The International Monetary Fund (IMF) has urged Eswatini to accelerate its deep structural reforms to unlock the country’s growth potential and generate employment, warning that the current pace of change is insufficient to reduce unemployment and poverty.
In its 2025 Article IV Consultation report, the IMF highlights that, while Eswatini’s economy is projected to expand by 4.3 per cent in 2025 and 4.6 per cent in 2026, this momentum might rapidly subside without substantial reforms. Growth is anticipated to slow to just 2.8 per cent over the medium term, inadequate to tackle persistently high unemployment—34 per cent overall and 58 per cent among youth.
According to the report, Eswatini faces notable structural constraints hampering private sector development, including skills mismatches, infrastructural gaps, and regulatory inefficiencies. Addressing these issues is vital for fostering inclusive, private sector-led growth.
The report stresses the urgent need to strengthen technical and vocational education and training (TVET) to better match graduates’ skills with labour market requirements. Skills shortages continue to be a significant hurdle for businesses, especially in manufacturing, ICT, and agriculture.
“Eswatini faces significant gaps in power, transport, and ICT infrastructure, with rural roads and water systems particularly vulnerable to weather shocks. Addressing the shortage of skilled labour and aligning education with market needs will require comprehensive policy reform,” the report notes.
The IMF also highlights burdensome regulations and high compliance costs that deter entrepreneurship, particularly for small and medium enterprises (SMEs). While ongoing e-Government reforms, including the “Government in Your Hand” and “One-Stop Business Shop” platforms, are recognised as positive initiatives, the Fund emphasises that deeper reforms are necessary.
Access to finance remains constrained, with bank credit to the private sector dropping to 21 per cent of GDP in 2024, well below regional peers. The IMF recommends expanding collateral registries, strengthening property rights, and supporting credit guarantee schemes to alleviate these constraints.
“Policy priorities should include securing and enforcing property rights, improving financial literacy to assist firms in navigating financing options, and promoting credit information sharing and digitalisation to reduce information asymmetries.”
The report, however, notes that Eswatini authorities broadly acknowledge the importance of reforms and stress that efforts are already in progress. They highlight ongoing measures to address skills mismatches through expanding TVET programmes and enhancing energy security via large-scale investments. Support is also being provided to SMEs through training on access to finance, export facilitation, loan guarantees, and expanded microfinance schemes.
Furthermore, the government is collaborating with the Food and Agriculture Organization (FAO) to implement micro-lending programmes aimed at improving farmers’ access to finance and bolstering climate resilience.
Authorities also noted that legislative reforms of public enterprises (PEs) are underway, although challenges remain, particularly the need for clearer legal definitions and the separation of PEs from regulatory agencies. They further confirmed that updated anti-money laundering and counter-terrorism financing (AML/CFT) legislation was enacted in 2024 to address most recommendations from the 2022 Mutual Evaluation Report.
In terms of governance, reforms are progressing, with cabinet approval of a national anti-corruption policy expected later this year, followed by a detailed implementation strategy.