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By NOMFANELO MAZIYA | 2024-01-28
Eswatini is poised to begin trading under the African Continental Free Trade Area (AfCFTA) agreement Wednesday, marking a significant step towards increased regional trade and economic integration.
This announcement was made by the Minister of Commerce, Industry and Trade Manqoba Khumalo in a press conference yesterday following the issuance of a Gazette by the International Trade Administration Commission (ITAC) on behalf of the five Southern African Customs Union (SACU) member states, including Eswatini.
The minister said the AfCFTA agreement, signed in 2018 and ratified by Eswatini in 2021, aims to create a single market for goods and services across the African continent.
He declared that this market, with over 1.3 billion people and a combined GDP of over US$3.4 trillion, presented immense opportunities for businesses and consumers alike.
"The commencement of trade under the AfCFTA agreement is a major milestone for Eswatini," said the minister, adding that the agreement would open up new markets for our businesses, attract investment, and create jobs.
“We are confident that this will contribute significantly to our economic growth and development," said Khumalo.
He highlighted that the gazette issued by ITAC outlines the rules of origin for products traded under the agreement.
“These rules are there to avoid trade diversion, where products from outside the continent are imported into the continent and further sold within the continent as if they were manufactured in the continent, thus displacing African products.,” said the minister.
Khumalo stated that the ministry had already engaged traders to take advantage of this great opportunity to penetrate the African market.
“ As a tool to enhancing trade under the AfCFTA Agreement, Eswatini has since joined other AfCFTA partner States that are part of the Guided Trade Initiative (GTI),” he said.
Khumalo further noted that under this initiative, the AfCFTA Secretariat assisted in connecting businesses and products for import and export among the partner States.
“Currently Egypt, Kenya, Cameroon, Rwanda, Ghana, Mauritius, Tanzania and Tunisia are trading under this initiative and Eswatini is amongst the countries that are set to join the second phase of the programme,” he said.
The minister revealed that traders in the country had already registered their interest in being part of the initiative.
The International Trade Department of the Ministry of Commerce Industry and Trade, in collaboration with the AfCFTA Secretariat, Eswatini Revenue Service (ERS) and the Eswatini Investment Promotion Authority (EIPA), will be engaging with these traders to assist them with increasing their market in the continent,” said Khumalo.
The minister underscored that the ministry was also engaged in discussions with key exporting companies namely; The Rhodes Food Group, CONCO, Eswatini Sugar Association (ESA), The Fridge Factory, just to name a few.
“These are some of the companies already exporting in the continent and are looking into expanding their exports into the rest of the continent. We will be reaching out to more traders including SMMEs and Women and Youth owned businesses, which are set to benefit from utilising this agreement,” he said.
Khumalo added that the ministry was ready to support traders to identify areas where they can utilise the preferences.
“The ministry together with ERS is currently planning an event to unpack this agreement, among other agreements, which have been signed by Eswatini, to ensure that traders have all the information on accessing the African market,” he said.
He further announced that the ministry, through support from the United Nations Economic Commission for Africa (UNECA) and the United Nations Development Programme (UNDP), had recently concluded the AfCFTA Implementation Strategy.
“The ultimate vision of this strategy is making Eswatini one of the Top 10 intra-regional exporters of value added goods and services,” said Khumalo.
The minister advised the nation to visit the International Trade Department offices on Gwamile Street between Eswatini Bank and The deputy prime minister’s office for more information.
“They can also visit Eswatini Revenue Service Headquarters in Ezulwini for the issuance of certificates of origin and Eswatini Investment Promotion offices at Sibekelo Building Mbabane,” he said.
Optimism in revised GDP forecast
Minister of Economic Planning Tambo Gina's 2023 GDP forecast review statement paints a bright picture for the nation's economic future.
It indicates that Real GDP is projected to grow by a robust 4.9 per cent this year, holding steady from previous estimates.
The 2024 steady hold is contrary to the upward revision for the following years, with an average growth of 3.4 per cent expected for 2025 and 2026, significantly higher than the previously projected 2.5per cent.
The minister, therefore, said the country’s economy depicted a recovery in 2023 from the low growth experienced in 2022.
“Real gross domestic product (GDP) grew by 3.0 per cent quarter-on-quarter and 7.7 per cent on a year-on-year basis, seasonally adjusted in the third quarter of 2023,” he said.
Gina noted that according to the latest projections in the January 2024 review, the Eswatini GDP is estimated to have expanded by 4.8 per cent in 2023, reflecting a slight upward revision from the previous projection of 4.7 per cent in September 2023.
He stated that the increase was accounted for by a strong performance from the tertiary sector, which counteracted a slowdown in the secondary sector and a poor performance in the primary sector.
“As previously anticipated, the second half of 2023 marked the commencement of Phase I of the Mkhondvo-Ngwavuma Water Augmentation Programme (MNWAP), which includes the construction of the Mpakeni dam estimated at E2.629 billion,” he said.
The minister revealed that this was expected to be one of the main drivers of growth for the short-to-medium term, coupled with other developments within other sectors of the economy.
He noted that exports of goods, on the other hand, grew by 19.2 per cent in 2023, compared to 6.3 per cent in 2022.
Gina said the growth was largely benefitting from a 12 per cent depreciation of local currency against major trading currencies.
On price developments, the minister said overall inflation increased to 5 per cent in 2023, relative to 4.8 per cent in the previous year.
“The discount and prime lending rates were unchanged at 7.50 per cent and 11.0 per cent, respectively,” he said.
He added that the unchanged discount and prime lending rates resulted in credit to the private sector having observed a 2.9 per cent increase in real terms in 2023 down from 7.0 per cent in 2022.
Gina further highlighted that gross official reserves rose by 15.2 per cent in 2023 compared to a decline of 15.4 per cent in 2022, saying they were sufficient to cover 2.8 months of import cover as of December 2023.
He said this fell below the international benchmark of 3.0 months of import cover.
“The recovery in reserve position was largely buoyed by rebound in the Southern African Customs Union (SACU) receipts, which increased from E5.82 billion in 2022/23 fiscal year to E11.75 billion in 2023/24,” he said.
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