2023 Investment Climate Statements: Eswatini

Policies Towards Foreign Direct Investment

The GKoE is generally open to foreign investment to drive economic growth, improve international competitiveness, and access foreign markets. Foreign direct investment (FDI) is one of the five stated pillars of its Sustainable Development and Inclusive Growth (SDIG) Program and is the intended means to drive the country’s economic growth, obtain access to foreign markets for its exports, and improve international competitiveness. While the government has strongly encouraged foreign investment over the past 15 years, it only adopted a formal strategy at cabinet-level in 2018 for achieving measurable progress. Eswatini does not have a unified policy on investment. Instead, individual ministries have their own investment facilitation policies, which include policies on Small and Medium Enterprises (SME), agriculture, energy, transportation, mining, education, and telecommunications. Calls for more concerted action on these policies have intensified in the last few years as Eswatini has suffered from drought, fiscal challenges, and general economic recession.

There are no laws which differ significantly between U.S. investors and domestic investors. The Swati constitution states generally non-citizen companies and/or companies with a simple majority of non-citizen shareholders may not own land unless they were vested in their ownership rights before the constitution entered into force in 2005. On the other hand, the constitution’s general prohibition “may not be used to undermine or frustrate an existing or new legitimate business undertaking of which land is a significant factor or base.” Furthermore, non-citizens and non-citizen majority-owned companies may hold long-term (up to 99 years) leases on title deed land and Swati Nation land. In 2019, the government listed some of its title deed land to make it available for long-term leasing for commercial purposes.

The Eswatini Investment Promotion Authority (EIPA) is the state-owned enterprise (SOE) charged with designing and implementing strategies for attracting desired foreign investors.

Eswatini’s investment policy which supports the business environment is online at https://investeswatini.org.sz/legal-and-regulatory-framework/ . EIPA is functional and helpful, but it is not yet a one-stop-shop for foreign investors. EIPA services include:

–  Attract and promote local and foreign direct investments

–  Identify and disseminate trade and investment opportunities

–  Provide investor facilitation and aftercare services

–  Promote internal and external trade

–  Undertake research and policy analysis

–  Facilitate company registration and business licenses/permits

–  Facilitate work permits and visas for investors

–  Provide a one stop shop information and support facility for businesses

–  Export product development

–  Facilitation of participation in external trade fairs

–  Buyer-Seller Missions

The GKoE continues its attempts to improve the ease of doing business in the country through the Investor Roadmap Unit (IRU). The IRU engages with businesses and government to review and report on the progress and implementation of the investor reforms through annual and biannual consultations.

In September 2022, the World Bank Group published a country private sector diagnostics report highlighting opportunities to strengthen the private sector to grow export markets and create jobs. The “creating markets” report highlights Eswatini’s comparative advantage in sugar, beef, forestry value chains, textiles and apparel. See link: https://www.ifc.org/wps/wcm/connect/publications_ext_content/ifc_external_publication_site/publications_listing_page/cpsd-eswatini 

Limits on Foreign Control and Right to Private Ownership and Establishment

Both foreign and domestic private entities have a right to establish, own, acquire, and dispose of interest in business enterprises. Foreign and U.S. investors own several of Eswatini’s largest private businesses, either fully or with minority participation by Swati institutions.

There are no limits on foreign ownership and control of companies which can be 100 percent foreign owned and controlled. The only exceptions to foreign ownership and control laws are in the mining sector and in relation to land ownership.

There are no sector-specific restrictions (except mining and land ownership). Eswatini does not prescribe investment levels, equity caps, governance or board representation requirements, mandatory domestic joint venture partner rules, licensing restrictions, mandatory Intellectual Property (IP)/technology transfer requirements, local presence, or workforce requirements.

The Mines and Minerals Act of 2011 requires that the king (in trust for the Swati Nation) be granted a 25-percent equity stake in all mining ventures, with another 25 percent equity stake granted to the GKoE. There are also sector-specific trade exclusions that prohibit foreign control, which include business dealings in firearms, radioactive material, explosives, hazardous waste, and security printing.

