2013 Investment Climate Statement
Bureau of Economic and Business Affairs
February 2013
Report

Openness to, and Restrictions upon, Foreign Investment

Strategically located in the heart of Southern Africa, Swaziland offers a number of comparative advantages for potential investors, including reasonable labor costs, positive labor relations, relatively high education levels, increasing access to finance, and good physical infrastructure. Wage rates in Swaziland are close to the other middle income countries but remain lower than in neighboring South Africa. Likewise, labor relations in the kingdom are generally not contentious and dispute resolution works well. Swaziland’s physical infrastructure is on-par or better than that of other regional countries. While landlocked, the kingdom’s good road and cargo rail systems provide easy access to seaports, including Durban and Richards Bay in South Africa. In 2012, companies in South Africa and Swaziland signed an agreement to construct a new cargo railway between South Africa's Mpumalanga province and western Swaziland. Swaziland is English-speaking and has an adult literacy rate of nearly 90 percent. Access to finance is on par with South Africa and business services are generally of a high standard. The Swaziland Lilangeni (plural of Emalangeni) is pegged at par with the South African Rand.

Particular incentives to invest in Swaziland include repatriation of profits, fully-serviced industrial sites, provision of purpose-built factory shells at competitive rates, and exemption from duty on raw materials to manufacture goods to be exported outside the Southern African Customs Union (SACU). Financial incentives for all investors also include generous tax allowances and deductions for new enterprises, including a 10-year exemption from withholding tax on dividends and a low corporate tax of 10 percent for approved investment projects. New investors also enjoy duty-free import of machinery and equipment.

The Government of the Kingdom of Swaziland continues to work to develop and improve investment and trade policies, in particular to facilitate ease of doing business in the country. The Swaziland Investment Promotion Authority (SIPA) is charged with designing and implementing strategies for attracting desired foreign investors and is working to become a one-stop-shop for foreign investors.

In early 2012, King Mswati III re-launched the kingdom’s Investor Roadmap, a comprehensive strategy originally drafted in 2005 to indentify and address barriers to investment in Swaziland. Among the plan’s seven discrete objectives are: improving the pace and efficiency of trade across borders; reducing the time and paperwork required to register a company and secure work permits; strengthening legal protections for investors; improving the tax regime, including providing for online filing; increasing the transparency of labor inspections; and increasing access to finance for small and medium-sized enterprises.

Over the last several years, Swaziland has taken concrete legislative steps to improve the business environment. In 2011, Swaziland's parliament passed legislation in support of the Roadmap’s objectives, including the Trading Licenses Act, which shortens the required advertising period for getting a business license from 21 days to 3 days, and the Shop Trading Hours Act, which allows shops to be open for 24 hours. Retail outlets were previously required to close at 5pm. The Companies Act of 2009, which replaced the outdated Companies Act of 1912, came into force on April 1, 2010. The Companies Act's main objective is to streamline the establishment, incorporation, and registration of companies. The Act will also improve the management, administration and dissolution of companies and put Swaziland's corporate laws in line with regional and international developments. Implementation of the Financial Services Regulatory Act No. 2 of 2010 that came into effect on June 1, 2010 is on course. An office has been established and a Chief Executive Officer has been appointed. The aim of the Financial Services Act is to put in place an integrated regulatory system for the non-bank financial services, including insurance, retirement funds, building societies, capital markets and other similar institutions.

Foreign investors are theoretically free to invest in all sectors of the Swazi economy, aside from sectors controlled by Swazi parastatals, such as water services. Other areas in which the Swazi government disallows investment are in the manufacturing of arms, chemical and biological weapons, radioactive materials, explosives, and manufacturing involving hazardous waste treatment or disposal. Any company wishing to do business in Swaziland must adopt articles of incorporation or association. Investors are screened for creditworthiness, business ethics track records and criminal records. If investors bring external funding, there is no requirement for further screening.

