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Eswatini is a small, open economy bordering South Africa and Mozambique. The country has a population of around 1.2 million, with an estimated per capita (Gross Domestic Product) GDP of $4,089 in 2024. Slightly more than half the economy is concentrated in services, and industry (particularly manufacturing) comprises another third. South Africa continues to be Eswatini¡¯s main trading partner, accounting for about 65% of its exports and 75% of its imports.

Economic growth increased to 4.8% in 2024, from 3.4% in 2023, as most sectors performed well. Growth in agriculture benefitted in particular from an increase in sugar production, while manufacturing, especially soft drink concentrates and sugar, benefited from higher external demand. Mining expanded because of increased coal output and the reopening of previously closed shafts. Stronger external demand led to a 13% rise in exports, while higher SACU revenues supported domestic demand.

Inflation slowed from 5% in 2023 to 4% in 2024, as global inflationary pressures eased. Food inflation fell significantly (from 12.8% to 3.9%), but food insecurity remains a challenge, with 25% of the population estimated to be food insecure. The Central Bank lowered the interest rate by 50 basis points to 7.05% between September and November 2024, following South Africa¡¯s policy rate trend.

The overall fiscal deficit rose to 2% of GDP in 2024/25, up from 0.1% in 2023/24. Increased expenditure, driven by a higher wage bill (after the government relaxed the hiring freeze), capital spending, and interest payments, outpaced the increase in SACU revenues. Public debt grew to 41% of GDP by the end of 2024, whereas arrears accumulated with the private sector were estimated at around 2.7% of GDP.

The current account surplus rose from 2.2% in 2023 to 3.8% of GDP in 2024, benefitting from higher SACU revenues and key commodity exports, which more than compensated for the increase in imports. Nevertheless, international reserves declined to 2.4 months of import cover in 2024 as the government used reserves to pay its external obligations.

Despite some progress, Eswatini¡¯s social indicators are lagging those of other lower middle-income countries. About 53% of the population live below the lower-middle-income poverty line of $3.65 per day (2017 PPP). The unemployment rate surged from 23% in 2016 to 35% in 2023, and job opportunities are concentrated in the informal sector. Eswatini¡¯s economy remains one of the most unequal in the world, with a Gini coefficient of 54.6 in 2016.

Poverty persists in part because of the lack of quality jobs.  Without sufficient formal job creation, employment is concentrated in low value-added activities, such as subsistence agriculture, and low-quality jobs¡ª40.8% of employed people are in the informal sector. Unemployment is high and rising. It is even higher among young people, with those between 15 and 24 years faced an unemployment rate of 56 % in 2023. Quality problems in education mean that young people lack the right skills to participate in the labor market. This undermines Eswatini¡¯s potential to effectively leverage its demographic dividend.

Inequality in consumption per capita and disparities in access to basic public services across income groups and geographic locations persist, although access is being expanded. Factors such as early education, parental education, place of birth, and place of residence explained 38.5% of consumption inequality in 2017.

Real GDP growth is projected at 5% in 2025, driven by both public and private investment. Medium-term growth will primarily by private sector-led energy-related and construction projects, and public sector mega-investment projects, such as the Mkhondvo¨CNgwavuma Water Augmentation Project, the International Convention Centre and Five Star Hotel, and the new Parliament building. These projects are supported by both domestic and foreign funding. The investments are expected to benefit sectors such as financial services, ICT, transportation and storage, wholesale and trade, mining, and manufacturing. Mining and quarrying are anticipated to continue expanding in 2025 and 2026, with double-digit growth driven by increased coal production and construction-related activities. Growth is projected to decline from 2026, with significant risks linked to both global and domestic developments. Downside risks include heightened global trade uncertainties impacting Eswatini through fluctuations in commodity prices, remittances, exchange rates, investment, and weaker growth in its main trading partners. Higher electricity and water tariffs and demand-pulled inflation linked to expected public sector wage increases are projected to contribute to an inflation rate of 5.6% in 2025. The fiscal deficit is projected to increase in 2025 and 2026 as SACU transfers are expected to fall by 20% in nominal terms in 2025. A higher wage bill and capital expenditure are expected to widen the fiscal deficit in 2025-26. The current account surplus is expected to decline due to reduced SACU revenues and higher imports from planned construction activities.

Development Challenges
Eswatini faces multiple development challenges to ensure inclusive, sustainable, and resilient economic growth. Central among these is a fiscally unsustainable public sector-driven growth model, which has trapped the country in a low growth and high poverty and inequality equilibrium and crowded out investments in productive sectors and the private sector. Fluctuations in SACU revenues have complicated fiscal management, and constrained long-term planning for growth-enhancing investments.

Access to credit for Small and Medium Enterprises (SMEs) is constrained by limited digitization of enterprise cash flows, weak secured transaction and insolvency regimes, high collateral requirements, and limited quality of credit information. Women-owned SMEs are particularly impacted by lack of access to credit. Access to credit continues to be one of the top three constraints to business in Eswatini. In fact, the highlights that 18% of all  Micro, Small, and Medium Enterprises (MSME) -employing 5-19 people- consider access to credit a major constraint. Many women struggle to find access to credit to launch or grow their businesses. In 2020 only 13% of women-owned businesses accessed formal credit versus 19% of male-owned enterprises.

