Namibia Swaziland

COUNTRY PROFILE 2001

Namibia Swaziland

This Country Profile is a reference tool, which provides analysis of historical political, infrastructural and economic trends. It is revised and updated annually. The EIU’s Country Reports analyse current trends and provide a two-year forecast

The full publishing schedule for Country Profiles is now available on our website at http://www.eiu.com/schedule

The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through our digital portfolio, where our latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group.

London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected]

Website: www.eiu.com

Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, on-line databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office

Copyright © 2001 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the EIU does not accept responsibility for any loss arising from reliance on it.

ISSN 1352-0857

Symbols for tables “n/a” means not available; “–” means not applicable

Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK.

Comparative economic indicators, 2000

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 1

Contents

Namibia

4 Basic data

5 Political background 5 Historical background 10 Constitution and institutions 11 Political forces 14 International relations and defence

16 Resources and infrastructure 16 Population 17 Education and health 20 Natural resources and the environment 21 Transport and communications 23 Energy provision

25 The economy 25 Economic structure 26 Economic policy 30 Economic performance

32 Economic sectors 32 Agriculture and fishing 36 Mining and semi-processing 39 Manufacturing 40 Construction 40 Financial services 42 Other services

43 The external sector 43 Trade in goods 45 Invisibles and the current account 45 Capital flows and foreign debt 47 Foreign reserves and the exchange rate

48 Appendices 48 Regional organisations 48 Sources of information 51 Reference tables 51 Population 52 Transport statistics 52 Port of Walvis Bay traffic 53 Electricity generation and sales 53 Gross domestic product 54 Gross domestic product by expenditure 55 Gross domestic product by sector 56 Government finances 57 Money supply and credit 57 Interest rates 57 Domestic public debt

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 2

58 Consumer price inflation 58 Cereal production 59 Livestock marketing 59 Fish catch 60 Minerals production 60 Private construction activities 61 Assets and liabilities of deposit money banks 61 Namibian Stock Exchange 62 Tourist accommodation 62 Foreign trade indices 63 Exports of goods and services 64 Imports of goods and services 65 Balance of payments, IMF series 66 Balance of payments, national series 67 External debt 67 Net official development assistance 68 Foreign reserves 68 Exchange rates

Swaziland

69 Basic data

70 Political background 70 Historical background 71 Constitution and institution 72 Political forces 73 International relations and defence

74 Resources and infrastructure 74 Population 74 Education and health 75 Natural resources and the environment 75 Transport and communications 76 Energy provision

76 The economy 76 Economic structure 77 Economic policy 78 Economic performance

79 Economic sectors 79 Agriculture and forestry 80 Mining 80 Manufacturing 80 Construction 81 Financial services 81 Other services

82 The external sector 82 Trade in goods 83 Invisibles and the current account 84 Capital flows and foreign debt 85 Foreign reserves and the exchange rate

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 3

86 Appendices 86 Regional organisations 93 Sources of information 95 Reference tables 95 Population census results 96 Employment 96 Transport and communications 97 Electricity statistics 97 Central government finances 98 Monetary survey 98 Gross domestic product 99 Gross domestic product by expenditure 99 Gross domestic product by sector 99 Consumer prices 100 Agriculture 100 Minerals production 101 Agro-industry 101 Construction, Mbabane and Manzini 101 Swaziland stock exchange, end-Jun 102 Tourism statistics 102 Exports 102 Imports 103 Destination of exports 103 Origin of imports 103 Balance of payments, IMF series 104 Balance of payments, national series 104 External debt 105 Net official development assistance 105 Foreign reserves 105 Exchange rates

Namibia

Basic data

Land area 824,269 sq km

Population 1.76m (2000 estimate)a

Main towns Population in ’000 (2000 estimates)

Windhoekb (capital) 230 Ondangwac 70 Oshakatib 60 Walvis Bayb 48 Swakopmunda 30

a Extrapolated from 1991 census. b Municipality figures. c EIU estimate.

Climate Semi-arid and subtropical

Weather in Windhoek Hottest months, January and February, 17-39°C (daily minimum and (altitude 1,833 metres) maximum); coldest months, June and July, 6-20°C; driest month, July, 1 mm average rainfall; wettest month, January, 350 mm average rainfall

Languages English (official), Oshivambo, Afrikaans, Nama/Damara, Herero, German, Lozi, Kwangali and Tswana

Measures Metric system

Currency Namibia dollar (N$)=100 cents; introduced in September 1993, at par with the South African rand. Average exchange rate in 2000: N$6.94:US$1. Exchange rate on July 16th 2001: N$8.24:US$1

Fiscal year April to March

Time 2 hours ahead of GMT

Public holidays January 1st, March 21st (Independence Day), Good Friday, Easter Monday, May 1st (Workers’ Day), May 4th (Cassinga Day), Ascension Day, May 25th (Africa Day), August 26th (Heroes’ Day), December 10th (Human Rights Day), December 25th and 26th (Christmas Day and Family Day)

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 5

Political background

Namibia is a unitary republic with a multiparty democratic system. The South West Africa Peoples’ Organisation (SWAPO) formed the first internationally recognised Namibian government after winning the UN-supervised pre- independence election in November 1989. SWAPO was re-elected in the parliamentary election in 1994, when it gained a two-thirds majority in the National Assembly (lower house). The SWAPO leader, Sam Nujoma, who had been appointed head of state by the first parliament, was directly elected at the concomitant presidential poll. Although the Namibian constitution stipulates that no individual can hold the presidency for more than two consecutive five-year terms, in 1998 SWAPO used its two-thirds majority in the lower house to enable Mr Nujoma to stand for a third term, on the grounds that he had only served one directly elected term. He was duly re-elected in the December 1999 presidential election with a virtually unchanged share of the vote, and SWAPO slightly increased its majority in the accompanying parliamentary election. The next presidential and legislative elections are scheduled for 2004.

Historical background

A violent colonial past The four key factors that have shaped contemporary Namibia are its geographical isolation, the small and diverse indigenous population, the violence of the colonial era, and the long independence struggle. The country’s name derives from the Namib Desert, which stretches along most of the coast and deterred systematic colonisation of the interior by Europeans until the 19th century. Germany’s colonisation began following the acquisition of the first land rights by a trader, Adolf Lüderitz, at Angra Pequena (now Lüderitz) in 1883, and a protectorate was proclaimed the following year. The gradual expropriation of land and cattle by settlers eventually provoked an uprising by the Herero and the Nama in 1904-08, which resulted in the decimation of the former.

Namibia became commercially useful to Germany with the start of copper and diamond mining and the introduction of karakul sheep from Central Asia, which were farmed for their pelts. After South Africa was awarded control of Namibia in 1915, large numbers of Afrikaners were allocated prime farming land under a generously subsidised settlement programme, whereas Africans were increasingly restricted to reserves introduced by the German colonial government.

The road to independence The UN declared Namibia a trust territory in 1945, but it was not until the 1970s that the Security Council took charge of negotiating an independence settlement with South Africa. A modern nationalist movement had emerged at the end of the 1950s, with the establishment of SWAPO under the leadership of Mr Nujoma. South Africa refused to negotiate with the party. SWAPO adopted a Marxist-Leninist programme in the 1960s, but its cultivation of ties

with the Soviet bloc was mainly intended to secure Soviet support for a guerrilla campaign by the People’s Liberation Army of Namibia (PLAN).

After Angola gained independence in 1975, SWAPO was granted bases for its military operations by the Movimento Popular de Libertação de Angola (MPLA). However, the key development in securing Namibian independence was the adoption by the UN Security Council of Resolution 435 in 1978. This provided for a phased decolonisation process based on a ceasefire, the demobilisation of armed forces monitored by a UN peacekeeping force (the UN Transitional Assistance Group, UNTAG), and free and fair elections supervised by the UN in co-operation with South Africa. The implementation of Resolution 435 was finally made possible by the “linkage diplomacy” of the US administration under its then president, Ronald Reagan, leading to agreements in 1988 between South Africa, Angola, Cuba and the US that led to the simultaneous withdrawal of South African troops from Namibia and of Cuban troops from Angola.

The 1989 election SWAPO’s main opponent in the constituent assembly election in November 1989 was the Democratic Turnhalle Alliance (DTA), a coalition of ethnically based parties that had led a South African-backed multiparty government with limited autonomy in 1984-89 and received covert funding from Pretoria for its election campaign. Although, as the only party with genuine nationalist credentials, SWAPO was the clear favourite, it was dogged by allegations that it had maltreated and killed several thousand Namibian exiles accused of being South African spies by the party leadership in the 1980s. Since independence SWAPO’s attempts to play down the issue have failed to mollify survivors, who have formed the Namibia Human Rights Society (NHRS) and the Breaking the Wall of Silence (BWS) movement. In 1998-99 the issue was revived by the DTA, which has called for the establishment of a Namibian equivalent of South Africa’s Truth and Reconciliation Commission.

These allegations, together with the adoption of a party-list system of proportional voting—still in use for National Assembly elections (but not for elections to the upper house, the National Council)—contributed to the modest scale of SWAPO’s winning margin (it gained 57% of the vote). The DTA and the Damara-based United Democratic Front (UDF) were the only two opposition parties to secure significant popular backing in the election. As SWAPO did not constitute over two-thirds of the assembly, the backing of other parties was needed to pass the post-independence constitution. Mr Nujoma was appointed as first head of state with unanimous backing. The new government, which took office in March 1990, was a blend of formerly exiled SWAPO leaders, representatives of the party’s internal leadership and white Namibians. This mix has gradually altered in subsequent cabinet reshuffles and there are now no white ministers, although there are still several whites at deputy and permanent secretary level.

SWAPO strengthens its hold In the first elections for regional authorities in 1992, SWAPO gained 67% of the on power in the mid-1990s vote, winning outright control of six of the 13 regions, with the DTA—whose share of the vote was only slightly down on 1989, at 27%—winning in Caprivi in the north-east and two eastern regions. Mishake Muyongo, a Caprivian and

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 7

former SWAPO vice-president, replaced a white farmer, Dirk Mudge, as DTA president in 1992, but this did little to improve the party’s credibility. SWAPO strengthened its hold on power in the December 1994 general election, when it won decisive majorities in the presidential and lower house polls (of 76% and 73%, respectively). However, in the local authority elections in 1998 SWAPO’s share of the vote declined to 60%, and, because only one-third of voters turned out, it failed for the first time to gain majority backing from the electorate. In 1998 Mr Muyongo was suspended by the DTA’s central committee for promoting the secession of Caprivi, and, having fled to Botswana at the end of that year with a group of close associates, became totally discredited following the abortive secessionist armed attack on Katima Mulilo in Caprivi in August 1999. Mr Muyongo is unlikely to return from exile in Denmark, where he was granted refugee status, as he would immediately be put on trial for treason.

Comfortable SWAPO SWAPO won the December 1999 legislative election with virtually the same victory in 1999 election level of support as in 1994. The party picked up two more seats in the National Assembly, owing to the division of the opposition vote caused by the creation in March 1999 of a new party, the Congress of Democrats (CoD), led by a former trade unionist and SWAPO guerrilla fighter, Ben Ulenga. The CoD failed to make significant inroads into SWAPO’s overwhelming support in the north, where there were some reports of intimidation, although it gained a substantial share of the vote in parts of Windhoek, where it won support from younger black professionals, and beat the DTA in Caprivi. SWAPO successfully painted the CoD as a sell-out to its core supporters. Nonetheless, the CoD gained the second highest number of votes—the DTA lost almost half of its 1994 support—and Mr Ulenga narrowly beat the DTA president, Katuutire Kaura, into third place in the presidential poll.

Election results, Dec 1999

‘000 votes % of total Seats won Presidential Sam Nujoma (SWAPO) 416 76.8 – Ben Ulenga (CoD) 57 10.5 – Katuutire Kaura (DTA) 53 9.8 – Justus Garoeb 16 3.0 – Total votes cast 542 100.0 – National Assembly South West Africa Peoples’ Organisation (SWAPO) 408 76.1 55 Congress of Democrats (CoD) 53 9.9 7 Democratic Turnhalle Alliance (DTA) 51 9.5 7 United Democratic Front (UDF) 16 3.0 2 Monitor Action Group (MAG) 4 0.7 1 Others 5 0.9 0 Totala 536 100.0 72

a Including spoilt ballots.

Sources: Directorate of Elections; The Namibian.

Important recent events

March 1999: A new party, the Congress of Democrats (CoD), is launched by Ben Ulenga, a former central committee member of the South West Africa Peoples’ Organisation (SWAPO) who had resigned his post as Namibia’s high commissioner to the UK the previous year, in protest at the party’s support for a third presidential term for the SWAPO leader, Sam Nujoma.

August 1999: Following an armed attack by a small group of secessionists on army and police posts in the Caprivi region’s capital, Katima Mulilo, a state of emergency is declared and Caprivi’s borders are closed.

December 1999: Mr Nujoma is re-elected for a third five-year term with a 77% share of the vote. His main challenger, Mr Ulenga, wins only 11%. SWAPO also gains an increased majority in the National Assembly, winning 55 of the 72 seats, with the CoD and Democratic Turnhalle Alliance (DTA) tying on seven each.

December 1999: The International Court of Justice in The Hague rules that Kasikile/Sedudu island in the Chobe river belongs to Botswana, a verdict that Mr Nujoma pledges Namibia will fully respect.

January-June 2000: SWAPO’s decision to allow Angolan government troops to attack rebel União Nacional para a Independência Total de Angola (UNITA) forces from the Namibian side of the border at the end of 1999 results in increasing instability along the border region east of Rundu.

April 2000: The DTA and the United Democratic Front (UDF) form a coalition with the ultimate aim of becoming a single party. With control of nine seats this enables the coalition to claim the status of official opposition in parliament, in place of the CoD, despite the latter gaining a slightly larger share of the vote than the DTA in the December 1999 election.

August 2000: Most Angolan government troops are reportedly withdrawn after widespread local complaints of poor discipline; the Namibia Defence Force (NDF) confirms that it is engaged in pursuit raids across the border against UNITA.

December 2000: The SWAPO secretary-general, Hifikepunye Pohamba, announces that party loyalists will be appointed to key posts in the government and parastatals to ensure that the ruling party’s 1999 election manifesto pledges can be implemented.

January 2001: The last of 132 Caprivians charged with 265 counts of high treason and other offences, in connection with the August 1999 secessionist attack on Katima Mulilo, enter pleas of not guilty at Grootfontein magistrate’s court. Their trial is due to commence early in the second half of 2001.

March 2001: Mr Nujoma tells University of Namibia students that the police have orders to arrest, detain and deport homosexuals, who have no place in Namibia; he also warns his audience to guard against all foreign influences. The mines and energy minister, Jesaya Nyamu, confirms long-standing rumours that Namibia was given a diamond concession near Tshikapa in the

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 9

Democratic Republic of Congo by that country’s late president, Laurent Kabila, in 1999.

April 2001: Mr Pohamba announces that the process of choosing a new SWAPO leader to succeed Mr Nujoma will take place at the party’s next congress, scheduled for August 2002. Mr Pohamba appeared to rule out any question of the constitution being further amended to enable Mr Nujoma to stand for a fourth term at the next presidential election, due to be held by the end of 2004.

June 2001: In an interview with the South African Broadcasting Corporation, Mr Nujoma appears to make an unequivocal pledge that he will stand down by the end of 2004, declaring he that he will make way for a younger leader.

July 2001: The Ministry of Defence announces the return of 1,000 of the estimated 2,000 NDF troops sent to support the Congolese government, owing to the implementation of the Lusaka peace accord. It states that only 30 NDF members were killed in action in Congo, in contrast to unofficial estimates of over 50 fatalities.

Land reform is still Land reform is an issue, but unlike in Zimbabwe the government has pursued a proceeding slowly strategy based on purchasing land from commercial farmers for resettlement by black Namibians under a “willing-buyer, willing-seller” principle. The government has continuously reaffirmed that this will remain the basis of its land policy, in line with the constitution, which entrenches the right to private property. However, there is widespread criticism of the government for focusing too much on redistributing commercial farmland, which is expensive to buy, at the expense of reforming the communal farming system, on which a majority of Namibians depend for their livelihood. Whereas a commercial land reform act was passed in 1999, a communal land reform bill has still to reach the statute book. A key factor is that although land is inequitably distributed— some 4,000, mainly white, farmers own 6,400 holdings covering 30.5m ha, or 37% of Namibia’s land area (compared with 2.2m ha owned by black commercial farmers and 2.9m ha by foreign nationals)—most of this land is too arid for small-scale crop farming, and is only suitable for large-scale ranching. The government has ruled out returning land to ancestral owners— the Herero, in particular, were dispossessed of large tracts of land in central Namibia by the German settlers—on the grounds this could provoke inter- tribal tensions and disrupt the predominantly livestock-based commercial farming sector.

However, the process has proved both expensive and slow: as of end-2000 just 97 commercial farms covering 569,000 ha had been purchased for the resettlement of some 29,000 Namibians. Only N$100m (US$12m) is being allocated for land acquisition during the second five-year national development plan (NDP2) of 2001-05. Communal land, mainly in northern Namibia, covers around 34m ha of generally better-watered land, but supports some 140,000 families, just under half of the total population. However, overcrowding is causing the degradation of available land, and illegal fencing (often by influential locals) has increased inequality. The lack of tenure is a

major constraint—land is in the gift of chiefs, and with no tenancy rights subsistence farmers have no collateral for loans to buy equipment.

In 2000 the SWAPO secretary-general, Hifikepunye Pohamba, warned farmers that the government’s patience was running out and that if they continued to prove unwilling to sell more land there would be no alternative but to expropriate some in the interest of landless Namibians. However, Mr Pohamba stressed that this would be in line with the constitution and subject to the payment of “just compensation” (which would undoubtedly turn out to be less than the full open-market price). Article 16 of the constitution in fact permits expropriation of private property in the national interest subject to such payment. At an end-2000 “cabinet retreat” in Swakopmund a plan to acquire a minimum of 9.5m ha for resettlement and redistribution over the next five years at an estimated cost of N$1bn was approved, and Mr Nujoma said that land not being effectively utilised would be repossessed by the state. The government hopes to obtain foreign aid to meet most of the cost.

Constitution and institutions

The 1990 constitution is the linchpin of Namibia’s multiparty democratic system, and SWAPO has observed its provisions with one main exception (see below). The president and the 72-seat National Assembly are elected by universal adult suffrage every five years; in addition, the president can appoint up to six non-voting members of the assembly. A part-proportional closed party-list system is used for the parliamentary poll. To be elected, a presidential candidate must obtain at least 50% of the vote, and the constitution specifies that a president can only serve two successive, directly elected, five-year terms. However, in a move orchestrated by senior loyalists of Mr Nujoma, the 1997 SWAPO National Congress decided that, as Mr Nujoma had not been directly elected in 1990, his real first term as defined by the constitution had actually started in 1994, and an amendment was duly approved by parliament enabling him to stand for a third term in the presidential election in 1999. In theory, the third term is a special case for Mr Nujoma as Namibia’s founding president, and the two-term limit remains for future presidents.

The 26-member National Council (the upper house of parliament) consists of two councillors nominated by each of Namibia’s 13 regional authorities, for which elections are held every six years on a constituency basis. The main safeguard against autocracy lies in the entrenched clauses of the constitution guaranteeing fundamental human rights, including freedom of association and expression, an uncensored press, and the proscription of arbitrary arrest, detention without trial and the death penalty. The right of individual property ownership and payment of just compensation for any expropriation by the state are equally enshrined. However, some civil rights, including a limit on how long a detainee can be held without trial, are suspended under a state of emergency, which the president can decree without reference to parliament. Several hundred Caprivians arrested in the aftermath of the failed secessionist attack on Katima Mulilo, when the area had been placed under a state of

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 11

emergency, have given evidence of maltreatment and torture at the hands of police and army interrogators.

Political forces

SWAPO has consolidated SWAPO’s policy of national reconciliation and progress in improving living its support standards for the deprived majority of the population in the early 1990s enabled the party to increase its support after the 1989 legislative election. In addition to its traditional strength in its northern, mainly rural, heartland, SWAPO gained support from the emergent black middle class in Windhoek and other towns, along with white Namibians reassured at the government’s commitment to a basically market-oriented economic development strategy. However, in the latter part of the decade voter turnout declined, partly as a result of disillusionment with stagnating living standards, owing to slower economic growth and, for rural Namibians, little progress in communal land reform. Nevertheless, the opposition parties have been unable to capitalise on the electorate’s increased scepticism and SWAPO has had no difficulty in retaining its majority support.

The 1999 elections reinforced SWAPO’s position as Namibia’s dominant political force. The failure of the CoD to become the official opposition in parliament—owing to the formation of a coalition by the DTA and the UDF in April 2000, with SWAPO’s tacit support—has weakened effective criticism of the government. If the DTA and UDF carry through their stated intention of forming a single party in time for the next national elections (due by end- 2004), this might gain it some seats in the mainly Herero and Damara inhabited rural areas of eastern, western and north-western Namibia. However, it would have little impact on SWAPO’s northern stronghold. Among the CoD’s seven MPs are some effective parliamentary performers, and it is the only party likely to appeal to disillusioned SWAPO supporters. However, as the 1999 election campaign made clear, SWAPO will have little compunction in making every effort to discredit the CoD, and Mr Ulenga will never be forgiven for leaving the ruling party and trying to split it.

Main political figures

Helmut Angula: Despite his demotion from finance minister to agriculture minister in 1996, Mr Angula remains an influential cabinet member and could be a candidate to succeed Sam Nujoma as leader of the South West Africa Peoples’ Organisation (SWAPO). As a northerner from the largest Ovambo ethnic sub-group, the Kwanyama, he could expect a solid core of support from SWAPO members.

Hage Geingob: Prime minister since 1990, Mr Geingob’s populist image belies his role as an effective behind-the-scenes fixer, although he has grown frustrated with Mr Nujoma’s interference in running the government— Mr Geingob’s official function. His early public support of a third presidential term for Mr Nujoma could secure him the president’s official blessing as his successor, which might be enough to enable him to defeat his probable northern (Kwanyama) leadership rivals. However, as a member of the non-

northern Damara community, Mr Geingob has a weaker base among the party and he failed in an attempt to replace Hendrik Witbooi as SWAPO vice- president in 1997, largely because the northern vote was mobilised in support of his rival.

Theo-Ben Gurirab: Foreign affairs minister since 1990, Mr Gurirab was SWAPO’s UN representative before independence and, like Mr Geingob, is from the Damara community. His influence has increased since the incorporation within his ministry, in 1999, of information and broadcasting. Having narrowly lost out in the contest to be secretary-general of the African Union (the successor to the Organisation of African Unity) in July 2001 he could now become a candidate to succeed Mr Nujoma.

Hidipo Hamutenya: A key member of SWAPO’s younger top leadership (in their late 50s and early 60s), Mr Hamutenya has the president’s ear on most issues. As trade and industry minister, he was the main initiator of the export- processing zone and is a leading proponent of extending black empowerment into the private sector. He will almost certainly be a candidate to succeed Mr Nujoma, and, as a Kwanyama, has a strong support base in the party.

Katuutire Kaura: Mr Kaura, a Herero, replaced Mishake Muyongo as president of the Democratic Turnhalle Alliance (DTA), in late 1998. A close confidant of the Herero paramount chief, Kuamia Riruako, Mr Kaura has little appeal to northern Namibians and was just beaten into second place by Ben Ulenga in the 1999 presidential election. However, he retained his position as official leader of the opposition when the DTA formed a coalition with the UDF.

Aaron Mushimba: The influential brother-in-law of Mr Nujoma, and SWAPO representative in Zambia prior to independence, Mr Mushimba is the promoter of numerous business ventures, some of them backed by SWAPO- controlled companies. He is the Namibian partner or chairman of local firms involved in a number of joint ventures with foreign investors.

Sam Nujoma: One of several founder members of SWAPO who went into exile in 1959, Mr Nujoma has been party leader ever since and Namibia’s president since independence. His jovial manner is combined with a forceful and often quick-tempered personality that has enabled him to keep a tight grip on the party and prevent the emergence of rivals or factions, with few willing to challenge the wishes of “the old man” directly (he remains in robust health at the age of 72). His third term is being marked by a further concentration of power within the presidency, and a lavish presidential complex to be built outside Windhoek (which is unlikely to be completed before he is due to step down), as well as an airstrip at Okahao, close to his home village. Although he is a northerner, Mr Nujoma is not a Kwanyama but an Ongandjera, a minority Ovambo sub-group, and the balancing act he has performed in providing positions for most of Namibia’s tribal groups and maintaining party unity will be a hard act to follow.

Hifikepunye Pohamba: Mr Pohamba is one of Mr Nujoma’s most trusted senior colleagues from SWAPO’s days in exile. Successively home affairs and fisheries minister, he became party secretary-general in 1997, and was given the lands portfolio in 2001.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 13

Ben Ulenga: A former SWAPO guerrilla fighter and trade unionist, Mr Ulenga resigned as Namibia’s high commissioner to the UK in August 1998 in protest at the proposed third presidential term for Mr Nujoma and Namibia’s intervention in the civil war in the Democratic Republic of Congo. In March 1999 he founded the Congress of Democrats (CoD) and was elected leader at the party’s congress in July. He contested the 1999 presidential election, where he came a poor second to Mr Nujoma, and his party failed to dent SWAPO’s northern power base. However, his status as CoD leader is unlikely to be challenged.

Hendrik Witbooi: Deputy prime minister and SWAPO vice-president, Mr Witbooi is the cabinet’s only representative of the southern Nama and the grandson of Namibia’s most famous 19th-century anti-colonial resistance leader of the same name. He is too old and too loyal ever to be a contender to take on Mr Nujoma’s mantle.

Successor to Mr Nujoma to Close confidant and SWAPO secretary-general, Hifikepunye Pohamba, has emerge within two years indicated that Mr Nujoma will stand down as SWAPO leader well before the end of his third presidential term, probably at the party’s next National Congress in 2002. The president remains popular with the vast majority of Namibians and is respected as the “father of the nation”. Despite a tendency to intervene personally in all areas of Namibian society and an increasing centralisation of power within the presidency, Mr Nujoma deserves much credit for successfully steering Namibia from an oppressed colonial society to a vibrant nation state (notwithstanding a worrying increase in violent crime and official corruption). His legacy will be to have maintained national unity with a minimum of civil unrest or oppressive policies, despite occasional heavy- handed tactics by the army and police in detaining those suspected of co- operating with UNITA rebels or Caprivi separatists during the past two years. However, as the abortive Caprivi secessionist attack of 1999 demonstrated, Namibia is not entirely free from the tribal tensions that have plagued most independent African states, and its multiparty democracy remains fragile given the declining proportion of Namibians bothering to vote. The danger for any successor to Mr Nujoma is that he or she may lack the authority to maintain party unity—especially if the leadership contest is closely fought—which could also result in increased social and inter-tribal tensions.

Although Mr Nujoma has been ready to promote younger leaders and women to senior posts, he has been reluctant to dispense with old colleagues, including those tainted by corruption or widely regarded as incompetent. However, the party structure has been democratised to some extent and this could ensure an open election for a new leader—Mr Nujoma has never indicated a preferred successor, although he may still do so. At present the most likely contenders are the prime minister, Hage Geingob, the trade and industry minister, Hidipo Hamutenya, and the agriculture minister, Helmut Angula, The latter two have the advantage of being from SWAPO’s northern heartland. However, Mr Geingob, from the minority Damara community, gained 40% backing in a contest with the veteran Hendrik Witbooi for the party vice-presidency in 1997. The finance minister, Nangolo Mbumba, also a northerner, has impressed as a technocratic, but uncharismatic, politician, who might gain support as a compromise candidate. The long-serving foreign

affairs minister, Theo-Ben Gurirab, also a Damara, is another potential contender, and along with Mr Geingob would probably enjoy the greatest national appeal, sharing a similar but less abrasive charisma with Mr Nujoma. He has consistently come near the top of the poll in elections to SWAPO’s Central Committee.