In 2012, Swaziland began to recover from a severe fiscal crisis, which began in 2010 after a sharp decline in revenue from the SACU, which historically accounts for more than half of the country’s revenue. In fiscal year (FY) 2012/2013, with SACU revenue back up – to E7.1 billion (USD 881 million) from E2.9 billion (USD 360 million) the previous year – the country was able to pay down domestic arrears, improve levels of international reserves, and continue work on some capital projects. Improved domestic revenue collection, through a new Swaziland Revenue Authority and introduction of a value-added tax (VAT) also contributed to the nascent recovery. According to Minister of Finance Majozi Sithole, Swaziland will again receive more than E7 billion in SACU receipts in FY 2013/2014. The minister and international partners, including the International Monetary Fund, continue to stress the need for the Swazi government to reduce recurrent spending, particularly its large public sector wage bill, in addition to work on the revenue side. Swaziland remains heavily depended on volatile SACU revenue. A number of national plans, including a Fiscal Adjustment Roadmap, Economic Recovery Strategy, and Public Finance Management reform plan, are in place to guide efforts going forward.

Despite demonstrable progress in improving the doing business environment, some distinct challenges remain. The monopolistic nature of Swaziland’s telecommunications sector results in high prices and sometimes unreliable mobile phone service. Internet service, provided largely by the Swaziland Post and Telecommunications Corporation (SPTC), a state owned operator which also acts as the industry regulator, is also costly and unreliable. Two pieces of legislation which provide necessary legal frameworks for improved regulation in the sector, the Swaziland Communications Commission Bill and the Electronic Communications Bill, have yet to be passed by parliament. The high cost and poor quality of telecommunications remain key constraints for the private sector in Swaziland.

Swaziland has a dual-legal system, and most investments are effected through and governed by Roman-Dutch law. Companies investing under traditional rules, for instance a transaction involving Swazi Nation Land which is controlled by traditional structures, should be aware that they may not be able seek resolution within the court system. Swaziland's judicial system generally upholds the sanctity of contracts; however, companies investing under the auspices of Swazi tradition and custom do not have the same judicial protections and remedies, as investments under the more commonly used Roman-Dutch law.

There are no formal policies or practices that are discriminatory to foreign investors, and companies may be 100 percent foreign-owned. However, foreigners have had difficulty when attempting to register new business ventures as Swazi businesses (as opposed to foreign businesses registered as such in Swaziland). According to the Companies Act of 2009 Section 15 (3), “a company is deemed to be a local company if that company – (a) has Swazi citizens who hold more than one half of its issued share capital; (b) has Swazi citizens forming the majority of its shareholders who have control over the placement of the Board of Directors; and (c) has Swazi citizens forming the majority of its Board of Directors.” In 2011, SIPA worked with investors to register as the correct type of company under Section 15.

The Swazi constitution bars ownership of land by foreign entities unless ownership was attained before the promulgation of the Constitution on February 8, 2006. However, the constitution also states that this provision "may not be used to undermine or frustrate an existing or new legitimate business undertaking of which land is a significant factor or base." Foreign companies looking to own land must attain approval from the Land Board, a sometimes opaque and lengthy process.

In the World Bank's "Doing Business 2013" Report, Swaziland ranked 123 out of 185 countries for overall ease of doing business, no change from its 2012 ranking. It ranked 165 for starting a business, down from 160 in 2012. It also showed slightly lower rankings from the previous year in access to credit, enforcement of contracts, and protecting investors. The kingdom showed improvements in 2013 with respect to dealing with construction permits and trading across borders. According to the Heritage Foundation's "Economic Freedom Index," Swaziland’s economic freedom score is 57.2, ranking its economy 106 out of 179 countries in 2012.

Swaziland's annual economic activity contracted in 2011 by 1.2 percent, lower than the 1.9 percent recorded in 2010. The International Monetary Fund (IMF) predicts that 2012 will see a further contraction of 1.5 percent in 2012. The Swazi government projects slight growth. Contributing to the economic slowdown were the fiscal cash-flow problems experienced in 2010/2011 and 2011/2012 fiscal years. The government’s fiscal problems resulted in accumulation of arrears to the private sector and dwindling confidence in Swaziland. Additionally, the government’s failure to meet IMF requirements for a Staff-Monitored Program and resultant ineligibility to borrow from international financial institutions presented further challenges. Corruption also has had a negative impact on Swaziland's growth. Transparency International ranks Swaziland 88 of 178 in the world in its Corruption Perceptions Index, with a rating of 3.1.

