Investment Opportunities in Swaziland

TRADE & INVESTMENT OPPORTUNITIES

Swaziland is envied for her strategic location in Southern Africa. The country is able to reach regional markets hassle-free, and on top of that boasts one of the best infrastructures in Africa and has been characterized by enormous progress emanating largely from foreign direct investment in Mining, Agribusiness, Tourism, Manufacturing Industries, etc.

Swaziland's economy is fairly diversified, with agriculture, forestry and mining accounting for about 8.2% of GDP, manufacturing (textiles and sugar-related processing) representing 42% of GDP. The Title Deed Land, where the bulk of high value crops are grown (sugar, forestry, and citrus) is characterized by high levels of investment and irrigation, and high productivity.

The Swaziland Investment Promotion Authority (SIPA) was established through an Act of Parliament, the Swaziland Investment Promotion Act 1998 and was formally launched in April of the same year. SIPA is a Category of a Public Enterprise and is wholly funded by the Government of Swaziland, with initial assistance from the European Union. SIPA's Mission is to:

"Promote and facilitate foreign direct and local investment in Swaziland, with the objective of creating the wealth necessary to enhance the Social and Economic Development of the Kingdom and its people."

The SIPA objectives are:

  • To attract, encourage, facilitate and promote local and foreign investment in Swaziland.
  • To initiate, coordinate and facilitate the implementation of government policies and strategies on investment.
  • To provide a one-stop information and support facility to local and foreign investors.
  • To advise the Minister on investment policies, strategies, proposals and suitable incentives for investors.

 

DEVELOPMENTAL ACTIVITIES

 

Swaziland Investment Promotion Authority
SIPA's strategies and activities have focused on working towards the attainment of its broad objectives, and have focused on: Foreign Direct Investment (FDI): In order to promote the creation of employment opportunities, SIPA promotes Swaziland as an "Investment Location of Choice" to Investment Markets abroad such as Europe, United States of America, Turkey, Taiwan, Malaysia, Gulf Region, India, Brazil, Mauritius, Japan, Korea, Thailand, the Republic of South Africa, and the United Kingdom, amongst many other target locations. In this process, investment opportunities in Swaziland are presented to companies in seminars in groups or to individual companies on "one-on one" basis based on direct targeting of companies.

Investor Facilitation and Aftercare Services: The Investor facilitation service has the objective of providing a one-stop service facility for investment information and support to local and foreign direct investors who decide to establish business in Swaziland. Information provided covers basic cost factors, availability and costs of utilities labour and transport costs. In addition, information is provided on business registration and licensing, work and residence permits, factory shells and available factory sites. This department also reviews government policies, regulations and legislation and makes recommendations for reforms to the relevant Ministry.

Within the Investor Aftercare Programme, the Department visits and assists established businesses on difficulties they may be experiencing so as to try and retain such investors in the country.

Domestic Investments: This department has the responsibility of developing local entrepreneurs and encouraging them into participating in investment projects, particularly the primary business sectors as opposed to the retail sector. It also assists local entrepreneurs with their plans for expansions, and forming linkages with foreign direct investors either in joint-ventures or in sub-supply functions. The department conducts business seminars across the country in an effort to raise awareness and help business groups organise themselves.

Research and Policy Analysis: This is a new department set up to provide information that influences policy and formulates strategy for SIPA and Government to grow investment in Swaziland. Beyond conducting business and sector risk analysis, the unit also monitors and interprets macro and micro economic including social environment and political environment in order to keep SIPA relevant to investors and Swaziland.