A blurring between the Namibia’s privately owned press is an effective critic of the government. The government and the party daily newspaper with the largest circulation, The Namibian, is broadly pro- government, but widely reports on official corruption and mismanagement. This has earned it SWAPO’s increasing displeasure and the party has launched thinly veiled attacks on foreign-owned media and non-Namibian journalists, even though the newspaper is owned by a local trust and its editor is a Namibian. A ban on government advertising in the newspaper was instituted at the end of 2000; SWAPO imposed a similar ban in June 2001. The government has also been slow to bring in a long-promised anti-corruption law, which it agreed was necessary at a 1998 conference on promoting ethics and combating corruption, and is to cover the executive branch of government as well as parastatals. Many ministers and senior officials have private business interests, including shareholdings in mining and fishing companies held directly or through close relatives. A register of assets, approved by the National Assembly in 1999, for the first time requires members of parliament to disclose personal and financial interests, including those of close relatives, but has yet to be implemented owing to foot-dragging by MPs. The register will in principle be open to public inspection; however, it has been made clear that the parliamentary committee of privileges will require written applications to inspect the files. All these developments highlight that the line between SWAPO in government and SWAPO as a political party has become increasingly blurred, and in recent years the party has become more defensive about criticism and unwilling to publish sensitive official documents.

International relations and defence

Namibia’s initial foreign policy priority was to offset the influence of South Africa by forging close relations within the rest of the region—particularly through the Southern African Development Community (SADC)—and developing international links, for example, by joining the Commonwealth. However, since 1994 relations between Namibia and South Africa have become close, facilitated by the latter’s hand-over of Walvis Bay and its surrounding enclave in 1996, and cancellation of Namibia’s inherited bilateral debt in 1997. An outline agreement to relocate Namibia’s southern border to the mid-course of the Orange river, rather than along the north bank as at present, has yet to be approved. Namibia and Angola co-operate in the utilisation of the Kunene river for power and irrigation development, although more concrete forms of co-operation—for example in extending Namibia’s northern rail link across the border—are only likely once the political situation in Angola has stabilised.

The close political ties between SWAPO and the ruling parties in Angola and Zimbabwe led Namibia to join them in sending troops to support the late president of the Democratic Republic of Congo, Laurent Kabila, against a

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 15

rebellion in 1998 (see below). Namibia has also been publicly supportive of the Zimbabwean president Robert Mugabe’s land seizure policy. Relations with Botswana have often been tense, owing to sovereignty disputes over the uninhabited Kasikili/Sedudu island and other islands, in the Chobe river, and Botswana’s hosting of several thousand Caprivian exiles. Now that the dispute over Kasikili/Sedudu has been resolved in Botswana’s favour by the International Court of Justice—a decision Namibia has accepted—and tensions in Caprivi have abated, relations have improved. Several meetings between Mr Nujoma and the Botswanan president, Festus Mogae, have proved positive.

Namibia has strong commercial links with Germany, its main bilateral aid donor. The US, China and Scandinavian countries are the other main donors; however, foreign aid grants to Namibia are steadily declining, and in 1999 Norway closed its aid office and announced that it would phase out all bilateral assistance over the next five years.

Troops on the Angolan The Namibia Defence Force (NDF), comprising former combatants from PLAN border and in the DRC and the colonial South West Africa Territorial Force (SWATF), includes four motorised infantry battalions partly equipped with ex-PLAN Russian tanks of dubious serviceability. At present the army has a maximum authorised size of 10,000; its current active strength of 9,000 will be expanded owing to the recruitment of over 2,000 unemployed ex-combatants in 1999 and 2000. Defence spending has increased significantly and reached 7% of total forecast expenditure in the fiscal year 2001/02 (April-March). Most of the extra costs of the NDF deployment in Congo has been funded by special authorisations; N$100m (US$12m) was allocated for allowances for soldiers serving in Congo in the 2000/01 revised budget.

From early 1999 an estimated 2,000 troops were stationed in Congo. By the end of the year the bulk of the remainder were on active service along the border with Angola, particularly along the section from Rundu eastwards, in response to attacks by UNITA groups following the start of a joint military offensive by Angolan and Namibian forces. The situation along the north- eastern border has stabilised since late 2000, with far fewer UNITA attacks, and the decision to start to implement the Lusaka peace accord by the new president of Congo, Joseph Kabila, enabled Namibia to bring home half of its estimated forces in mid-2001. The Special Field Force (SFF), a paramilitary police unit recruited from ex-PLAN combatants, is also deployed along the north-eastern border and in Caprivi to guard against any renewed secessionist attacks, and has reportedly been responsible for most of the human rights violations suffered by civilians. A small “air wing” is equipped with unarmed aircraft and helicopters, and, under a “maritime wing” development programme, construction of a naval base at Walvis Bay, with promised Brazilian assistance, is planned. Kwanyama ex-PLAN commanders hold most senior NDF posts, and state security appointments have a similar ethnic tilt. Namibia signed a bilateral military aid treaty with Russia in 1998 that initially involves the training of NDF senior officers and pilots, and in July 2001 Namibia and South Africa agreed to form a joint permanent commission on defence and security, with access to each other’s arsenals in wartime. Namibia already has similar commissions with Angola, Botswana and Zambia.

Military forces and defence spending, 2000 (no. of troops unless otherwise indicated) Armya 9,000 Paramilitary (special field force) 6,000 Coast guard (fishery protection) 100 Defence spendingb (N$ m) 713 % of total budget 7.3

a One presidential guard battalion, five infantry battalions and one combat support brigade. b 2001/02 main budget estimates.

Sources: International Institute for Strategic Studies (IISS); budget documents.

Resources and infrastructure

Population

Namibia has a low average population density, of 1.7 per sq km, and an estimated 55% of Namibians are under the age of 20. The current population growth rate of some 2% per year should increase over the next five to ten years in the absence of effective population planning measures, although this will be moderated by the impact of HIV/AIDS. According to the 1991 census, 73% of the population lived in rural areas, with some 60% residing in the seven northern regions. The most densely inhabited region is Oshana, which includes the largest northern towns, Ondangwa and Oshakati. Khomas, which includes the capital, Windhoek, is the most densely populated region outside the north. Windhoek’s population has grown by an estimated 5% per year since independence, to some 230,000; in addition around 60,000 impoverished Namibians are living in informal settlements on the outskirts of the city (85% of which are migrants from the north). Some 600 people arrive in the capital every month and its population is projected to triple over the next 20 years. Outside Windhoek there are less than ten established towns with a population in excess of 10,000; the fastest growth is in newly proclaimed northern towns such as Ondangwa and Oshakati. The next census is being carried out in 2001.

English, which is the official language and is predominantly used in business, is the first language of only 1-2% of the population, and is spoken fluently by fewer than 10% of Namibians. There are four principal indigenous languages. Oshivambo and its dialects—of which Kwanyama and Ndonga are the main ones—are spoken in the four north-central regions and by a high proportion of black urban residents in the south, where many are former migrant workers that have settled. Nama, a Khoisan “click” language, is spoken by people in southern Namibia and by the Damara, who together make up about 12% of the population, and Herero and Rukavango are each the main language for some 9% of Namibians. The Herero and Damara are almost equally split between town dwellers and rural communities, mainly in the Omaheke/Otjizondjupa regions and the Erongo/Kunene regions, respectively. Lozi, the language of the Barotse of western Zambia, is spoken by most Caprivians. Afrikaans, which is widely understood, is the first language for 10% of Namibia’s population,

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 17

including those of mixed-race (“coloureds”) and Basters (a distinct coloured community inhabiting Rehoboth to the south of Windhoek with its own fiercely prized traditions), as well as two-thirds of the 85,000 or so white residents. The remainder of the whites are of German ancestry (about one-quarter) and of English-speaking South African origin. (Reference table 1 gives population data for 1996-2000.)

Population statistics, 1991 Area Population % of total Population Region (‘000 sq km) (‘000) population densitya Caprivi 19 90 6.4 4.7 Erongob 65 55 3.9 0.9 Hardap 110 66 4.7 0.6 Karas 162 61 4.3 0.4 Kavango 43 117 8.3 2.7 Khomasc 38 167 11.8 4.4 Kunene 137 64 4.5 0.5 Ohangwena 10 180 12.8 17.9 Omaheke 87 53 3.8 0.6 Omusati 13 190 13.5 15.1 Oshana 5 135 9.6 26.0 Oshikoto 27 129 9.1 4.8 Otjizondjupa 108 103 7.3 0.9 Total 824 1,410 100.0 1.7 Urban – 383 27.2 – Rural – 1,027 72.8 – Gender profile Male – 686 48.7 – Female – 724 51.3 – Age profile 0-14 – 588 41.7 – 15-24 – 296 21.0 – 25-44 – 318 22.6 – 45+ – 208 14.8 –

a Inhabitants per sq km. b Excludes Walvis Bay. c Includes Windhoek.

Source: Central Statistics Office (CSO), Statistical Abstract, 1995.

Education and health

Reorganisation has yet to At independence Namibia inherited massive inequalities in educational be reflected in results provision, as the South African administration had allocated disproportionate funding to urban schools catering mainly for white children, and most state- run primary and secondary schools attended by black children were understaffed, poorly equipped and had high drop-out rates. The UN estimated that in 1997 about 20% of the population were illiterate.

A national education system has been successfully established—education now receives the largest share of government spending, peaking at 28% in 1997/98—and there has been an extensive rural school-building programme. In the 2001/02 budget N$2.4bn (US$290m) was allocated to education (N$2bn for basic education and N$411,000 for higher education, training and

employment creation), representing 24% of total expenditure. However, personnel costs absorb 65% of expenditure on education. Although school enrolment has increased by one-quarter since 1990, drop-out rates remain high, and less than one-quarter of pupils go on to secondary-level education.

School and higher education enrolments, 1998

Primary schoolsa (grades 1-7) 385,900 Secondary schools 109,700 Grades 8-10 85,200 Grades 11-13 24,500 Total 495,600 School teachers 16,900 University studentsb 2,500 Polytechnic studentsb 2,900 Educational colleges 2,000 Other collegesc 1,400

a Includes special schools. b Full-time only. c Vocational training centres and agricultural colleges.

Source: Central Bureau of Statistics, Statistical Abstract, 1999.

Shortly after independence the medium of instruction was changed from Afrikaans to English, a language in which most local teachers were not qualified to teach, and the subsequent replacement of South Africa’s matriculation curriculum by the Cambridge International General Certificate of Secondary Education has proved costly to implement, owing to the need to import teaching materials. In mid-2000 one-half of the 1,800 teachers in Kavango region lacked any formal qualifications, for example. At present some 30,000 Namibians have gained higher or further education qualifications. The University of Namibia has experienced financial difficulties since its establishment in 1993, because of poor administrative controls and insufficient funding for its ambitious development programme, but it has produced some 4,000 graduates. Almost half of the 550 degrees and diplomas awarded in 1998 were for educational courses, and management and administration accounted for two-thirds of the 651 diplomas and certificates awarded by the Polytechnic that year. Many university students are educated in South Africa and Zimbabwe.

Access to healthcare The government’s declared priorities are to increase access to clinical facilities facilities prioritised in rural and deprived urban areas, and reduce vulnerability to poverty-related illness by expanding primary care services. Public spending on health was increased substantially after independence, and the number of state-run clinics and health centres in the north has been substantially increased. However, since the 1996/97 fiscal year (April-March) spending has stayed constant in real terms; in 2001/02 the N$976m allocated to health (excluding social security and welfare) accounted for 10% of total expenditure. Personnel costs accounted for 55% of health spending in 2001/02, leaving insufficient money for hospital maintenance, medical equipment, drugs and supplies.

As of 1998 hospital bed availability averaged just under four per 1,000 people, down from seven in 1993, as despite an expansion in local health centres and clinics the building of hospitals with permanent healthcare services has not

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 19

kept pace with population growth. Marked regional disparities persist, with most facilities in the north-eastern and north-western health regions comprising district hospitals and health centres without specialised services. At present there is no national insurance provision for Namibians who are not covered by private/employee medical schemes.

Health facilities, Dec 1998 (no. of facilities unless otherwise indicated) Southerna Centralb North-westc North-eastd Total Hospitals 18 16 11 9 54 State 9 13 9 5 36 Otherse 9 3 2 4 18 Clinics 47 48 80 60 235 State 33 46 80 56 215 Otherse 14 2 0 4 20 Health centres 8 2 12 11 33 State 7 2 12 11 32 Otherse 1 0 0 0 1 Total 72 67 103 80 322 Population servedf (‘000) 434 278 259 793 1,764 Bed capacityg 2,247 1,088 2,300 800 6,435 Beds per ‘000 5.2 3.9 8.8 1.0 3.6 Bed occupancyg (%) 53 46 74 72 62

a Covering Hardap, Karas, Khomas and Omaheke regions. b Erongo, Kunene and Otjizondjupa. c Ohangwena, Omusati, Oshana and Oshikoto. d Caprivi and Kavango. e Mission, mining company and private (hospitals only) facilities. f Extrapolated from 1991 census. g State national, regional, district, some mission hospitals; clinics and other centres with permanent healthcare facilities; end-1997 figures.

Source: Central Bureau of Statistics, Statistical Abstract, 1999.

AIDS has become the The incidence of HIV/AIDS has increased rapidly since the first victims were main killer identified in 1986, but UN-assisted programmes have, as elsewhere in the region, so far failed to check the spread of the disease. In 1996 AIDS overtook tuberculosis as the main killer disease; there were 1,539 registered deaths from AIDS in 1998, compared with 847 from tuberculosis and 723 from malaria, which is endemic in the north. However, the Ministry of Health and Social Services stated in mid-2001 that government spending of N$300m on combating HIV/AIDS over the previous decade had raised awareness levels to 95%, and the dissemination of information on how to avoid infection had helped to increase the use of condoms from only 1% of the population in 1992 to 40% in 2000. A report by the Joint UN Programme on AIDS-HIV (UNAIDS) and the World Health Organisation (WHO) in 1999 estimated that 20% of the population aged between 15 and 49 (around 150,000 Namibians) were infected with the HIV virus or had contracted AIDS. UNAIDS estimated the cumulative death toll at 18,000 by the end of 1999. The epidemic has reduced average life expectancy from 57 years in 1990 to 52 as of 1997, and over 30% of Namibians are currently not expected to live beyond the age of 40. One encouraging trend is that the latest data show that the prevalence of HIV infection among

pregnant women in the highest risk age groups of 15-19 and 20-24 years has been static since 1998.

Natural resources and the environment

A harsh climate offsets the Climate and geology have endowed Namibia with abundant natural resources. rich resource endowment However, owing to low average rainfall, rapid water evaporation rates because of high mean temperatures, and the absence of perennial rivers except along the northern and southern borders, Namibia is highly susceptible to drought, and water resources to supply expanding populations in the main towns are coming under growing pressure. Rainfall is at its lowest along the coastal Namib Desert and in the southern interior, where it averages less than 100 mm per year (small livestock farming is the predominant economic activity in these areas). Over the central and north-central inland plateau, which covers about half of the country, rainfall increases to 200-400 mm. The plateau includes open savannah with tree and shrub cover, which supports extensive cattle ranching, and cereals in some fertile valleys. In the flatter north and north- east, rainfall averages around 400-600 mm, but soil cover is generally thin, and arable farming is mainly on a subsistence basis, with the best growing conditions along the Okavango river and in the eastern Caprivi flood plain area. Most food crop staples are rain-fed, but small-scale irrigated production of table grapes, dates and other crops has substantially increased over the past five years, with a major expansion of irrigated crop production planned along the north bank of the Orange river near Noordoewer.

Mineral deposits are found sporadically throughout Namibia. The largest concentrations are along the southern coastline and the south-west (alluvial diamonds of very high average gem quality, zinc and other base metals), the central Namib region (uranium, gold, marble, granite, semi-precious stones and coastal brine salt pans) and the north-eastern Otavi highlands (copper and other base metals). Since independence the discovery of substantial quantities of gem-quality diamonds on the seafloor, up to 100 km from the southern shore, has resulted in the development of a large marine mining industry. The cold, nutrient-rich south-east Atlantic, fed by the Benguela current, spawns normally abundant quantities of edible pelagic and white fish, shellfish and other marine resources, including deep-sea species such as orange roughy (the exploitation of which started in the late 1990s). However, owing to changes in ocean temperature and other factors, the biomass for the main species can fluctuate considerably, requiring continual monitoring and controls on catch levels to ensure that resources are not depleted by over-fishing. The best hopes for discovering oil are offshore, and although no commercial oil deposits have yet been located, extensive exploration and development has confirmed that the Kudu gasfield off the Orange river mouth contains a substantial resource.

Water remains a scarce Over the past decade water resources have come under unprecedented resource pressure, with extraction rates increasingly exceeding aquifer replenishment levels because of recurrent drought and rising demand. Demand in Windhoek has soared as a result of population growth, and water-saving measures have had only a limited impact. The state-owned water company, Namwater, is

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 21

implementing progressive tariff increases in an attempt to attain full cost- recovery on new water-supply schemes; several major projects are being implemented in the north, and the innovative Windhoek wastewater reclamation plant is being upgraded.

To avert the prospect of Windhoek running out of water, in the mid-1990s the government brought forward a N$1bn project to draw water from the Okavango river with a 200-km pipeline linked to the main Eastern National Water Carrier bulk supply system at Grootfontein. This raised concerns in neighbouring Botswana that the planned annual extraction of 20m cu litres would sharply reduce the flow of water into the Okavango delta, its main tourist attraction. The subsequent replenishment of most Namibian dams owing to several years of greater rainfall has reduced the urgency of securing additional supplies in the short term, and the project has been shelved pending a full assessment of the Okavango river system and the securing of Botswana’s consent. Supplies to Walvis Bay and the whole central coastal area are also under pressure, owing to shrinking local aquifers, and a contract for what will be Africa’s first seawater desalination plant was awarded to South African-based Wier Westgarth in early 2001. Construction of the N$200m plant, to be located in Swakopmund and managed by the Aquanam public/private partnership, is expected to start by the end of 2001 once bulk user agreements have been finalised with the main expected customers, the local municipalities and the Rössing uranium mine.

Transport and communications

With a generally well maintained network of over 5,000 km of tarred and 27,000 km of gravel roads, combined with efficiently operated rail, harbour and air services, the economy is largely free from transport bottlenecks. Two hived-off agencies from the Ministry of Works, Transport and Communication are now responsible for the construction and maintenance of the national highway network, and a major new project involves connecting the diamond mining town of Oranjemund to the trunk road network at a cost of N$274m (US$35m). Road links to Namibia’s eastern neighbours have been significantly improved by the mainly donor-funded construction of the Trans-Kalahari and Trans-Caprivi tarred highways; the former, via Botswana, was completed in 1998, cutting the road distance between South Africa’s Gauteng region and Walvis Bay by 425 km. However, usage of the route has remained below expectations, with South African and Namibian hauliers complaining that Batswana officials are levying high customs and other duties, and the lack of petrol-filling stations on the long stretch through western Botswana has also proved a deterrent. The Trans-Caprivi highway is due for completion in 2001, although, until a permanent bridge across the Zambezi river is built, trucks will continue to be ferried across by pontoon.

The TransNamib multi-modal transport parastatal, established prior to independence, was restructured in 1997 into separate divisions covering the railways, the country’s largest road-haulage fleet, and shipping services. TransNamib’s lossmaking national airline subsidiary, Air Namibia, was hived

off as a separate entity in 1998, ultimately to be privatised (see below). The 2,400-km metre-gauge railway network carries more than 1m tonnes of freight a year. Efforts to revive passenger traffic by upgrading the service are beginning to bear fruit, and a luxury Desert Express between Windhoek and Swakopmund catering for tourists was launched in 1998. A start was made in 2001 on construction of the northern railway extension project, a 260-km line linking Tsumeb to Ondangwa, Oshakati, and Oshikango on the Angolan border, at a projected cost of N$580m over four years, which is being part- financed by concessional loans from China and Kuwait.

Air Namibia’s finances have In view of Namibia’s large size and widely separated population centres, an deteriorated sharply efficient air service has always been a vital part of the national transport system. Since independence new regional and international air links have been established by the national carrier, Air Namibia, including direct flights to Frankfurt and London, and, since the end of 2000, Munich. However, although both passenger and freight traffic have expanded, the airline has incurred persistent operating losses, in part owing to a mismanaged fleet upgrading in 1999, which landed it with excessive leasing fees and interest costs. Despite the appointment of Jaafar Ahmed, a Malaysian former governor of Namibia’s central bank, as managing director in 1999 with a brief to restructure the airline and prepare it for eventual privatisation, by mid-2001 its debts had increased to N$300m and liquidity problems left it unable to pay outstanding bills. Further cost-cutting measures are being implemented, and the government is providing a “final” bailout of N$350m. A programme to upgrade Namibia’s main airports is being carried out by the new Namibia Airports Company, although a planned lengthening of the runway at Walvis Bay airport so that it can handle wide-bodied aircraft has been postponed. (Reference table 2 shows trends in transport operations.)

Walvis Bay is being Namibia’s main port of Walvis Bay currently handles some 2m tonnes/year of developed as a regional hub cargo—15-20% of it containerised—but has an estimated capacity of 10m t/y. It is being expanded with the aim of making it a major regional hub by the Namibian Ports Authority (Namport), under a N$350m development programme that also included upgrading the harbour at Lüderitz. A new container terminal with 380 ground slots able to handle 20- and 40-foot containers was completed in 1999, and the following year the harbour was dredged from 10 metres to 12.8 metres, enabling the accommodation of container vessels of between 2,200 and 2,400 twenty-foot equivalent units (TEUs). The next major project will involve expanding the existing “Synchrolift” dry-docking facility. A new 500-metre-long multipurpose quay was completed at Lüderitz in 1999 and the port channel dredged to 8 metres. To promote greater usage of Walvis Bay for regional imports and exports via the trans-Kalahari and trans-Caprivi highways, a Walvis Bay Corridor Group, made up of private-sector firms, associations and government bodies, has been set up. (Reference table 3 gives data on cargo traffic at Walvis Bay.)

Telecommunications Namibia has one of Africa’s most modern and efficient telephone systems; there is a core fibre-optic network and 90% of all lines are digital, with exchange automation almost complete. Telephone penetration is high by

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 23

African standards, at just over one per 20 inhabitants in 1996, although the number of business and public connections is more than double that of residential connections. Telecom Namibia, a commercialised parastatal, funds its large capital-investment programme out of its own resources. Since 1995 an earth satellite station and international switching centre in Windhoek have connected Namibia directly to the global telecommunications system, and a new fibre-optic link to South Africa is under construction. This has facilitated rapid growth in Internet usage, and most government departments and businesses have e-mail addresses. To promote competition, Telecom Namibia was due to lose its monopoly service provider status in 2000, but this is now unlikely to happen before the end of 2001. A mobile telephone network operated by Mobile Telecommunications, a joint venture between Telecom Namibia and Swedish interests, covers most of the country.

Energy provision

Most of energy requirement Namibia imports all of its petroleum requirements as refined products. is imported Electricity generation by the state-owned Namibia Power Corporation (Nampower) is the main form of primary energy production, although wood and charcoal are used extensively by rural households. Most of Namibia’s electricity supply is normally derived from the 240-mw hydropower station at Ruacana on the Kunene river, but in recent years generation has been erratic, owing to low water flow caused by recurrent drought and the poor condition of water control facilities upstream in Angola. In years of poor river-flow Nampower imports electricity from South Africa, with the 120-mw Windhoek coal-fired station and smaller Paratus station at Walvis Bay kept on stand-by. In 1998/99 Ruacana was able to provide 57% of the 2,085-gwh total supply, owing to good rains; this enabled a 27% reduction in imported power—mainly from South Africa’s Escom—lessening Namibia’s overall dependence on imports to 42%, from 57% in the preceding year.

Nampower is a profitable parastatal, paying a regular dividend to the government, and earning record net income of N$193m in 1998/99. It is engaged in a substantial investment programme to expand the transmission network to meet growing domestic usage and potential export opportunities, including pre-investment in capacity to utilise power generated by a planned combined cycle station at Oranjemund, to be fed by gas from the Kudu field (see below). To improve supply security, a 400-mw interconnector (and related substations) with the South African grid between Windhoek and Aries on the border was commissioned in early 2001. To meet the power requirements of the new Skorpion zinc mine and refinery in the south-west, a N$118m turnkey contract was placed with Germany’s Siemens for substations, and a N$160m contract with France’s Alsthom and the Swedish/Swiss group ABB for a 251-km transmission line, in early 2001. The whole project is due for completion in April 2002. The Skorpion substation has a capacity greater than that required and a 220-kv connecting line to the Oranjemund power station (to where the Kudu gas will be piped) has been constructed with the aim of eventually feeding Kudu gas-generated electricity into the national grid. Plans for a new dam and 450-mw hydropower station downstream from Ruacana at Epupa

Falls have in effect been shelved owing to the ongoing Angolan civil war. The dam is controversial on environmental grounds. (Reference table 4 shows electricity production and consumption.)

Energy balance, 2000 (m tonnes oil equivalent) Elec- Oil Gas Coal tricity Other Total Production 0.00 0.00 0.00 0.36a 0.10 0.46 Imports 0.77 0.00 0.02 0.20a 0.00 0.99 Exports 0.00 0.00 0.00 0.03 0.00 0.03 Total 0.77 0.00 0.02 0.53a 0.10 1.42 Net transformationb 0.00 0.00 0.00 –0.37 0.00 –0.37 Final consumption 0.77 0.00 0.02 0.16c 0.10 1.05

a Expressed as input equivalents on an assumed generating efficiency of 33%. b Comprises transformation input and output, plus energy industry fuel and losses. c Output basis.

Source: Energy Data Associates.

Kudu gas could transform With the Epupa project unlikely to proceed in the foreseeable future, the energy equation Nampower has focused on the Kudu gas-to-power project. The first phase of the project involves piping gas ashore to a 400-mw combined cycle gas turbine station at Oranjemund, which would have sufficient capacity to meet forecast domestic demand until at least 2015 and provide an exportable surplus. The Kudu field, located some 100 km offshore from the mouth of the Orange river, is commercially exploitable—the permit holder, Shell Exploration and Production Namibia, has confirmed reserves of more than 20trn cu feet (560bn cu metres). The current Nampower/Shell proposal involves construction of the Oranjemund station by an independent power producer (IPP), with expressions of interest invited in early 2001; it is hoped to have the station completed by the end of 2002. Lengthy negotiations with South Africa’s Escom on a contract for Kudu to supply gas to new power stations in Western Cape region proved ultimately abortive. Instead, a Kudu second phase development would involve supplying gas to South African IPPs who would channel it to Cape Town municipality and, potentially, industrial developments at Saldhanha Bay.

Kudu was one of five offshore exploration permits awarded in Namibia’s first petroleum licencing round in 1992, and is the only one to have been renewed beyond the initial four-year term. Drilling by the other licensees proved disappointing, and despite the accumulation of substantial seismic data, a lack of sufficient new well data meant that two subsequent rounds, in 1995 and 1998, attracted much less interest. This was despite the government’s easing of the already favourable licence terms—in contrast to Angola, no signature bonus is required. In 1999 the government announced an open licensing system for both onshore and offshore exploration, under which applications for exploration permits will be accepted at any time, and in 2000 the northernmost Namibian area, Block 1711, was awarded to US firm Vanco Energy. In March 2001 an open-ended licensing round was launched jointly by the National Petroleum Corporation of Namibia and Angola’s state oil

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 25

company, Sonangol. This covers eight blocks in the Namibe basin, which straddles the maritime border between the two countries, although only one— Block 1811—is within Namibian waters.

The economy

Economic structure

Main economic indicators, 2000

Real GDP growth (%) 3.9 Consumer price inflationa (av; %) 9.3 Current-account balance (N$ m) 1,339 Foreign debt (US$ m) 146b Exchange rate (N$:US$) 6.94 Population (m) 1.76c

a Windhoek only. b EIU estimate. c Extrapolated from 1991 census.

Sources: EIU; Central Bureau of Statistics (CBS).