Foreign investments are screened only through standard background and credit checks, for which significant processing times must be allowed. Under the Money Laundering and Financing of Terrorism (Prevention) Act of 2011, investors must submit certain documents including proof of residence and source of income for deposits. EIPA also conducts general screening of FDI monies through credit bureau checks and Interpol. This screening is not a barrier to investing in Eswatini. There are no discriminatory mechanisms applied against U.S. foreign direct investors.

Other Investment Policy Reviews

There have been no investment policy reviews for Eswatini in the last 3 years. Through its membership in the Southern African Customs Union, its ratification of the African Continental Free Trade Agreement in 2019, and its participation in the work of the WTO, Eswatini continues to pursue the importance of trade in development.

http://www.oecd.org/investment/countryreviews.htm , http://www.wto.org/english/tratop_e/tpr_e/tpr_e.htm . http://unctad.org/en/Pages/DIAE/Investment%20Policy%20Reviews/Investment-Policy-Reviews.aspx .
https://www.ohchr.org/EN/Issues/Business/Pages/WGCountryVisits.aspx 

In the past five years, Eswatini has not received any third-party investment policy reviews through organizations such as the Organization for Economic Co-operation and Development (OECD), World Trade Organization (WTO), United Nations Conference on Trade and Development (UNCTAD), or UN Working Group on Business and Human Rights.

Business Facilitation

In 2020 the Government launched The Eswatini Trade Information Portal (ETIP) as a one-stop shop trade and investment portal in line with Article 10 of the WTO agreement to publish related procedures for trade. The portal Eswatini Trade Information Portal – Display Site (eswatinitradeportal.com)  publishes procedures for importation, exportation, transit required forms and documents, and other necessary information. The ETIP is aimed at facilitating trade and reducing the cost of trade. The portal will provide traders will all information relating to trade, including regulatory requirements, forms, procedures, and fees that traders will be required to pay. This information should enable traders to swiftly carry out cross border transactions.

Online registration for companies is done via the link www.online.gov.sz . The registration process is not entirely online as the final steps (payment of statutory fees and registration fee) are offline (payable at local offices). According to the Doing Business Report, the process of registering a company in Eswatini takes approximately 3-10 days. In practice, the process can take much longer for foreign investors. The process of registration is very simple and is managed by the Registrar of Companies within the ministry of Commerce, Industry, and Trade. The company registration is the first and most crucial step that enables further registration. Additional registration requirements are found at Eswatini Trade Information Portal – Display Site (eswatinitradeportal.com) .

Further business licensing is required after registration. The licensing process is overseen by the Ministry of Commerce in the adjacent licensing department under separate oversight.

Outward Investment

The government does not specifically promote or incentivize outward investment.

The GKoE does not generally restrict domestic investors from investing abroad. The only two restrictions which apply as exceptions relate to the Public Service Pension Fund and the Eswatini National Provident Fund which are state-owned enterprises (SOEs). They are required by law to invest a minimum of 50 percent of their balance sheets in the domestic economy.

Transparency of the Regulatory System

In general, the laws of the country are transparent, including laws to foster competition. The Swaziland Competition Act came into force in 2007 and the Competition Commission Regulations came into effect in 2011. The Eswatini Competition Commission (SCC) is a statutory body charged with the administration and enforcement of the Competition Act of 2007. The legal and regulatory environment is underdeveloped but currently growing as the GKoE has recently established additional regulatory bodies in the financial, energy, communications, and construction procurement sectors. These bodies generally attempt to emulate the regulatory practices of South Africa or Britain.

Eswatini’s rule-making and regulatory authority lies with the central government and may be delegated by the relevant line ministry to a department, parastatal, or board. The primary custodian of policy and regulation is the minister responsible for the relevant law. All laws, regulations, and policies are applied at a national level.

There are no regulatory processes managed by nongovernmental organizations or private sector associations. Regulatory enforcement actions can be reviewed through the court system and court rulings are publicly available.