INVESTMENT OPPORTUNITIES IN VARIOUS SECTORS

  • Electronic Components Manufacture & Assembly
  • Automobile Spare Parts Manufacture
  • Processing of hides and skins (Leather goods and footwear)
  • Pharmacauticals
  • Biotechnology
  • Furniture and other timber related Manufacturing
  • Fruit, Vegetable Preservation and Bottling
  • Bottling (preservation) of pickles and chutneys
  • Bottling of jams and jellies
  • Processing of beans and other legumes
  • Dairy products (e.g. Yoghurts, custards) and ice bottling of spring water and flavoured spring water
  • Juice squeezing (fresh juice from oranges. grapefruits, guavas etc) for sale to restaurants and public

Agriculture

 

Agriculture is traditionally the backbone of Swaziland's economy and a great contributor to the country's GDP with a 12.7% share after a 2% growth in 2007/8. However a greater proportion of GDP is indirectly related to agriculture as a significant part of the manufacturing sector is value-added through processing of agricultural products like timber, fruits and sugar cane. The sector is a major source of employment for over 70% of the rural population. The diverse agricultural activities that take place in the country include sugar cane production, citrus fruit, cotton, forestry, livestock, maize, other cereal crops and other undertakings which generate foreign exchange earnings.

Manufacturing

Swaziland offers immense opportunities for manufacturing. The strategic location further enhances Swaziland's export potential, which is anchored by Government's focus on value addition to a wide range of natural resources of locally available unprocessed resources is vital to attracting investments into value added industries. Manufacturing operations range from small factories to large concerns employing thousands of people and utilizing the latest technology. This sector accounts for around 65% of total FDI and as an employer is second only to agriculture, providing jobs for about 26% of the work force.

Engineering, Steel, Refrigeration and Assembly Swaziland is beginning to experience a rise in companies who are investing in this sector. Manufacturing activities undertaken include mining drills for the European markets, refrigeration for domestic and commercial purposes. Steel and wire goods are produced for the Southern Africa and local markets. This industry is set to grow substantially from the mining sector which is currently being revived.

  • Electronic Components Manufacture & Assembly
  • Automobile Spare Parts Manufacture
  • Processing of hides and skins (Leather goods and footwear)
  • Pharmaceuticals
  • Biotechnology
  • Furniture and other timber related Manufacturing

Food, Confectionary & Beverage, This is a very vibrant and significant player in the manufacturing sector of Swaziland. Food processing includes fruit and vegetable canning for export in the European, North America and Japan markets. There is huge demand for Swazi produce in the overseas markets especially pineapples, which has resulted in a strategy to increase production. Sweets & delicatessen as well as soft drinks concentrates manufacturing all utilize locally produced sugar and are carried out on a large scale.

  • Fruit , Vegetable Preservation and Bottling
  • Bottling (preservation) of pickles and chutneys
  • Bottling of jams and jellies
  • Processing of beans and other legumes
  • Dairy products (e.g. Yoghurts, custards) and ice bottling of spring-water and flavoured spring water
  • Juice squeezing (fresh juice from oranges, grapefruits, guavas etc) for sale to restaurants and public.

Energy

Over 95% of the total power production in Swaziland is hydro – powered energy. Two hydro stations supply the electricity needs of the country. These stations are owned and operated by the Swaziland Electricity Company. The smallness of the country makes it possible for SEC to adequately provide isolated transformers to individual large companies in some cases. This helps these companies to avoid power cuts and in consequence stay clear of unnecessary foregone revenues due to power interruptions.

Mining

Over the years, the Kingdom of Swaziland has had rich deposits in a number of precious stones and gems. Though these minerals are in small volumes, they have not been exhaustively extracted from the ground. In a number of mines, specifically the diamond and gold mines, operations have been suspended due to mining protocols and regulations that needed to be reviewed by the Mining Regulations body.

In some mining products, however, explorations have resumed and the industry seems to be headed for stellar performance. The hosts of minerals in the country are inclusive of: asbestos, coal, quarried stone, soapstone, kaolin, talc, silica, green chert and others. Such wealth goes on to prove the potential of mining in Swaziland. It is hoped that development in the mining sector will have trickle down effects on the whole Swazi Economy.