Economic activity is concentrated in primary sector activities—mining, large- scale commercial livestock farming and fishing—although services account for the major share of GDP. World market prices for diamonds and uranium— Namibia is the world’s eighth largest value producer and the fourth largest volume producer, respectively—are major influences on the economy, although mining contributes just under one-tenth of GDP at constant factor cost. The manufacturing base remains small, with fish- and meat-processing the largest individual sub-sectors, although beverages, other food products, metal and pre-cast concrete products, furniture, paints, detergents, and leather goods are also produced. Government services accounted for one-quarter of GDP in 2000. Namibia’s abundant natural resources, good infrastructure and access to regional and overseas markets provide potential for developing a more diversified economy, although insufficient labour skills and high transport costs are a hindrance. As of 2000, whereas primary sector industries accounted for 22% and secondary industries 17%, the tertiary sector maintained its share of over half the total GDP at constant factor cost, at 61%.

Owing to the high disposable incomes enjoyed by a minority of Namibians— predominantly, but no longer exclusively, white—private consumption is still the largest component of GDP by expenditure, accounting for around 60% in most years. With a relatively high average income per head, Namibia’s main economic problem is not an absence of wealth, but the highly uneven distribution of income. Only a small number of Namibians are involved in the commercial economy, and as a result of the historic pattern of land ownership the majority of Namibians are landless or small-scale subsistence farmers. A 1993/94 national household income and expenditure survey showed that 10% of households had average annual incomes per head of N$30,000 (about US$8,500 in 1994), whereas the average for all other households was N$1,500,

of which one-third had less than N$500. (Reference table 5 shows nominal and real GDP per head; Reference tables 6-7 give a breakdown of GDP by expenditure and sector.)

Comparative economic indicators, 2000

South Namibia Africa Swaziland Botswana Lesotho GDP (US$ bn) 3.47 125.56 1.28 5.65 0.88 GDP per head (US$) 2,006 2,864 1,308 3,424 407 Real GDP growth (%) 3.9 3.1 3.7 5.8 2.5 Consumer price inflation (av; %) 9.3 5.3 7.3 8.5 6.1 Current-account balance (US$ m) 194 –469 –50 449 –154 Exports of goods fob (US$ m) 1,455 31,434 900 2,694 201 Imports of goods fob (US$ m) 1,595 27,202 950 2,036 700 Source: EIU.

Economic policy

Poverty eradication and Since independence the government’s main policies have been aimed at economic diversification achieving sustainable economic growth and a real increase in income per head, diversifying the productive sector and expanding employment opportunities. The first five-year National Development Plan (NDP1), covering 1995/96-1999/2000, set a target for average annual real growth of 5%, which proved unattainable. NDP2, due to be published in 2001, is likely to set a more modest target, but with an increased emphasis on poverty alleviation and employment creation through promotion of small and medium-size enterprises. The government has continued to eschew any major state intervention in the economy, aiming to promote sustainable development by facilitating foreign direct investment (FDI) inflows into priority sectors— natural resource value added, non-traditional manufacturing and tourism— through partnership with the private sector and the creation of an attractive commercial environment. However, it has expanded the role of the state with the creation of a number of new parastatals, while at the same time outsourcing some central government functions, most recently with the setting up of a company to handle road maintenance and construction.

Although most parastatals are obliged to operate on commercial lines, a formal privatisation programme has yet to be implemented. However, in mid-2000 the cabinet approved a position paper from the finance ministry and the trade and industry ministry for divestiture and equity dilution in state-owned enterprises. This is to include the establishment of an empowerment trust to hold shares for the purpose of broadening ownership, and a full-scale review of parastatals’ existing business operations. Poverty alleviation has been addressed mainly by raising the proportion of public spending on health, education and infrastructure, but this has increasingly conflicted with the parallel commitment of maintaining fiscal stability and progressively reducing the budget deficit to 3% of GDP. Black empowerment and affirmative action are progressively being implemented, although progress in the private sector is

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 27

slow. A 1999 survey found some 75% of participating Namibian firms had no formal programme in place and that blacks held only 8% of middle- management positions.

Investment incentives Between 1991 and 1994 the top rates of personal and corporate income tax are extensive were successively reduced to 35%, and, after being raised in the 1998 budget to 40% as a temporary revenue-raising measure, were returned to that level in 1999. Separate tax regimes for mining and petroleum activities include generous capital and equipment write-off provisions.

The government has put in place a number of separate investment incentive packages for manufacturing and export-oriented activities, but in the 2000 budget statement it was announced that a review of these was to be carried out, along with a separate one into the tax system. No further reference was made to the incentives review in the 2001 budget statement, although Sweden is to fund a consultant to review the tax system in its totality and introduce an overall reform programme. Changes could involve modifications to the export- processing zone (EPZ) regime launched in 1995, as in practice many firms granted EPZ status have failed to implement projects, owing to inadequate financing and unrealistic business plans.

The investment incentive regime

Foreign Investment Act (1990): All sectors of the economy are open to foreign investors; no local participation requirement; full protection of investments; free repatriation of profits subject to Common Monetary Area (CMA).

Manufacturing incentives (1993): Applicable to new and existing manufacturers; 50% corporate tax abatement for five years (effective rate 17.5%), phased out over ten years; export promotion costs are 125-175% tax-deductible; direct production wages and training costs are 125% tax-deductible.

Export incentives (1994): 80% of profits accruing from exports of manufactured goods, excepting meat and fish products, are tax-exempt (effective rate 7%).

Export-processing zones (EPZs, 1995): Zero corporate tax for an indefinite period; exemption from indirect taxes and import duties on goods and inputs for exports outside the Southern African Customs Union (SACU); conditional reimbursement of up to 75% of EPZ training costs; guaranteed currency conversion via an eventual offshore banking regime.

The burden of the Partly owing to a reintegration of the former second-tier authorities into one civil service central authority at independence and the establishment of new regional councils, Namibia is burdened by an oversized civil service, which accounts for an unsustainably high proportion of government spending. Personnel costs— amounting to N$4.3bn (US$520m) or 44% of total estimated expenditure for 2001/02—are the main reason why the government has been unable to achieve a budgetary surplus in any single fiscal year since independence. The position was exacerbated by the government’s decision to provide public-sector jobs to

some 9,000 unemployed ex-combatants in 1999. This brought the authorised civil service establishment to 88,000 in 2001/02, with over half the posts in education, defence and the police, and the number actually employed rose by 3%, to 77,200, although this was a reduction on the preceding year’s 15% increase. Despite repeated pledges to curb the rising cost, cutting staff numbers is politically sensitive, as most post-independence appointments were of indigenous Namibians. The finance minister, Nangolo Mbumba, announced a freeze on pay rises in 1999 and only a modest increase the following year, but the hopes of restraining growth in personnel costs in real terms to the 1% forecast in the 2000/01 budget look unrealistic in the light of higher wage demands by public-sector unions. In the 2001/02 budget Mr Mbumba announced an allocation of only N$335m to cover public-sector salary increases for the three fiscal years 2001/02-2003/04, under the medium-term expenditure framework (MTEF; see below). However, this was only provisional, pending the final outcome of ongoing negotiations with public-sector unions, and seems certain to be exceeded.

Government finances, 2001/02 N$ m % changea Total revenue 8,775 14.2 of which: customs & exciseb 2,641 –8.2 value-added taxc 1,950 38.8 income tax on individuals 1,705 21.4 diamond miningd 769 80.9 non-mining companies 635 1.6 Total expenditure 9,782 15.8 Recurrent 8,354 16.2 of which: personnel costs 4,281 15.1 Capitale 1,429 13.6 Balance –1,007 –32.3 Main spending areas Education, training & Employment creationf 2,381 15.8 Health & social services 1,345 5.2 Defence 713 15.6 Works, transport & communications 517 –2.6 Agriculture, water & rural development 490 6.5

a Over original estimates for preceding fiscal year. b Namibia’s share of revenue from the Southern African Customs Union (SACU). c Value-added tax came into effect in 2001/02, replacing the additional sales levy and general sales tax, to which the comparison with the preceding fiscal year pertains. d Income tax and royalty payments to the government. e Includes lending and equity participation. f Includes spending on culture and sport.

Source: Ministry of Finance, State Revenue Fund, Estimate of Revenue and Expenditure for the Financial Year Ending March 31st 2002.

The government has maintained its persistent propensity to overspend in recent years, necessitating the tabling of an additional budget before the end of the fiscal year. The 2001/02 budget estimates provided for a 16% rise in total spending, increasing the forecast budget deficit by almost one-third, to just over N$1bn from a revised N$850m for 2000/01, representing 3.6% of the 2001/02 projected GDP. Capital spending and parastatal on-budget lending was raised by

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 29

14% to N$1.4bn for 2001/02; this covers spending on projects through the State Revenue Fund, with additional allocations for capital development projects directly funded by donors via the National Planning Commission. According to the Development Budget for the three years covered by the MTEF, development spending will total N$3.4bn. The major spending areas outlined included the purchase of military equipment, rural electrification, the northern railway extension and road construction. (See Reference tables 8-10 for historical budget data, money supply and interest-rate figures.)

A three-year rolling budget In a bid to control planned spending increases more effectively, and crucially has been adopted to bring down the budget deficit over the next few years to a level at or below 3% of GDP, the government has adopted an MTEF, covering the 2001/02-2003/04 fiscal years. The MTEF contains tight spending ceilings, although as the initial target levels have been expressed in 2001/02 constant prices they will be adjusted upwards in the light of projected applicable inflation rates. For 2002/03 and 2003/04, total spending has been set at N$10bn and N$10.5bn, respectively, allowing for annual real spending growth of 2% and 5%. This is well below the average for the past few fiscal years, but if adhered to, and provided that revenue projections of N$9.1bn and N$9.5bn prove equally realistic, would hold the budget deficit to 2.9% of GDP. Although the MTEF is a laudable attempt to improve fiscal performance, it will require significant political will on the part of the government to hold down spending growth to the projected levels, particularly with regard to public- sector pay and conditions.

Domestic public debt Namibia’s public debt profile is not typical for an African country, in that sharp growth in domestic liabilities rather than external borrowing is the main cause of indebtedness. This is primarily a result of regular issues of internal registered stock (IRS) and Treasury bills on the domestic market to finance the budget deficit. At the end of 2000 liabilities of this type amounted to N$4.3bn, or 82% of total outstanding public debt (the balance comprising external debt) of N$5.2bn, equivalent to 18% of GDP. The true level of public domestic debt is even higher: the Bank of Namibia (BoN, the central bank) has calculated that the addition of government-guaranteed loans to state-owned enterprises would increase the end-1999 total to N$6.7bn, or 32% of GDP (this calculation was not made in its 2000 annual report). This increase in domestic debt reversed the fall in overall public debt that followed cancellation of the pre- independence debt owed to South Africa in 1997, when overall public debt fell by 12% to N$2.9bn. In May 1998 the government eased its short-term debt- repayment obligations by consolidating all outstanding IRS issues into three longer-maturity bonds worth N$1.6bn, due for redemption in 2002-10 at an interest rate of 12% per year. Domestic debt interest repayments were estimated at N$615m in 2001/02, up from N$520m in 2000/01. (See reference table 11 for domestic debt data.)

Economic performance

Real GDP growth Average annual real GDP growth of just below 5% in 1991-95 was sufficient to has slowed allow a real increase in GDP per head of 1.5% per year over the period. Growth in diamond mining, fishing and fish-processing, construction activities, tourism, and financial services more than offset contractions in agriculture caused by two severe droughts, and fluctuating output by the rest of the mining industry. However, in 1996-2000 the average real growth rate decelerated to 3.8%, owing to slower growth in fishing and a decline in mining output, excluding diamonds; growth in GDP per head remained positive, although it averaged only 0.7% in 1996-2000. The government projects growth at just under 4.8% in 2001—slightly higher than the Economist Intelligence Unit’s current projection—based on further expansion in offshore diamond output, increased production build-up from the resumed base-metal mining and smelting at Tsumeb, and a recovery in livestock marketing. Growth remains heavily influenced by the external trade balance, but this influence has slightly declined as the latest national accounts show that real gross domestic expenditure (GDE) expanded by 5.5% per year in 1994-2000. Private consumption’s share of GDE has remained relatively constant, at 45-50% in 1992-99, whereas gross domestic fixed investment grew by an average of just under 9% per year, recording the strongest growth in 1995-96 owing to expansion of white fish-processing capacity. Investment declined in 1997 before expanding sharply again the following year, mainly owing to additional investments in diamond mining capacity. It subsequently waned with the fall- off in fishery investments and slower real increases in mining and finance capital formation.

Gross domestic product (% real change) Annual average 2000 1996-2000 Agriculture 11.7 5.9 Mining 3.2 3.4 Fishing –5.1 4.5 Manufacturing (incl fish processing) 6.7 2.9 Construction 25.5 –6.6 Financial services 3.4 7.4 GDP at factor cost 4.3 3.7 Source: CBS, Preliminary National Accounts 2000.

Inflationary pressures have From a peak of 18% in 1992, the annual inflation rate progressively decelerated moderated until 1998, the year-on-year rate falling to an average of 6.2% in that year, the third successive year of single-digit increases. The downward trend of inflation during the late 1990s reflected the impact of South Africa’s tight monetary policy, which is replicated in local interest rates. (The Namibian economy is closely linked to South Africa through the Common Monetary Area, and the Namibian dollar is tied to the rand at par.) However, inflation rose in 1999 and 2000, when it averaged 9.3% as the impact of a sharp depreciation of the South African rand increased the cost of most non-food items, and domestic fuel

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 31

prices were successively raised during 2000 in response to higher global crude prices. In consequence, inflation in the prices of imported tradeables remained significantly higher than that for domestic goods and services during 1999- 2000. The year-on-year rate inflation rate reached double digits in the first quarter of 2001 for the same reasons, but has subsequently eased.

Consumer price inflationa (Dec 1992=100; period averages) % annual change Weights (%) 1999 2000 Food 28.4 5.6 6.9 Beverages & tobacco 4.1 14.9 10.5 Housing, fuel & power 19.9 34.1 8.9 Clothing & footwear 4.4 6.1 3.9 Household goods 10.2 5.9 6.6 Transport & communications 20.7 13.5 17.1 Recreation & education 4.1 9.6 9.5 Healthcare 1.4 3.7 10.8 Miscellaneous 6.9 6.3 3.4 All items 100.0 8.6 9.3 By source Domestic goods & services 52.1 7.3 7.5 Imported tradeables 47.9 10.1 11.2

a Interim consumer price index for Windhoek only.

Source: CBS.

An easing in food price increases has been the major factor in reducing Namibia’s overall inflation rate, as food has the dominant weighting in the basket of goods used to determine the local consumer price index (CPI). This measures price changes in Windhoek only and is officially designated as interim; a planned national index will eventually cover most population centres and compare urban and rural price trends. Because of higher transport costs and different consumption patterns outside the capital, Namibia’s true inflation rate is probably around 1 percentage point above the level recorded by the present CPI. (Reference table 12 shows historical trends in consumer and food price inflation.)

Most Namibians work on The only detailed employment data published are from a 1993/94 survey by land or for government the National Planning Commission (NPC). Some 392,000 people, including subsistence farmers, were formally employed in 1994. An estimated 84,000, or 19% of the labour force, were unemployed, with a lower overall rate recorded for rural areas (16%) than for urban areas (25%). Generally the highest jobless rates are in the north, whereas 70% of central-southern households are recorded as having at least one member in full-time work. By occupation, almost 50% of those in work are employed in agriculture, but if subsistence farmers are excluded, the public sector is the major employer, accounting for one-fifth of all jobs. The NPC’s draft 1998-2010 national human resource plan suggests that unemployment is higher, at an estimated 35%.

Employment by sector, 1994a ’000 % of total Agricultureb 191 48.7 Government 72 18.4 Wholesale & retail tradec 37 9.4 Construction 20 5.1 Manufacturingd 18 4.6 Mining 12 3.1 Transport & communications 11 2.8 Finance & business services 10 2.6 Social services 10 2.6 Fishing 7 1.8 Total incl others 392 100.0

a Includes estimates for Walvis Bay. b Of which 150,000 are subsistence farmers, 37,000 agricultural workers and 4,000 commercial farmers. c Includes hotels and restaurants. d Including fish- processing.

Source: National Planning Commission, based on projections from 1991 census data.

Economic sectors

Agriculture and fishing

Livestock predominates but Agricultural output fluctuates in response to weather conditions, with the crops have been diversified impact of successive droughts affecting both crops and livestock. For the latter the impact is prolonged by the destocking and restocking of the commercial cattle herd in particular. Although the commercial livestock sub-sector (cattle, sheep and, most recently, ostriches) continues to dominate both commercial and total agricultural output, in recent years its share has declined slightly, whereas those of commercial crops and the subsistence (communal) sub-sector has increased. The main factor increasing the contribution of commercial crops has been the expansion of irrigated grape production and other non-cereal crops since the mid-1990s. The communal sector’s share of agricultural output had risen from less than one-fifth in 1990 to around one-quarter by 1999, mainly owing to an increase in the number of live animals marketed. By contrast, the real value of commercial livestock declined between 1990 and 1999, largely because of falling real commodity prices and volume declines in karakul sheep and pig production, only partly offset by the expansion in ostrich farming since the mid-1990s. There are extensive forests of teak and other hardwoods in the north-east, and illegal timber-felling and smuggling have proved difficult to control.

Subsistence farmers grow Agriculture’s share of GDP at constant factor cost declined to 8.4% in 2000, most of the cereal crop compared with 10% in the early 1990s, owing to the cumulative impact of three severe droughts, the latest during the 1997/98 (July-June) growing season. Late and inadequate rains also damaged prospects for the 2000/01 harvest. Nonetheless, an estimated 49% of the labour force continue to be

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 33

employed in farming, and 70% of the population are partly dependent on agriculture for their livelihood. Most of the cereal crop is rain-fed maize and the local millet variety (mahangu); the latter is grown almost exclusively by an estimated 150,000 subsistence farmers in northern Namibia, who normally plant enough to meet their own requirements. A winter wheat crop is produced at the Hardap dam irrigation scheme in the south, with some irrigated maize produced in the Otavi-Tsumeb-Grootfontein commercial maize triangle and at Namibia Development Corporation (NDC) schemes in Kavango region and on the Kunene river. However, even in drought-free years Namibia needs to import both maize and wheat to meet national requirements. The government has stepped up assistance to communal farmers, who now qualify for concessional loans from the state-owned Agribank.

Agricultural output, 1999a (N$ m at current prices unless otherwise indicated) Value % of total Commercial sector 1,119 73.4 Livestockb 1,011 66.3 cattle 493 32.4 sheep/goats 301 19.7 pigsc –0.1 0.0 dairy (milk) 31 2.0 hides & skins 125 8.2 karakul wool/pelts 13 0.8 ostriches & other 49 3.2 Cropsb 108 7.1 maize 11 0.7 wheat 5 0.3 grapes 70 4.6 otherd 23 1.5 Communal sector 361 23.7 Livestock 142 9.3 Crops 45 3.0 Other 174 11.4 Own construction works 44 2.9 Total output 1,524 100.0

a Figures for agricultural output are higher than for its sectoral contribution to GDP in the equivalent year as intermediary inputs are not deducted. b Components do not sum precisely owing to rounding. c In 1999 no pigs were slaughtered locally and with all requirements met by imports the contribution was negative. d Includes dates, lucerne and cotton.

Source: Ministry of Agriculture, Water and Rural Development, Directorate of Planning, Agricultural Statistics Bulletin, October 2000.

Cereal shortfalls are Namibia normally imports about half of its cereal requirement, although in normally manageable drought-free years coarse grain output covers about 70% of demand, the bulk of it millet/sorghum. Average yields have remained low, but subsistence farmers have been increasing the areas planted in good rainfall seasons. In the drought-free 1996/97 agricultural year (July-June), subsistence farmers planted a record 322,000 ha, producing a record 117,100 tonnes of millet, and the total coarse grain harvest of 166,400 tonnes covered two-thirds of domestic requirement for the 1997/98 marketing year (May-April). Coarse grain output fell to only 30-40% of this level in the following two agricultural years, owing

to drought, but recovered to 135,500 tonnes (85,000 tonnes of millet and 50,500 tonnes of maize) in 1999/2000. The 2000/01 coarse grain harvest is provisionally forecast at only 65,000 tonnes (45,000 tonnes of millet and 20,000 tonnes of maize), about half of the previous year’s harvest. Some commercial farmers in the rain-fed Otavi valley have started growing small quantities of millet/sorghum, and the irrigated winter wheat crop averages 3,000-5,000 tonnes (4,000 tonnes forecast in 2000/01). Despite recurrent drought, Namibia’s overall food security situation has generally been satisfactory, with commercial imports by local milling firms normally making up the shortfall between cereal demand and local supply without recourse to international food aid. The cereal import requirement (maize and wheat) for 2001/02 is calculated at 208,000 tonnes, two-thirds higher than in 2000/01, to meet the shortfall between domestic cereal supply of 91,000 tonnes (including opening stocks) and national consumption of 299,000 tonnes. (Reference table 13 shows trends in cereal production.)

Irrigated crop schemes are Expanding existing, and developing new, irrigation schemes provide Namibia’s set to expand main hope for both increasing and diversifying domestic production of crops. About 7,000 ha are currently under irrigation, of which 90% is on private land and the rest irrigated by the NDC and parastatals for small-scale growers. The largest schemes are on the north bank of the Orange river (2,200 ha) and Hardap dam (2,000 ha). Table grape production was pioneered on the Aussenkehr farm, 50 km from Noordowewer. Annual income from the export of table grapes—which ripen two weeks earlier than those produced for export in South Africa—to Europe more than trebled between 1995-99 to N$70m (US$11m), and parts of the farm have been sold to private grape producing companies, of which the largest is Namibia Grape Company. The president, Sam Nujoma, has enthusiastically backed an expansion of irrigated crops in the region, and a Chinese-funded scheme for 20 smallholder plots was completed in early 2001. A much more ambitious Tandjieskoppe “green valley” irrigation scheme for table grapes and other crops is to be developed in the currently arid area between Aussenkehr and Noordoewer, at a cost of N$540m. The development of smallholder irrigated date production by the NDC under a programme backed by the UN Food and Agriculture Organisation (FAO) has also proved successful, with three areas covering 125 ha (including Naute dam near Keetmanshoop and Aussenkehr) currently producing the Barhee date variety. The first export shipment of 15 tonnes was made in early 2001, and the NDC plans to expand acreage to 170 ha by 2002, as it calculates that the industry has a potential capacity to export 240 tonnes/year, worth some US$15m.

Livestock sector not yet Livestock ranching usually contributes over two-thirds of commercial farming recovered from droughts output, but recent droughts have had a serious impact on the sub-sector. Most of the 830,000 commercial cattle herd (as of 1999, when there were 1.4m communal cattle) are concentrated to the north and east of Windhoek, with mutton and karakul sheep farming (1.9m in commercial herds and 295,000 communal herds) predominant in the more arid south. In the past five years the impact of successive droughts led commercial, and some communal, farmers to diversify into ostrich breeding, with the first ostrich-products

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 35

plant—which has export-processing zone (EPZ) status—opened in 1998 at Keetmanshoop. This has a capacity of 96,000 birds annually, but lack of capital and high interest rates have hindered further expansion of the industry; the Ostrich Producers’ Association of Namibia is expecting to produce some 30,000-35,000 slaughter birds in the season starting in July 2001. Cattle are marketed for slaughter in the export-approved abattoirs of the Meat Corporation for sale to the EU under Namibia’s 13,000-t/y Contonou Convention export quota, or sold live, along with most sheep, to South Africa. Cattle held by subsistence farmers north of the “red line” along the Etosha Pan—an artificial boundary designed to curb the spread of foot-and-mouth disease—are not certified for export marketing. A record 498,000 cattle were marketed in 1996 as farmers increased herd offtake in the wake of the 1995/96 drought, but marketing had fallen to 352,000 head in 1999—of which a higher proportion, 57%, were slaughtered locally—because of herd restocking. Marketing of sheep averaged 1.1m annually during 1995-2000, with some 75- 90% sold live to South Africa. In a bid to diversify markets, some 40,000 sheep (and goats) were shipped to Saudi Arabia in early 2001 and a de-boning plant is being installed at the Marienthal small stock abattoir in the south, a privately owned facility with a weekly slaughtering capacity of 4,500 animals. (Reference table 14 contains data on livestock marketing and slaughtering levels.)

Fishing is expanding In 1991-93 the fishing industry recorded strong output growth, averaging 29% more slowly annually, and was a major contributor to overall economic growth. However, since the record 784,000-tonne catch in 1993, levels have declined—to 578,000 tonnes in 1999—owing to adverse oceanic conditions and the setting of conservative total allowable catches (TACs) by the government for the main controlled species: pilchard, hake, mackerel, crab, rock lobster and, latterly, orange roughy. Growth in fishing output in real terms was 22% in 1998, but it halved the following year and then contracted by 5% in 2000. However, the government has largely succeeded in its dual objectives of promoting localisation of the industry and increasing onshore white fish-processing capacity. The short-term outlook is currently mixed, as although hake and mackerel catches have held up well, pilchard stocks appear to be in long-term decline. Fish-processing output—mainly canned pilchard and semi-processed hake—contracted by one-fifth in 1999, after two years of strong growth, but partly recovered in 2000, when output growth was 17%, owing mainly to higher treatment rates of hake, the most valuable species. Most of the catch is now landed wet for sale to onshore factories prior to export (mainly to Spain), rather than being exported as sea-frozen product by foreign trawlers. To date some N$600m has been invested in new hake-processing capacity at Walvis Bay, the centre of the fishing industry, and by Spain’s Pescanova at Lüderitz. The licensed fishing fleet increased from 214 vessels in 1991 to 293 in 1999 (down from a 1996 peak of 309), 80% of which are now Namibian-flagged vessels, with the remainder mainly comprising Russian (mackerel) and Japanese (crab) vessels. (Reference table 15 gives data on fish catches.)

Terms for exploitation At independence the government proclaimed a 200-km exclusive economic rights have been revised zone (EEZ) and banned fishing by foreign trawlers except those chartered by Namibian quota-holding companies. The government maintains a strict

conservation regime by setting annual total allowable catches in line with regular fish biomass surveys; these often lead to lower catch ceilings than the industry estimates would be feasible. The first exploitation rights providing entitlement to annual quotas by licensees in terms of Namibia’s national fishery policy were awarded in 1994, with most of the formerly South African- controlled companies that had dominated the industry pre-independence restructured to bring in Namibian partners. Of the 150 exploitation rights, ranging from four to ten years and held by 120 firms, new entrants gained a 40% share. The allocation of both rights and quotas to companies within the overall catch limit is not fully transparent, but the government maintains that there is no need for an independent entity to determine allocations, despite allegations of corruption. The government has stated that Namibian firms transferring their quota entitlements to third parties without authorisation may have their rights cancelled. A decision by the fisheries and marine resources minister, Abraham Iyambo, that awards of new exploitation rights would be made conditional on the formation of joint ventures involving Namibian partners (previously foreign investors mainly held a controlling interest) initially caused consternation when it was applied to the renewal of seven-year rights at the end of 2000. However, the process was resolved without undue difficulties, although some existing operators lost out, and the industry has welcomed Mr Iyambo’s announcement in mid-2001 that the terms of exploitation rights would be adjusted to seven, ten, 15 and 20 years, to facilitate better planning and long-term investments. The 20-year right will have stricter conditions, with only firms employing or planning to employ 5,000 permanent workers onshore qualifying.

Total allowable catches (tonnes) 2000 2001 % change Pilcharda 15,000 10,000b –33.3 Hakec 194,000 200,000 3.1 Horse mackereld 410,000 410,000 0.0 Orange roughyc 01,850 n/a

a January-August season. b Reduced from initial 25,000 ton allocation. c May-April season, from May of the calendar year specified. d January-December season.

Source: Ministry of Fisheries and Marine Resources.