Transparency is provided through adherence to the International Financial Reporting Standard (IFRS) as required for listed companies, financial institutions, and government-owned companies. It remains optional for small and medium enterprises.

Legal and expert drafters within federal ministries develop regulations. No regulations or laws are promulgated at regional administration or local (tinkhundla) levels. Ministries sometimes consult by invitation with selected members of the public and private sectors through publicly announced stakeholder meetings. Most draft regulations are not made available online but can be acquired in hard copy through the government printing office for a fee. Regulations are generally developed and reviewed through various stakeholder consultations. The use of science and data to inform regulatory reform is not widespread. Proposed laws and regulations are published in the government Gazette and have a public comment period of thirty days prior to a bill’s presentation to parliament.

Foreign investors coming into the country can join the recognized federation of businesses, Business Eswatini, on equal footing with Eswatini nationals. Business Eswatini often serves as the link between the private sector and the government. There are no informal regulatory processes that apply to foreign investors.

Eswatini public finance and debt obligations are published online through the Budget Estimates Book as well as the Central Bank of Eswatini’s annual report, https://www.centralbank.org.sz/annual-report/ 

International Regulatory Considerations

Eswatini is member to four distinct economic blocks: the Common Monetary Area (CMA), the Southern African Customs Union (SACU), the Southern African Development Community (SADC), and the Common Market for Eastern and Southern Africa (COMESA). The standards of membership in these blocks are primarily based on British law and have been domesticated accordingly into each context.

Eswatini is a member of the WTO and notifies all draft technical regulations to the WTO Committee on Technical Barriers to Trade. Eswatini signed and ratified the Trade Facilitation Agreement (TFA) in 2016 and has begun implementing its requisites. The TFA entered into force in February 2017 and requires prompt and transparent publication of trade-related information. Eswatini developed a trade portal in partnership with the World Bank to make reliable trade-related information accessible to the private sector.

Legal System and Judicial Independence

Eswatini has a dual legal system consisting of a set of courts that follow Roman-Dutch law and a set of national courts that follow Swati law and custom. The former consists of a Court of Appeals (Supreme Court) and a High Court, in addition to magistrate’s courts in each of the four districts. The traditional courts deal with minor offenses and violations of traditional Swati law and custom. Sentences in traditional courts are subject to appeal and review at the Court of Appeals and High Court. The western-style court system enforces contracts and property rights.

The country has various written commercial and contractual laws. Commercial and contractual disputes are handled in the magistrate court or High Court depending on the amount in dispute. Specialized commercial and small claims courts have been introduced in the 2022. Specialized Industrial Courts hear labor relations matters.

The constitution and law provide for an independent judiciary and the courts are generally independent of executive control or influence in nonpolitical criminal and civil cases not involving the royal family or government officials. The current judicial process is procedurally competent, fair, and reliable, although the capacity of the judiciary to handle cases in a timely manner is extremely limited, creating significant case backlogs. Enforcement of laws and regulations can be appealed up to the Supreme Court.

Laws and Regulations on Foreign Direct Investment

The Swaziland Investment Promotion Act of 1998 established EIPA and provides for the freedom of investment, protection of investment, and non-discrimination on the part of the government with respect to investors. The Competition Act of 2007 proscribes anti-competitive trade practices and specifies requirements for mergers and acquisitions, and protection of consumer welfare. The new economic recovery strategy (Revised National Development Strategy) for 2023-2028 emphasizes the need to promote further reforms to facilitate investment.

