Chris Vandome
Research Analyst, Africa Programme
The US has decided that Swaziland’s inclusion in the African Growth and Opportunities Act (AGOA) will end from 1 January 2015. Although this decision will be economically and politically detrimental for the country it is unlikely to push the increasingly isolated monarchy of King Mswati III towards serious reform.
Thousands of Swazi public servants take part in a protest march in Mbabane on March 18, 2011. Photo by Jinty Jackson / AFP / Getty Images.Thousands of Swazi public servants take part in a protest march in Mbabane on March 18, 2011. Photo by Jinty Jackson / AFP / Getty Images.

Swaziland’s inclusion in AGOA, which grants tax free access to the US market for certain products, was seen as an opportunity for job creation and diversification and was expected to generate significant developmental benefit. The Act was passed in 2000, and from 2001 to 2006 Swazi textile exports to the USA increased by over 250 per cent. The increased exports resulted in growth in textile production and other manufacturing industries, generating thousands of jobs. Today Swazi exports to the US are half what they were at their peak in 2004, but still double what they were before the introduction of the Act.

The conditions for Swaziland to remain in AGOA included amending four acts relating to industrial relations, the suppression of terrorism, and public order, as well as establishing a code of conduct for the police during public protests. Primary among the concerns of US officials is the use of security forces and arbitrary arrests to stifle peaceful demonstrations, and the lack of legal recognition for labour and employer federations. Adherence to the conditions set by AGOA would bring Swaziland in line with internationally recognised workers’ rights.

Despite rhetoric demonstrating support of the AGOA programme and commitment to reform, the Swazi government has achieved very little. Tentative movements towards reform have been made, but they are not enough. The first of the required amendments to the suppression of terrorism acts was only tabled in February 2014.

The failure to meet the requirements set by AGOA is a symptom of deeper structural governance problems in the country. The judiciary is heavily controlled by the government, the traditional Tinkhundla system of government prohibits the registration of political parties, and the king has the power to appoint a significant number of the members of the two houses of parliament and the government. Judicial bias has been highlighted recently by the high profile arrests of newspaper editor Bheki Makhubu and human rights lawyer Thulani Maseko, who were charged with contempt of court following the publication of articles critical of the king. The pair were released and promptly re-arrested on the orders of the kingdom’s Chief Justice.

Political parties are prohibited from registering and competing in elections, and although there are multiple opposition groups, including the People’s United Democratic Movement (PUDEMO), which receives support from the Congress of South African Trade Unions (COSATU), internal opposition is fractured and demoralised. Reform must come from external pressure or from the pragmatic need to combat the worsening economic situation, as argued by a recent Chatham House report.

The need for political and structural economic reform in Swaziland has been a matter of public discourse for many years, and seemingly little has been achieved. Every time the economy has been pushed to the brink an exit option has been provided and the country has survived.

But the country is running out of options. Swaziland’s economy is estimated to have grown by 2.75 per cent in 2013, a significant recovery following a deep fiscal crisis in 2011. But the country remains in a fragile position. It has an unemployment rate of around 40 per cent and has been almost entirely dependent on revenues from sugar exports and transfers from the Southern African Customs Union (SACU).

Both of these revenue streams are uncertain. The current Economic Partnership Agreement (EPA) with the EU will come to an end before the end of 2014, resulting in a loss of preferential access for sugar into the EU, and payments from SACU are expected to decline following a change in the revenue sharing formula. Therefore the government will no longer be able to depend on revenue transfers from its richer neighbours.

Diversification of the economy must be a priority but the government has been incredibly slow to act and without deeper democratic accountability and policy responsiveness there will be little incentive for the government to change until it is too late.

Notably, while Swaziland has been removed from AGOA, the US has reinstated Madagascar. This signals that Swaziland’s removal does not have to be permanent and that reinstatement may come if the required reforms are completed. But if the government is to diversify the economy, and create a more business friendly environment with a strong rule of law, then getting back into AGOA is just the first step.

To comment on this article, please contact Chatham House Feedback