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Measure

Year

Index/Ranking

TI Corruption Index

2012

88

Heritage Economic Freedom

2012

106

World Bank Doing Business

2013

123

WEF Global Competitiveness Index

2012-2013

135

Conversion and Transfer Policies

Prior approval from the Central Bank of Swaziland is necessary for all capital transfers into Swaziland from outside the Common Monetary Area (CMA) to avoid subsequent repatriation of interest, dividends, profits and other income accrued, but no restrictions are placed on the transfers. In practice, approval is routinely granted when required for genuine investment activity, but bureaucratic delays are common. When converting funds, the investor's bank uses its discretion to decide if there is a need to seek the Central Bank's approval.

No recent changes have been made to Swaziland's remittance policies.

There is a straightforward process for obtaining foreign currency. A resident requiring currency other than Swazi Emalangeni(E) or South African Rands (accepted as legal tender with an exchange rate on a par with the Emalangeni) for permissible purposes must apply through an authorized dealer, and a resident who acquires foreign currency must sell it to an authorized dealer for local currency within 90 days. No person is permitted to hold or deal in foreign currency other than an authorized dealer. Authorized dealers in Swaziland are First National Bank of Swaziland (FNB), Nedbank, Standard Bank, and Swazi Bank.

The average delay period for remitting investments is dependent on the mode for remitting funds. SWIFT transfers average a week, while electronic transfers typically take less than a week.

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 the non-resident shareholders' tax of 15 percent. Local credit facilities may not be utilized for paying dividends. The Swazi government does not issue dollar-denominated bonds. There are no limitations on the inflow or outflow of funds for remittances.

The Central Bank of Swaziland monitors the flow of foreign investment in and out of the country, as it follows all foreign exchange. The Central Bank has formal powers to screen and regulate foreign exchange and investment, but these powers are exercised in a formal, routine, and equitable manner. The Central Bank, in July 2011, increased the deposit reserves requirement for local banks from 2.5 percent to 6 per cent of deposit liabilities in order to maintain liquidity in the country. In 2011, two credit-financial institutions were licensed namely the Relief Financial Service and the First Finance Company. These companies offer loans and advances to the public.

Expropriation and Compensation

Expropriation and nationalization are prohibited. There have been no known cases of a foreign-owned business being expropriated. Swaziland's land tenure system can be confusing for investors. Approximately sixty percent of land is Swazi Nation Land, land held by the monarchy in trust for the people of Swaziland. Control over use of Swazi Nation Land is generally delegated to local chiefs. Settlement of disputes regarding traditionally held land can take years. Legality of land leases is sometimes unclear and uncertainty exists as to the details of land ownership rights. Although not common, there have been cases of 99-year leases on Swazi Nation land. Clear titles can exist for non-Swazi Nation Land, generally located in municipalities.

Dispute Settlement

Swaziland has a dual legal system consisting of Roman-Dutch law and customary law, or “Swazi law and custom.” This parallel system can be confusing and has, at times, presented problems for foreign-owned businesses. In addition to a Western-style court system, in which the Industrial Court hears industrial relations matters, Swaziland's traditional courts, with the king as supreme authority, are also available for dispute settlement. Swazi employees have brought grievances against foreign employers to these traditional courts. Such disputes, however, can be transferred to the Western-style court system. The Industrial Relations Act of 2000 created the Conciliation, Mediation and Arbitration Commission (CMAC) to resolve employer-employee disputes. CMAC is a competent and well-regarded institution. In general, the Swazi legal system has effectively enforced property and contractual rights.

The Companies Act of 2009 outlines commercial law. Swaziland's bankruptcy law, the Insolvency Act of 1955, is silent on the currency used in monetary judgments; however, international companies doing business in Swaziland include the currency to be used in the Memorandum of Agreement. The court has jurisdiction over the property of a person who has ordinarily resided in or carried on business for 12 months in Swaziland before the lodging of the petition.

The Swazi government accepts binding international arbitration of investment disputes between foreign investors and the state. Any agreement with international investors/parties includes a clause stating where arbitration will take place and which laws will apply. Swaziland is a member of the International Centre for the Settlement of Investment Disputes (ICSID) and the Multilateral Investment Guarantee Agency (MIGA). There is no specific legislation providing for enforcement of ICSID awards.

Performance Requirements and Incentives

The Swazi government does not maintain any measures that are alleged to violate the WTO's Trade Related Investment Measures requirements.

