Swaziland

The adoption of the new Constitution marks the preliminary end of a ten year drafting and consultation process and a significant change of Swaziland’s political framework. On 26th July 2005 the King signed Swaziland’s Constitution, which entered into force on 8 February 2006. The Constitution tries to reconcile requirements of modern law with traditional Swazi law and customs and is therefore inevitably open to differing interpretation in important sections.

The economic situation has deteriorated in recent years. Real GDP growth performance has been poor, averaging 2.3% per year for the period 1998 to 2004, and was down to 1.8 percent in 2005. The real appreciation of the lilangeni since 2002, and high oil import prices, hurt Swaziland’s main exports (sugar, wood pulp, and garments) and manufacturing activities. Since South Africa democratised in 1994, Swaziland has lost part of its attractiveness to foreign investors. The perceived increase in the level of corruption lasting recent years has also reduced investor confidence. As regards public finance management, government is faced with increasing problems to contain the budget deficit and to exercise effective control over expenditure.

In the medium term, the Swaziland economy will be adversely affected by the removal of preferences that have supported the sugar and garment industries. In the longer term, SACU tariff revenues, the largest source of revenue for Government, are forecast to decline as a result of trade liberalisation.

Despite past interventions, the HIV/AIDS pandemic continues to spread rapidly and reached 42.6 percent among pregnant women attending ante-natal clinics in 2004. The combined effects of HIV/AIDS and poverty have caused a surge in the number of orphans and out-of-school children, many of whom live in very precarious situations. Given the present level of sero-positivity, it is likely that many traditional social safeguards are being eroded, while the demands made on health services are putting additional stress on the government budget and public services.

The combined effect of the above developments has led to deterioration in the delivery of public services to such an extent that the country might become dysfunctional in the respective areas unless appropriate remedial measures are taken.

Against this background and after extensive consultations among stakeholders, the EC and Government of Swaziland have agreed on two focal sectors of support to contribute to the objective of poverty reduction: firstly, promotion of human development through support to the health and education sectors, and secondly improvement in the supply of water to the poor. Outside the focal areas, support will consist in particular of an allocation to EPA support, Governance initiatives, Non-State Actors and a Technical and Cooperation Facility. The main cross-cutting issues will be gender, HIV/AIDS, good governance, capacity building and environment. Across all areas of EC support, it is expected that NSA will be able to contribute to the design, implementation and/or monitoring of the interventions. The overall indicative allocation for the A- Envelope under the 10th EDF amounts to € 63 million and the B- Envelope to € 2 million.