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Eswatini is a small, open economy bordered by South Africa and Mozambique, with a population of about 1.2 million and an estimated per capita GDP of $3,898 in 2024. The economy is dominated by services, which account for just over half of output, while industry, particularly manufacturing, contributes about a third.

Poverty in Eswatini remains entrenched, driven by limited formal job creation, a weak business climate, and constrained economic opportunities. Unemployment is high and rising, particularly among youth, with 56% of those aged 15 to 24 unemployed in 2023. Eswatini’s vulnerability to external and climate shocks, especially recurrent droughts, further undermines rural livelihoods and slows poverty reduction efforts.

Inequality compounds these challenges, with large disparities in consumption and access to basic public services across regions and income groups. In 2024, 55% of the population lived below the Lower Middle Income Consumption poverty line of $4.20 per day (PPP 2021), levels that are high for a lower-middle-income country. A Gini coefficient of 54.6 reflects a persistent uneven income distribution. These outcomes highlight the need for better service delivery, more inclusive growth, as well as improved infrastructure to connect under-served regions.

Human capital development is also constrained by poor health and education outcomes. High rates of stunting, low adult survival due to preventable illnesses such as HIV, and a growing burden of non-communicable diseases weigh heavily on productivity. Education challenges particularly low quality, limited access and retention at the secondary level, and weak alignment with labor market needs further restrict opportunities. With over half the population under 25, Eswatini’s large youth cohort could be a powerful driver of growth, but without stronger investments in skills and health, the demographic dividend risks being lost.

ECONOMY

Economic growth slowed to 3% in 2024, from 3.5% in 2023, mainly reflecting weaker services sector output. Manufacturing, especially soft drink concentrates and sugar, benefited from higher external demand. Mining expanded because of increased coal output and the reopening of previously closed shafts. Stronger external demand led to a 14% rise in exports, while higher Southern Africa Customs Union (SACU) revenues supported domestic demand.

Inflation slowed from 5% in 2023 to 4% in 2024, as global inflationary pressures eased. Food inflation fell significantly (from 12.8% to 3.9%), but food insecurity remains a challenge, with about a fifth of the population estimated to be food insecure. The Central Bank lowered the interest rate by 50 basis points to 7% between September and November 2024, following South Africa’s policy rate trend. The benchmark rate was reduced further to 6.75% in May 2025.

The overall fiscal deficit narrowed slightly to 1.3% of GDP in 2024/25, from 1.4% in 2023/24. Increased expenditure, driven by a higher wage bill (after the government relaxed the hiring freeze), capital spending, and interest payments, outpaced the increase in SACU revenues. Public debt grew to 40.5% of GDP by the end of 2024, whereas arrears accumulated with the private sector were estimated at around 3.5% of GDP.

The current account surplus declined from 2.2% in 2023 to 0.8% of GDP in 2024. International reserves declined to 2.4 months of import cover in 2024 as the government used reserves to pay its external obligations.

Last Updated: Oct 06, 2025

Eswatini faces structural challenges in achieving inclusive and resilient growth. The World Bank’s 2025 Public Finance Review notes that the public sector-driven growth model is fiscally unsustainable, constraining private sector dynamism and reinforcing a cycle of low growth, high poverty, and inequality. Heavy reliance on volatile SACU transfers has weakened fiscal stability. In response, the government established the SACU Revenue Stabilization Fund, embarking on reforms to strengthen public financial management.

Private sector growth is constrained by limited access to finance, particularly for MSMEs and women-owned firms. The shows only 15% of MSMEs access formal credit, with a financing gap of 49% of GDP. High collateral demands, weak insolvency frameworks, and poor credit information systems exacerbate the problem, disproportionately excluding women.

Infrastructure deficits remain binding. The highlights electricity, land access, and informal practices as top business concerns. While 88% of households have electricity, coverage falls (60% in Lubombo, 63% in Shiselweni) and in lagging regions unreliable electricity has limited agro-processing and manufacturing investment which in turn has constrained diversification and job creation.