There are two performance requirements that may affect foreign business in Swaziland. Swazi government policy requires hiring qualified Swazi workers, where possible. This has discouraged some business people from relocating to Swaziland and can make it difficult for family members of working expatriates to find employment. The other performance requirement affects only exporters who wish to label their product as made in Swaziland. Local export authorities require that the local content of such exports be at least 25 percent. This determination, however, is often difficult to make, and appears to be conducted on a case-by-case basis.

Investment incentives for qualifying investments, particularly those in export-driven manufacturing, mining, and international services, include: human resources training rebate – a rebate of 150% of the cost is written against tax for training; at the discretion of the Minister of Finance, a tax rate of 10 percent for the first ten-year period, 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; repatriation of profits and dividends including salaries for expatriate staff and capital repayments; the Central Bank of Swaziland guarantees loans raised by investors for the export market. There is also provision of loss cover which a company can carry over in case it incurs a loss in the year of assessment.

There are no performance requirements for establishing, maintaining, or expanding an investment. To receive duty free status on capital goods imports, the investment must be considered productive.

There are no requirements regarding the purchase or export of goods.

There is no requirement on composition of ownership, equity diversification, or that there is a technology transfer.

Swaziland does not impose "offset" requirements.

There are no enforcement procedures for performance requirements. The updated Companies Act expects companies to lodge annual returns with the Registrar of Companies. The return should include the name of the auditors, nominal and issued share capital, names and addresses of members (in case of a private company), among other requirements. Investors are not required to disclose proprietary information as part of the regulatory process.

U.S. and foreign firms are not able to participate in government financed and/or subsidized research and development programs.

Residence and work permits have been a major source of tension between the expatriate business community and a government otherwise well disposed toward foreign investment. All foreign nationals working in Swaziland were required to apply for work and residence permits to the Immigration Office demonstrating that no Swazi is available to fill the vacancy. Although they generally were awarded, expatriate business people complained that the process is cumbersome, and is a reported source for unofficial "expedition" payments. Residence permits were good for five years for expatriate directors, senior management and key technical personnel of new companies, at which time they must be renewed. In 2011 work permits for some prominent business people were not renewed, without a reasonable explanation given. The re-launch of the Investor Roadmap has brought the problem to the fore, however, and SIPA engaged the Swazi government on the matter. In the November/December 2012 review, SIPA reported that beginning in June 2013 all expatriates will be issued with five-year working permits and automatic renewal if the expatriates were owners of large investments.

There are no discriminatory or preferential export or import policies affecting foreign investors.

Right to Private Ownership and Establishment

The majority of Swaziland's largest businesses are owned by foreign investors, either fully or with minority participation by Swazi institutions. There are no restrictions on foreign ownership that are discriminatory against foreign investors. Both foreign and domestic private entities have a right to establish businesses, and acquire and dispose of interests in business enterprises.

Protection of Property Rights

The Swazi government recognizes and enforces secured interests in property, both moveable and real. There is a recognized and reliable system of recording such security interests.

The legal system protects and facilitates acquisition and disposition of property.

Adherence to key international agreements on intellectual property rights is minimal. Protection for patents, trademarks and copyrights is currently inadequate under Swazi law. Patents are currently protected under a 1936 act that automatically extends patent protection, upon proper application, to products that have been patented in either South Africa or Great Britain. The African Regional Industrial Property Organization in Harare assisted in drafting a new patent law. The draft law includes protection for pharmaceutical and agricultural chemical products.

Trademark protection is addressed in the 1994 Trademarks Act. Copyright protection is addressed under four statutes, dated 1912, 1918, 1933 and 1936.

Swaziland inherited its intellectual property rights regime from the colonial era, under which copyrights, patents, and trademarks were somewhat protected under various acts promulgated by the colonial authorities. According to the Registrar General, the acts have not been implemented and copyright protection in Swaziland is "limited." The Copyright and Neighboring Rights Bill is still pending before parliament. When the bill is passed by Parliament, it will repeal the 1912 Copyright Act. Swaziland does not have a bilateral copyright agreement with the United States.

There are no ongoing disputes with regard to patents, trademarks, or copyrights in Swaziland.

The government has acceded to the WTO TRIPS agreement. Implementation and enforcement are minimal due to the small number of patent disputes. The Swazi government has not signed the WIPO Internet agreement.