Mining and semi-processing

Most non-diamond mineral The importance of mining to Namibia’s economy has decreased since indepen- output has declined dence, mainly because—with the notable exception of diamonds, and to a lesser degree zinc, fluorspar and salt—output of most minerals has declined, or remained static, owing to unfavourable prices and lower grades. Mining’s contribution to GDP at constant factor cost averaged 9.4% over 1995-2000, and it still generates the largest share of Namibia’s foreign-exchange earnings, but the industry remains largely an enclave with few downstream linkages to other economic sectors. Mine closures and increasing mechanisation caused

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 37

mining employment to contract by almost two-thirds in the 15 years to 1999, to 5,400. However, mining employment increased to 6,200 in 2000, following the reopening of Namibia’s major base and precious metals producer, Tsumeb. Short-term prospects are broadly positive, with further expansion in offshore diamond mining under way, and the development of the Skorpion zinc mine and refinery near the existing Rosh Pinah lead/zinc mine in the south-west. Skorpion, with a N$450m (US$55m) capital cost, is Namibia’s largest post- independence mining project, and will produce some 150,000 t/y of zinc metal, significantly increasing and diversifying the country’s mineral exports. Exploration activities have continued at a relatively high level, in part reflecting the quality of data now available from the Namibian Geological Survey. Spending by members of the local chamber of mines rose by over one- third in 1999, to a record N$175m, although this dipped to N$167m in 2000, of which N$132m was spent on diamond exploration.

The minerals (prospecting and mining) act of 1992 (currently being reviewed) guarantees security of tenure to holders of mining rights, although there is widespread ministerial discretion for the negotiation of special agreements. A new diamond act came into effect in 2000, providing for strictly controlled trading in rough stones and “restricted areas” where diamond mining or bulk sampling takes place. The government is also opening up most of the 26,000-sq-km Diamond Area 1, the Sperrgebiet (forbidden territory) in the southern Namib desert, for general minerals exploration; there is considerable potential for zinc and other base metals in the south-eastern sector adjoining the existing Rosh Pinah zinc mine. The first licences were issued in early 2001, subject to strict environmental conditions.

Production of main minerals, 2000 (tonnes unless otherwise indicated) Diamonds (’000 carats) 1,552 of which: marine 899 Uranium oxide 3,201 Gold (kg) 2,417 Fluorspar 66,128 Salt 523,009 Zinc concentrates 73,535 Sources: Chamber of Mines of Namibia; individual producers.

Offshore diamond sector Diamonds, over 95% of which are of exceptionally fine gem quality, are mined capacity is expanding onshore from alluvial deposits in Diamond Area 1, north and east of Oranjemund, by Namdeb Diamond Corporation, in which the government and De Beers Centenary became equal partners under a 1994 agreement. However, the future of Namibia’s diamond industry lies offshore, where reserves of alluvial gem-quality diamonds on seabed gravels at depths of up to 100 metres total an estimated 1.5bn carats, and have become accessible through advances in marine dredging and mining technology. Commercial mining offshore was pioneered by De Beers Marine (Debmarine), acting as Namdeb’s contractor in the huge Atlantic 1 deepwater concession along the

southern coast. In November 2000 a new agreement with the government provided Namdeb with a 30% stake in the restructured De Beers Marine Namibia (DBMN), with four mining vessels valued at US$120m transferred to DBMN from Debmarine. This provides for the long-term security of offshore mining operations, with DBMN retaining rights to Atlantic 1 until 2020. The government will receive a direct share of profits from DBMN in addition to tax and royalty payments. Despite Namdeb’s introduction of innovative dredging technology and the mining of new alluvial deposits inland along the north bank of the Orange river at Auchas—and, from 2001, Daberas—onshore recoveries are steadily declining owing to resource depletion.

Offshore output set to Namibia’s offshore diamond output is set to exceed 1m carats by 2002. exceed 1m carats by 2002 However, this forecast could be revised downwards if the current weakness of the global diamond market, owing to the economic slowdown in the US, intensifies. In 2000 offshore output accounted for 58% of the total production of 1.55m carats. Whereas DBMN recoveries rose by 12% to a record 576,000 carats, output by UK-based Namibian Minerals Corporation (Namco) fell by almost one-fifth, to 221,000 carats, owing to difficult conditions encountered in its offshore Lüderitz mining licence. In early 2001 Namco was forced to suspend mining following damage to its NamSSol seabed crawler mining system, which caused a short-term freeze in revenues and forced the company to place its operating subsidiaries into provisional liquidation. A financial rescue package was secured in mid-2001, under which the Israeli- owned Leviev group became the largest shareholder and gained the exclusive right to market Namco’s output. Mining was due to resume in the second half of 2001, and Namco should be on track to achieve its production target of 400,000 carats in 2002. Canada’s Diamond Fields International (DFI) became Namibia’s third offshore mining operator in June 2001. The company is mining the Marshall Fork feature offshore from Lüderitz, using a vessel purchased from Namco (under a joint-venture agreement with South Africa’s TransHex, the latter is to supply two more mining vessels, by end-2001 and end-2002, respectively). DFI projects output 65,000-135,000 carats between June 2001 and June 2002.

Diamond production, 2000 (‘000 cts) 2000 % change Namdeb 1,320 2.3 of which: Onshorea 653 –8.8 Offshoreb 576 12.1 Beach & marine contractors 91 54.2 Other offshore producersc 232 –33.5 Total 1,552 –5.3 of which: Offshore recoveries 899 –2.5 % recovered offshore 57.9 –

a Includes Mining Area No.1, Auchas and Elizabeth Bay. b Recoveries from the Atlantic 1 deepwater concession mined by DBMN. c Mainly Namco.

Source: Chamber of Mines of Namibia; De Beers group.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 39

Uranium After almost halving in 1991-92 because of weak global prices, uranium oxide production from the large but low-grade Rössing mine recovered in 1996-97, to around 70% of the operation’s 4,500-tonne-rated capacity, in order to meet higher delivery commitments, mainly to France. However, production was trimmed again in 1998-2000 owing to renewed price weakness. Plans for returning to full output have been postponed for the short term. Rössing, in which the UK’s Rio Tinto holds a 69% interest and the government 3.5%, has successfully implemented a programme to reduce costs by 20%, involving voluntary redundancies and investment in improved operating methods. In 1999 Rio Tinto’s share of net earnings almost doubled, to US$19m; it was unchanged in 2000. Despite low uranium prices, in 1999 an Australian company, Acclaim Uranium, purchased the nearby Langer Heinrich deposit, formerly explored by South Africa’s Gencor, where ore reserves are smaller but of higher grade. (Reference table 16 shows mineral production trends.)

Manufacturing

Food-processing is the The manufacturing sector is constrained by the small domestic market, close major activity economic integration with South Africa and a shortage of skilled personnel. Food-processing is the main activity, with one-third of all manufacturing firms engaged in fish- and meat-processing, brewing and soft drinks, dairy produce, and other food products, which together account for some 80% of sectoral real value added. Other products include metal components, fish cans, furniture, paints, soap and detergents, paper and plastic packaging, clothing, and leather goods.

A 1994/95 census of manufacturing establishments identified 280 firms and total employment of 18,000 in the sector. About half of the workforce was employed in the food industry, with metal, and wood and furniture enterprises each employing some 10%. At constant prices manufacturing’s share of GDP has declined, from 14% in 1993 to 12% in 2000, mainly owing to a reduction in the value of processed meat and the re-basing of the constant price series to 1995 in the latest national accounts. Government hopes that the EPZ regime would kick-start the development of new export-oriented manufacturing capacity have yet to be fulfilled. By 2001, 31 companies granted EPZ status had started operations for a total investment of just under N$900m. Including the reopened Tsumeb mining operation, whose smelting operations have EPZ status, EPZ employment totals some 4,000, although new employment creation is only 2,500.

Most existing capacity Local manufacturing capacity is mainly in the hands of Namibian-owned or remains locally owned based firms, and the government gives preference to investors establishing locally registered companies with Namibian partners. One of the most successful locally owned firms, Namibia Breweries (Nambrew), which operates two breweries and a soft-drinks bottling plant, is a subsidiary of German firm Ohlthaver and List, which in 2000 formed a strategic partnership with Germany’s Bräuerei Beck to facilitate regional and international marketing. Nambrew, which produced a record 1.1m hl of German-style lagers in 2000/01 (April-March), is the only licensed producer and has a 90% share of the local

beer market. It has also made significant inroads into South Africa’s premium lager sector, in which it has a 25% share—a distribution centre was opened in Gauteng in 2000. South African Breweries (SAB) has made aggressive forays into the Namibian market—Nambrew is almost the only independent brewery left in southern Africa—but the government continues to refuse it permission to open a Namibian brewery on the grounds that Nambrew would be forced into retrenchments. However, SAB is maintaining the pressure by forming the FastPack consortium with a local black empowerment group. The only heavy industry is the cement factory at Otjiwarongo, in which Lafarge South Africa acquired a majority stake in 1998; however, it was closed indefinitely at the end of 1999 owing to the emission of excessive dust by outdated equipment. A planned upgrade has yet to be scheduled.

Construction

The construction sector has The building industry has recorded mixed fortunes recently, with the level of recovered strongly interest rates and capital outlays by the government being the major factors affecting its performance. Real output rose by 15% in 1996, but slumped the following year, repeating the pattern in 1998-99, during which interest rates were at their peak—with a consequent adverse impact on new residential property developments. However, the reduction in interest rates from 1999 produced a rebound in activity, and the sector recorded real growth of 26% in 2000. The government’s N$1bn (US$120m) capital spending allocation in the 2001/02 fiscal year and major projects, such as the Skorpion zinc mine/refinery and associated infrastructure, and the northern rail link, should ensure continued positive sectoral growth in the short term. The value of approved building plans and completions reached record levels in 1995, but subsequent high real mortgage rates caused a drop in residential property developments. The value of commercial and industrial building completions has also dropped off. (Reference table 17 shows trends in private construction activities.) Government-funded building projects are mainly allocated through the Namibian Tender Board, whose regulations are in the process of being amended to give preference to Namibian companies. Local firms have long complained of unfair competition by foreign contractors, in particular by Chinese firms that have won a significant proportion of government contracts recently.

Financial services

A small but profitable Banking activities have recorded strong growth in turnover and profitability banking sector since independence, and the range of local financial institutions has expanded. Merchant banking and asset management firms have set up local operations to tap into the increased domestic liquidity provided by the partial repatriation of pension fund and insurance assets from South Africa (see below). Total assets of the four main commercial banks more than doubled from 1995 to 2000, to N$12bn (US$1.5bn), and growth in total deposits rose to N$9.2bn in 2000, with demand deposits accounting for 58% of this. Private-sector deposits continued to comprise the bulk of total deposits, with an end-2000 share of 75%, and recorded 16% growth during the year.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 41

The Banking Institutions Act of 1998 brought the legal framework into line with international banking and supervisory standards, particularly the Core Principles for Effective Banking Supervision recommended by the Basle Committee. The Bank of Namibia (BoN; the central bank) has enhanced supervisory powers, including rights to investigate the finances of banking institutions and take action against those conducting illegal banking activities. New, more flexible, capital adequacy and liquidity requirements have been adopted, with the former more sensitive to risk profiles of the different assets of banking institutions, and an overall requirement for 10% of total liabilities to the public to be in the form of liquid assets. In 1999 the BoN stated that all banking institutions had continued to meet the new capital adequacy requirements (in line with the Basle Accord on Risk-Weighted Capital Adequacy), with a ratio of qualifying capital to risk-weighted assets of 14.4%, compared with the stipulated minimum of 8%.

First National Bank Namibia (FNBN) and Standard Bank Namibia, with assets of over N$2bn each at the end of 2000, have the largest branch networks. FNBN was floated on the stock exchange in 1997, and, unlike Standard, is no longer wholly owned by its South African parent group. The Commercial Bank of Namibia—a subsidiary of Geneva-based Société financière pour les pays d’outre-mer and South Africa’s Nedcor Bank—and Bank Windhoek, in which South Africa’s ABSA Bank is the main shareholder, had assets of over N$1.5bn each. Namibia’s sole building society, Swabou, had end-1999 assets of N$1.2bn. (Reference table 18 gives historical data on commercial banks.)

An insurance sector The insurance and pensions sector, in which South African mutual societies are undergoing rapid change the largest participants, was reshaped by 1995 regulations requiring a proportion of assets traditionally invested on the South African market to be reinvested locally. A minimum of 35% of Namibian-generated funds must now be invested in specified local assets. This has provided new opportunities for local asset management firms. Pension funds alone had some N$8bn under management at the end of 1999, including the Government Institutions Pension Fund, which had a portfolio valued at over N$4.5bn. State-owned Namibia National Reinsurance Corporation (NamibRe) was created in 1999 with the aim of reducing the placement of reinsurance business with firms in South Africa and overseas. The local insurance industry strongly opposed a provision in the government bill creating NamibRe that proposed a 20% compulsory cession of the value of their reinsurance policies and premiums to NamibRe. Following protracted legal hearings between the insurers and the government, the 20% clause was dropped for five years, after which the provision is to be reviewed. NamibRe will still have first option on reinsurance placed within Namibia, and the right to a small percentage of insurers’ treaties (risks laid off by local firms).

The Namibian Stock The Namibian Stock Exchange (NSX), established in October 1992, remains Exchange relatively small and is dominated by a number of leading “blue-chip” South African stocks that are dual-listed (these account for 98% of total capitalisation, although their number dropped in 2000 owing to mergers). Activity on the NSX was 24% higher in 2000 than in 1999, lifting the total value of shares

traded to N$2.5bn, reflecting a one-third rise in the total volume of shares traded. However, this was partly the result of investors selling off their holdings. The NSX local index ended 2000 down by 41%, at 92, largely because of the poor performance of PEP Holdings and Namibian Minerals Corporation (Namco), whose share price fell by 70% and 63%, respectively. The overall index, which includes the 28 dual-listed South African companies that account for the bulk of market capitalisation, closed 2000 down by 9%, at 267. (Reference table 19 gives data on stockmarket activity.)

Namibian Stock Exchange, 2000 (year-end; domestic companies only unless otherwise indicated) Listed companies 13 incl South African cross-listed shares 41 Market capitalisation (N$ bn) 2.4 incl South African cross-listed shares (N$ bn) 333.9 Market capitalisation (US$ bn) 0.7 incl South African cross-listed shares (US$ bn) 54.7 Turnover ratioa (%) 0.5 Average price/earnings ratio (%) 14.5 Average dividend yield (%) 3.0

a Total value traded annually divided by total market capitalisation.

Sources: Bank of Namibia; Namibian Stock Exchange.

Other services

Overseas tourist arrivals The number of visits by overseas tourists has increased sharply since have increased sizeably independence, helped by the inauguration of direct air links with Germany and the UK. According to the BoN, tourism was the third highest contributor to total GDP (excluding the government sector), after mining and fishing. Although South Africa remains the predominant source of tourists, non- African visitors now account for one-quarter of total arrivals. Namibia’s spectacular desert landscapes and wildlife in the 5,000-sq-km Etosha national park in the north are among the prime attractions. Although 1997 is the latest year for which detailed visitor arrival figures have been published, a 9.5% growth in tourist arrivals was recorded during 1998, fractionally less than in the preceding year. However, the adverse security situation along the north- eastern border since the end of 1999, owing to the spreading of the Angolan civil conflict, has hit the sector. Many local tourist lodges have been closed and Namibia’s international reputation as a safe destination has been badly dented. (Reference table 20 gives data on tourism.) There is a wide range of quality private accommodation available, ranging from three- and four-star hotels in Windhoek and Swakopmund to numerous pensions and guest-farms. Northern Namibia’s first four-star hotel opened at Ondangwa in mid-2000.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 43

The external sector

Trade in goods

Diamonds and fish are the Namibia’s economy has always been highly export-oriented (foreign trade in top export earners goods is the equivalent of nearly 100% of GDP), and the value of transactions far exceeds the value of goods traded within the small domestic market. Most raw material commodities are exported in unprocessed or semi-processed form, and the principal exports—rough diamonds, uranium oxide, semi-processed hake and beef—therefore remain highly susceptible to global market prices, which, along with the fluctuations in the value of the South African rand, are the main determinants of foreign-exchange earnings.

Foreign trade N$ m % of total Exports, 2000a Diamondsb 4,841 47.9 Manufactured products 2,468 24.4 Food & live animals 1,264 12.5 Other minerals 1,321 13.1 Total incl others 10,100 100.0 of which: fishc 2,269 29.8 Imports, 1998d Food, live animals, beverages & tobacco 1,659 18.2 Machinery, electrical goods 1,153 12.6 Vehicles & transport equipment 1,777 19.5 Chemical, plastic & rubber products 983 10.8 Textiles, clothing & footwear 648 7.1 Metal & metal products 817 9.0 Total incl others 9,116 100.0

a Preliminary, different breakdown provided to that in Reference table 22, so figures are not comparable. b Includes central bank allowance for smuggled stones, currently estimated at 5% of production. c The central bank presentation of exports includes unprocessed and some semi- processed fish under the food and live animals category, and some semi-processed and all processed fish (exported as a finished product) under the manufactures category without providing a breakdown. Figures for exports published by the Central Bureau of Statistics show a complete breakdown for fish exports, the bulk of which are classified as “prepared and preserved fish”, from which the total given here is derived. d Are more recent breakdown of imports has yet to be published.

Sources: Bank of Namibia, Annual Report 2000; Central Bureau of Statistics (CBS), National Accounts, 1993-99.

These factors can be seen clearly in recent years. The value of total exports in local currency terms rose by almost two-thirds during 1996-2000 to N$10.1bn (US$1.45bn), mainly owing to continued growth in diamond and fish export volumes and prices. However, this increase was inflated by the depreciation of the South African rand/Namibia dollar against the US dollar, as in US dollar terms total earnings rose by only around US$50m, to US$1.46bn. Diamond earnings showed the strongest growth, more than doubling during 1996-2000 to a record N$4.8bn (equivalent to 48% of total exports), and rising by 29% in US dollar terms to US$698m. Although diamond output declined slightly in

2000, earnings were boosted by 35% by a combination of a 7% rise in export volumes and a 28% increase in diamond prices on the global market. Exports of preserved and prepared fish confirmed their position as Namibia’s second largest source of foreign exchange, and, with processed meat exports included, the overall value of manufactured products increased by just over one-half during 1996-2000, to N$2.5bn (a 5% decline in US dollar terms). In 1998, when diamond sales were depressed by quota restrictions on deliveries by De Beers, manufactured products became the most valuable export commodity, but they returned to second place in 1999-2000.

Further expansion in offshore diamond production, the resumption of blister copper exports and continued growth in white fish sales should underpin export growth in the short term, offsetting weakness in the uranium market, provided that the world diamond market is not badly damaged by the US economic slowdown. From 2002 mineral exports will also be boosted by the start of refined zinc sales from the Skorpion mine and refinery, worth some US$130m annually based on current zinc prices and the target output of 150,000 tonnes/year. (Reference tables 21-23 show trends in exports and imports.)

There is a persistent Namibia’s strong propensity to import has resulted in a structural deficit on the foreign trade deficit merchandise trade account since independence; between 1996 and 2000 imports (fob) rose by two-thirds to N$11.1bn (US$1.6bn). Namibia imports most production inputs, intermediate goods—including fuels and lubricants— consumer products and foodstuffs. South Africa is the source of 80-90% of its imports by value, including virtually all commodities (except petroleum products), although many items are re-exports from third-party suppliers. Food, beverages, and, increasingly, machinery and transport equipment, are the largest import categories. Bilateral trade between the two countries still accounts for some two-thirds of Namibia’s total foreign trade, although Namibia’s major export market is the EU, which accounts for over 60% of exports by value.

Main trading partners, 1997

Exports to: % of total Imports from: % of total UKa 41 South Africa 90 South Africab 18 Germany 2 Spainc 16 US 1 Japand 4 Russia 1 Francee 4France 1 Belgiumf 2UK 1 Germanyg 2 Italyh 2 Switzerlandi 1

a Mainly diamonds, beef, canned fish. b Mainly live animals, meat, fish and mineral products. c Mainly hake. d Mainly lobster and crab. e Mainly uranium. f Mainly copper. g Mainly beef and copper. h Mainly hake, karakul pelts and marble. i Mainly gold.

Sources: CBS; EIU; other countries’ foreign trade data; IMF.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 45

Invisibles and the current account

Namibia has run a current-account surplus since independence, mainly owing to consistently high net transfers offsetting a persistently large net outflow on both visibles and other invisibles. Despite a widening trade deficit in 2000, a continued rise in Southern African Customs Union (SACU) transfers and a further reduction in the deficit on the services account resulted in a record current-account surplus of N$1.3bn (US$194m).

Tourism and net transfers The main weakness in Namibia’s current account is the invisibles outflow, are crucial which averaged over N$700m annually during 1996-2000. Increased tourism revenue during the past decade and the rising inflow of SACU customs receipts—which reached a record N$2.9bn in 2000—have prevented Namibia from running a current-account deficit in most years. The services deficit declined in 1999-2000, owing to a reduction in net insurance costs and, in the latter year, smaller deficits on business, administrative, communications and financial services. The net travel surplus was a record N$1.2bn in 1999, but fell back to N$1.1bn in 2000, reflecting the impact on tourism of the insecurity along the north-eastern border. Net transport has remained consistently in deficit, with chartering costs for foreign fishing vessels the main item.

An investment income surplus was consistently recorded until 1998, but a net outflow occurred in the subsequent two years. This was mainly attributable to a substantial rise in payments to direct investors in Namibia, which more than trebled in 1999, to N$1bn, and remained as high the following year, owing to increased profits from diamond mining in particular. This offset a renewed upturn in income receipts from pension fund and life assurance investments in South Africa, which had declined in 1997-98 owing to progressive asset localisation requirements. Inflows of remitted profits and dividends are low, because of the modest foreign holdings by Namibian-domiciled companies, and although income reinvested by foreign direct investors in Namibia has risen, the combined inflow of N$22m in 2000 was dwarfed by pension and insurance receipts of N$1.1bn. SACU receipts, which account for the bulk of the public transfers net inflow, will decline as external tariffs on most European imports begin to be reduced from around 2003, under the EU-South Africa free- trade agreement and progressive global trade deregulation. (Reference tables 24-25 show historical balance-of-payments data.)

Capital flows and foreign debt

Since 1990—the earliest year for which figures are available—Namibia’s capital account has been in deficit, reflecting large outflows to South Africa. The main component, averaging over N$1bn a year in 1990-97, was net outflows of Namibian pension fund and life insurance premiums invested in South African assets. These tailed off in 1997-98, but rose again in 2000, to N$1.4bn, owing to a continued increase in purchases of pension fund assets by Namibian residents combined with a fall in repatriated redemptions. Net inflows have normally been recorded on foreign direct investment (FDI), short-term investment transactions (which are also mainly with South Africa) and, until

1998, portfolio investment, along with foreign aid receipts for capital projects—although the latter have declined substantially since 1998. In 2000 the capital-account deficit more than quadrupled, to N$1.2bn, owing to increased outflows of long-term and portfolio investment. The latter is dominated by purchases by Namibian residents of South African unit trusts, which more than trebled to N$396m in 2000, whereas redemptions of these assets declined to N$117m. The deficit on the long-term investment account doubled to N$1.4bn because of the transactions by pension fund and life assurance companies, with combined outflows increasing by a similar magnitude in 2000. The outflow of short-term investment declined moderately, to N$353m, as although Namibian commercial banks substantially raised their foreign assets, they also increased foreign liabilities in response to the sharp recovery in domestic credit demand. In 2000 FDI rose by 16%, to N$785m, below the record 59% expansion in the preceding year, reflecting a reduced, but still substantial, N$600m increase in reinvested retained earnings, mainly by mining companies, which more than offset reduced equity capital investment of N$133m.

Outstanding external debt External debt transactions have accounted for only a small share of capital remains modest flows as, under a 1992 rescheduling agreement, Namibia did not have to service principal payments on the N$800m bilateral debt to South African financial institutions it inherited at independence, and most new debt has been on concessional terms. The former South African government-guaranteed liabilities—which totalled N$1.4bn including capitalised interest owed—were written off completely in 1997 under a debt-cancellation agreement offered by South Africa in 1994. The impact was to slash Namibia’s stock of outstanding external debt to N$354m as of end-1997. Until then the book value of external debt had continued to increase because the South African debt was rolled up as capitalised interest and redemptions, and transferred to a Bank of Namibia (BoN, the central bank) facility with the South African Reserve Bank. Non- rand-denominated debt has largely been contracted on concessional terms since independence, so servicing remains inexpensive, but borrowing, mainly for capital development projects, has recently risen sharply. Public external debt rose by 32% in 2000, to N$909m, with a substantial rise in credit from the European Investment Bank, to N$151m. China was the principal bilateral donor, with disbursements rising to N$118m by end-2000. However, because of the government’s much greater domestic liabilities, external debt comprised only 18% of Namibia’s total outstanding public debt of N$5.2bn at end-2000, up from a 14% share a year earlier.

Private debt has fallen After almost trebling to N$345m at the end of 1997, private debt subsequently declined. Owing to the repayment of a large syndicated loan, private external debt fell to only N$182m at the end of 1998. A full breakdown of external debt— including private debt—was not shown in the central bank’s 1999 and 2000 annual reports, and Namibia has yet to be included in the World Bank’s Global Development Finance, the standard source of debt data. Namibia currently benefits from a low external debt-service ratio, at 2.8% for 1998 according to central bank data, although debt service rose sharply in that year, to N$240m. Most outstanding public external debt is on concessional terms and Namibia

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Namibia 47

therefore benefits from a good credit risk rating, which would enable it to borrow on international markets if necessary to fund its share of the cost of major projects. To date no parastatal has yet sought to raise funds via an international bond placing. (Reference table 26 gives central bank data for external debt; Reference table 27 gives OECD data on net official development assistance.)

Foreign reserves and the exchange rate

Namibia has only accumulated foreign reserves since 1993, when the Namibia dollar was introduced; prior holdings were the country’s share of South Africa’s foreign-exchange reserves. IMF data show that Namibia’s foreign reserves increased at a steady, albeit modest, rate from US$251m at end-1997 to US$305m at end-1999, but fell back to N$260m at end-2000, because of increased expenditure on imports. Foreign reserves as recorded by the central bank totalled N$2bn at end-2000, 6% higher than their level one year earlier, and provided just over nine weeks’ import cover. (IMF and central bank data for foreign reserves are shown in Reference table 28.)

The Namibia dollar As the Namibia dollar is pegged to the South African rand at par—there are no remains pegged to the rand plans for delinking it—its nominal external value is determined on the basis of the latter’s cross rates against major foreign currencies. It has therefore steadily lost value against major currencies in line with the rand’s depreciation. As a member of the Common Monetary Area (CMA) and signatory of the Multilateral Monetary Agreement, Namibia is not able to adjust the exchange rate in line with domestic economic conditions and balance-of-payments considerations, should these vary significantly from those of South Africa. Namibia also has to apply the foreign-exchange control regulations applied by the South African Reserve Bank. However, these are being gradually liberalised, and all CMA member states now have Article VIII status at the IMF, signifying the absence of controls over current transactions. Control of capital transactions by residents remains in force, but in consultation with other CMA central banks, the BoN has adopted a new approach for the management of exchange controls, shifting from the previous policy of barring all foreign transactions subject to specific exemption, to one based on allowing all such transactions in principle and selectively disallowing those where controls are still deemed necessary. Authorised dealers, in practice the commercial banks, will continue to handle all crossborder transfers, but the emphasis has also been shifted from control functions to securing vital statistical information on foreign transactions. (Reference table 29 shows exchange rate trends.)

Appendices

Regional organisations

For information about the regional organisations to which Namibia belongs, see Swaziland: Regional organisations. The two countries belong to the same regional organisations.

