation.
Country Score
(out of 100)
African Average
Score (out of 100)
62
63
59
40
85
28
10
26
47
50
55
59
40
45
66
57
59
84
51
53
48
43
44
78
45
42
43
51
47
56
50
31
54
56
52
51
66
50
Annex IX: Portfolio Performance Challenges and Proposed Remedial Actions
Challenge
1. Ageing portfolio
Causes
a. Lack of institutional capacity of the
Borrowers
b. No country presence of the Bank
2.
Delays in
disbursement
and procurement
3. Lack of a formal
Procedural
manual
4. Delegation
of
Authority
and
review process
5. Lack of country
ownership
a. Inadequate financial management
systems
b. Limited comprehension of the
Bank’s disbursement and
procurement procedures by
borrowers
a. Outdated Bank Operations Manual,
the version available is dated in
1999 - New and relevant issues
regarding the project cycle are not
mentioned (for example, the rules
around disbursement deadline
extension)
a. Cumbersome review process, with
too many layers
a. Commitment is limited and
inexperienced/junior staff are
assigned
b. Unclear TORs, and there is no
motivation
6. Cost
effectiveness
a. Irregular supervision
Proposed Remedial Action
a. Decentralization and field
presence. Regional Resource
Centers to play a more active
role
b. Plug communication gaps
between the Bank and member
countries.
a. Capacity building training to
PIUs to provide regular
technical support.
b. Task Managers to identify
implementation constraints and
pro-actively recommend
remedial action
a. Update the operations Manual to
reflect new changes
a. Simplify review process
b. Implement delegation of
authority strictly
a. For large projects a dedicated
PIU tends to do better
b. MIC Grants –Senior Officers
should be designated as Project
Managers.
c. Agree with client on TORs for
Project Manager
a. Adopt a programmatic approach
to implementing MIC grant
projects (but some of the studies
are supposed to help design the
country program)
Annex X: Comparative Social Indices in SACU
Multidimensional Poverty Index (MPI) 2010 For
Selected Countries- Country Rankings
South Africa
HDI
Lesotho
0.43
28
Swaziland
Swaziland
62
Namibia
63
Lesotho
65
0
20
40
60
S. Africa
0.60
Namibia
0.61
Botswana
80
0.73
S. Africa
0.74
Lesotho
0.79
0.60
0.65
0.70
0.75
0.80
Number of Covered persons (000)
0.73
Botswana
0.20
0.40
0.60
0.80
HIV/AIDS Treatment and Care
0.67
Namibia
0.63
0.00
Gender equality
Swaziland
0.50
200
Botswana
150
Mozambique
100
Lesotho
50
Swaziland
Angola
0
0
100
200
300
400
Spending/person US$
Source: International Institute of Social Studies and UNDP, Oxford Poverty & Human Development Initiative and the UNDP and AIDSinfo
Online Data 2011; Note: the size of the bubbles indicates total expenditure on HIV-Treatment.
500