In February 2018, the GKoE enacted the Special Economic Zones (SEZ) Act in an effort to attract foreign direct investment, to be reviewed every five years. The implementing regulations for the year 2023-2024 are under review. The benefits for an SEZ investor include: a 20-year exemption from all corporate taxation, followed by taxation at the rate of 5 percent; full refunds of customs duties, value-added tax, and all other taxes payable in respect of goods purchased for use as raw material, equipment, machinery, and manufacturing; unrestricted repatriation of profits; and full exemption from foreign exchange controls for all operations conducted within the SEZ. The Citizen Economic Empowerment Bill under review pursues an agenda of giving local entities a 15 percent competitive advantage in if desiring to sell to local markets. For foreign businesses that are export-oriented, competition is on an even basis. Government published SEZ advantages and procedures, including these published suggestions: Special Economic Zones: What Should Eswatini Consider? – Separc 

The primary website for investment that provides relevant laws is Eswatini Trade Information Portal – Display Site (eswatinitradeportal.com) 

Competition and Antitrust Laws

The Eswatini Competition Commission (SCC) adheres to fair and transparent norms and procedures. In 2022, there were no significant competition cases which influenced foreign companies or investment. The Competition Commission was established in 2007 to review transactions and encourage competition in Eswatini’s economy by controlling anti-competitive trade practices, mergers, and acquisitions; protecting consumer welfare; and providing an institutional mechanism for implementing these objectives. Government updates competition topics online at News and Notices – Eswatini Competition Commission (compco.co.sz) 

The Swaziland Competition Act ( http://www.compco.co.sz/documents/Competition%20Act%202007%20scanned18%20Februry%202010.pdf ) and Competition Commission Regulations ( http://www.compco.co.sz/documents/Competition%20Commission%20Regulations%20Notice%202010.pdf ) are available online.

All entities must submit their merger and acquisition plans to the SCC for prior approval. The SCC has the power to not only investigate and regulate, but also to issue administrative decisions relating to mergers, competition, and anti-trust. There have been no rulings against foreign investors since the establishment of the Eswatini Competition Commission. Competition Commission decisions can be appealed at the High Court and further at the Supreme Court which has previously occurred.

Expropriation and Compensation

The law prohibits expropriation and nationalization. The Eswatini Constitution narrowly limits the GKoE’s powers to deprive a landowner of “property or any interest in or right over property,” except under circumstances where “necessary,” conducted pursuant to a court order, and compensated by the “prompt payment of fair and adequate compensation.” There is no history of alleged expropriations, without compensation. In the interest of national development, anyone whose property interests are threatened by expropriation is also expressly granted due process rights under the Constitution. There have been no recent cases of foreign-owned businesses being expropriated in any circumstance, and when disputes have arisen in the past, there has been due process through Swati institutions and/or international tribunals.

Dispute Settlement

ICSID Convention and New York Convention

Eswatini is a member state of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). It is not a signatory to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. There is no specific legislation providing for enforcement of awards under international conventions, but the Swati legal system has effectively enforced court decisions and international arbitration awards in the past.

Investor-State Dispute Settlement

Eswatini is a member state of the International Centre for the Settlement of Investment Disputes (ICSID Convention) and the Multilateral Investment Guarantee Agency (MIGA). Eswatini, as a member of SACU, signed a Trade, Investment and Development Cooperative Agreement in 2008 with the United States. There have been no claims under this agreement. There have been at least two major investment disputes involving foreign investors in the past ten years, one in the mining industry, and the other in telecommunications, but none involving U.S. companies or citizens.

The Eswatini government accepts binding international arbitration of investment disputes between foreign investors and the state. All government agreements with international investors/parties include venue and choice of law provisions. Local courts recognize and enforce foreign arbitral awards issued against the government, but do not have jurisdiction against the king, who is constitutionally protected. Eswatini has not had any reported incidents of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

The National alternative dispute resolution (ADR) mechanism available to settle disputes between two private parties is the Conciliation, Mediation and Arbitration Commission (CMAC), which is governed by the Industrial Relations Act of 2000. Eswatini does not have a domestic arbitration body to deal with investment or commercial disputes. A Commercial Court division of the High Court was established in March 2022 to facilitate resolution of business disputes which have traditionally lasted up to two years.

Local courts recognize and enforce foreign arbitral awards and judgments of foreign courts.