Sources of information

National statistical sources During the 1960s and 1970s hardly any separate statistics were compiled or published for Namibia because of South Africa’s policy of, in effect, incorporating Namibia as a fifth province. Official statistics were still at a nascent stage in 1990, as most data were derived from South African figures or estimated as residual items, with the notable exception of those for merchandise exports and mining output. The compilation of accurate and comprehensive official statistics has been given priority since independence as an important tool in development planning. The Central Bureau of Statistics (CBS)—until 1998 the Central Statistics Office (CSO)—of the National Planning Commission publishes comprehensive data on the national accounts and external trade, which are regularly revised. In 1995 Namibia became one of the first countries to revise its presentation of national accounts data in line with the latest UN guidelines for a system of national accounts (SNA). The main change was one of terminology; for example, GDP at factor cost was replaced by all industries at basic prices for the sectoral breakdown of GDP. As the numerical differences are minor, the Economist Intelligence Unit continues to use the former terminology to ensure compatibility with its other Country Profiles.

The Bank of Namibia (BoN, the central bank) has significantly improved its coverage of external transactions with the assistance of IMF experts in recent years, and there is now a consistent series for the current and capital accounts since 1990. Different presentational methods and timing sometimes lead to discrepancies between central bank and CSO figures, mainly in external trade data for the latest reporting year.

It should be noted that diamond export values published by the central bank include estimates of the value of smuggled stones for external transactions purposes (based on information provided by De Beers’ diamond security unit), and are therefore higher than the official sales figures of commercial producers as reported to the government Diamond Board. Although the BoN does not give estimates of the proportion of exports accounted for by unofficial transactions, a comparison between published output figures by the principal diamond producers and volume export figures calculated by the central bank indicates that smuggling averages 5% of total production. The gap has narrowed since the early 1990s, when it was around 10%, owing to the increasing proportion of output mined offshore, smuggling of which is much more difficult owing to stringent security systems on the vessels. One problem

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 49

with the bank’s methodology is that, apart from possibly inflating the real value of diamond export transactions, its estimates for production are used for calculating the diamond sector’s real value-added contribution to GDP. This means that in some years (such as 1997), when declared diamond output by commercial producers increases, diamond real value added in the national accounts is shown as contracting (and vice versa), because the figures are based on the central bank’s calculation of output, which includes the estimated smuggled content.

The inflation figures published by the CBS also need to be treated with caution. At present, these still relate to price changes in Windhoek only, and the weights and indices are based on a household expenditure survey carried out five years before independence. A national consumer price index, based on data from a 1993/94 national household income and expenditure survey, has been under preparation for several years, but has yet to be introduced.

Annual reports by the BoN, the Chamber of Mines of Namibia, De Beers Centenary, the Meat Corporation of Namibia (Meatco), Namibian Minerals Corporation (Namco), Namibia Power Corporation (Nampower), Namibian Ports Authority (Namport), Namibian Stock Exchange (NSX), Rio Tinto and TransNamib are all useful sources of information.

Auditor-General’s Office, Report of the Auditor-General on the Accounts of the Government of Namibia (annual)

Bank of Namibia, Monthly Developments in Monetary Statistics and Prices

Bank of Namibia, Quarterly Bulletin

Central Bureau of Statistics, Interim Consumer Price Index—Windhoek (monthly)

Central Bureau of Statistics, Preliminary National Accounts 2000; Preliminary National Accounts 1999; National Accounts 1983-98

Central Bureau of Statistics, Statistical Abstract 1999

Irwin, Jacobs, Greene (Pty) Ltd, Emerging African Markets Equity Research, IJG Namibia Monthly

Ministry of Agriculture, Water and Rural Development, Namibia Early Warning and Food Information Unit, Crop and Food Security Bulletin (bi-monthly)

Ministry of Finance, Estimate of Revenue and Expenditure, State Revenue Fund (annual)

Ministry of Trade and Industry, Namibia Trade Directory (annual)

The Namibian (daily), Windhoek

Namib Times (twice weekly), Walvis Bay

National Planning Commission, Living Conditions in Namibia, The 1993/94 Namibia Household Income and Expenditure Survey, Main Report

International statistical The main international source of relevance to Namibia is the IMF’s monthly sources International Financial Statistics, which derives most of its data from the central

bank and the CBS. In addition, the IMF produces periodic statistical reports as background documentation for its consultations with the Namibian government, the most recent being Namibia: Statistical Appendix, IMF Staff Country Report No. 99/9 of February 1999.

Namibia is not yet featured in the World Bank’s Global Development Finance, and a standard international tabulation of the country’s external debt is therefore lacking. Trade publications are an invaluable source of information on sectoral developments in mining and fishing. Since independence most of Namibia’s European and other overseas trading partners have published separate statistics for bilateral trade with the country, which previously were lumped together with those for South Africa (with the main exception of the UK). It should be noted that there is one major discrepancy in the treatment of Namibian exports to the UK. The official UK foreign trade statistics do not separately record imports of rough diamonds from Namibia (or from Botswana and South Africa), despite the fact that the bulk of these are sold in London by De Beers’ Diamond Trading Company (DTC). This is because De Beers obtained a dispensation from the UK authorities during the 1970s that diamonds imported into the UK for sale by the DTC would not be shown according to country of origin, in order to protect market confidentiality and, almost certainly, in order to make tracking of diamond exports from Namibia and South Africa more difficult were these ever to be the subject of economic sanctions by a UK government. Rough diamonds from southern African producers are flown first to Switzerland, although only a small proportion are sold to the diamond industry there and then shipped on to the UK. As a consequence, the UK official figures significantly undervalue the true value of bilateral trade with Namibia, as the main categories of Namibian imports shown are beef and fish.

Energy Data Associates, Bishops Walk House, 19-23 High Street, Pinner, Middlesex HA5 5PJ

IMF, International Financial Statistics (monthly)

Organisation for Economic Co-operation and Development (OECD), Geographical Distribution of Financial Flows to Aid Recipients (annual)

UNDP, Namibia Human Development Report, 1998.

Select bibliography and Helmut Bley, South-West Africa under German Rule, Heinemann, London, 1971 websites Klaus Dierks, Chronology of Namibian History, Namibia Scientific Society, Windhoek, 1999

Ronald Dreyer, Namibia and Southern Africa: Regional Dynamics of Decolonization 1945-90, Kegan Paul International, London, 1994

Lawrence Green, Lords of the Last Frontier, the Story of South West Africa and its People of All Races, Howard B Timmins, Cape Town, 1952

Johannes Haape, Insight Guides Namibia, APA Publications/Hofer Press, Singapore, 1993

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 51

Lazarus Hangula, The International Boundary of Namibia, Gamsberg Macmillan, 1993, Windhoek.

Patricia Hayes et al, Namibia under South African Rule, Mobility and Containment, 1915-46, James Currey, Oxford, 1998

Peter Katjavivi, A History of Resistance in Namibia, James Curry, London, 1988

Colin Leys and John S Saul, Namibia’s Liberation Struggle, The Two-Edged Sword, James Curry, London, 1995

David Lush, Last Steps to Uhuru, an Eye-witness Account of Namibia’s Transition to Independence, New Namibia Books, Windhoek, 1993

Sydney Moir, Namib Narrow-Gauge, Janus Publishing Company, Benoryn, South Africa, 1982

John Pallet, The Sperrgebiet: Namibia’s Least Known Wilderness. An Environmental Profile, DRFN/Namdeb Diamond Corporation, Windhoek, 1995

Putz, Von Egidy & Caplan, Namibia Handbook and Political Who’s Who, The Magus Company, Windhoek, 2nd ed., 1990

Bank of Namibia, http://www.bon.co.na, central bank website regularly updated with the data and downloadable versions of the bank’s publications

Namibian Government, http://www.republicofnamibia.com, official government website containing general and economic information

The Namibian newspaper, http://www.namibian.com.na, daily updates containing all current articles plus archived material which can all be downloaded free of charge

The Namibian Geological Survey, http://www.gsn.gov.nam/survey, features regularly updated mineral resource data and colour geological maps

Tourism, http://www.travelnews.com.na, contains updated information on local tourism attractions and services

Reference tables

These reference tables provide the most up-to-date statistics available at the time of publication.

Reference table 1 Population (mid-year; ‘000 unless otherwise indicated) 1996 1997 1998 1999 2000 Population 1,641 1,677 1,711 1,742 1,771 % change, year on year 2.31 2.19 2.03 1.81 1.66 Population by age group 0-14 718 730 741 751 760 15-64 857 871 904 925 944 65 & over 66 66 66 66 67 Source: US Bureau of the Census, International Database.

Reference table 2 Transport statistics 1994 1995 1996 1997 1998 Railways Freight (m tonnes) 1.7 1.7 1.6 1.7 1.5 Freight traffic receipts (N$ m) 148 155 163 175 195 Passenger journeys (‘000) 24 50 49 56 56 Roads Freight (‘000 tonnes) n/a 503 610 n/a n/a No. of passengersa (‘000) 70 70 65 68 n/a Harbour trafficb Walvis Bay 1,808 1,906 1,822 1,908 n/a Lüderitz 71 95 103 111 n/a Airline trafficc Freight (‘000 tonnes) 6.3 6.3 7.4 7.2 n/a No. of passengers (‘000) 210 210 228 234 n/a of which: international 67 n/a 69 66 n/a

a 1994-97 cover TransNamib services only; years starting April 1st. b Years starting May 1st. c 1994-97 cover Air Namibia only; years starting April 1st.

Sources: Central Bureau of Statistics (CSB), Statistical Abstract 1999; TransNamib; Namibian Ports Authority.

Reference table 3

Port of Walvis Bay traffica (‘000 tonnes unless otherwise indicated) 1993/94 1994/95 1995/96 1996/97 1997/98 Cargo landed 902 1,110 1,215 1,156 1,148 Petroleum products 435 580 719 677 645 Fish productsb 61 107 108 110 136 Coal 148 154 47 52 67 Maize & wheat 80 62 130 30 36 Sugar 3945515649 Cement 19 20 19 20 16 Malt 7 9 11 15 14 Vehicles 4 11 19 9 2 Other 109 122 111 187 183 Cargo shipped 622 665 653 630 718 Salt bulk & bagged 352 370 297 325 496 Fish products 104 109 76 78 73 Copper & lead 51 39 38 34 44 Fluorspar 32 53 35 31 29 Manganese ore 0 29 104 63 15 Marble & granite 20 14 11 13 14 Others 63 51 92 86 47 Cargo transshipped 95 32 38 37 41 Total 1,620 1,808 1,906 1,822 1,908 Containerised cargo (%) 19.8 18.4 18.0 18.0 15.1

a Years ending March 31; in 1997 Namport changed its financial year to end on September 30th; figures for 1997/98 are on a twelve-month comparative basis. b Landings of fish by Namibian and foreign fishing vessels.

Source: Namibian Ports Authority, Annual Reports.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 53

Reference table 4

Electricity generation and salesa (m kwh unless otherwise indicated) 1994/95 1995/96 1996/97 1997/98 1998/99 Total supply 2,015 1,951 1,949 2,211 2,085 Ruacanab 1,134 854 610 992 1,169 Van Eckc 115 18 17 11 27 Paratus 8 1 3 1 2 Imports 758 1,078 1,319 1,207 887 of which: E s c o m d 758 1,078 1,319 1,192 869 Zesco n/a n/a n/a 15 18 Total sales 1,784 1,731 1,700 1,904 1,863 Domestic consumers 1,638 1,701 1,699 1,881 1,807 Municipalitiese 868 913 963 1,028 1,060 Mines 631 656 596 668 562 Rural 139 132 140 185 185 Exportsd 146 30 1 23 56 Sales revenuef (N$ m) 309 375 274 331 337

a Years ending June 30th. b Hydro. c Coal-fired. d Via 200-mw interconnector with South Africa’s power grid, plus from 1998 small amounts exported to Angola and Botswana. e For distribution to individual consumers, commerce and industry and the government sector. f Sales of electricity only; excluding investment income and other items.

Source: Namibia Power Corporation (Nampower), Annual Reports.

Reference table 5

Gross domestic producta 1996 1997 1998 1999 2000b Total (N$ m) At current prices 15,012 16,797 18,858 21,230 24,145 At constant (1995) prices 13,112 13,704 14,162 14,770 15,343 % change, year on year 3.2 4.5 3.3 4.3 3.9 Per head (N$) At current prices 9,137 9,904 10,776 11,762 12,967 At constant (1990) prices 7,981 8,080 8,092 8,183 8,240 % change, year on year 0.1 1.2 0.1 1.1 0.7

a Walvis Bay activities have been gradually incorporated into the national accounts: fish-processing has always been included, and from 1994 coverage was extended to include salt extraction, the harbour and municipality, providing additional growth of 0.7-0.8 percentage points that year; other, more tentative, additions have been made to manufacturing, wholesale and retail trade. b Preliminary.

Source: CBS, Preliminary National Accounts 2000.

Reference table 6 Gross domestic product by expenditure (N$ m unless otherwise indicated; constant 1995 prices) 1996 1997 1998 1999 2000a Private consumption 7,973 8,575 8,778 8,864 9,041 % change, year on year 10.7 7.5 2.4 1.0 2.0 % of total 60.8 62.6 62.0 60.0 58.9 Government consumption 3,908 4,055 4,178 4,263 4,250 % change, year on year 2.6 3.8 3.0 2.0 –0.3 % of total 29.8 29.6 29.5 28.9 27.7 Gross domestic investment 3,306 2,938 3,667 3,908 4,239 % change, year on year 17.4 –11.1 24.8 6.6 8.5 % of total 25.2 21.4 25.9 26.5 27.6 Change in stocks –65 92 518 52 108 % contribution to growth 0.0 1.2 3.1 –3.3 0.4 % of total –0.5 0.7 3.7 0.4 0.7 Gross domestic expenditure 15,122 15,660 17,142 17,087 17,637 % of total 115.3 114.3 121.0 115.7 115.0 Exports of goods & services 6,462 6,287 6,270 6,818 6,723 % change, year on year 2.8 –2.7 –0.3 8.7 –1.4 % of total 49.3 45.9 44.3 46.2 43.8 Imports of goods & services 8,184 8,465 9,117 9,126 7,997 % change, year on year 15.7 3.4 7.7 0.1 –12.4 % of total –62.4 –61.8 –64.4 –61.8 –52.1 GDP at market pricesc 13,112 13,704 14,162 14,770 15,343

a Preliminary. b Change in changes of stocks as a percentage of the previous year’s GDP. c Does not sum owing to discrepancy in source.

Source: CBS, Preliminary National Accounts 2000.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 55

Reference table 7 Gross domestic product by sector (N$ m unless otherwise indicated; constant 1995 prices) 1996 1997 1998 1999 2000a Agricultureb 1,005 926 909 1,018 1,137 % change, year on year 15.2 –7.8 –1.8 12.0 11.7 Fishing 482 465 567 629 597 % change, year on year –1.8 –3.6 21.9 10.9 –5.1 Mining & quarrying 1,100 1,145 1,117 1,210 1,249 % change, year on year 4.0 4.1 –2.5 8.4 3.2 of which: diamond mining 783 782 792 908 914 % change, year on year 2.6 –0.1 1.3 14.5 0.8 Manufacturingc 1,226 1,447 1,576 1,527 1,629 % change, year on year –16.1 18.0 8.9 –3.1 6.7 of which: fish processing 139 262 356 281 329 % change, year on year –64.4 88.8 35.7 –21.0 17.1 Construction 416 367 423 374 469 % change, year on year 15.4 –11.8 15.3 –11.6 25.5 Electricity & water 238 214 223 268 232 % change, year on year –8.3 –10.1 4.3 20.2 –13.5 Wholesale & retail trade 1,179 1,248 1,339 1,401 1,426 % change, year on year 9.5 5.9 7.3 4.6 1.8 Hotels & restaurants 200 254 285 251 270 % change, year on year –7.5 26.8 11.9 –11.7 7.4 Transport & communications 894 962 862 986 1,032 % change, year on year 5.0 7.6 –10.3 14.4 4.7 Finance & real estate 1,664 1,703 1,776 1,841 1,867 % change, year on year 7.0 2.3 4.3 3.7 1.4 Government services 2,876 2,980 3,059 3,167 3,302 % change, year on year 3.4 3.6 2.6 3.5 4.2 Social & community services 120 122 122 124 127 % change, year on year 5.8 1.0 –0.1 1.7 2.5 Other producers 270 275 281 286 292 % change, year on year 2.0 2.0 2.0 2.0 2.0 GDP at factor cost 11,546 11,971 12,394 12,930 13,482

a Preliminary. b Agricultural coverage has been expanded from the main livestock and crop farming activities to include production of milk, eggs, sunflower, cotton, ground nut and lucerne crops, and the value of the ostrich stock. c The contribution of other manufacturing value added was raised substantially by incorporating results from a survey of non–meat and fish-processing activities conducted in 1996.

Source: CBS, Preliminary National Accounts 2000.

Reference table 8

Government financesa (N$ m unless otherwise indicated) 1998b 1999b 2000b 2001c 2002c Tax revenue 5,106 5,501 6,598 6,935 7,837 of which: income tax on individuals 966 1,241 1,509 1,405 1,705 diamond miningd 505 161 143 185 475 non-mining companies 406 540 359 625 635 general sales tax 756 885 1,054 1,025 0 value-added tax 0 0 0 0 1,950 customs & excise 1,560 1,805 2,241 2,877 2,641 Non-tax revenue 530 648 605 671 758 of which: diamond royalties 160 199 269 240 294 dividends from central bank n/a n/a 18 70 56 Grants 54 37 69 80 180 Total revenue 5,690 6,186 7,272 7,686 8,775 Expenditure 6,129 6,936 7,953 8,447 9,782 Current 5,262 6,103 6,884 7,189 8,353 of which: personnel expenditure 2,831 3,162 3,619 3,719 4,281 Capitale 867 833 1,069 1,258 1,429 Overall balance –439 –749 –681 –761 –1,007 financed by: net borrowing 1,065 429 436 726 707 change in cash balances –626 321 245 35 300 Balance as % of GDP 2.5 3.9 3.1 3.1 3.6

a Fiscal years ending March 31st. b Budget outturns. c Budget estimates. d Diamond income tax. e Includes net lending and equity participation.

Source: Ministry of Finance.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 57

Reference table 9 Money supply and credit (N$ m unless otherwise indicated; year-end) 1996 1997 1998 1999 2000 Demand deposits 2,517 2,563 3,316 4,166 5,298 Currency in circulation 283 336 365 423 481 Money (M1) 2,800 2,898 3,681 4,589 5,779 % change, year on year 53.7 3.5 27.0 24.7 25.9 Quasi-money 3,250 3,603 3,525 4,037 3,859 Broad money (M2) 6,050 6,501 7,206 8,626 9,638 % change, year on year 27.4 7.5 10.8 19.7 11.7 Domestic credit 6,946 7,704 8,774 10,349 11,961 Claims on central government 221 68 112 459 275 Claims on other public sectora 91 166 162 153 246 Claims on private sector 5,663 6,554 7,129 7,434 8,700 Claims on other financial institutionsb 18 24 15 11 47 Net foreign assets 954 892 1,356 2,288 2,692

a Total includes local and regional governments and parastatals. b Total includes claims on non-bank financial institutions.

Source: Bank of Namibia, Annual Report 2000.

Reference table 10 Interest rates (%; end-period) 1996 1997 1998 1999 2000 Bank ratea 17.75 16.00 18.75 11.50 11.25 Prime overdraft rateb 20.70 20.00 23.55 16.70 15.90 Deposit ratesb 12.90 12.00 13.76 8.57 7.63 Lending ratesb 19.90 19.60 22.31 17.51 15.11 Treasury billsa 16.52 15.31 18.32 11.53 9.62

a Bank of Namibia. b Commercial banks.

Source: Bank of Namibia, Annual Report 2000.

Reference table 11

Domestic public debta (N$ m; year-end amounts outstanding) 1996 1997 1998 1999 2000 Treasury billsb 992 1,678 1,888 2,497 2,640 Internal registered stockc 1,045 1,262 1,878 1,878 2,052d Total domestic debt outstanding 2,037 2,940 3,766 4,375 4,692d % of GDP 13.6 17.5 20.0 20.6 19.4

a Entirely comprising liabilities arising from issues by the central government of scrip with short- term and longer-term maturities (Treasury bills and internal registered stock) primarily to finance successive budget deficits. b 182-day and 365-day bills. c In mid-1998 a consolidation of internal registered stock was completed, including a total net additional issue of N$477m. d End-November.

Source: Bank of Namibia, Annual Report 2000.

Reference table 12 Consumer price inflation (Dec 1992=100; annual averages) 1996 1997 1998 1999 2000 All items index 138.2 150.4 159.7 173.4 189.5 % change, year on year 8.1 8.9 6.2 8.6 9.3 Food price indexa 137.8 148.4 152.4 160.9 172.0 % change, year on year 6.7 7.7 2.6 5.6 6.9

a Food is the largest component of the all-items index, with a 28.4% weighting.

Source: CBS.

Reference table 13 Cereal productiona (‘000 tonnes) 1996/97 1997/98 1998/99 1999/2000 2000/01b Millet & sorghumc 117.1 37.5 49.2 86.0 44.9 Maize 49.4 13.8 22.9 49.4 19.8 Commercial areasd 37.3 12.8 20.8 35.3 14.2 Communal arease 12.1 1.0 2.1 14.1 5.6 Total coarse grain 166.4 51.3 72.1 135.5 64.7 Wheatf 6.3 5.0 3.2 4.5 4.0 Total 172.8 56.3 75.3 140.0 68.7 a July-June crop years. b Preliminary forecast. C All rain-fed and produced in northern communal farming areas: Caprivi, Kavango, Ohangwena, Omusati, Oshana and Oshikoto regions until 1998/98, since when some 2,000-3,000 tonnes annually have been produced in commercial areas. d Rain-fed and irrigated. e Kavango and Caprivi rain-fed. f Winter crop from irrigated dam areas.

Sources: Namibia Early Warning and Food Information Unit; Ministry of Agriculture, Water and Rural Development.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 59

Reference table 14 Livestock marketing (‘000 head) 1995 1996 1997 1998 1999 Cattle 415 498 227 313 352 Locally slaughtered 216 218 134 169 200 Abattoirsa 186 190 102 145 180 Butchers 30 28 32 24 20 Live exports to South Africab 199 279 93 143 152 Small stockc 1,183 1,060 954 1,179 1,206 Locally slaughtered 175 131 88 108 298 Abattoirsd 122 129 88 105 61 Butchers 53 2 0 3 237 Live exports to South Africac 1,009 929 866 1,072 908 Pigs 33 30 27 9 6 of which: Imported 17 15 20 5 6 Ostrichese 513211521 Total 1,636 1,601 1,229 1,516 1,585

a Mainly cattle from commercial herds slaughtered at Meat Corporation (Meatco) plants in Windhoek, Okahandja and Otavi with some cattle from northern communal areas not certified for export. b Includes controlled market sales via quotas negotiated with the South African Meat Board (abolished for cattle in 1996 and small stock in 1997) and open market sales of mainly young cattle or lambs for feedlots. c Mainly mutton sheep. d Windhoek abattoir. e Birds slaughtered.

Source: Ministry of Agriculture, Water and Rural Development, Directorate of Planning, Agricultural Statistics Bulletin, October 2000.

Reference table 15

Fish catcha (‘000 tonnes) 1995 1996 1997 1998 1999 Purse seine net fishingb 144 116 134 128 77 of which: pilchard 43 1 28 69 45 horse mackerel 51 91 88 25 27 anchovy 481330.4 Trawling/coastal fishingc 410 388 351 454 495 of which: hake 130 136 118 151 166 mackerel 260 230 214 287 295 monkfish 10 10 10 17 15 Ring & bow net fishing 2.2 2.0 1.7 2.7 2.4 Crab 2.0 1.7 1.5 2.3 2.1 Rock lobster 0.2 0.3 0.2 0.4 0.3 Orange roughyd 61319113 Total incl others 569 524 511 606 578

a Declared fish catches within Namibia’s exclusive economic zone (EEZ), including foreign trawlers chartered by Namibian quota-holding firms. b Inshore pelagic catch, mainly landed for local canning or reduction to fishmeal and oil. c Bottom trawling and long-lining, mainly hake, monk, kingklip and sole; mid-water trawling, mainly mackerel (exported unprocessed); coastal long-lining and pole, tuna. d Categorised as experimental trawl in 1995-96 and part of 1997 seasons.

Source: Ministry of Fisheries and Marine Resources.

Reference table 16 Minerals production (‘000 tonnes unless otherwise indicated) 1996 1997 1998 1999 2000 Diamondsa (‘000 carats) 1,390 1,418 1,440 1,639 1,552 Goldb (kg) 2,190 2,433 1,882 2,008 2,417 Silverc (tonnes) 42 39 23 0 9 Copper, blister (99% Cu) 16.6 16.0 8.0 0 5.1 Lead, refined metal 8.5 0.5 0.2 0 0 Cadmium, refined metalc 14 2 0 0 0 Arsenic trioxide, refined metalc 1,159 1,232 175 0 0 Zinc, concentrate 69.7 74.6 78.6 69.2 73.5 Pyrite, concentrate 90.7 93.7 28.2 0 12.0 Manganese ore 93 40 0 0 0 Fluorspar, concentrate 32.3 23.2 42.1 57.7 66.1 Lithium oresd 2.0 0.6 0.2 0 0 Salte 302.3 490.5 507.3 502.7 523.0 Marble 12.7 13.7 9.8 n/a n/a Semi-precious stonesf (tonnes) 918 439 189 n/a n/a Uranium oxide (tonnes) 2,886 3,425 3,257 3,171 3,201

a About 98% gem quality; production as reported by the commercial producers. b Mainly bullion plus metal contained in blister copper. c Metal contained in blister copper. d Used for uranium processing at the Rössing mine. e Coarse, rock and table salt; includes output from Walvis Bay salt pans as well as those at Swakopmund. f Mainly agate, amethyst, rose quartz, tourmaline.

Sources: Ministry of Mines and Energy; Chamber of Mines of Namibia; De Beers Centenary; Gold Fields of Namibia; Namibian Minerals Corporation; Rio Tinto.

Reference table 17 Private construction activities (N$ m unless otherwise indicated) 1994 1995 1996 1997 1998 Plans approved Units (no.) 5,343 4,736 4,188 3,788 4,167 Value 639.6 666.9 823.2 513.2 483.7 Residential 279.2 287.5 184.7 139.9 222.3 Commercial/industrial 155.7 215.2 391.8 179.8 77.1 Othersa 204.7 164.2 246.8 193.6 184.3 Buildings completed Units (no.) 5,090 3,394 3,418 2,509 2,867 Value 454.4 644.0 506.1 346.8 382.8 Residential 244.2 225.1 194.6 111.1 147.6 Commercial/industrial 86.9 279.7 154.1 64.7 110.5 Othersa 123.3 139.2 157.5 171.1 124.7

a Includes alterations.

Sources: Ministry of Works, Transport and Communication; Ministry of Regional/Local Government and Housing; municipal authorities.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 61

Reference table 18

Assets and liabilities of deposit money banksa (N$ m; year-end) 1996 1997 1998 1999 2000 Assets 6,808 8,217 8,821 10,006 12,063 Reserves 226 276 266 511 369 Foreign assets 350 537 548 878 1,753 Claims on government 461 660 702 1,020 949 Claims on other banks 7 24 15 11 46 Claims on private sector 5,673 6,554 7,129 7,434 8,700 Othersb 91 166 162 153 246 Liabilities 6,808 8,217 8,821 10,006 12,063c Demand deposits 2,517 2,563 3,316 4,166 5,298 Time & savings deposits 3,251 3,603 3,525 4,037 3,859 Foreign liabilities 295 839 681 418 981 Central government deposits 78 218 173 89 228 Capital & reserves 644 783 919 1,081 1,291 Other items (net) 15 204 194 86 370 Bonds 9 7 6 8 1 Credit from Bank of Namibia 0 0 8 120 19

a The data cover the operations of the country’s four commercial banks: Bank Windhoek, Commercial Bank of Namibia, First National Bank Namibia and Standard Bank Namibia. b Comprises non-financial sector public enterprises and regional councils. c Does not sum in source.

Source: Bank of Namibia, Annual Report 2000.