Energy security adds another challenge: Eswatini imports 70% of its electricity from South Africa. The updated Generation Master Plan aims to boost domestic capacity to 1 GW by 2050. Achieving this requires substantial investment and careful policy coordination.

Human capital outcomes lag despite relatively high social spending. Education absorbs 5% of GDP and primary access is near universal, but secondary enrollment is low, and the system aligns poorly with labor market needs. Stronger alignment of social spending with outcomes is essential to translate fiscal and infrastructure reforms into inclusive development.

Last Updated: Oct 06, 2025

Eswatini’s five-year CPF FY2024-2028 has an overarching goal to support Eswatini’s shift to a more private sector-led growth model that can promote inclusive, sustainable, and resilient economic growth. It is centered around two high-level outcomes: increased private sector employment, and improved human capital development.

It is aligned with Eswatini's National Development Plan (2023-2027) and the Program of Action (PoA) of the current government, both of which seek to ensure recovery from weak growth and limited poverty reduction through good governance, fiscal discipline, and inclusive private-sector growth that provides sustainable livelihoods for all, especially women and youth, as well as improvements in service delivery.

As part of the World Bank Human Capital Project, there is an accelerated effort to encourage investment in people as a critical step to boosting inclusive economic growth and ending extreme poverty. ľ��ӰԺ has been working with the government to ensure a coordinated and harmonized approach across key human development sectors, supporting the government in addressing the country’s low Human Capital Index, especially to ensure all children grow up healthy and reach their maximum learning and development potential. The harmonized approach to improving human capital in Eswatini includes three investment projects totaling $106 million.

Since July 1, 2024, Eswatini has been classified as a “blend country.”  This means it can access IDA concessional financing (low interest loans to support poverty reduction), as well as the International Bank for Reconstruction and Development (IBRD) market-based loans, which provide financing at slightly less than market terms to support middle-income countries and those with stronger creditworthiness. This dual eligibility allows Eswatini to benefit from both highly concessional resources and more flexible financing instruments, depending on the nature of its development priorities and fiscal capacity.

Last Updated: Oct 06, 2025

The supported 238,711 people (150,633 female) with essential health, nutrition, and population services. A total of 52,023 people were screened and diagnosed with hypertension, and 16,976 with diabetes. 1,351 Health Care Workers were trained in integrated reproductive, maternal, newborn, child, adolescent health (RMNCAH), and noncommunicable disease (NCD) services.

The - NRAP’s electrification has connected 5,732 households in Shiselweni, including 1,102 vulnerable households, increasing grid connections from 127,892 to 150,820. Activities were completed to help in reducing power outages and supporting increased demand from expanded grid access in Shiselweni, including the full construction of 83 km of 132kV transmission lines, four substations, and distribution network reinforcement. Testing and commissioning were completed in June 2025. The Eswatini ASCENT Project obtained concessional funding of $100 million to connect 50,000 households, reinforce networks, and support energy security studies.

The ($53 million) has completed three reservoirs and a pump station and construction of the main pipeline and laterals is near completion. To facilitate resilient water management, a National WASH Masterplan (up to the year 2050) has been developed, providing a strategy for the country to achieve universal service coverage in the medium to long term. A national drought policy has been developed; and a river health monitoring plan for the Mkhondvo river has been developed and is under implementation. The sanitation component of the project aims to reach 38,000 people with social and behavior change campaign (SBCC). SBCC activities including training, community engagements, SBCC messaging have been carried out in schools, health facilities, informal settlements and rural households in the Shiselweni Region.

Partners

Partners include the United Nations Development System (UNDS), United Kingdom, United States, European Union, and African Development Bank (AfDB). ľ��ӰԺ in Eswatini engages with other development partners through the Eswatini International Development Partners Platform (IDPP) which was established to foster enhanced information sharing and coordination of the development activities of Eswatini’s international development partners. The Bank has also initiated a Platform on Gender Equality and Citizen Engagement through which it intends to strengthen policy engagement, coordination and partnerships with government, civil society, and development partners on these two priority issues.

Last Updated: Oct 06, 2025