SOEs are rarely involved in investment disputes. In the last 10 years, there has been no dispute involving a SOE. There have not been any complaints about the court processes. Court records are available online for public scrutiny at: https://www.swazilii.org/ .

Bankruptcy Regulations

The Insolvency Act of 1955 is the law that governs bankruptcy in Eswatini. The insolvent debtor or his/her agent petitions the court for the acceptance of the surrender of the debtor’s estate for the benefit of his/her creditors. Creditors need to petition with the court and provide documents supporting their claim. Bankruptcy is only criminalized if the debtor, trustee, or sole owner does not comply with the requirements of the creditor.

Investment Incentives

SEZ investors have access to numerous investment incentives more fully described above in “Laws and Regulations on Foreign Direct Investment” and below in “Foreign Trade Zones/Free Ports/Trade Facilitation.” For non-SEZ investors, the Minister of Finance has the discretion to apply a reduced tax rate of 10 percent for the first ten-year period of operation, which is available for businesses that qualify under the Development Approval Order. Capital goods imported into the country for productive investments are exempt from import duties. Raw materials imported into the country to manufacture products to be exported outside the SACU area are also exempt from import duties. These incentives apply equally to women as they do to men. U.S. companies have successfully taken advantage of this exemption.

The GKoE issues through the central bank guarantees for key sectors like transportation and energy. There have been no reports of government jointly financing FDI projects. Government does not offer incentives for net-zero or clean energy investments.

Foreign Trade Zones/Free Ports/Trade Facilitation

In 2018, the GKoE enacted the Special Economic Zones (SEZ) Act to attract foreign direct investment. The Act establishes two designated SEZs: the Royal Science and Technology Park and King Mswati III International Airport. According to the Act, investors may establish additional SEZs outside of these designated areas by satisfying the minimum requirements and applying to the Minister of Commerce.  Under the Act, foreign-owned firms within SEZs have the same investment opportunities as Swati entities.

To operate within an SEZ, a beneficiary company must meet the following minimum requirements (among others): at least 90 percent of its employees must be paid at or above the threshold for income taxation (approximately USD 330/month); at least two thirds of its employees must be Swati citizens; and the minimum capital investment must be E30 million (USD 2.1 million) for sole companies and E70 million (USD 5 million) for joint ventures. The benefits for an SEZ investor include: a 20-year exemption from all corporate taxation, followed by taxation at the rate of 5 percent; full refunds of customs duties, value-added tax, and all other taxes payable in respect of goods purchased for use as raw material, equipment, machinery, and manufacturing; unrestricted repatriation of profits; and full exemption from foreign exchange controls for all operations conducted within the SEZ. These requirements and incentives are reviewed every five years and are set to be reviewed in 2023.

Performance and Data Localization Requirements

Government does not follow forced localization of content in goods or technology. There are no requirements for foreign IT providers to turn over source code or provide access to encryption. The technology industry in Eswatini is still in its infancy.

There are no government-imposed conditions on permission to invest. The government does not follow a “forced localization” policy. However, in the manufacturing sector if a company plans to label a product for export as “Made in Eswatini,” the government requires that the local content of such export be at least 25 percent.

The Ministry of Labor and Social Security’s Training and Localization Unit requires the hiring of qualified Swati workers where possible, even at executive positions. The mandate of the unit is to ensure the maximum utilization of local manpower resources and to formulate training plans in conjunction with industries so as to maximize employment. It also facilitates and provides information on the process of obtaining work permits. Foreign investors are required to apply for residence and work permits. Although they are generally awarded, businesspeople complain that the process is cumbersome.

This is true despite a current emphasis on localization of labor and skills, despite the skill gaps published in the Eswatini National Skills Audit Report of 2022 by the Economic Policy Analysis and Research Centre (SEPARC) https://www.separc.co.sz/reports/ .

Real Property

The Constitution protects and enforces the right to own property, but most rural land is Swazi Nation Land (SNL) and is not covered by this constitutional protection. Most urban property, on the other hand, is Title Deed Land (TDL). The law allows for eminent domain in limited circumstances but requires prompt payment of adequate compensation. There are mortgages and liens on TDL and on farms. There are gender limitations on owning and transferring real property, particularly under the country’s traditional structures.