Transparency of the Regulatory Systems

In general, Swaziland’s tax, labor, environment, health and safety, and other laws do not distort or impede investment. However, in many areas, the legal and regulatory environment is underdeveloped, opaque, or unpredictable. For instance, Swaziland does not have an approved trade policy, investment policy, or industrial policy. Also, the lack of enabling legislation and an independent regulator allow for the continued monopolistic nature of the ICT sector. The country’s Economic Recovery Strategy specifically identifies the need to promote an enabling policy, regulatory, legislative and institutional environment in order to facilitate investment.

Proposed laws and regulations are published in the government Gazette for public comment thirty days prior to a bill's presentation to Parliament. Ministries sometimes consult with selected members of the public and private sector.

The Competition Commission whose duty it is to end the monopolies of parastatals is in place, and the office is fully functioning. The Commission will be governed by the public enterprise unit law. It is the government's stated policy to foster a free market economy, and the government's decisions in individual matters have generally upheld that objective. At the same time, the Swazi government has not been active in promoting competition in certain industries, such as ICT.

There are no informal regulatory processes.

There are no efforts to restrict foreign participation in industry standards-setting organizations. Swaziland has recently established the Swaziland Standards Authority (SWASA) to serve industry, commerce and the public sector by developing, maintaining and monitoring implementation of standards and performing conformity assessments.

Efficient Capital Markets and Portfolio Investment

The kingdom's efficient capital markets are closely tied to those of South Africa and operate under conditions generally similar to the conditions of that market. Commercial banks offer credit on market terms, but the rules of the Common Monetary Area forbid non-Swazis from raising domestic loan capital, although they can apply to the Central Bank for an exception. This restriction has not greatly discouraged foreign capital flows into Swaziland in the past, but could increasingly sour the Swazi investment climate as regional competitors build investment regimes more attractive to foreign business.

At present, the Swazi government is trying to put in place an effective regulatory system to encourage portfolio investment. In 2010, the government enacted the Securities Act, which will strengthen the regulation of such investment. This Act’s aim is primarily to facilitate and develop an orderly, fair and efficient capital market in the country. Swaziland has a small stock exchange with six companies currently trading two types of shares, equity shares and bonds. The Financial Services Regulatory Authority (FSRA) Act came into force in June 2010. This act governs non-bank financial institutions including capital markets, insurance, retirement fund, building societies, micro-finance institutions and Savings and Credit Co-operatives.

The Central Bank supervises financial institutions, which include the First National Bank of Swaziland Limited, Nedbank, Standard Bank, Swazi Bank, Swaziland Building Society and the Blue Financial Services (Pty) Ltd. There is currently an effort underway to provide for increased supervision and regulation of non-bank financial institutions.

"Cross share-holding" and "stable shareholder" arrangements do not exist in Swaziland. There have been no hostile takeovers by domestic or foreign interests. Since Swaziland's financial markets are just emerging, a variety of credit instruments have yet to be developed.

Competition from State-Owned Enterprises (SOEs)

Swazi parastatals operate in multiple industries, including telecommunications and energy. Public enterprises often are responsible for charging levies for supplies imported by private enterprise in which the public enterprise also competes. Examples of this occurrence include the milk, vegetable, and maize industries. A private enterprise that imports wheat and wheat products was given a monopoly.

Senior management of SOEs report to a board which, in turn, reports to the line minister. A senior member of the ministry sits on the board. SOEs are governed by the Public Enterprises Act which requires audits of the SOEs and public annual reports.

A sovereign wealth fund known as Tibiyo takaNgwane, which was created through royal charter, forms joint ventures with foreign investors. Tibiyo takaNgwane is held by the king in trust for the Swazi nation and is considered separate from the government. A perceived lack of transparency in the fund’s dealings, and its close ties to the monarchy, has been cause for investor caution.

Corporate Social Responsibility

Multinational enterprises in the country, including U.S. wholly-owned companies, take their corporate social responsibility seriously, and consumers often recognize their efforts. Health, education and social services are sectors in which they invest. A growing CSR culture in Swaziland is demonstrating potential for more large-scale and high-profile projects as well as public-private partnerships with the U.S. Government and potentially with the Government of the Kingdom of Swaziland.

Political Violence

In 2012, there were no major incidents of political violence undertaken by dissidents or labor organizations aimed at destroying commercial installations in Swaziland. During the year, the country experienced a number of labor protests. The kingdom’s teachers engaged in a weeks-long strike and protest action to demand a 4.5 percent across the board wage increase. The Swazi government refused any wage increase, citing ongoing fiscal constraints. The protest and strike action did not result in destruction of commercial property.