While gaps in infrastructure, notably in energy, transport, and Information and Communication Technologies (ICTs), stymie economic development, national and regional integration; tax rates, access to land; informal sector regulations/ practices as well as political instability are cited as impediments by businesses participating in a 2024 World Bank Enterprise Survey. Despite significant progress in bringing overall access to electricity to about 86%, in Lubombo access is only 60.6% and in Shiselweni only 63%, which constrains agriculture output and agro-processing in these mostly rural regions.

Energy security is a major concern as Eswatini imports up to 90% of its electricity from South Africa. To address dependency on power import, the Government of the Kingdom of Eswatini (GoKE) has recently updated its Generation Master Plan, which includes development of a significant coal plant (200-300MW) in the country along with renewable energy development to increase domestic installed capacity to 1GW by 2050. This would require a cumulative domestic capacity increase of about 700MW within 20 years.

While the government¡¯s expenditure on education (5% of GDP in 2021) exceeds the Low- or Middle-Income Country (LMIC) average and near-universal access to primary education has been achieved, education quality is insufficient; access and retention are low in secondary school; and the education system is not responsive to the labor market. In 2017, Eswatini was ranked 136 out of the 139 countries captured on the International Labour Organization (ILO) Skills Mismatch Index. Eswatini spends relatively more on health and education than its neighbors in the region. However, this spending results in poorer health and education outcomes than expected due to inefficient and inequitable spending.

High poverty (58.9%) and inequality (54.6 Gini coefficient) have persisted reflecting a scarcity of formal jobs outside the public sector, a weak business climate, limited economic opportunities in lagging areas, and insufficient growth-enabling infrastructure. Despite some progress, poverty remains high, particularly for a lower middle-income country (LMIC). Estimates in 2022 indicated that 54.8% of the population were below the LMIC poverty line ($3.65/person/day in 2017 Purchasing Power Parity). Human capital is impeded by high prevalence of stunting; low adult survival linked to a high burden of preventable illnesses and premature deaths, including from Human Immunodeficiency Virus (HIV); a rising burden of non-communicable disease (NCD); and gaps in the quality of education. Eswatini¡¯s sizeable youth population¡ªmore than half of the population is under 25 years old¡ªhas limited skills to compete in the labor market, jeopardizing economic opportunities and the country¡¯s potential to benefit from a demographic dividend. Eswatini remains highly susceptible to external and climate shocks, including droughts. Gains in poverty reduction have been concentrated in urban areas.

Last Updated: Apr 17, 2025

Eswatini¡¯s five-year CPF FY2024-2028, has an overarching goal to support Eswatini¡¯s shift to a more private sector-led growth model that can promote inclusive, sustainable, and resilient economic growth.  It is centered around two high-level long-term outcomes: increased private sector employment, and improved human capital development.

The CPF is aligned with Eswatini's National Development Plan (2023-2027) as well as the Program of Action (PoA) of the current government both of which seek to ensure recovery from weak growth and limited poverty reduction through good governance, fiscal discipline, and inclusive private-sector growth that provides sustainable livelihoods for all, especially women and youth as well as improvements in service delivery.

Eswatini is part of the World Bank Human Capital Project (HCP), an accelerated effort to encourage investment in people as a critical step to boosting inclusive economic growth and ending extreme poverty. In line with this initiative, the World Bank has been working with the government to ensure a coordinated and harmonized approach across key human development sectors, supporting the government in addressing the country¡¯s low Human Capital Index, especially to ensure all children grow up healthy and reach their maximum learning and development potential. The harmonized approach to improving human capital in Eswatini includes five investment projects, totaling a commitment of $223 million.

Last Updated: Apr 09, 2025

• With the support of the project, a total of 219,445 people have received essential health, nutrition, and population services. Of which, 150,633 were female. A total of 46,466 people have been screened and diagnosed with hypertension, and 15,491 screened and diagnosed with diabetes.
• 1,351 Health Care Workers have been trained in the provision of integrated reproductive, maternal, newborn, child and adolescent health (RMNCAH) and noncommunicable disease (NCD) services. A total of 2,801 rural health motivators (RHMs) have been trained and provided tools to improve the nutritional screening of clients.
• 93% of targeted health facilities with at least one Health Care Worker sensitized on gender-based violence (GBV) prevention guidelines.
• About 15,537 women have been screened for cervical cancer with 828 (5.3%) tested positive. Of these, 537 were treated with either thermocoagulation or loop electrosurgical excision procedure (LEEP). The Cancer Control Program has provided training to 89 health care workers, including 28 nurse managers, and 38 medical officers and specialists.