There are two major categories of land tenure: Swati Nation Land (SNL) and Title Deed Land (TDL), each subject to different rules and procedures. More than 60 percent of Eswatini’s territory is SNL, governed by the country’s traditional structures. SNL is “held in trust for the Swati people” by the King, who appoints chiefs to oversee its use. The chiefs keep records of who “owns” or resides on land in their chiefdoms. For TDL, the Eswatini government recognizes and enforces secured interest in property and there is a reliable system of recording security interests.

Though foreign or non-resident individuals generally may not own land (with some exceptions), foreign-owned businesses are able to own or lease land. Legally purchased property cannot revert to other owners (must be “willing buyer, willing seller”).

The GKoE is currently reviewing the 1982 Farm Dwellers Act to mitigate the negative impact on squatters’ rights on the transfer of property to new owners, incorporating a legal process to ensure the protection of rights of all concerned.

Intellectual Property Rights

Eswatini is not listed in USTR’s Special 301 report. Eswatini is not listed in the notorious market report.

Protection for patents, trademarks, and copyrights is currently inadequate under Swati law. Patents are currently protected under the 1997 Patents, Utility Models, and Industrial Designs Act.  The 2018 Patents Act has been passed, however, the regulations are still outstanding and the law is therefore not operative. Trademark protection is addressed in the Trade Marks Act of 1981. Copyright protections are addressed under the Copyright and Neighbouring Rights Act, 2018. The most recent country intellectual country profile, from 2021, is provided at https://www.wipo.int/edocs/statistics-country-profile/en/sz.pdf .

The Copyright and Neighboring Rights Act of 2018 (replacing the Copyright Act of 1912) protects literary, musical, artistic, audio-visual, sound recordings, broadcasts, and published editions. It also criminalizes illicit recording and false representation of someone else’s work. The Act also gives the duration of copyright among other things. The Swaziland Intellectual Property Tribunal Act of 2018 established an Intellectual Property Tribunal that is responsible for hearing all matters and disputes involving intellectual property in Eswatini.  However, the tribunal is not yet operational.

Eswatini is not listed on the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List. For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at https://www.wipo.int/directory/en/details.jsp?country_code=SZ .

In June 2022, Eswatini hosted the Africa Regional Intellectual Property Organization (ARIPO) Head of Intellectual Property Office’s conference HIPOC for 22 member states. The country does not track and report on seizures of counterfeit goods as it relates to intellectual property.

Capital Markets and Portfolio Investment

GKoE’s general attitude toward foreign portfolio investment is open, but consistent with that of the common monetary area led by South Africa. Eswatini’s capital markets are closely tied to those of South Africa and operate under conditions generally like the conditions in that market. In 2010, the GKoE passed the Securities Act to strengthen the regulation of portfolio investments. The Act was primarily intended to facilitate and develop an orderly, fair, and efficient capital market in the country.

Eswatini has a small stock exchange with only a handful of companies currently trading. In 2010, the Financial Services Regulatory Authority (FSRA) was established. This institution governs non-bank financial institutions including capital markets, insurance firms, retirement funds, building societies, micro-finance institutions, and savings and credit cooperatives. The royal wealth fund and national pension fund invest in the private equity market, but otherwise there are few professional investors.

Existing policies neither inhibit nor facilitate the free flow of financial resources; the demand is simply not present. The Central Bank respects the terms of International Monetary Fund (IMF) Article VIII, and credit is allocated on market terms. Foreign investors can get credit and equity from the local market. A variety of credit instruments are available to the private sector including Central Bank of Eswatini loan guarantees for the export markets and for small businesses.