 

Tourism

Swaziland's tourism industry remains one of the fastest growing industries and a large generator of income. The peace, stability and low crime rate compare well with the neighbouring countries South Africa and Mozambique. Unique attractions and close proximity to the world famous Kruger National Park make Swaziland the right place to visit. Swaziland offers many diverse and unique attractions that appeal to a wide cross-section of tourists. Traditional ceremonies are an integral part of Swazi life, despite the advent of modernization. The most important of these include the sacred Incwala or the Festival of the First Fruits. This is essentially a Kingship ceremony held to renew the strength of the King and the Swazi Nation for the coming year. Incwala is held in December/ January of each year, at the time of the new moon preceding the event.

Another major ceremony is Umhlanga or the Reed Dance which is held for a week at the end of August or early September. Swazi maidens gather at the Queen Mother's residence and set out in parties to gather reeds. The reeds are used to repair the windbreak around the Queen Mother's residence.

The Swaziland Tourism Authority is a parastatal that was formed under the Tourism Authority Act with the objective of stimulating and expanding the industry through various programs. The STA has made significant contributions to the development of tourism in the country. Among its other activities, the STA conducts market research to plan and create awareness of tourism nationally.

Investment Opportunities

  • Development of a state of the art government owned ICC
  • Development of a Golf Estate, Casino and supporting Facilities
  • A holiday housing estate to cater for holiday makers mostly foreign

Textile

Textile and garment production plays a significant role in Swaziland's manufacturing sector. In the last several years, the textile and garment industry has grown to offer a wide range of services, including spinning, weaving, knitting, dyeing, and finishing. Introducing such labour-intensive processes locally has increased employment opportunities; currently, the industry provides jobs for over 15,000 Swazis. Swaziland's textile and garment manufacturers are primarily located in the Matsapha Industrial Estate. Swaziland's offering of comprehensive product lines in one location is attractive to buyers, as it allows them to meet their broad purchasing needs in one place. As a result, Swaziland provides textiles and garments to some of the largest retailers in the United States, Europe, and South Africa.

Industry History

The Swazi textiles industry took off in 2001 after Swaziland signed the African Growth and Opportunity Act (AGOA) with the US in 2000. Guaranteed export markets encouraged investors to enter the country and boosted employment. As a result, garment exports to the US tripled in the three years following Swaziland's membership with AGOA. Now that the industry has been established, opportunities to capitalize on current infrastructure and relevant trade policy make setting up new businesses in the industry simpler.

Value Chain

Though the textile and garment sector is export-oriented, the industry is vertically integrated and includes cotton farming and the production of cotton lint. The Swaziland Cotton Board is mandated to promote the development of the cotton industry by, among other things, regulating the procurement of planting seed by farmers to ensure a marketable final product.

The Board's activities include initiatives to increase overall cotton production, provide resources to market cotton, and develop small-scale spinning industries. The Board was also instrumental in the acquisition of the country's first locally owned cotton ginnery. Finally, the Board is working closely with relevant stakeholders to introduce genetically engineered cotton seed in order to explore the potential of growing genetically modified cotton in an effort to increase yields and reduce production costs.

Sector Opportunities

The footwear manufacturing industry is confined mostly to traditional footwear that is used in a number of cultural activities. A number of smaller, basic operations focused on sandals and other basic shoes operate in a number of communities providing customer specific designs.

These are mostly informal operators scattered around the country. The country has in the past played host to a sneaker manufacturing company, which stopped operating in the early 90's. Commercial footwear manufactures are non-existent in the country as there are no manufacturing entities in this category. This industry has a huge potential as Swaziland has preferential agreements with the US, EU and the region (Africa).

Availability of Raw Materials

Cotton: The revitalized cotton industry has potential to become increasingly export oriented and also supply the domestic market. Cotton fibres and yarn can also be imported from the SADC region to supplement production if necessary. Leather: Swaziland has raw materials like cow skin hides as the country has about 639,718 cattle, commercial slaughters about 42,743 cattle in the year 2007/08.Game leather can also be sourced locally.

Textile and Apparel: Several leading international companies are into textile manufacturing and can provide raw material for value addition. Wool and Mohair: Neighbouring South Africa is the world's largest mohair producer and the fifth largest producer of wool. Competitively Priced Cost of Labour: Despite that the infrastructure in Swaziland is nearly world class, costs are comparable to those of developing countries.