Reference table 19 Namibian Stock Exchange (year-end) 1996 1997 1998 1999 2000 No. of listed companies 27 33 41 41 36 of which: domestic shares 12 13 15 15 13 Market index (Oct 1992=100) 218 226 176 292 267 Market capitalisation N$ bn 76.0 154.8 159.4 333.1 307.1 US$ bn 17.7 33.6 28.8 54.6 44.3 No. of shares traded (m) 68.6 67.2 107.2 193.6 247.0 Turnover value (N$ m) 660 901 1,035 1,828 2,500 Source: Namibian Stock Exchange.

Reference table 20 Tourist accommodation (‘000 room-nights sold unless otherwise indicated) 1994 1995 1996 1997 Total 546 622 682 656 of which: Khomas regiona 151 183 194 211 Coastal regionb 134 162 167 138 Average room occupancy (%) 40 40 41 43 Hotels & lodges 299 354 372 338 Average room occupancy (%) 42 44 44 47 Rest campsc 177 177 197 207 Average room occupancy (%) 46 41 42 44

a Includes Windhoek b Includes Swakopmund, Walvis Bay and Henties Bay. c Government-owned facilities.

Sources: CBS; Ministry of Environment and Tourism.

Reference table 21 Foreign trade indices (1990=100) 1995 1996 1997 1998 1999 Value of exports 199 244 255 268 303 Volume of exports 152 162 162 152 162 Export prices 131 150 157 176 188 Value of imports 186 223 245 266 284 Volume of imports 123 132 125 128 132 Import prices 151 169 196 208 216 Terms of trade 8789808587 Source: CBS, Preliminary National Accounts 1999.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 63

Reference table 22 Exports of goods and services (N$ m; fob) 1995 1996 1997 1998 1999 Live animals & animal products 547 689 400 454 429 of which: cattle 271 386 126 157 152 sheep & goats 148 143 144 179 145 Fisha 26 17 14 14 14 of which: tuna 22 13 10 10 10 Minerals 2,650 3,344 3,600 3,183 3,681 Diamondsb 1,763 2,328 2,495 2,150 2,529 Copper 250 154 194 52 0 Gold 99 118 123 102 118 Zinc 45 73 116 118 167 Uranium & all others 493 671 672 761 867 Manufactured products 1,918 2,195 2,267 3,003 3,199 of which: prepared & preserved fish 1,254 1,220 1,447 2,142 2,255 of which: w h i t e f i s h c 747 1,014 1,081 1,712 1,902 c a n n e d f i s h d 390 34 191 273 170 rock lobster & crabe 79 126 134 94 118 fish meal & fish oil 34 40 33 56 55 meat & meat preparations 368 445 316 494 692 Electricity 4 0 0 2 3 Total exports of goods incl others 5,145 6,245 6,282 6,656 7,602 Purchases by non-residents 1,060 1,315 1,597 1,659 1,826 Other services 83 135 154 133 146 Total exports of services 1,143 1,450 1,752 1,792 1,972

a Unprocessed. b Including central bank estimated value of smuggled stones. c Mainly semi- processed hake and mackerel. d Mainly pilchard. e Including seal products and seaweed.

Source: CBS, Preliminary National Accounts 1999.

Reference table 23

Imports of goods and servicesa (N$ m; cif) 1994 1995 1996 1997 1998 Agriculture & forestry products 200 227 278 376 395 Fish and other fishing products 21 23 27 24 7 Ores & minerals 96 96 123 180 52 Meat & meat products 85 95 172 172 198 Other food products 577 562 708 840 876 Beverages 133 113 162 176 147 Tobacco products 53 37 45 48 36 Textiles, clothing, leather prod, footwear 353 427 567 606 648 Wood prod, furniture 187 257 282 365 393 Paper prod, printed matter, recorded media 267 276 298 349 392 Refined petroleum products 393 489 595 661 565 Chemical products, rubber & plastic prod 529 583 796 892 983 Other non-metallic mineral prods 118 230 190 220 200 Basic metals 139 175 255 213 304 Fabricated metal proda 221 256 294 399 513 Machinery & equipment 457 554 649 676 874 Office, accounting & computing machinery 84 96 122 146 235 Electrical machinery and apparatus 146 189 199 264 279 Radios, TVs, communications equipment 126 165 158 245 266 Medical instruments, watches, clocks 67 76 98 111 104 Transport equipment 723 970 1,201 1,079 1,777 Other prods; unspecified items 125 74 105 163 95 Electricity 79 80 95 139 83 Adjustment for re-exports –166 –192 –236 –266 –307 Imports cif 5,013 5,858 7,183 8,078 9,115 Less freight & insurance 460 549 593 678 738 Imports, current prices, fob 4,553 5,309 6,590 7,400 8,377 Servicesb 1,052 1,387 1,771 1,722 1,977 Direct purchases abroad by residents 320 375 436 517 549 Services imports 1,372 1,762 2,207 2,239 2,526 Imports of goods & services 5,925 7,071 8,797 9,639 10,903

a Excluding machinery & equipment. b Excluding direct purchases abroad.

Sources: CBS, Preliminary National Accounts 1999.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 65

Reference table 24 Balance of payments, IMF series (US$ m) 1994 1995 1996 1997 1998 Goods: exports 1,320.4 1,418.4 1,403.7 1,343.3 1,278.3 Goods: imports –1,406.3 –1,548.2 –1,530.9 –1,615.0 –1,450.9 Trade balance –85.8 –129.7 –127.1 –271.7 –172.6 Services: credit 259.0 315.3 337.4 380.1 327.0 Services: debit –468.3 –551.5 –580.9 –533.7 –456.9 Income: credit 213.8 374.0 319.2 252.0 226.7 Income: debit –159.8 –235.1 –249.0 –180.6 –165.9 Current transfers: credit 349.2 426.9 437.3 462.2 418.2 Current transfers: debit –22.7 –23.9 –21.0 –18.0 –14.7 Current-account balance 85.3 175.9 115.8 90.4 161.8 Direct investment abroad 6.1 3.5 21.7 –0.7 2.2 Direct investment in Namibia 98.0 153.0 128.7 91.0 96.2 Portfolio investment assets –17.0 –5.1 –8.1 –14.6 –11.1 Portfolio investment liabilities 64.2 82.2 31.2 26.0 –4.4 Other investment assets –301.0 –428.0 –411.2 –289.9 –175.5 Other investment liabilities 47.6 –10.9 63.8 116.7 –53.1 Financial-account balance –102.1 –205.3 –174.0 –71.4 –145.6 Capital account nie credit 43.8 40.7 42.5 33.9 24.2 Capital account nie debit –0.6 –0.6 –0.5 –0.5 –0.4 Capital account nie balance 43.2 40.1 42.0 33.4 23.8 Net errors & omissions 48.5 13.4 39.1 15.3 15.7 Overall balance 75.0 24.2 22.9 67.8 55.8 Source: IMF, International Financial Statistics.

Reference table 25 Balance of payments, national series (N$ m) 1996 1997 1998 1999 2000a Merchandise exports fob 6,245 6,281 6,656 8,390 10,100 of which: diamonds 2,318 2,495 2,161 3,578 4,841 Merchandise imports fob –6,636 –7,566 –8,236 –9,185 –11,067 Trade balance –390 –1,285 –1,580 –795 –967 Non-factor services, net –1,063 –722 –872 –827 –778 of which: transport –861 –830 –779 –782 –942 travel 878 1,074 1,094 1,209 1,066 Investment income, net 327 351 506 –104 70 Transfers, netb 1,845 2,050 2,393 2,486 3,154 of which: foreign aid inflows 366 343 445 401 341 SACU receipts 1,301 1,560 1,805 2,241 2,877 debits (mainly SACU) –62 –55 –58 –334 –237 Current-account balance 719 394 447 761 1,339c Capital transfersd 181 154 252 140 52 Direct investment 647 383 434 691 795 Portfolio investment 134 86 –56 –30 –298 Other long-term investment –1,540 –992 –615 –668 –1,351 Short-term investment –94 221 –190 –413 –353 of which: banks –415 349 –169 –592 –313 Capital-account balance –672 –148 –174 –281 –1,155 Errors & omissions 51 66 37 72 –66 Overall balance 99 312 309 350d 109d

a Provisional. b Including compensation for employees. c Does not sum in source. d Mainly foreign aid receipts for capital projects.

Source: Bank of Namibia, Annual Report 2000.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 67

Reference table 26 External debt (N$ m unless otherwise indicated; year-end) 1996 1997 1998 1999 2000 Public debt 1,365 354 545 729 909 of which: bilateral 403 212 335 448 127 multilateral 85 142 210 281 782 Bank of Namibia facilitya 877 0 0 0 0 Private debt 195 345b 182 n/a n/a of which: financial institutions 46 219 47 n/a n/a Total debt outstanding 1,560 699 728 n/a n/a % of GDP 10.5 4.6 4.5 n/a n/a Total debt servicec 180 26 240 n/a n/a Debt-service ratiod (paid) 2.4 0.3 2.8 n/a n/a

a Under the 1992 debt-rescheduling agreement with South Africa the Namibian central bank took over a credit facility originally set up by the South African Reserve Bank for the servicing of Namibia’s pre-independence bilateral debt. This increased gradually, with transfers of the amounts of redemption and interest due on the rescheduled debt, although actual payments out of the facility were not made until the debt was written off the central bank’s books in mid-1997, when the facility was terminated. b The sharp increase reflects a syndicated loan taken out by a commercial bank that was paid off the following year. c Payments from the State Revenue Fund, excluding transfers of redemptions and interest due on rescheduled bilateral debt to the Bank of Namibia facility up to 1997. d Debt service as a percentage of exports of goods and services.

Sources: Bank of Namibia, Annual Report 2000; Quarterly Bulletin; Research Department data provided to EIU; the 1999 and 2000 Annual Reports did not include any data on private external debt.

Reference table 27

Net official development assistancea (US$ m) 1996 1997 1998 1999 2000 Bilateral 147.7 136.4 122.9 128.7 117.2 of which: Germany 51.5 43.1 26.6 36.1 48.5 Sweden 14.3 16.8 14.9 12.5 8.7 Norway 10.8 16.6 11.8 11.0 5.4 USA 6.0 9.0 17.0 13.4 13.9 Denmark 8.5 6.6 6.3 8.3 2.3 Multilateral 43.9 51.4 41.6 51.5 60.4 of which: AfDF 3.3 2.4 1.9 3.0 3.6 EU 24.1 36.6 31.5 40.7 46.5 UNICEF 3.8 3.6 1.6 1.7 1.7 Total 191.6 190.0 165.7 179.3 182.7 of which: grants 169.2 164.4 145.7 132.4 118.0

a Disbursements minus repayments. Official development assistance defined as grants and loans with at least 25% grant element, provided by OECD and OPEC member countries and multilateral agencies, and administered with the aim of promoting development and welfare in the recipient country.

Source: OECD, Geographical Distribution of Financial Flows to Aid Recipients.

Reference table 28 Foreign reserves (end-period) 1996 1997 1998 1999 2000 Total reserves excl golda (US$ m) 193.87 250.53 260.25 305.49 260.01 Foreign exchangea 193.81 250.47 260.18 305.42 259.94 SDRsa 0.02 0.02 0.02 0.02 0.02 Reserve position in IMFa 0.03 0.04 0.04 0.05 0.05 Foreign reservesb (N$ m) 906 1,219 1,527 1,877 1,985 Import cover in weeksb 5.2 6.4 7.4 8.7 9.3

a IMF data. b Bank of Namibia data.

Sources: IMF, International Financial Statistics; Bank of Namibia, Annual Report 2000.

Reference table 29 Exchange rates (annual averages) 1996 1997 1998 1999 2000 N$:US$ 4.30 4.61 5.53 6.11 6.94 N$:£ 6.72 7.55 9.15 9.89 10.49 N$:E 5.38 5.21 6.22 6.52 6.39 ¥:N$ 25.45 26.26 23.83 18.54 15.31 Sources: Bank of Namibia; IMF.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 69

Swaziland

Basic data

Land area 17,364 sq km

Population 980,000 (2001 estimate)a

Main towns Population ’000 (2000 estimates)a

Greater Manzini 80,000 Mbabane (capital) 60,000

a EIU estimate.

Climate Subtropical; near-temperate on Highveld (where Mbabane is located)

Weather in Mbabane Hottest months, January and February, 15-25°C; coldest month, June, 5-19°C; (altitude 1,163 metres) driest month, June, 18 mm average rainfall; wettest month, January, 252 mm average rainfall

Languages Siswati and English

Measures Metric system

Currency Lilangeni, plural emalangeni (E)=100 cents. Average exchange rate in 2000: E6.94:US$1. Exchange rate on July 16th 2001: E 8.19:US$1.

Fiscal year April 1st to March 31st

Time 2 hours ahead of GMT

Public holidays January 1st, Good Friday, Easter Monday, April 25th (National Flag Day), Ascension Day, July 22nd (King Sobhuza’s Birthday), September 6th (Independence Day), December 25th (Christmas Day), December 26th (Boxing Day)

Political background

The political system in Swaziland is the closest approximation of a traditional African monarchy. Political parties were banned when the constitution was suspended in 1973. Parliament is part-elected under a modified traditional system and part-appointed by the king, who also chooses the prime minister.

Historical background

The Swazi people, part of the broader Nguni group, had established a coherent and homogeneous nation state by the early 19th century. By the end of that century most of the land had been taken over by individual Europeans who had gained temporary land rights from the king. Swaziland became a British protectorate in 1902, a High Commission Territory in 1910 and an independent state in 1968. By independence, some 56% of the land had been repurchased by the nation and was under a traditional land tenure system.

Political parties, including the radical Ngwane National Liberatory Congress (NNLC) and the royalist Imbokodvo National Movement (INM), emerged in the 1960s, and the INM won all the parliamentary seats in the elections in 1962 and 1967. However, King Sobhuza II, who had acceded to the throne in 1921, banned all political parties after the NNLC won a seat in the 1972 election. King Sobhuza established himself as an absolute ruler during the ten stable years before his death in 1982, which created a power vacuum and resulted in continued royal infighting until King Mswati III was crowned in April 1986. This turbulence encouraged popular dissent in the form of strikes and public protests, which were met with police repression.

A traditional electoral system (tinkhundla), under which candidates must be independent of any political party, was instituted in 1978. Following public protests the king launched a review of the system in 1991, which rejected multiparty democracy. Legislative elections in 1993 and 1998 failed to still popular dissent. There was a rash of strikes led by the Swaziland Federation of Trade Unions (SFTU) in 1994-97, and periodic confrontations between dissenters and the police continue. An attempt by the government to appease critics with the formation of a Constitutional Review Commission (CRC) in 1996 has failed; its report has not yet been made public. A royal decree in 2001 extending the powers of the king at the expense of the judiciary has heightened tension and eroded public trust, but this is was partly revoked in late July.

Important recent events

February 1998: King Mswati III announces that an election will be held later in the year. Progressive groups call for a boycott.

March 1998: The Ngwane National Liberatory Congress (NNLC) publicly re- emerges in March at the funeral of its former leader Ambrose Zwane.

October 1998: Elections are held for House of Assembly. Only 30% of eligible voters cast their ballots.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 71

February 1999: The king sets an end-of-year deadline for the Constitutional Review Commission (CRC) to complete its report.

February 2000: The king sets a new CRC deadline (October 31st).

May 2000: The unelected Swazi National Council (SNC) proposes amendments to the Industrial Relations Bill, angering parliament, which had already passed the bill.

June 2000: The bill including the SNC amendments is enacted.

November 2000: The king ignores an ultimatum calling for political reform from progressive organisations who then arrange a stayaway from work and lead a border blockade. The Industrial Relations Act is amended under International Labour Organisation (ILO) and US pressure in order to secure Swaziland’s preferential access to the US market.

June 2001: The king issues a decree expanding his powers over the judiciary, which is partly revoked in July.

Constitution and institutions

King Mswati III rules in conjunction with the queen mother (actually his natural mother, Ntombi). The king is surrounded by numerous princes and traditional advisers: the inner workings of the system are unclear, but it appears that he is severely constrained and can take no major decision without wide consultation among the conservative elements (including the Swazi National Council—SNC) who control access to him.

Under the tinkhundla system, nominations to the House of Assembly are conducted by a show of hands within 55 local areas. Three candidates are then chosen by secret ballot before a final secret ballot decides the winner. The king appoints the remaining ten members of the House of Assembly. He also appoints 20 of the 30 members of the Senate (the upper house); the other ten are nominated by parliament. The king appoints the prime minister, has to approve the cabinet and may legislate by decree. Swaziland continues, in effect, to have two governments: the prime minister and cabinet (together with the civil service) in Mbabane, and the traditional authorities in the royal palace.

The legal system resembles that of South Africa in that it is based on Roman- Dutch law. The High Court has always included retired South African judges: the present chief justice is South African, but the remaining judges are Swazi, appointed on merit. Government influence is exerted through the appointment of foreigners on contract to top posts in the offices of the attorney-general and the public prosecutor.

The Industrial Relations Act

Labour legislation has been the subject of serious controversy for several years. The Industrial Relations Act (IRA) of 1996 did not conform to an agreement reached by government, business and labour representatives. By allowing for individuals instigating stayaways to be indicted, it upset trade union leaders, four of whom were arrested for their part in the mass stayaway of January

1996. The act was soon declared null and void and the union leaders were acquitted. However, their trial focused international trade union attention on worker rights in Swaziland, leading to a complaint against Swaziland being filed with the International Labour Organisation (ILO) and the US government being petitioned for Swaziland to be removed from the list of eligible beneficiaries of the generalised system of trade preferences (GSP).

The government promised a prompt amendment to the act, but a new bill (drafted with ILO participation) was gazetted only in August 1998, tabled in parliament in May 1999, and passed with some reluctance by both houses by September. Speedy royal assent was expected, but in May 2000 it transpired that the king had referred the bill to the Swazi National Council (SNC), which proposed certain amendments. With Swaziland facing ILO and US threats of action for the fifth successive year, a joint sitting of parliament passed the bill in June. Immediate royal assent enabled the act to be submitted to the ILO within days, but the ILO as well as US trade representatives insisted that the SNC amendments be deleted. The disputed amendments were altered and the act was passed in November, thereby saving Swaziland’s existing preferential access to US markets and securing its participation in the US Africa Growth and Opportunity Act (AGOA), which was confirmed in January 2001.

The passage of the labour legislation illustrates how an increasingly dysfunctional political system has harmed national interests, threatening market access, which is vital for sugar, textile and clothing exports, and jeopardised the climate for attracting foreign direct investment (FDI).

Political forces

Tension between Although political parties are illegal, several movements operate with traditionalists and increasing openness, despite police harassment. The Swaziland Democratic modernists Alliance (SDA) is an umbrella body of trade unions, churches and political groups, including the SFTU and the more radical People’s United Democratic Movement (Pudemo). The SFTU has lost some credibility in the wake of the poorly supported and economically damaging strikes in 1996-97, but both it and Pudemo are more vociferous than the NNLC.

Even the modernists support the idea of a constitutional monarchy. The only traditionalist body to have emerged is Sive Siyinqaba Sibahle Sinje, which is ostensibly a cultural organisation, but is widely regarded as a revival of the royalist INM. Army and police leaders have little personal power, and do not have a high profile.

Main political figures

Prince Masitsela: Member of the Swazi National Council (SNC), an influential adviser to King Mswati III.

Moi Moi Masilela: Influential in the clique of conservatives on the SNC, politically to the right of Prince Masitsela.

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 73

Sibusiso Dlamini: Prime minister, former minister of finance and IMF official. He is unlikely to wield great influence in the long term, but is supportive of economic and social reforms.

Albert Shabangu: Minister of housing and urban development, a modernist with strong links to the king and a shrewd strategist who is influential in cabinet. He is also the former leader of the Swaziland National Association of Teachers (SNAT).

Lutfo Dlamini: Minister of enterprise and employment; politically ambitious and coming to the fore as a royal favourite.

Obed Dlamini: Former prime minister, trade unionist and member of the Senate. Now president of the Ngwane National Liberatory Congress (NNLC).

Jan Sithole: Secretary-general of the Swaziland Federation of Trade Unions (SFTU). His power peaked during the 1996 strike, but has since waned. He is influential in regional and international trade union circles.

Mario Masuku: President of the People’s United Democratic Movement (Pudemo). Enjoys the support of radicals and the Swaziland Youth Congress.

Mandla Hlatshwayo: Human resources manager of Illovo Sugar. An astute, independent liberal thinker; influential on the Federation of Swaziland Employers’ board and respected by the SFTU; exerts influence on Mr Sithole.

Themba Dlamini: Chief executive officer of Tibiyo Taka Ngwane, the royal conglomerate. The king respects his opinion and his stature is growing.

Musa Hlope: Executive director of the Federation of Swaziland Employers, regarded as a liberal. He enjoys the respect of government and unions and acts as a go-between in consultative forums.

International relations and defence

Close ties with South Africa Swaziland has adopted a distinctly pro-Western and conservative stance in international relations. It maintained good relations with South Africa and Mozambique through both countries’ periods of political transition, and foreign policy is generally cautious. The support given by South African trade unions to the SFTU and to border blockades during strikes has at times strained relations with South Africa, but close economic ties have overridden this. The establishment of a security arm of the Southern African Development Community (SADC) has enabled leaders of neighbouring countries to meet King Mswati on several occasions, apparently in an attempt to urge him to hasten constitutional reform and multiparty elections.

Swaziland has ten diplomatic missions abroad. In Mbabane there are six embassies or high commissions and seven consular offices. The country is a member of the UN, the Commonwealth, the Organisation of African Unity (OAU), the Southern African Customs Union (SACU), the Common Monetary Area (CMA), the SADC and the Common Market for Eastern and Southern Africa (Comesa).

Resources and infrastructure

Population

The 1997 census revealed a total resident population of just fewer than 930,000. In addition, there were 51,000 absentees, mainly men working in South Africa. The population growth rate has fallen from 2.9% per year between 1986 and 1997 to below 1% because of the effects of AIDS; it may now be closer to zero. The population is almost entirely Swazi, with a small minority of other Africans (mostly Mozambican and South African), Europeans and people of mixed race (“coloureds”). The main religion is Christianity, although many people also follow traditional beliefs. (See Reference table 1 for population census data and Reference table 2 for employment data.)

Resident population, 1997 census (no. unless otherwise indicated) Age group Male Female Total % of total 0-4 67,529 68,868 136,397 14.7 5-9 68,976 70,269 139,245 15.0 10-14 68,200 69,287 137,487 14.8 15-19 54,775 57,581 112,356 12.1 20-24 38,807 46,287 85,094 9.2 25-29 30,147 37,896 68,043 7.3 30-34 21,988 30,168 52,156 5.6 35-39 19,645 26,157 45,802 4.8 40-44 16,165 19,340 35,505 3.8 45-49 14,461 15,910 30,371 3.3 50-54 10,799 12,517 23,316 2.5 55-59 8,758 9,162 17,920 1.9 60-64 6,325 7,541 13,866 1.5 65-69 4,645 5,507 10,152 1.1 70-74 2,924 4,377 7,301 0.8 75-79 2,175 3,094 5,269 0.6 80+ 2,503 4,037 6,540 0.7 Unspecified 1,332 1,566 2,898 0.3 Total 440,154 489,564 929,718 100.0 Rural 333,898 381,392 715,290 76.9 Urban 106,256 108,172 214,428 23.1 Swazi 428,409 481,323 909,732 97.9 Non-Swazi 11,745 8,241 19,986 2.1 Source: Central Statistical Office.

Education and health

Basic indicators for all levels of education have improved considerably since independence, and the literacy rate is now 74% for both sexes. Education is the second largest element of recurrent government expenditure, accounting

EIU Country Profile 2001 © The Economist Intelligence Unit Limited 2001 Swaziland 75

for an average of 23% between 1996/97 and 2000/01. Unfortunately, the emphasis has been on quantitative expansion rather than on quality, and the system is not producing the skills required to boost economic growth and increase competitiveness.

Swaziland has above-average infant mortality rates compared with countries with similar income levels, but health indicators are now skewed by the prevalence of HIV/AIDS. According to the Joint UN Programme on AIDS-HIV (UNAIDS), Swaziland has the second highest HIV prevalence in the world among adults aged 15-49, at 25.5%. In 1999, 13.2% of the total population were living with HIV/AIDS, and this proportion is rising, putting pressure on the health budget.

HIV prevalence in antenatal clinic clients by age, 2000

Age No. % HIV+ 10-14 11 0.0 15-17 242 22.7 18-19 358 28.8 20-24 760 42.5 25-29 467 40.7 30-34 279 29.7 35-39 147 17.0 40-44 45 26.7 45-49 7 28.6 Source: AIDS Analysis Africa.

Natural resources and the environment

Most of Swaziland has a subtropical climate. The country is well watered, but drought is a recurring problem in the Lowveld, and the storage of water is thus critical. Three of the five major rivers rise in South Africa, and all five flow into either South Africa or Mozambique. The exploitation of water resources is governed by bilateral or trilateral agreements with those countries. The Komati Basin irrigation project is being developed in conjunction with South Africa, and plans are being formulated to develop the Usutu Basin. In view of the hilly terrain, two-thirds of all agricultural land is used for livestock, with the remainder devoted to arable agriculture and forestry.

Transport and communications

There is a good road network, and the main Mbabane-Manzini road is now dual carriageway. Swaziland Railway is one of the few profitable railways in Africa. It depends largely on through-traffic from the north to the ports of Richards Bay and Durban, although it has diversified by expanding services to the Mozambican port of Maputo. Swaziland is served by a joint-venture airline between the government and a South African carrier that operates the Manzini-Johannesburg route. (See Reference table 3 for data on transport and communications.)

Telecommunications are poor by South African standards, but the cellular phone network, opened in late 1998, has grown more rapidly than anticipated. The Internet penetration level (there were over 5,000 active users in 2001) is higher than in most African countries. Radio and television are state-controlled, and press freedom has been virtually destroyed by a royal decree of June 2001 that bans criticism of the royal family.

Energy provision

Most electricity is purchased from South Africa, with the balance generated at hydroelectric stations. A new transmission line from South Africa through Swaziland to Maputo came into operation in 2000; it has improved the reliability of electricity supply, and should provide the country with adequate capacity for 30 years. Although the electricity grid has spread to most areas, rural households still depend heavily on wood, petroleum products and coal for their energy needs. (For electricity statistics see Reference table 4.)

Energy balance, 2000 (m tonnes oil equivalent) Elec- Oil Coal tricity Other Total Production 0.00 0.23 0.05a 0.43 0.71 Imports 0.13 0.12 0.17a 0.00 0.42 Exports 0.00 –0.23 0.00 0.00 –0.23 Total 0.13 0.12 0.22a 0.43 0.90 Net transformationb 0.00 –0.04 –0.12 –0.14 –0.30 Final consumption 0.13 0.08 0.10c 0.29 0.60

a Expressed as input equivalents on an assumed generating efficiency of 33%. b Transformation input and output, plus energy industry fuel and losses. c Output basis.

Source: Energy Data Associates.

The economy

Economic structure

Main economic indicators, 2000

Real GDP growtha (%) 3.7 Consumer price inflation (av; %) 7.3 Population (‘000) 980 Current-account balance (US$ m) –50b Total external debt (US$ m) 265b Exchange rate (av; E:US$) 6.94

a Year ending June 30th 2000. b EIU estimate.

Source: EIU.

Swaziland’s economy is based on agriculture and agro-industry (mainly sugar, citrus and woodpulp). Growth sectors include soft-drink concentrates, other food products, textiles and paper products. Asbestos and coal are the major minerals.

The two largest towns, Mbabane and Manzini, are 40 km apart. These two, and the area between them, form the country’s commercial, financial, tourism and manufacturing hub. The sugar and most of the citrus estates, as well as the coal mine, are located in the Lowveld. There are forested areas in the north-west, south-west and south-central regions. Subsistence agriculture is practised mainly in the Middleveld and the Lubombo plateau.