Money and Banking System

Banking services penetration equates to 54 percent of the Swati adult population. According to the Central Bank of Eswatini’s Financial Stability Report, the Swati banking sector is stable, well positioned to withstand shocks, and financially sound. If one could say there was a weakness, it would be the lack of diversity of product offerings. Because four of the six operating banks are owned by South African parent companies which only offer retail and corporate banking services, there is a scarcity of banking services supporting citizens financial development needs. It is a weakness because many citizens report lack of access to credit and prioritizing profit over development.

The Non-Performing Loan (NPL) ratio increased from 5.6 percent in June 2021 to 6.5 percent in June 2022, remaining above the acceptable 5.0 percent Competition and Market Authority (CMA) threshold. The increase in NPLs is attributable to the expiration of COVID-19 Relief Measures in December 2021. As at end June 2022, the aggregate liquidity ratio for banks stood at 37.7 percent, well above the minimum requirement of 20 percent for commercial banks and 18.0 percent for development banks. The average returns on assets (ROA) and returns on equity (ROE) ratios increased to 13.0 percent and 24.3 percent in June 2022 from 8.6 percent and 17.4 percent in June 2021, respectively.

Eswatini’s banking sector is relatively small with assets of about 30% of GDP. The financial sector is dominated by non-bank financial institutions (“NBFs”) i.e., the pensions sector, insurance sector and collective investment schemes, with gross assets accounting for about 110% of GDP, including a large government retirement fund (with assets of about 35% of GDP). The financial institutions are closely interconnected and have large foreign exposures, with NBFIs providing a sizable share of banks’ deposits while holding about half of their assets abroad (about 40% of GDP), exposing the system to external shocks. Households are highly leveraged compared to neighboring and other middle-income countries; and the sovereign-financial sector linkages have been strengthening, exposing the sector to the government’s weak fiscal position. Eswatini has a central bank system. Eswatini’s banks are primarily subsidiaries of South African banks. Standard Bank is the largest bank by capital assets and employs about 400 workers.

Eswatini’s financial sector is liberalized and allows foreign banks or branches to operate under the supervision of the Central Bank’s laws and regulations (http://www.centralbank.org.sz). Foreigners may establish a bank account in Eswatini if they have established official residency in one of the CMA countries (Eswatini, South Africa, Lesotho, Namibia).

There have been no bank closures or banks in jeopardy in the last three years. Hostile takeovers are uncommon, last occurring in 1996. (Note: Bank of Credit and Commerce International (BCCI) was taken over by FNB. End Note).

Foreign Exchange and Remittances

Foreign Exchange

There are no limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment, or on the inflow or outflow of funds for remittances. Dividends derived from current trading profits are freely transferable on submission of appropriate documentation to the Central Bank, subject to provision for the non-resident shareholder tax of 15 percent. Local credit facilities may not be utilized for paying dividends. Eswatini is part of the Common Monetary Area (CMA), which also includes South Africa, Namibia, and Lesotho. All capital transfers into Eswatini from outside the CMA require prior approval of the Central Bank to avoid problems in the subsequent repatriation of interest, dividends, profits, and other income accrued. Otherwise, there are no restrictions placed on the transfers.

Eswatini mainly deals with three international currencies: the U.S. Dollar, the Euro, and the British Pound. The Swati Lilangeni is pegged 1:1 to the South African Rand, which is accepted as legal tender throughout Eswatini. To obtain foreign currency other than Rand, one must apply through an authorized dealer, and a resident who acquires foreign currency must sell it to an authorized dealer for the local currency within ninety days. No person is permitted to hold or deal in foreign currency other than authorized dealers, namely, First National Bank (FNB), Nedbank, Standard Bank, or Swazi Bank.

Because the Lilangeni is pegged to the Rand, its value is determined by the monetary policy of the CMA, which is heavily influenced by the South African Reserve Bank.

Remittance Policies

There have been no recent changes to investment remittance policies. There are no specified time limitations on remittances. Once documentation is complete (e.g., latest company financial statements) and relevant taxes paid, SWIFT transfers require an average of one week, and other electronic transfers can take less than a week.

