Digital Transformation and Public Finance Reform Critical for Eswatini’s Inclusive Growth: World Bank

Eswatini’s economy is projected to grow by approximately 5% in 2025, buoyed by increased public and private sector investments, even amidst global uncertainties.

The World Bank’s newly released Eswatini Economic Update (EEU) underscores the urgent need for the country to digitalise, reform public finances, and resolve persistent structural economic bottlenecks to sustain growth momentum and foster inclusive development. Titled “Harnessing the Potential of Digital Technologies for Eswatini’s Growth and Job Creation”, the report is a strategic roadmap to unlock long-term prosperity for the Kingdom of Eswatini.

Macroeconomic Outlook and Growth Drivers

Eswatini’s economy is projected to grow by approximately 5% in 2025, buoyed by increased public and private sector investments, even amidst global uncertainties. The report highlights that such growth is promising but fragile, necessitating deliberate policy action to consolidate gains and ensure broad-based economic participation.

The key challenge, according to the EEU, lies in transforming short-term gains into medium- and long-term inclusive growth by addressing fiscal vulnerabilities, diversifying the economic base, and enhancing institutional and structural efficiency.

Digitalization as a Game-Changer

Digital technology is positioned at the center of Eswatini’s development strategy. The report identifies digital transformation as a crucial lever to overcome deep-seated structural challenges, including high unemployment (35.4%), underperformance in agriculture and services, and limited innovation capacity.

“This report aligns with the Kingdom of Eswatini’s 2024–2028 digital strategy,” said Hon. Thambo Gina, Minister for Economic Planning and Development. “It provides actionable insights to reinforce our efforts to expand digital access and reduce fiscal dependency, particularly on Southern African Customs Union (SACU) transfers.”

Despite 4G network coverage reaching 95% of the population, actual internet usage remains low at 58%, primarily due to high data costs—3.47% of GNI per capita, exceeding regional affordability benchmarks. The report calls for reforms in the telecom sector, including:

• Restructuring Eswatini Posts and Telecommunications Corporation (EPTC)

• Adopting open access network policies to promote fair competition

• Updating regulatory frameworks to lower data prices and improve service delivery

Enabling SMEs and Entrepreneurship

With nearly half of Eswatini’s Small and Medium Enterprises (SMEs) facing hurdles in digital adoption, the EEU calls for targeted skills development programs, entrepreneurship support, and mechanisms to integrate SMEs into public procurement systems. This, it argues, will drive innovation, productivity, and employment creation, particularly for youth and women.

Pillars for Economic Transformation

To fully leverage the benefits of a digital economy and strengthen macroeconomic resilience, the EEU outlines three foundational policy pillars:

1. Effective Macroeconomic Management

   • Strengthen fiscal oversight and reduce budgetary inefficiencies

   • Increase domestic resource mobilization through digital taxation reforms

2. Private Sector-Led Job Creation

   • Improve the business environment

   • Remove regulatory bottlenecks hindering entrepreneurship

3. Efficient and Affordable Public Services

   • Reform public sector enterprises, including the EPTC

   • Expand digital public infrastructure such as national digital IDs

Strategic Policy Recommendations

The report offers an integrated policy framework for harnessing digital potential:

• Digital Governance: Establish clearer institutional roles and coordination mechanisms for digital policy implementation.

• Telecom Sector Reform: Fast-track the restructuring of EPTC and enable open-access infrastructure.

• Digital Infrastructure Investment: Develop foundational digital systems including e-government services and secure identity systems.

• National Digital Skills Plan: Design and implement training programs aligned with emerging labor market needs.

• Innovation Ecosystem: Foster regulatory reforms to support startups and provide easier access to finance and procurement opportunities.

The EEU emphasizes that bold reforms, coupled with strong policy coordination and inclusive digital development, are essential for Eswatini to achieve sustainable economic growth and reduced inequality. The transition to a digital economy offers a powerful opportunity—but only if underpinned by broad-based capacity building, market reforms, and accountable governance.

“Eswatini’s digital transformation presents an opportunity to drive inclusive growth. Realizing this will require bold reforms to unlock the full potential of digital technologies,” stated Satu Kahkonen, World Bank Division Director for Eswatini. “Strengthening coordination across government initiatives, accelerating digital skills development, and fostering innovation will be key.”