Comparative economic indicators, 2000

Swaziland South Africa Namibia Botswana Lesotho GDP (US$ bn) 1.28 125.56 3.47 5.65 0.88 GDP per head (US$) 1,308 2,864 2,006 3,424 407 Real GDP growth (%) 3.7 3.1 3.9 5.8 2.5 Consumer price inflation (av; %) 7.3 5.3 9.3 8.5 6.1 Current-account balance (US$ m) –50 –469 194 449 –154 Exports of goods fob (US$ m) 900 31,434 1,455 2,694 201 Imports of goods fob (US$ m) 950 27,202 1,595 2,036 700 Source: EIU.

Economic policy

Since independence Swaziland has adhered to prudent macroeconomic management, which led to average real growth rates of GDP and GDP per head of over 6% and 3% per year, respectively, between 1968 and 1993, slowing to over 3% and less than 1%, respectively, between 1993 and 1999. Economic policymaking cannot be divorced from the country’s complex political structure. The proposals for policy changes that have been made are in essence technocratic and in line with standard contemporary macroeconomic thinking. However, they are opposed by more conservative elements of the ruling elite who have been able to delay economic reforms. Privatisation has thus been extremely slow—to date, only the sales of the airline, dairy and water parastatals have been completed. Economic policy is aimed at attracting foreign investment and diversifying revenue sources. The latter is critical, since a new Southern African Customs Union (SACU) revenue-sharing formula, the Southern African Development Community (SADC) free-trade agreement, and the South Africa-EU trade agreement will all ultimately have an adverse impact on customs revenue, which accounts for over 50% of government revenue. (See Reference table 5 for historical central government accounts, and Regional organisations for information on SACU and SADC.)

Monetary links with Autonomy in monetary and fiscal policy has been restricted by Swaziland’s South Africa close association with South Africa in the SACU and the Common Monetary Area (CMA), and by the openness and small size of the economy—especially the narrowness of the export base—which render it vulnerable to exogenous

shocks. Interest rates cannot diverge significantly from those prevailing in South Africa while the lilangeni remains pegged at par with the South African rand, because of the free movement of funds in the CMA. Although Swaziland has the legal right to break the parity condition, this is unlikely to occur. The rand is widely accepted in Swaziland, although it is not legal tender. (For background data on money supply and interest rates, see Reference table 6.)

Central government finances, 2000/2001a (E m) Total revenue 2,766.9 Current revenue 2,630.2 of which: SACU receipts 1,406.2 taxes on net income & profit 584.5 s a l e s t a x 333.7 Grants 136.7 Total expenditure 3,104.1 Current expenditure 2,294.1 Capital expenditure 741.9 Net domestic lending 68.1 Overall balance –337.2 Financing Domestic 88.1 Foreign 249.0

a Fiscal year April-March, budget estimates.

Source: Central Bank of Swaziland.

Economic performance

Aggregate growth in national income since independence has been high enough to lead to a sustained improvement in average real income per head and in economic welfare. Even during the 1990s, a period of weaker real economic growth, real income per head increased slightly. Inflation has been comparatively low, as have the debt stock and the debt-service ratio, and the economic and social infrastructure has improved.

Estimated gross domestic product (constant 1985 prices) Annual average 1999/2000 1995/96-1999/2000 Annual growth rate (%) 3.7 3.8 Agriculture (% of GDP) 10.4 10.0 Manufacturing (% of GDP) 35.9 36.9 Sources: Ministry of Economic Planning and Development; Central Bank of Swaziland.

The influence of drought Given the openness of the economy and the importance of agricultural-based and world markets exports, GDP is strongly influenced by climatic conditions and world market prices. Below-average rainfall and depressed world demand for the country’s primary exports marked the first half of the 1990s. Crop production and GDP

then improved, but GDP growth slowed in 1998, mainly because of the effect on exports of difficulties in the South African and Asian economies, before recov- ering again in 1999. (For background data on GDP see Reference tables 7-9.)

Foreign investment is being The lifting of international sanctions against South Africa in 1992-94 eroded attracted some of Swaziland’s advantages as a location for foreign investment. Investor confidence has subsequently been damaged by labour unrest since 1995 and by the Industrial Relations Act controversy (see Political background), but foreign investment—much of it from Taiwan—has again begun to flow in to take advantage of Swaziland’s preferential access to the US market.

Inflation follows trends in Because of Swaziland’s strong monetary and trade relationships with South South Africa Africa, inflation has tended broadly to follow trends in South Africa. The rate fell to single digits in 1996 and since then has fluctuated around 6-8%. (For historical inflation data see Reference table 10.)

Inflation (%) Annual average 2000 1996-2000 Consumer prices 7.3 7.0 Source: Central Statistical Office (CSO).

Economic sectors

Agriculture and forestry

Agriculture’s share of GDP has fallen from about one-third at independence to just over 10% in 1999/2000. There are two forms of land tenure and production, Swazi Nation Land (SNL) and Title Deed Land (TDL). Because it is dependent on rain-fed cultivation, SNL is highly vulnerable to drought. It produces the maize crop, and accounts for 80% of all cotton growers and 81% of the total cattle herd. Cattle on SNL are of mainly social significance—few of them go for commercial slaughter. Only drastic reform of the land tenure system will encourage the transformation of SNL agriculture. (See Reference table 11 for historical data on agricultural production.)

Output of main crops, 1999/2000 (‘000 tonnes) Sugarcane 4,322.6 Citrusa 101.6 Maize 112.8 Seed cotton 7.5

a 1998/99.

Source: Central Bank of Swaziland, Annual Report.

Land tenure

Swazi Nation Land (SNL) accounts for approximately 60% of the total land area. It is held in trust by the king, and controlled and allocated by chiefs according to traditional arrangements. It is operated on the basis of communal tenure, and mainly used for subsistence agriculture—maize and cattle—with little production for markets. The land is mainly rain-fed.

Title Deed Land (TDL) accounts for around 40% of the total land area. Title is freehold, but all Usutu Pulp forest land is owned by the crown. The land, large areas of which are under irrigation, is used for commercial production, with company estates and plantations (forestry, sugarcane, citrus and pineapples), and cattle farming. The royal investment fund, Tibiyo Taka Ngwane, has a large shareholding in major companies operating on TDL. There is some cultivation of sugarcane by Swazi smallholders. Further growth on TDL will result from river basin development schemes. The Komati Basin scheme will provide water for a further 7,400 ha, and 14,000 ha could be irrigated if the Usutu Basin scheme is implemented. No expansion of forestry is planned.

Mining

The mining and quarrying sector has declined in both relative and absolute terms since 1980, when the country’s only iron ore mine closed. Mining’s share of GDP fell from 10% in the 1960s to just over 1% in 1999/2000. The asbestos mine has closed, leaving the sector confined to coal mining and quarried stone for use in domestic construction. (See Reference table 12 for historical data on minerals production.)

Manufacturing

Until the mid-1980s commercial agro-processing (sugar, woodpulp, citrus, pineapples, cotton and meat) accounted for about 80% of manufacturing production. (For data on agro-industry see Reference table 13.) The manufacturing sector has since diversified, particularly in the late 1980s. The Coca-Cola concentrate plant relocated to Swaziland from South Africa in 1986 during the sanctions and disinvestment period, and a number of other companies located in Swaziland to take advantage of cheap refined sugar, which is processed into confectionery, syrups and mixes for export to South Africa. The textile industry has expanded significantly, but the plant producing refrigerators, which had become a major export, was liquidated and then sold in 2001; several months of production will be lost before it reopens.

Construction

Statistics on the construction sector are unreliable and sometimes contradictory. The sector contributed 5.8% to GDP in 1999/2000, compared with an average of 3% over 1990-96. Since 1996/97 construction activity has

been stimulated by major capital expenditure on road projects and the Komati Basin scheme. There is a chronic shortage of adequate urban housing. To tackle this the government is implementing the Urban Development Project, which provides new land and upgrades plots for sale to residents at nominal prices. (See Reference table 14 for data on construction in Mbabane and Manzini.)

Financial services

Commercial banks Swaziland has a well-developed commercial banking system that is served by South Africa’s Nedbank, Standard Bank, First National Bank and the parastatal Swaziland Development and Savings Bank. The Swaziland Building Society provides long-term mortgage lending to all income groups.

The stockmarket The Swaziland Stock Exchange was opened in 1990, but only six companies are listed and trading levels remain small. (For historical data on the Swaziland Stock Exchange see Reference table 15.)

Insurance The Swaziland Royal Insurance Corporation, a private enterprise (of which the government owns 41%), has an industry monopoly. The Insurance Bill of 1993 has still not been passed, owing to a lack of political will, but could eventually increase competition and efficiency. Several South African companies have indicated that they would enter the market if it were liberalised.

Development finance The main vehicle for funding industrial and other projects in the private sector is the Swaziland Industrial Development Company (SIDC). In 1998 the Swaziland Investment Promotion Authority was launched to assist potential investors and attract foreign companies. The royal investment trust, Tibiyo Taka Ngwane, is also sometimes classified as a development finance institution. Tibiyo is a controversial institution, capitalised by mining royalties, which has some high-profile equity holdings in Swaziland, ostensibly held in the “national interest”. Its investment focus is increasingly on profitmaking rather than development-oriented projects.

SIDC project finance, 1999/2000 (E m) Approvals 22.5 Commitments 12.9 Disbursements 12.8 Source: Swaziland Industrial Development Company.

Other services

Tourism Tourism was an important revenue earner for Swaziland prior to the proliferation of casinos in South Africa in the 1990s. This development, together with increased competition for South African tourists from the growing Mozambican tourism industry, has led to a declining growth rate in the sector in recent years. Swaziland’s main attraction now lies in marketing itself as part of a regional trip. The country’s participation in trilateral

development initiatives with South Africa and Mozambique could help to promote it as a destination for European and North American tourists, who, together with the conference business, are considered the main potential market. (For historical data on tourism see Reference table 16.)

Retail Swaziland has a reasonably well-developed retail and wholesale sector, which is dominated by branches of the leading South African chain stores. However, many shoppers still make large purchases in South Africa.

The external sector

Trade in goods

The economy is extremely open. In 1999/2000 the foreign trade/GDP ratio was estimated at 161% and the exports/GDP ratio at 76%. The trade balance has been in deficit since 1989 as the value of imports has grown more rapidly than that of exports. The substantial depreciation in recent years of Swaziland’s currency, which is linked at par to the South African rand, has had a relatively limited impact on the balance of trade. Most exports are either priced in foreign currencies or sold to South Africa, so the effect on the volume of exports has not been significant. Currency depreciation has increased the cost of all goods originating from outside the Common Monetary Area (CMA), about 85% of imports are normally obtained from South Africa. Although the bilateral trade deficit with South Africa has widened, Swaziland continues to record a trade surplus with the rest of the world.

Sugar and woodpulp were the leading exports until 1993, when sugar was overtaken by soft-drink concentrate as the dominant export. In recent years the export base has been diversified through non-traditional products, such as soft-drink concentrate, sugar-based products, paper products, textiles and refrigerators. The export base stagnated in the late 1990s because of slowing inflows of foreign direct investment (FDI); although FDI has picked up since the turn of the decade, 40% of exports are still either sugar or sugar-based products. Refrigerator exports temporarily ceased in 2001 but will resume when the plant producing them reopens under new ownership. (See Reference tables 17 and 18 for a commodity breakdown of exports and imports.)

Main exports and imports (E m; fob) Exports 2000 Imports 2000 Miscellaneous edibles 1,740.1 Machinery & equipment 1,933.9 Consumable finished goods 923.9 Manufactures classified by material 1,060.7 Sugar 780.0 Food & live animals 905.1 Woodpulp 599.3 Chemicals & chemical products 767.9 Citrus & canned fruit 128.5 Inedible crude materials 296.3 Coal, asbestos & diamonds 69.8 Mineral fuels & lubricants 886.8 Total incl others 5,566.7 Total incl others 6,795.2 Source: Central Bank of Swaziland, Quarterly Review.

South Africa is the leading South Africa is Swaziland’s main source of imports and its main export market. trading partner The country’s trading pattern is determined overwhelmingly by its membership of the Southern African Customs Union (SACU) and the CMA, which guarantee the duty-free movement of goods and mobility of capital. Swaziland is a member of the ACP-EU Cotonou Agreement (the successor to the Lomé Convention), receives general system of preferences (GSP) treatment from the EU and the US, and is a beneficiary under the US Africa Growth and Opportunity Act (AGOA). The EU preferences are retained until the end of 2007. (Reference tables 19 and 20 give data on the main destinations of exports and origins of imports; the Regional organisations appendix provides information on the SACU, the CMA and the Cotonou Convention.)

Key trading partners (E m) Exports to: 1999 Imports from: 1999/2000 South Africa 4,067.9 South Africa 6,305.4 UK 382.8 UK 239.8 Mozambique 208.7 Taiwan 49.7 US 195.4 Mozambique 46.1 France 168.1 Hong Kong 44.2 Source: Department of Customs and Excise.

Invisibles and the current account

The current account oscillates between deficit and surplus. Both the trade and the services account are usually in deficit. The outflow of invisibles consists largely of royalties, licensing fees, advertising, market research and merchandising expenses. It increased by 11% in 1999, to E180m (US$29m). Swaziland is a net importer of a range of transport (especially shipping), financial and technical services.

A net outflow of interest, The income account is usually in surplus, registering E548m in 1999. The profit and dividends surplus is attributable mainly to increased interest earned in South Africa as a result of higher levels of investment in the form of domestic pension funds managed in South Africa. Remittances from Swazi migrant workers employed in South Africa fell by 1.3% in 1999, owing to a decline in workers as marginal gold mines closed. The main outflows are dividends and distributed earnings. Interest earnings relate mainly to Swaziland pension funds invested in South Africa, and offshore placements by the Central Bank of Swaziland. Total investment income and interest earned rose by 28% to E883m in 1999.

Net current transfers have historically been positive, and consist largely of payments from the SACU common revenue pool administered by the South African Reserve Bank (SARB). The large net inflow of transfers helps to offset the deficit in the goods and services balance. However, SACU revenue is expected to decline as a result of further tariff liberalisation in line with World Trade Organisation (WTO) obligations, Southern African Development Community (SADC) free trade and, from 2006, changes in the SACU revenue-

sharing formula. This could lead to deterioration of the overall current-account position. (Reference tables 21 and 22 give balance-of-payments data.)

Current account, national estimates, 2000 (E m) Goods: credit 6,329.5 Goods: debit –7,047.1 Balance on goods –717.6 Services: credit 405.4 Services: debit –1,200.8 Balance on services –795.4 Income: credit 1,013.9 Income: debit –618.4 Net income 395.5 Current transfers: credit 1,504.2 Current transfers: debit –734.6 Net current transfers 769.6 Current-account balance –347.9 Source: Central Bank of Swaziland, Quarterly Review.

Capital flows and foreign debt

The financial account (excluding reserves) oscillated between net outflows and inflows throughout the 1990s. The major influencing factors are fluctuating investment levels, notably those of foreign assets held by the banking sector (especially deposits held by commercial banks in the South African money market), local pension and provident funds deposited in South Africa, public sector loan repayments (affected by currency depreciation), and foreign direct investment (FDI). In 1999 FDI posted a net inflow of E197.6m (US$32m), but there was an overall net outflow on the financial account of E213.3m.

Total public and publicly guaranteed external debt remained fairly steady from 1988 to 1992, but has subsequently risen in local-currency terms as a result of the depreciation of the lilangeni and the drawdown of loans for various infrastructure and agricultural projects. Interest payments on Komati Basin projects led to a slight increase in external debt service in 1999/2000, but Swaziland’s debt/GDP and debt-service ratios remain consistently low by developing country standards, reflecting cautious government borrowing. (See Reference table 23 for World Bank data on external debt and Reference table 24 for data on inflows of aid by donors.)

Total public and publicly guaranteed debt, end-Dec 2000 (E m unless otherwise indicated) Multilateral organisations 1,263.8 Foreign governments 711.3 Private creditors 152.0 Total external debt 2,127.1 Central government 2,075.8 Parastatals 51.3 Total debt service 168.6 Debt service/export of goods & services (%) 3.0 Total debt/GDP (%) 35.4 Source: Central Bank of Swaziland, Quarterly Review.

Foreign reserves and the exchange rate

Swaziland’s foreign reserves remained stable throughout the 1990s and into 2000 and 2001, at about US$300m. This reflects the Central Bank’s reliance on the SARB for exchange-rate management, and a relatively conservative economic policy. According to the IMF’s International Financial Statistics, total reserves stood at US$324m at end-April 2000, representing just over three months of import cover. (See Reference table 25 for historical data on international reserves.)

The lilangeni is pegged at par to the South African rand. As such, Swaziland is tied to the exchange controls of the CMA, which have recently been gradually relaxed. Individuals can now invest up to E750,000 (US$92,000) abroad. However, Swaziland has not set a ceiling for companies, with applications being considered on a case-by-case basis. (See Reference table 26 for historical exchange-rate data.)

Appendices

Regional organisations

Organisation of African The OAU was founded in 1963 by 30 African nations to promote solidarity and Unity (OAU)/African Union higher living standards, to defend the sovereignty of member states, and to (from July 2001) eliminate colonialism. Another 21 signatories have since joined, the last being South Africa in 1994. Morocco left in 1985. The OAU is committed to creating an Africa-wide customs union and to removing tariff and non-tariff barriers by 2004. The organisation has been criticised for lacking effectiveness—little real action results from its policy decisions—and has been hampered for years by severe budgetary problems. The General Secretariat has a budget of roughly US$30m and is headquartered in Addis Ababa, Ethiopia, with ten sub-regional offices and missions abroad in Banjul, Conakry, Cairo, Lagos, Nairobi, Niamey, Yaoundé, Brussels, Geneva and New York. The General Secretariat is headed by the secretary-general, currently Salim Ahmed Salim, who is appointed for a four-year term. The foreign ministers of member states meet twice a year to discuss the implementation of the organisation’s accords. The issues raised are dealt with at the annual assembly of heads of state, which meets in June or July. The annual conference is hosted by the member state that is due to hold the chairmanship of the organisation for the next year. The 2001 conference took place in the Zambian capital, Lusaka, where the Zambian president, Frederick Chiluba, took over the chairmanship of the organisation from President Gnassingbé Eyadéma of Togo. There have, in addition, been three extraordinary conferences of heads of state: the first was in 1970 to discuss the Angolan crisis; the second, in 1980, sought to address the continent’s economic problems; and the third, in 1990, attempted to address the problem of African debt.

The OAU is committed to the creation of an African economic community (AEC) according to the Lagos Plan of Action drawn up in 1980. Originally this was scheduled to be in place by 2000, but at the 27th summit of heads of state in Abuja, Nigeria, in June 1991, this target was postponed to 2025. The AEC treaty, signed at the summit, outlined six stages, including the removal of tariff and non-tariff barriers to trade and the establishment of a continent-wide customs union by 2004. A commitment was also made to establish an African common market, with a central bank and single currency, by 2031. The annual summit meeting in Togo in July 2000 agreed to the formation of the African Union, to replace the OAU, which would enter into force one year after ratification by two-thirds of member states. The 37th OAU assembly of heads of state and government was held in Lusaka on July 2nd-11th 2001. The assembly formally implemented the Constitutive Act of the African Union, following Nigeria’s ratification of the Act on April 26th, allowing the Act to enter into force 30 days after the deposit of the instruments of ratification.

The possibility of establishing a military force to observe and monitor ceasefires negotiated by the OAU has been raised. Although no agreement to deploy peacekeeping forces has been reached, the organisation has agreed to send observer missions. Conflict resolution has come to dominate the annual

summit of heads of state since the mid-1990s, amid the crises in the Great Lakes, the Democratic Republic of Congo, Somalia, Sierra Leone and Ethiopia and Eritrea. Although the OAU did not intervene directly during the Rwandan genocide in 1994, it was the only international institution to quickly recognise the gravity of the situation and to condemn events openly at an early stage. In 1996 the OAU agreed to impose sanctions on Burundi, following a military coup, although an earlier proposal to send a military force was never implemented. Since 1999 the OAU has become involved in mediation in the conflicts in Somalia, Ethiopia and Eritrea, Comoros and the Democratic Republic of Congo, where seven member states are involved as direct combatants. The OAU’s Council of Ministers endorsed President Frederick Chiluba of Zambia as mediator in the conflict in 1999; under his guidance a framework peace agreement, the Lusaka Accord, was negotiated in July 1999, and numerous summits have been held to attempt to bring the various parties to an agreement. The attempted secession of Anjouan island from Comoros is another area of activity for the OAU, which imposed sanctions on the secessionists in 2000 and has threatened to intervene militarily.

Any move to step-up OAU activity is hampered by the organisation’s severe budgetary problems. In November 1995 the ten worst debtor countries, owing US$16.5m between them, were barred from speaking or voting at any OAU meeting. By 1999 this was reduced to eight countries, although additional sanctions were imposed which denied nationals from these countries the right to work at the General Secretariat. The return of the countries’ full rights is conditional on the payment of a large part of their arrears.

Multilateral Monetary The MMA formalises the use of the same, or parallel, currencies among Agreement (MMA) members of the Common Monetary Area (CMA); Lesotho, Namibia, South Africa and Swaziland. Botswana participated in negotiations to form the Rand Monetary Area (RMA), predecessor of the CMA, but in 1976 instead opted to pursue independent monetary and exchange-rate policies. The CMA replaced the RMA in 1986 and Namibia joined in 1992, shortly after independence.

Lesotho, Namibia and Swaziland introduced their own national currencies after independence, but their exchange rates remain fixed at parity with the rand. There are no exchange controls between members. This ensures that the external exchange rate and interest rates are essentially exogenous to the smaller members, being determined in a unified market, the core of which is in South Africa. The rand is legal tender in Namibia and Lesotho, which are compensated by South Africa for loss of seigniorage. Since 1992 the rand has not been legal tender in Swaziland (although in practice it is still widely used), opening the possibility of de-linking the Swazi lilangeni from the rand. However, all member countries have maintained the parity of their currencies with the rand, and foreign-exchange regulations and monetary policy throughout the CMA have continued to reflect the influence of the South African Reserve Bank (the central bank).

Southern African Customs This customs union linking Botswana, Lesotho, Namibia, Swaziland (the Union (SACU) “BLNS” states) and South Africa, is the oldest and most formal regional economic grouping in Southern Africa and dates back to 1910. Administered

by South Africa, the customs union gathers excise duties on local production and customs duties on member states’ imports from outside the SACU area. These are then paid to all the member states in quarterly instalments, using an agreed revenue-sharing formula. In the past, particularly in South Africa, imports have been subject to very high tariffs, to protect industries within the union. However, the tariffs have been reduced in recent years, as South Africa has reformed its trade policy in accordance with the South Africa-EU free-trade agreement and to meet World Trade Organisation (WTO) guidelines. The BLNS states still depend on South Africa for most of their imports and, more importantly, on the privileged access to the South African market that their goods receive.

Negotiations to reform SACU have been under way for years. Although originally scheduled to take only three months, six years later—and despite several supposedly inviolable deadlines—it now appears that the renegotiation of the SACU agreement will conclude in 2001. The basic problem with the existing revenue-sharing formula has been its inclusion of a compensation element, which was supposed to offset the fact that, under South Africa’s old trade regime, exports from South Africa to the BLNS states were more expensive than on the world market. It was also meant to compensate for the concentration of industry within South Africa and for the loss of policy discretion. However, with the end of apartheid and with South Africa joining the WTO, the BLNS states continue to benefit from the stabilisation and compensation elements even though external trade barriers are now being lifted. In addition, the compensation element is magnified because imports into the BLNS countries have grown more rapidly than imports into South Africa, at a time when South Africa greatly needs to increase fiscal revenue. The new agreement will therefore be based on the following three principles.

• Each country will receive a share of the common customs revenue pool, based on its imports from SACU as a proportion of total intra-SACU imports. The BLNS countries import much more from South Africa than it does from them, so the formula is biased in their favour and implicitly takes account of price-raising effects and other distortions, which will in any case decline as tariffs are lowered under WTO obligations.

• 15% of total excise duties will be allocated to development, and will be shared on the basis of an inverse ratio of income per head to the SACU mean, reduced by a factor of 10 to smooth out distortions. Each member country will thus receive between 18% and 22% of the development allocation. Because excise duties are levied mainly on South African production, this is a way of redistributing to the BLNS countries.

• 85% of total excise duties will be allocated on the basis of GDP, which implicitly favours the poorer states—Lesotho, and to a lesser extent, Swaziland—over the richer states such as Botswana.

Although the negotiations were not fully finalised at the start of 2001, reports indicate that the new agreement will be implemented in stages; it is intended that the revised revenue-sharing arrangements will be introduced on April 1st 2001, but it will not be possible to redraft the entire agreement for ratification

until the institutional structure has been finalised and other aspects, relating to common farm and industrial policies, have been agreed. It is also likely that the EU will increase aid to the BLNS countries, to offset any long-term decline in revenue under either the revision of the SACU agreement or as a result of the South Africa-EU free-trade agreement which will reduce the total customs revenue accruing to the BLNS countries.

It has also been proposed that an independent SACU secretariat be established to administer the new agreement—the administration of the agreement by the South African government has long been a source of contention. The new secretariat should also allow any further reforms to be adopted more quickly.

Southern African In August 1992 Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, Development Community Swaziland, Tanzania, Zambia and Zimbabwe signed a treaty establishing the (SADC) SADC. This replaced the Southern African Development Co-ordination Conference (SADCC), formed in 1980 by the Southern African states in a largely unsuccessful attempt to reduce the region’s economic dependence on white-ruled South Africa. Namibia joined the SADCC shortly after independence in 1990; South Africa became a member in 1994; Mauritius joined in 1995; and the Democratic Republic of Congo (DRC, formerly Zaire) and Seychelles joined in 1997.

The SADC inherited the SADCC’s secretariat, based in Gaborone, Botswana, and the responsibilities of each member for co-ordinating a different policy sector have remained broadly unchanged. The end of apartheid in South Africa, following multiracial elections, and South Africa’s admission into the SADC on August 29th 1994, inevitably shifted some of the SADC’s political and economic emphasis, but its goals remain much the same; to promote regional trade and integration, to boost the region’s general economic independence, and to mobilise support for national and regional projects. In mid-1994, before South Africa joined the SADC, only 4% of members’ trade was within the community and 25% was with South Africa—this pattern has not changed greatly.

Although the SADC voted in 1994 to set up a regional rapid-deployment peacekeeping force—and there are long-term plans for a regional development bank, a common currency and a regional parliament—in recent years the group has focused mainly on energy and trade issues. The member countries aim to interlink their power grids, and considerable progress has been made on this to date. As for trade issues, on September 1st 2000 the SADC trade protocol came into effect, having been ratified by all member states. This aims to remove tariff and non-tariff barriers to trade within the region within eight years, although progress will depend on the speed with which individual member governments dismantle their existing barriers to trade. So far, only South Africa has made a concrete commitment to progress, agreeing to reduce its tariffs substantially during the eight-year period. Progress in reducing tariff barriers within the region is also likely to be complicated by the fact that many of the countries belong to other regional groupings, such as the Common Market for Eastern and Southern Africa (Comesa), diverting time and energy and occasionally presenting conflicting agendas. In addition, the EU and South Africa have now concluded their own free-trade agreement successfully, and

many of the other SADC countries—particularly members of the Southern African Customs Union—feel that they may be flooded with cheap European imports. However, now that the EU and African, Caribbean and Pacific states have replaced the Lomé Convention with a new convention, it is clear that all SADC member states will have to decide whether the SADC as a region should have a free-trade agreement with the EU, or whether they should negotiate individual free-trade agreements on a bilateral basis.

Progress in other areas of potential intra-SADC co-operation, such as mining or establishing a landmine-free zone and measures to combat drug-trafficking, have been delayed owing to members’ disagreements over intervention in the civil war in the DRC, and by the amount of time taken up by the search for a resolution to the conflict. According to the SADC defence protocol, member states are bound to help defend existing governments from foreign invasion and internal insurgency. Zimbabwe, Angola and Namibia sent troops to the DRC to support the then president, Laurent Kabila, but initially South Africa opposed the intervention. Indeed, the growing animosity between Zimbabwe’s president, Robert Mugabe, and the South African leadership threatens to undermine the SADC. Further complicating mutual security arrangements, in September 1998 South African and Botswanan troops entered Lesotho to prevent a coup, leaving South Africa open to criticism for its inconsistent regional policy. Zambia and South Africa have emerged recently as mediators in the DRC conflict, but it will continue to overshadow all SADC initiatives.