The Swaziland Investment and Payment and Settlement System (SWIPSS) offers real-time transactions. SWIPSS, Eswatini’s Real Time Gross Settlement System, is an advanced interbank electronic payment system that facilitates the efficient, safe, secure, and real-time transmission of high-value funds in the banking sector. Direct access to SWIPSS is limited to only the four commercial banks, and these banks act as intermediaries for other financial institutions.

As part of the government policy to attract foreign investment, dividends derived from current trading profits are freely transferable on submission of documentation (including latest annual financial statements of the company concerned) subject to provision for non-resident shareholders’ tax. Government does not issue dollar-denominated bonds. Otherwise, there are no limitations on the inflow and outflow of funds for remittances of profits or revenue.

Sovereign Wealth Funds

Eswatini does not have a sovereign wealth fund as defined by international norms. Instead, its origins were to recapitalize colonial-era land to nationalize existing property for resettlement of local populations in the country and provide for a sovereign wealth fund equivalent function.

In 1968, the late King Sobhuza II created a Royal Charter that governs the nominal “Sovereign Wealth Fund (SWF)” in Eswatini known as Tibiyo TakaNgwane primarily to protect land, ideology, culture and Swati tradition. This fund is not subject to government or parliamentary oversight. The fund does not provide information to the public on value of its assets, which sectors are invested, or details of financial performance. Its subsidiaries, however, are well known. Tibiyo TakaNgwane produces an internal annual report with financials, but it is not required by law to do so as it is not registered under the Companies Act of 1912. Tibiyo annual reports are not made public or submitted to any other state organ for debate or review. The SWF obtains independent audits at the discretion of its Board of Directors.

Tibiyo TakaNgwane states in its objectives that it supports the government in fostering economic independence and self-sufficiency. It widely invests in the economy and holds shares in most major industries, e.g., sugar, real estate, beverages, dairy, hotels, and transportation. For its social responsibility practices, it provides scholarships to students. The SWF and the government co-invest to exercise majority control in many instances. Tibiyo TakaNgwane invests exclusively in the Eswatini economy and local subsidiaries of foreign companies. It has shares in several private companies. Foreign companies, including American companies, can and do form partnerships with Tibiyo, especially if the foreign company wants to raise capital and can manage the project on its own.

Privatization Program

The International Monetary Fund (IMF) has long advised the Eswatini government to privatize SOEs, particularly in the telecommunications sector and the electricity sector. In response, the government has passed several laws and privatization efforts are advancing. For example, since Eswatini Post and Telecommunications Corporation was unbundled and Eswatini Mobile (formerly Swazi Mobile) was launched in 2016, prices for cellular services have come down and mobile and data offerings have improved in the country facilitated by government oversight through Eswatini Communications Commission (ESCCOM) regulation. Following the unbundling, additional companies have entered the market and increased competition has brought down prices further.

The policies and reforms that Eswatini energy (ESERA) and telecommunications (ESCCOM) regulators are pursuing to promote innovation and competition in their respective industries will be important barometers on the extent to which those markets will prove to be friendly for international investors. Sectors and timelines for additional future privatization exist but have not been published. The National Development Plan 2023-2028 lays out guidelines and parameters for government to pursue a consolidated development framework, including plans for privatization.

The government is working to reduce the country’s dependence on foreign electricity by promoting renewable energy production through privatization of generation, distribution, and retail electricity functions. Eswatini imports the bulk of its electricity from South Africa and Mozambique, reaching 100 percent importation during a recent drought as domestic production comes predominantly from hydropower. With assistance from USAID’s Southern Africa Energy Program (SAEP), the government has developed a National Grid Code and a Renewable Energy and Independent Power Producer (RE&IPP) Policy to provide a framework for the sector and incentivize investors.

Resources to Report Corruption

Contact at the government agency or agencies that are responsible for combating corruption:

Dan Dlamini
Commissioner
Eswatini Anti-Corruption Commission
3rd Floor, Mbandzeni House, Mbabane
+268-2404-3179/0761