Eswatini: Investing

FDI in Figures

Despite its relatively small size compared to other countries in the region, Eswatini has been able to attract some FDI in recent years, particularly in the manufacturing and tourism sectors. According to UNCTAD's 2022 World Investment Report, the flow of FDI returned around its pre-crisis level, at USD 126 million in 2021 (from 41 million one year earlier). In the same year, the total stock of FDI was estimated at USD 1.1 billion, around 23.6% of the country’s GDP. The Annual Economic Review Report 2021/22 released by the Central Bank shows that the country’s FDI accounts have posted a net of SZL 989.5 million inflow, with SZL 3.193 billion worth of net portfolio investments assets acquired during the period under review. In terms of sectors, the main FDI flows into Eswatini have been in manufacturing, with a focus on textiles, clothing, and agribusiness. Other sectors that have received FDI include tourism, construction, and services. The main countries investing in Eswatini are South Africa, Taiwan, and the United States. South Africa, as Eswatini's neighbour and largest trading partner, accounts for a significant proportion of FDI in the country.

Eswatini benefits from good road infrastructure, electric energy (mainly imported from South Africa), and telecommunications. Investors are offered various incentives, such as repatriation of profits, fully serviced industrial sites, purpose-built factory shells at competitive prices, and exemptions from duties on raw materials used in the production of goods intended for export outside the Southern African Customs Union (SACU). Additionally, investors can benefit from financial incentives like tax allowances and deductions for new businesses, including a 10-year exemption from withholding tax on dividends and a low corporate tax rate of 10% for approved investment projects. New investors can also enjoy duty-free import of machinery and equipment. Investors in the Special Economic Zone (SEZ) may receive further benefits, such as a 20-year exemption from all corporate taxation (followed by taxation at 5%), full refunds of customs duties, value-added tax, and other taxes paid on goods purchased for use as raw material, equipment, machinery, and manufacturing, unrestricted repatriation of profits, and full exemption from foreign exchange controls for all SEZ operations. However, investments are screened by the government, and foreign investment in land is restricted. In addition, state-owned enterprises distort the economy. The Constitution provides for an independent judiciary power, but the king’s power to appoint judges limits judicial independence (The Heritage Foundation). Corruption is also a major issue. Overall, Eswatini ranks 120th out of 176 countries in the 2023 Index of Economic Freedom and 130th out of 180 in the latest Corruption Perception Index.

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Latest Update: December 2023