The trial of the survivor of the September 2008 highway-bridge attempted bombing concluded in 2012 and the convicted individual was sentenced to 85 years in prison for murder, unlawful possession of explosives, entering Swaziland illegally and sedition under the country’s courts.

The case of the Swaziland Student leader, Maxwell Dlamini, has not yet been to the courts. Dlamini is charged with possession of explosives.

Corruption

In 2007, the Prevention of Corruption law came into effect and established an Anti-Corruption Commission. In his 2011 medium-term budget review, the minister of finance stated that corruption continued to be a major problem in the country and attributed the loss of E 80 million (USD 11.02 million) each month to corruption. While the finance minister promised additional resources for the Commission, Prime Minister Barnabas Sibusiso Dlamini expressed a lack of confidence in the institution. The prime minister continues to promise to fight corruption but without significant results. In 2012, only one major corruption case came before the courts.

Corruption is particularly prevalent in government procurement. For example, in May 2010 the general manager of Swaziland’s Central Transport Administration, Polycarp Dlamini, was arrested, along with three others, on charges of fraud. More than one year later, Dlamini pled guilty to and was convicted of defrauding the Swazi government of more than E12 million ($1.5 million). Dlamini admitted to authorizing payments to a private company – owned by one of the co-accused – for services never rendered.

On August 23, 2011, the Swaziland passed The Procurement Act whose aim is to provide regulation and control practice in respect of public procurement. Giving or receiving a bribe is illegal. A convicted person faces a maximum of a 100,000 Emalangeni (USD 13,774) fine or ten years imprisonment. A convicted law enforcement officer or public prosecutor faces a maximum fine of 200,000 Emalangeni (USD 27,548) or twenty years in prison.

Swaziland is a signatory to the UN Anti-Corruption Convention, African Union Convention on Preventing and Combating Corruption and Related Offences, and the SADC Protocol against Corruption. It has not ratified the UN Anti-Corruption Convention. Swaziland is not a signatory to the OECD Convention on Combating Bribery.

Foreign and domestic businesses have indicated that corruption and bribery requests impact profits, contracts and investment decisions for their companies.

Bilateral Investment Agreements

Swaziland has investment agreements with Great Britain, Germany, and the European Union (EU). The Cotonou Agreement between the EU and the African, Caribbean and Pacific (ACP) countries expired on December 31, 2007. Swaziland has signed an interim Economic Partnership Agreement (EPA) with the EU. In 2008, SACU and the U.S. signed a Trade, Investment, and Development Cooperative Agreement (TIDCA).

Swaziland has bilateral investment protection agreements with Egypt, Germany, Taiwan, Mauritius, and the United Kingdom.

Swaziland does not have a bilateral investment or bilateral taxation agreement with the United States. The Swaziland Revenue Authority (SRA), the tax collection agency, opened its doors on January 1, 2011. Charged with improving the efficiency and rate of revenue collection in the kingdom, the SRA has been assertive in pursuing payments.

Swaziland introduced a value-added tax (VAT) of 14 percent in April 2012. In his Mid-Year Budget Review Report 2012/13 delivered in November, the finance minister said that from April to September the SRA had collected E800 million (USD 99.26 million) in VAT and predicted that it would collect E1.6 billion (USD 199 million) during the full fiscal year, ending March 2013.

OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC), the U.S. Trade and Development Guarantee Agency, and the Multilateral International Guarantee Agency have been active in Swaziland and are sources for export financing and insurance.

In 2012, the Embassy used approximately USD 7,693,621.72 (E 62,008,282.98) in local currency. The average exchange rate in 2012 was 8.06 Emalangeni for one U. S. dollar.

The Embassy purchases local currency at the official exchange rate. In 2012, the Lilangeni (the singular form for the Emalangeni) appreciated by 9.92 percent compared with the appreciation of 6.71 percent the previous year.

Labor

Swaziland generally adheres to the International Labor Organization (ILO) conventions protecting workers' rights. Labor–employer relations are generally amicable. Strikes did occur periodically throughout the year. According to the Industrial Relations Act, workers can engage in a strike action if there is an unresolved dispute. The party that intends to go on strike needs to give notice to the employer, the Labor Commissioner, and the Conciliation, Mediation and Arbitration Commission. Within seven days CMAC should arrange and supervise a secret ballot to determine whether the majority of employees are in favor of the strike action.

