Tax Breaks Can Help Improve Eswatini’s Industrialization Objectives

By Ntokozo Nkambule

The African Development Bank (AfDB) has advised a number of African countries including the Kingdom of Eswatini to revise their trade policies in order to achieve their industrialization objectives.

The Bank points to a number of measures that the country can employ such as Special Economic Zones and Industrial Parks which can promote linkages between trade and industry.

The AfDB states that this can be achieved through incentives such as tax breaks, favourable customs regimes, government subsidies, and targeted infrastructure, which can help support the establishment of new export-oriented industries.

The Bank notes this in its Africa Industrialization Index 2022 and makes an example of Ethiopia.

“Ethiopia’s growing network of industrial parts has proved a smart way of aligning its trade and industrial policies, boosting investment in export-oriented industries such as textiles and apparel, leather products, pharmaceuticals, and agro-processing”

In the case of Ethiopia for instance Industrial Park developers and enterprises benefit from fiscal incentives that include income tax exemption for up to 8-15 years, export tax exemptions, exemption from customs duty, and an export credit guarantee scheme.

Other incentives include a guarantee against expropriation, repatriation of profits and dividends, foreign currency retention, no export price control, right to own immovable property, and fast-track services in licensing, permits, customs clearances, and other services can be termed as non-fiscal incentives forwarded to industrial park developers and enterprises.

Another measure that can be employed in Eswatini according to the report is the Tariffs Policy. It makes an example of how this policy is used in Nigeria.

“The Nigerian government is using tariff policy to encourage the revival of the country’s automotive industry, by raising tariffs on fully assembled vehicles and lowering tariffs on component parts.  It anticipates that the assembly industry could create as many as 70.000 direct jobs and another 200.000 indirect jobs”

Worth mentioning is that Eswatini is currently ranked 6th on African Industrialization Index 2022.

Share With Friends