Strengthening Early Childhood Development and Basic Education Systems to Support Human Capital Development in Eswatini Project

The project aims to strengthen education service delivery and management systems in the early years and junior secondary education. To date, requisite foundations have been laid including:  

• Piloting of the Progressive Science Initiative (PSI) and Progressive Mathematics Initiative (PMI) model in 20 schools in readiness for scaling up the model in 126 schools by 2027. The PSI-PMI model combines new technology and teaching methods with curriculum and teacher training to create a new approach to secondary education instruction for mathematics and science . In place are 24 master trainers, and 136 mathematics and science teachers trained and resourced to scale up the model, while 15.9% of the target 126 schools have been supplied with complementary ICT equipment to facilitate application of the PMI-PSI model in the classrooms. The model will be implemented in the 126 secondary schools in Eswatini, selected from all 4 regions by 2027.
• To strengthen early childhood development and education, the curriculum has been updated and teachers trained on the pedagogical skills needed for effective instruction at that level. The assessment tools for learning and classroom quality have been developed for piloting before national roll-out.
• The tools for the assessment of early grade reading and numeracy (grades 1-3) have been developed, and pilot learning assessments are being conducted in 20 schools (5 schools per region). Once adopted, the education system of Eswatini will be able to regularly assess progress in children¡¯s learning and take corrective measures whenever needed early in the children¡¯s learning cycle. Supply of early grade curriculum materials for teachers and learners continues.
• The design for the pilot Orphan and Vulnerable Child (OVC) grant has been completed informed by the diagnostic study on the ongoing OVC grant system in readiness for implementation. The 3-year pilot will inform improvements in the national OVC grant system.

and Eswatini ASCENT

To date, the NRAP has connected 4,751 households to the existing national utility grid including 910 vulnerable households benefiting from ready-board installation, thereby increasing the total number of grid-connected people in Shiselweni, the project targeted area, from the baseline of 127,892 to 146,896. This interim result directly contributes to reaching the target of 159,892 people provided with new or improved electricity services under the project.

Work under NRAP has significantly progressed on network reinforcement activities to reduce power outages in high voltage and medium voltage networks and to accommodate the expected increase in demand resulting from the expanded access to grid electricity services in the Shiselweni region. This includes the building of transmission lines and associated substations. As of March 2025, construction of the 132kV transmission lines of 83 km was fully completed.  Construction of the four substations was also completed. Testing is ongoing and the commissioning of the lines and substations are expected to be achieved by end of April 2025.

The Eswatini ASCENT Project was approved by the World Bank in February 2025 and received a concessional funding of $39 million equivalent, a loan of $51 million equivalent, and a performance-based grant funding of $10 million to connect 50,000 additional households to electricity, reinforce the networks, and implement key technical assistance activities and studies for improving energy security.  With successful implementation of the project, the Government of Kingdom of Eswatini will achieve universal access to electricity by 2030 from the access rate of 88% in 2024.

This project ($45 million) has 4 components; (1) resilient water access and management, (2) improved sanitation access, (3) project management and (4) contingency and emergency response.

Component 1 aims to reach approximately 18,000 people with improved water supply services in rural areas, schools and health care facilities in the Shiselweni Region. To date, 3 reservoirs and a pump station have been completed while construction of the main pipeline and laterals is underway anticipated to be completed by January 2026. To facilitate resilient water management, a National WASH Masterplan (up to the year 2050) is under preparation, providing a strategy for the country to achieve universal service coverage in the medium to long term; procurement for consultancy services for review of the water legislation are at contract negotiation stage; consultancy services for the development of a national drought policy are nearing completion; and a river health monitoring plan for the Mkhondvo river which is the main source for the EWSSAP has been developed and effectively under implementation. Furthermore, the project is supporting the ongoing Composite Drought Indicator (CDI-E) validation exercise together with the development of drought contingency plans for cities and towns as well as the Disaster Risk Profiles. This will prepare towns to mitigate the effects of droughts through targeted water and sanitation investments.

The sanitation component of the project aims to reach 38,000 people with social and behavior change campaign (SBCC). SBCC activities are underway in schools, health facilities, informal settlements and rural households in the Shiselweni Region. To date, 90 facilitators have been trained including Officials from the Ministry of Health Environmental Health Department, Teachers, Health Works and Rural Health Motivators (RHMs). The facilitators will then roll out the SBCC in their respective settings where RHMs have so far reached 2,244 households on SBCC. Construction of sanitation facilities in schools and health centers is also well underway with anticipated completion by December 2025. Contractors for construction for sanitation facilities in informal settlements and for vulnerable rural households have also been engaged and ready to break ground. The procurement of materials for construction of over 8000 latrines facilitated through the SBCC consultancy is at final stages of procurement.

Last Updated: Apr 09, 2025

Partners include the United Nations Development System (UNDS), United Kingdom, United States, European Union, and African Development Bank (AfDB). ľ¹ÏÓ°Ôº in Eswatini engages with other development partners through the Eswatini International Development Partners Platform (IDPP) which was established to foster enhanced information sharing and coordination of the development activities of Eswatini¡¯s international development partners. The Bank has also initiated a Platform on Gender Equality and Citizen Engagement through which it intends to strengthen policy engagement, coordination and partnerships with government, civil society, and development partners on these two priority issues.

Last Updated: Apr 09, 2025