High HIV/AIDS prevalence rates, estimated at 26 percent of the adult population in 2007, have had an impact on economic growth in Swaziland, and companies need to take illness among its employees into account when making management decisions. There is a high level of overall unemployment, 28 percent, and youth unemployment tops 50 percent. There is also a severe shortage of technically skilled labor, a fact that results in a heavy reliance on expatriate technicians, including accountants and engineers.

Foreign Trade Zones/Free Trade Zones

Swaziland does not have any free trade zones, but supports four industrial areas. The largest is in Matsapha, located between the primary cities of Mbabane and Manzini. It has direct rail and road links. The Matsapha Industrial Estates dry port maximizes time and cost savings for importers and exporters using the ports of Durban and Port Richard's Bay, South Africa and Maputo, Mozambique.

Foreign Direct Investment Statistics

The Central Bank tracks foreign direct investment by type and sector. Preliminary data indicate an increase in overall stock by 10.9 percent to E6,818.1 million (USD 845.92 million) in 2011. Reinvested earnings of inward stock grew by 10 percent from E3,611.9 million (USD 448.13 million) in 2010 to E3,976.3 million (USD 493.34 million) in 2011. Other short term capital contributed 15.8 percent growth. Equity component of FDI increased from E520.0 million (USD 64.52 million) in 2010 to E520.6 million (USD 64.59 million) in 2011. The establishment of new insurance players and new investment in an iron ore mine contributed to the slight growth in equity. Reinvested earnings of FDI increased from a revised E3,611.9 million (USD 448.12 million) in 2010 to register E3,976.3 million (USD 493.34 million) in 2011.

There is no specific policy for encouraging Swazis or Swazi businesses to invest abroad. A number of Swazi businesses do have investments abroad, primarily in South Africa.

Total Foreign Direct Investment into Swaziland by Type, 2006-2011 (USD Million)

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2006

2007

2008

2009

2010
(revised)

2011 (preliminary)

Equity

95.16

99.62

70.45

71.63

64.52

64.59

Reinvested Earnings

389.14

446.28

285.66

340.99

448.13

493.34

Long-term Capital

117.35

119.75

219.21

246.59

90.26

105.84

Short-term Capital

116.95

85.72

59.34

81.51

159.59

182.13

TOTAL FDI

718.60

751.37

625.62

740.72

762.49

845.92

Change in Total FDI (%)

16.5

4.6

-16.7

18.4

2.9

10.9

Change excluding reinvested Earnings (%)

14.2

-7.4

11.4

17.6

-21.4

12.2

Average Inflation (%)

5.3

8.1

12.6

7.5

4.5

6.1

Source: Central Bank of Swaziland

Note: Figures reported in historical E, converted using 2012 average exchange rate USD1/E8.06

Total Foreign Direct Investment into Swaziland by Sector, 2007-2011 (USD Million)

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2007

2008

2009

STOCK

CHANGE (%)

STOCK

CHANGE (%)

STOCK

CHANGE (%)

Manufacturing

420.27

1.1

333.00

-20.8

375.37

12.7

Services

116.01

27.7

82.21

-29.1

112.35

36.7

Investment

30.82

39.3

29.73

-3.5

31.60

6.3

Agriculture

121.59

-6.8

89.33

-26.5

107.30

0.0

Finance

53.04

14.5

90.73

71.1

114.83

26.6

Mining

9.62

0.0

.62

-93.5

-.72

-261.0

TOTAL

751.34

625.56

740.72


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2010(revised)

2011 (prelim.)

STOCK

CHANGE (%)

STOCK

CHANGE (%)

Manufacturing

480.24

27.9

526.68

18.4

Services

97.31

-13.4

118.29

-18.4

Investment

25.03

-20.8

30.29

4.2

Agriculture

79.80

-25.6

78.74

35.8

Finance

71.58

-37.7

84.12

-29.2

Mining

8.55

1288.6

7.83

1,288.6

TOTAL

762.49

845.92

Source: Central Bank of Swaziland. Note: Figures reported in historical E, converted using 2012 average exchange rate USD1/E8.06

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