Eswatini Seeks to Capitalize on South Africa's Economic Slowdown

Eswatini may benefit from South Africa's economic slowdown as companies look to relocate and maintain access to the US market under the African Growth and Opportunity Act (AGOA). The Kingdom's stable economy and low inflation make it an attractive option for manufacturers. According to Getaneh Woldemichael, Commercial Director of Eswatini Air, the country's economic challenges could be turned into investment opportunities. Eswatini's economic growth projections are encouraging, with a forecasted growth of 5.6 per cent.

South Africa's economic growth prospects are subdued, with a revised forecast of 1.2 per cent, down from 1.6 per cent in April. The International Monetary Fund (IMF) projects growth of one per cent. Uncertainty surrounding AGOA and its impact on South African companies exporting to the US could create opportunities for Eswatini. Woldemichael noted that Eswatini's preferential access to the US market under AGOA makes it an attractive location for companies looking to maintain access to the American market.

The global economic environment is challenging, with inflation, geopolitical tensions, and slowing economic growth affecting several countries. The relationship between inflation and GDP growth has been relatively close between 2014 and 2018, but inflation has since overtaken economic growth in many economies. However, Eswatini remains in a comparatively favourable position, with relatively low inflation of approximately 2.9 per cent.

The Atlas of Sustainable Development Study categorizes Sub-Saharan Africa as a region facing very high structural economic risks. Woldemichael noted that the classification reflects the vulnerability of economies to global shocks, including geopolitical conflicts, damaged infrastructure, insecurity, and disruptions to economic activity. Eswatini's geographical position as a landlocked country adds to the cost of importing fuel, which could continue to put pressure on the airline's operating costs.

Eswatini Air has recorded growth in passenger numbers, with its load factor increasing from 50 per cent to 61.7 per cent between September last year and September this year. Woldemichael said the improvement represented an 11.7 percentage-point increase in the proportion of available seats occupied by paying passengers. Although the airline is still below the African industry average load factor of approximately 73 per cent, the growth demonstrates that more travellers are choosing to fly with Eswatini Air.

The introduction of the e-Visa service will provide a quick turnaround time for travellers with urgent travel needs. Chief Immigration Officer Mthokozisi Dlamini said the service is specifically designed for people who need to travel at short notice, including tourists visiting neighbouring South Africa who might decide to spend a night in Eswatini. The e-Visa service aims to promote ease of travel to Eswatini.

Woldemichael praised the maintenance team for taking care of the airline's Embraer E145 aircraft, saying their work had contributed significantly to the airline's operational performance. He emphasized that reliability is not necessarily determined by the number of aircraft an airline operates, but also by the dedication and commitment of its employees. The airline's maintenance team has played a crucial role in ensuring the operational performance of its aircraft.

Key points

• Eswatini's stable economy and preferential trade access to the US make it an attractive location for manufacturers relocating from South Africa.