The business market in Eswatini is made up of various industries including retail, agro-processing, and tourism, apart from a few multinationals which are export-oriented within the manufacturing sector. Most mid-market businesses in Eswatini are typically locally owned and have limited access to funding and exposure to international markets. Although there are few multinationals in the export-oriented manufacturing sector, these are the exception rather than the norm.
Prior to the COVID-19 pandemic, Eswatini businesses faced several challenges.
One of the most significant challenges was a lack of financing, particularly from formal lending institutions which hampered businesses' ability to invest in growth and expansion. Another challenge was labour shortage, with many businesses reporting difficulty finding and retaining employees in technical and specialised fields. High bureaucracy and regulations made it difficult for businesses to establish and grow. Furthermore, limited access to international markets posed a challenge for many Eswatini companies due to a lack of exposure and resources.
Following the peak of the COVID-19 pandemic
Businesses faced challenges such as instability in local politics, high levels of bureaucracy due to the pandemic, and limited access to financing. The government needed to take steps to address these challenges to improve the general business environment and promote entrepreneurship.
According to the World Bank, private investment has been limited, owing to, among other factors, heavy state involvement in the economy, a lack of transparency due to governance challenges (exposed further by the political unrest that occurred in June 2021), and a generally weak business environment. It further states that due to an over-reliance on volatile customs revenues, the fiscal situation has been precarious. Over-reliance on Southern African Customs Union (SACU) revenues has resulted in significant fluctuations in public spending and continues to pose a challenge in managing fiscal resources and growth potential. Volatile SACU receipts, combined with rigid government spending, have resulted in persistent fiscal deficits in recent years.
The COVID-19 pandemic added to the already existing challenges for businesses in Eswatini. The pandemic disrupted global supply chains, causing shortages of goods and materials and impairing businesses' ability to meet customer demand. Additionally, businesses have been impacted by declining consumer spending, with people becoming more cautious with their money due to economic uncertainty and job losses. Remote work and technology have also become more prevalent as a result of the pandemic, posing new challenges, particularly for those that are ill-equipped to adapt to these changes. Internet connectivity and high internet speed have become a basic need for businesses and households. The pandemic also raised new health and safety concerns which require businesses to take precautions to protect their employees and customers.