However, the SADC has recently begun on a programme to reform its institutions, notably its Organ on Politics, Defence and Security which will now be formally integrated into the SADC structure with the chairperson rotated on an annual basis. The existing structure will also be streamlined into four directorates (trade, industry, finance and investment; infrastructure and services; social and human development; and special programmes) over the next two years. If carried according to schedule, these reforms may make the SADC a more effective body.

Common Market for Based in Lusaka, Zambia, Comesa is the successor organisation to the regional Eastern and Southern Preferential Trading Area (PTA), and came into force on December 8th 1994 Africa (Comesa) after the 12 member states ratified the integration treaty. Comesa, a weaker rival to the Southern African Development Community (SADC), includes Angola, Burundi, Comoros, Democratic Republic of Congo (DRC), Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe. The 20 members have a total population of around 385m and a combined estimated GDP of US$165bn. Mozambique and Lesotho withdrew from Comesa in 1997 to concentrate on their membership of the SADC. Tanzania, which belongs to both the SADC and the East African Community (EAC), also formally withdrew on September 1st 2000. South Africa’s decision not to join the organisation, which aims to liberalise trade between the member countries, has given the SADC the stronger hand.

The original PTA, launched in 1981, aimed to liberalise trade and encourage co- operation in industry, agriculture, transport and communications. Comesa’s

principal aims build on these ideals; it main goals are to help eliminate the structural and institutional weaknesses of member states and to promote peace, security and stability so as to enable states to attain sustained development, both individually and collectively as a regional bloc. These aims are to be delivered, in time, through the formation of a monetary union with its own single currency and a common central bank. A common external tariff (the creation of a customs union) is envisaged by 2001, to be followed by full monetary union by 2025.

The creation of a free-trade zone on October 31st 2000 was a major step towards achieving these goals. However, only nine of the 21 members have agreed to participate fully (Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Sudan, Zambia and Zimbabwe). They have removed all barriers on intra-regional trade, though they retain tariffs on imports from non-Comesa sources. Burundi, Comoros Eritrea, Rwanda, Seychelles and Uganda are expected to join during 2001, while Angola, DRC and Ethiopia have given no indication that they will reduce tariffs in the near future.

The most recent figures, for 1998 (which are provisional), show that the total of intra-Comesa trade stood at US$4.2bn, and intra-member levels of trade varied from the Seychelles’ 3.2% of its total trade (US$15m) to Kenya’s 17.1% (US$894m). Disappointingly, over the past 30 years the share of intra-regional trade in total exports has fallen from 9% in 1970 to 7.7% in 1998 (although these figures do not take into consideration high levels of illegal crossborder trade). Nevertheless, this is below the 10.5% average in 1998 for the whole continent. Reasons for the low level of intra-Comesa trade include a lack of political commitment and weak balance-of-payments and foreign reserve positions. In some cases there are hardly any official trade links between member states—Kenya, Malawi, Uganda, Zambia and Zimbabwe accounted for 58% of the total trade between members of Comesa in 1998 (68% including the former member, Tanzania).

With generally low levels of industrial and manufacturing development, many members are loth to reduce tariffs further for fear of undermining local industries—this was Tanzania’s main reason for leaving—or fiscal revenue. A further constraint has been the strict and cumbersome “rules of origin” criteria, which stipulate that preferential treatment can be granted only to goods which have been either wholly produced within Comesa, contain an import content of no more than 60% cif value of the total cost of materials used, contain no less than 45% ex-factory value added, or contain no less than 25% value added if the product is significantly important to the economic development of a member state. In addition to these impediments, progress towards free trade will be further hampered while five Comesa members remain engaged in supporting different sides in the DRC conflict and Ethiopia and Eritrea rebuild relations after concluding a two-year war in mid-December 2000. However, some countries, such as Zambia, are factoring the reduction in tariff revenue associated with the removal of tariff barriers into their budgetary calculations for 2001.

Regional free-trade areas like Comesa aim to increase intra-regional commerce, leading to higher economic growth rates; but they attract criticism from many

who feel that this cannot be achieved while supply-side constraints—such as poor infrastructure, inefficient transport links, weak education and skill levels, and cumbersome bureaucracy—remain. In addition, because of a general lack of domestic institutional capability and vested interests, commitment to the organisation and its financing is frail. The administration budget is heavily dependent on Kenya and Zimbabwe, and meetings are frequently cancelled. Further attempts at crossborder investment promotion and monetary harmonisation have been superseded by initiatives from EAC and SADC.

Under the old PTA system, a multilateral clearing facility was established in Harare, Zimbabwe, in February 1984. A PTA monetary unit of account (UAPTA), equivalent to the IMF’s special drawing right, was used to settle debts between members every two months, the balances being payable in dollars. The UAPTA was replaced by the Comesa dollar, which is fixed to the US dollar, in 1997. Comesa has founded two organisations since its inception. The PTA Trade and Development Bank was established in November 1985 but only became operational in 1989. Now renamed the Comesa Trade and Development Bank, its headquarters have been moved to Nairobi, Kenya, from Bujumbura, Burundi. As well as the African Development Bank, 14 Comesa members hold shares in the bank; total share capital was increased to US$5bn in June 1999. The PTA Reinsurance Company was established in November 1990, and officially launched in September 1992 with a capital stock of US$27bn. It is also based in Nairobi; 13 Comesa members hold shares.

The EU-ACP Convention Following 18 months of negotiations, a new EU-ACP convention was signed in June 2000 in Cotonou, Benin. It replaced Lomé IV, a convention which was signed in 1989 and had replaced previous agreements signed in 1975, 1979 and 1984. The EU-ACP conventions afford a group of 71 African, Caribbean and Pacific (ACP) countries preferential trade and aid links with the EU.

The new agreement, which is to last 20 years, has a strong political dimension. As well as respect for human rights, democratic principles and the rule of law, which were all essential components of Lomé IV, the ACP countries have also agreed—reluctantly—to promote good governance and to combat corruption and illegal immigration into the EU.

Under previous conventions, ACP products, whether agricultural or industrial, entered the EU duty-free, but four agricultural products—beef, sugar, bananas and rum—were subject to a more restrictive system of tariff quotas. The new agreement offers a negotiating framework for tailor-made regional free-trade agreements (RFTAs), under which ACP countries, preferably within existing economic groupings, will gradually open their domestic markets to European products. Given the adjustment costs involved, a preparatory period of eight years has been agreed, during which the old system of preferences will continue to apply.

In any event, 33 African countries classified as least developed countries will still be given the option of entering the EU generalised system of preferences (GSP). By 2004, one year before the GSP is to be renegotiated, the EU will assess which other ACP countries are not in a position to enter a RFTA. Unlike the Lomé Convention, the GSP, which benefits all developing countries, complies

with the rules of the World Trade Organisation because it is based on the dual principles of non-reciprocity and non-discrimination.

The European Development Fund (EDF) will remain the main source of multilateral EU aid to the ACP countries. Under the new convention, EDF instruments have been regrouped and rationalised into two programmes: one to provide grants for country and regional long-term development schemes, with additional support available in case of fluctuation in export earnings; and the other to finance risk-capital and loans to the private sector. The ninth EDF will total ¤13.5bn (US$12.9bn). In addition, about ¤10bn left undisbursed from previous programmes will remain available until 2007, and ¤1.7bn will be provided by the European Investment Bank.

Sources of information

National statistical sources The Central Statistical Office (CSO) in Mbabane is the main source of government publications. Its most important publications are:

• Annual Statistical Bulletin; • Employment and Wages (annual); • Annual Agricultural Survey; • Education Statistics (annual); • Census—agriculture, population, industries (occasional).

The Central Bank of Swaziland is another key source of information on the economy. Its major publications are the Annual Report, the Quarterly Review and the Monthly Statistical Release.

From government ministries, the most important publication is the rolling three-year Development Plan from the Economic Planning Office of the Ministry of Economic Planning and Development. However, there have been delays in publication in the past few years, and the last published plan covers the period 1998/99-2000/01. The publication schedule should be normalised in 2001. The Ministry of Finance produces the annual Budget Speech and Estimates for the Year, which is a detailed exposition of revenue and expenditure contained in the budget. The annual Business Report of the Swaziland Industrial Development Company contains useful information for investors.

The public enterprise unit of the Ministry of Finance produces a quarterly report on the status of these enterprises. Information is also available in the annual reports of the public enterprises, of which the following are particularly useful:

• Swaziland Railway Board; • Swaziland Electricity Board; • Swaziland Posts and Telecommunications Corporation

Swaziland’s statistics are in better shape than those of many other countries in Sub-Saharan Africa. Nonetheless, there are some weak areas, notably

commercial agriculture, forestry, manufacturing, construction and the retail sector. In all these cases data are scant or non-existent. Tourism data could also be improved; there are wide discrepancies between the expenditure figures provided by the CSO and the Central Bank. The latter, in fact, conducts its own survey. The CSO figures contain contradictions about the number of tourists and the number crossing the border, especially with regard to nationalities. A general problem is that there are discrepancies between figures contained in the Development Plan, the Annual Report of the Central Bank, and the Central Bank’s Quarterly Review. However, it is usually possible to obtain a consistent set of data.

Other sources include:

• Ernst & Young, Doing Business in Swaziland, Mbabane (updated annually) • Fisher Hoffman Sithole, Swaziland Tax Guide, Mbabane (updated annually) • Swaziland Review of Commerce and Industry, Manzini, (annual) • C Forsyth Thompson, Swaziland Business Yearbook, Mbabane (annual) • Swaziland Sugar Association, Annual Report, Mbabane • Swaziland Sugar Association, Swaziland Sugar Journal, Mbabane (monthly)

International statistical Energy Data Associates, Bishops Walk House, 19-23 High Street, Pinner, sources Middlesex HA5 5PJ

IMF, International Financial Statistics

IMF, Swaziland: Selected Issues and Statistical Appendix, Washington, August 2000

Organisation for Economic Co-operation and Development (OECD), Geographical Distribution of Financial Flows to Aid Recipients

World Bank, Global Development Finance

Select bibliography and A Booth, Swaziland: Tradition and Change in a Southern African Kingdom, Boulder, websites US, 1983

J Crush, The Struggle for Swazi Labour 1890-1920, Kingston, Canada, 1987

T J D Fair, G Murdoch and H M Jones, Development in Swaziland, Johannesburg, 1969

C Forsyth-Thompson, Mbabane into the Millennium: The Story of a City, Mbabane, 1999

Z R Ginindza, King Mswati III, Manzini, 1987

R and H Hussey, Jumbo Tourist Guide-Swaziland, Mbabane, 1998

H Kuper, Sobhuza II—Ngwenyama and King of Swaziland, London, 1978

G Maasdorp, “The landlocked countries—Swaziland”, in: Z A Konczacki, J L Parpart and T M Shaw, Studies in the Economic History of Southern Africa, Vol. II, London, 1991

J S M Matsebula, A History of Swaziland, Cape Town, 1976

J S M Matsebula, The King’s Eye, Cape Town, 1983

D Schwager et al, Swaziland, Manzini, 1993 (a “coffee-table” guide)

M Turco, Visitors’ Guide to Swaziland, Johannesburg, 1994

Government of Swaziland, http://www.swazi.com/government, contains main economic policy documents and information on ministries

Central Bank of Swaziland, http://www.centralbank.sz, features annual report, information on policy, data and government tenders

Swaziland Investment Promotion Authority, http://www.sipa.org.sz, provides information on one-stop-shop for potential investors, facts on Swaziland, information on Swaziland industries

Swaziland Industrial Development Company, http://www.sidc.co.sz, features information on equity and loan finance, asset leasing, industrial buildings, and advisory services

Swaziland Sugar Association, http://www.swazibusiness.com/ssa, contains statistical and marketing information, structure of the industry.

Swazi News, http://www.swazinews.co.sz, contains latest news from Swaziland and many relevant links.

Reference tables

These reference tables provide the most up-to-date statistics available at the time of publication.

Reference table 1 Population census results (no. unless otherwise indicated) 1966 1976 1986 1997 Resident population 374,571 492,567 677,783 929,718 Population growth (%) 2.7 2.8 3.2 2.9 Total population incl absentees 395,138 518,217 708,455 980,722 Source: Central Statistical Office (CSO).

Reference table 2 Employment

1995 1996 1997 1998 1999 Formal employment 94,797 94,766 95,681 91,874 89,015 Private sector 63,835 63,497 64,122 59,983 60,856 Public sector 30,962 31,269 31,559 31,891 28,159 Informal employment 16,133 16,877 17,063 17,311 17,565 Total employment a 110,930 111,643 112,744 109,185 106,580 % change, year on year 1.2 0.6 1.0 –3.3 –2.4 Migrant mineworkers 15,304 14,725 12,960 10,336 9,160 Male 61,939 63,540 62,020 58,666 59,835 Professional & technical 4,439 4,331 4,805 4,514 4,886 Administrative & managerial 3,666 3,751 3,925 3,548 3,571 Clerical 6,873 7,674 7,426 7,313 7,884 Skilled 4,471 4,261 3,991 4,137 3,950 Semi-skilled 8,016 7,334 8,516 8,168 8,663 Unskilled 34,474 36,189 33,357 30,986 30,881 Female 25,096 26,324 26,162 28,402 29,180 Professional & technical 6,750 6,827 7,431 6,860 7,503 Administrative & managerial 1,273 1,193 1,187 1,315 1,385 Clerical 4,897 5,285 5,190 5,342 5,867 Skilled 134 175 204 153 154 Semi-skilled 1,153 1,114 1,555 2,810 2,919 Unskilled 10,889 11,730 10,595 11,922 11,352

a This data comes from the Central Bank of Swaziland, the breakdown by sex is provided by the CSO and does not sum to the Central Bank’s total employment figure.

Sources: Central Bank of Swaziland; CSO.

Reference table 3 Transport and communications

1995 1996 1997 1998 1999 Rail transporta Freight carried (m tonnes) 4.3 4.1 4.0 3.8 4.0 Tonne-km (m) 742.8 684.4 670.0 652.7 676.6 Transit traffic (%) 77.5 79.9 78.6 79.5 81.2 Profit (E m) 12.8 11.7 8.3 –0.0 5.5 Road transport User cost coverage ratio (%) 27.7 39.1 31.9 n/a n/a Government vehicles 3,759 3,707 4,319 3,685 n/a Private vehicles 66,359 69,987 74,569 n/a n/a Fuel consumption (m litres) 209.5 208.3 213.2 208.8 n/a Air transport (Matsapha airport) Aircraft movements 7,971 3,097 7,247 10,396 n/a Passengers 59,675 53,983 54,957 62,656 n/a Passengers RSNACb 51,426 45,262 33,327 38,652 n/a Loss RSNACb (E m) –6.4 –8.7 –20.7 –1.6 n/a continued

1995 1996 1997 1998 1999 Posts & telecommunications No. of direct exchange lines 19,000 21,130 22,602 25,073 28,999 Telecoms revenue (E m) 79.5 97.6 110.8 120.6 133.8 Telecoms profit (E m) 16.9 42.6 43.8 52.3 40.8 Posts revenue (E m) 7.6 8.3 9.6 10.4 12.3 Posts profit (E m) –1.8 –2.5 –1.6 –1.4 –0.7

a Year ending March 31st. b Royal Swazi National Airways Corporation for 1994-97, Airlink Swaziland for 1998.

Sources: Ministry of Public Works and Transport, Transport Bulletin; Swaziland Posts and Telecommunications Corporation, Annual Report.

Reference table 4 Electricity statistics (gwh unless otherwise indicated) 1996 1997 1998 1999 2000 Energy generation 703.6 789.8 800.0 830.7 847.1 Hydroelectric 118.5 191.0 192.9 189.6 192.3 Diesel-powered 2.0 0.8 1.5 1.4 2.4 Purchased from South Africa 583.1 598.0 605.6 639.7 652.4 Energy sold 585.0 671.7 694.7 718.6 732.0 Operating surplus of Swaziland Electricity Board (Em) 13.4 37.2 24.8 23.5 27.7 Source: Swaziland Electricity Board, Annual Report.

Reference table 5 Central government finances (E m; fiscal years Apr-Mar) 1996/97 1997/98 1998/99 1999/2000 2000/01a Total revenue 1,704.1 2,038.8 2,275.0 2,567.9 2,766.9 Current revenue 1,684.0 2,020.5 2,230.3 2,536.1 2,630.2 of which: SACU receipts 852.7 1,007.1 1,076.3 1,221.9 1,406.2 taxes on income & profit 485.6 528.9 581.8 697.2 609.3 sales tax 207.1 254.8 275.4 333.6 333.7 Grants 20.2 18.3 44.7 31.8 136.7 Total expenditure 1,760.3 1,854.7 2,282.2 2,706.7 3,104.1 Current expenditure 1,465.2 1,503.8 1,731.9 2,140.9 2,294.1 Capital expenditure 293.1 322.8 483.0 535.0 741.9 Net domestic lending 2.0 28.1 67.3 30.7 68.1 Overall balance –56.2 184.1 –7.1 –138.8 –337.2 Financing Domestic 41.4 –226.1 –191.2 –462.2 88.1 Foreign 14.8 42.0 198.3 601.0 249.0 a Budgeted.

Source: Central Bank of Swaziland, Annual Report; Quarterly Review.

Reference table 6 Monetary survey

(Em unless otherwise indicated; end-period) 1996 1997 1998 1999 2000 Currency in circulation 90.8 109.0 107.2 137.0 149.3 Demand deposits 332.1 382.8 393.6 525.7 512.5 Money (M1) 423.0 491.8 500.9 662.7 661.8 Savings & time deposits 1,005.0 1,213.3 1,423.7 1,562.6 1,417.7 Money (M2) 1,427.9 1,705.0 1,924.5 2,225.3 2,079.5 % change, year on year 16.5 19.4 12.9 15.6 –6.6 Net foreign assets 1,465.8 1,710.0 2,457.7 2,741.9 2,772.9 Credits to state, net –804.0 –952.8 –1,441.3 –1,541.0 –1,717.2 Credits to private sector, net 936.3 1,076.7 1,139.8 1,238.6 1,324.6 Interest rates (%; year-end) Central Bank discount rate 16.75 15.75 18.00 12.00 11.00 Treasury bills 14.17 13.54 13.65 8.50 8.62 Bank deposits 31 days 11.15 10.25 12.50 6.75 5.75 12 months 13.40 11.75 14.13 8.00 7.00 Prime lending rates Swaziland 19.75 18.75 21.00 15.00 14.00 South Africa 20.25 19.25 23.00 15.50 14.50 Source: Central Bank of Swaziland, Quarterly Review.

Reference table 7 Gross domestic product (Year to end June) 1995/96 1996/97 1997/98 1998/99 1999/2000 GDP (E m) At current market prices 4,659 5,307 6,268 7,047 8,102 At constant (1985) factor cost 1,251 1,304 1,355 1,405 1,457 % change, year on year 3.7 4.2 3.9 3.7 3.7 Per head (E) At current market prices 5,211 5,819 6,740 7,443 8,440 At constant (1985) factor cost 1,399 1,430 1,457 1,485 1,518 % change, year on year 1.0 2.2 1.9 1.9 2.2 Sources: Ministry of Economic Planning and Development; EIU.

Reference table 8 Gross domestic product by expenditure (Year to end June, current prices; E m) 1994/95 1995/96 1996/97 1997/98 1998/99 Private consumption 2,313.9 3,072.6 3,228.6 3,731.9 5,030.6 Government consumption 951.0 1,185.8 1,639.2 1,800.9 1,978.6 Gross fixed capital formation 1,530.8 1,530.0 1,997.0 2,424.4 2,977.2 Change in stocks 37.4 47.2 54.4 n/a n/a Exports of goods & services 3,814.6 4,265.2 4,947.3 5,941.0 6,198.3 Imports of goods & services –4,051.5 –4,858.4 –5,821.1 –6,857.4 –8,082.7 GDP at market prices 4,596.2 5,242.5 6,045.4 7,040.8 8,102.0 Source: IMF, International Financial Statistics.

Reference table 9 Gross domestic product by sector (Year to end June, constant 1985 prices; E m) 1995/96 1996/97 1997/98 1998/991999/2000 Agriculture & forestry 127.1 155.6 153.3 156.4 168.9 Mining 23.6 15.2 18.5 23.5 20.2 Manufacturing 469.8 481.3 507.8 515.8 522.3 Electricity & water 39.0 44.0 44.9 46.9 49.3 Construction 56.5 59.7 66.1 75.0 85.2 Trade, hotels etc 121.8 127.1 138.1 149.1 160.8 Transport & communications 82.7 82.4 83.3 86.1 89.1 Financial services real estate 90.1 95.8 103.9 104.5 108.9 Owner-occupied dwellings 32.8 33.7 34.7 36.3 36.9 Government services 222.8 226.4 225.6 230.4 235.4 Other services 21.9 22.6 23.3 24.0 24.5 Less imputed bank services –36.8 –40.0 –44.2 –43.1 –45.0 GDP at factor cost 1,251.3 1,303.8 1,355.3 1,404.8 1,456.5 Source: Ministry of Economic Planning and Development.

Reference table 10 Consumer prices (1996=100; annual averages) 1996 1997 1998 1999 2000 Index Aa 100.0 109.2 117.7 124.5 138.4d Index Bb 100.0 111.5 120.0 129.5 149.0d All groups indexc 100.0 109.2 118.0 125.0 138.6d Inflation (%) All groups 6.5 7.2 8.0 5.9 7.3 South African inflation 7.4 8.6 6.9 5.7 5.3

a Middle- and high-income groups in Mbabane and Manzini. b Low-income groups in Mbabane and Manzini. c Not an average of A and B, covers a wider income range. d 2000 indices are not comparable with those of previous years.

Source: Central Bank of Swaziland, Quarterly Review.

Reference table 11 Agriculture (Apr-Mar unless otherwise indicated) 1995/96 1996/97 1997/98 1998/99 1999/2000 Production (‘000 tonnes) Sugarcane 3,404.1 3,694.0 3,886.7 3,886.4 4,322.6 Maize 135.0 85.0 137.7 68.5 112.8 Seed cotton 14.0 16.2 16.9 14.9 7.5 Citrusa 87.2 81.4 79.0 101.6 n/a Value (E m) Cotton 30.4 38.4 42.2 39.9 17.2 Citrusa 124.4 123.8 122.7 n/a n/a Cattlea (’000) No. of cattle 656.5 658.5 659.7 601.6 586.4 No. of cattle slaughtered 42.5 51.1 56.0 65.5 69.5

a Calendar years 1995-96.

Sources: Central Bank of Swaziland, Annual Report; Ministry of Economic Planning and Development, Development Plan; CSO, Annual Statistical Bulletin.

Reference table 12 Minerals production

1996 1997 1998 1999 2000 Volume Asbestos (tonnes) 26,014 25,888 27,693 22,912 12,690 Coal (tonnes) 128,973 203,115 410,021 426,299 378,0430 Quarried stone (cu metres) 221,237 455,753 453,334 250,193 304,043 Value (E m) Asbestos 57.9 64.1 56.8 57.0 21.4 Coal 7.9 10.6 24.2 51.7 48.4 Quarried stone 5.1 16.1 12.4 9.8 11.3 Total 94.6a 90.9 93.4 118.5 81.1 % change 9.0 –3.9 2.8 26.9 –31.6

a includes diamond exports of E23.7m

Sources: Central Bank of Swaziland, Annual Report; Department of Geological Survey and Mines.

Reference table 13 Agro-industry (all years are Apr-Mar and all units in tonnes unless otherwise indicated) 1995/96 1996/97 1997/98 1998/99 1999/2000 Sugar Production 421,997 470,988 475,785 474,790 534,183 Domestic sales 182,895 205,555 237,050 270,120 274,793 Exports 244,495 214,080 275,999 197,463 250,912 Export value fob (E m) 492.1 587.2 580.3 583.3 639.6 Woodpulpa Production 170,857 115,045 179,560 163,229 165,184 Exports 160,296 130,635 170,616 256,549 165,753 Export value (E m) 440.7 240.1 272.7 310.5 350.6 Canned fruita Production 14,897 16,993 17,324 19,644 22,395 Domestic sales 200 277 200 200 200 Exports 15,933 14,668 18,977 23,557 19,205 Export value fob (E m) 49.6 53.7 68.1 95.0 75.4 Meata Production 3.7 3.3 3.9 4.6 5.9 Domestic sales 1.9 2.9 4.2 4.7 5.1 Exports 0.9 1.0 0.7 0.6 1.0 Export value fob (E m) 13.9 15.4 11.6 12.9 31.4

a Calendar years 1995-99.

Source: Central Bank of Swaziland, Annual Report.

Reference table 14 Construction, Mbabane and Manzini (E m unless otherwise indicated) 1996 1997 1998 1999 2000 Building plans approved Residential 34.1 26.0 24.8 31.7 41.5 Industrial 17.5 27.4 9.6 21.5 14.7 Total incl other 52.9 57.0 34.4 53.2 56.9 % change –15.8 7.8 –39.6 54.7 7.0 Buildings completed Residential 6.3 7.0 9.7 8.5 11.9 Industrial 1.4 6.5 14.2 5.8 13.3 Total incl other 7.8 13.5 23.9 14.3 26.5 % change –71.8 73.1 77.0 –40.2 85.3 Source: Central Bank of Swaziland, Quarterly Review.

Reference table 15 Swaziland stock exchange, end-Jun

1997 1998 1999 2000 2001 Index (1990=100) 240.5 65.6 70.1 137.2 125.6 % change 33.9 –72.7 6.9 95.7 –8.5 Market capitalisation (E m) 2,823 466 535 547 503 No. of listings 5 5 6 6 6 Source: Swaziland Stock Exchange.

Reference table 16 Tourism statistics

1996 1997 1998 1999 2000a Bed nights sold 400,000 415,000 424,116 436,966 421,407 Total receipts (E m) 118.3 170.0 179.0 185.0 188.7 Average expenditure (E per day per person) Sun International 330 251 259 262 n/a Protea Hotels 260 289 313 325 n/a Others 250 255 277 280 n/a

a Provisional.

Source: Central Bank of Swaziland, Annual Report.

Reference table 17 Exports (E m) 1995 1996 1997 1998 1999 Food & live animals 1,017.6 1,430.4 1,336.5 2,210.6 2,239.9 Beverages & tobacco 49.1 95.5 59.3 66.4 264.7 Crude inedible material 635.5 439.3 402.6 612.2 599.9 Minerals, fuels & lubricant 5.1 3.2 13.0 53.1 7.8 Animal & vegetable oils & fat 5.7 18.5 23.7 38.5 43.9 Chemicals & chemical products 593.8 427.5 440.3 869.2 979.5 Manufactured items classified by material 215.0 320.8 344.7 387.6 359.0 Machinery & transport equipment 247.5 468.3 527.1 498.0 478.4 Miscellaneous manufactured items 257.9 362.3 342.9 543.1 660.7 Unclassified commodities 2.8 5.0 12.4 13.7 13.6 Total exports 3,030.0 3,570.9 3,502.5 5,292.4 5,647.5 Source: CSO, Annual Statistical Bulletin.

Reference table 18 Importsa (E m cif) 1996 1997 1998 1999 2000 Food & live animal 739.0 784.3 853.3 901.3 905.1 Beverages & tobacco 106.3 108.7 109.1 116.4 115.5 Crude inedible materials 214.3 222.1 279.1 289.2 296.3 Mineral, fuels lubricants 579.8 687.1 836.0 902.6 886.8 Animal & vegetable oils & fats 55.3 69.8 92.2 97.3 97.9 Chemicals & chemical product 738.4 630.1 723.4 768.8 767.9 Manufactured items classified by material 720.6 857.3 999.9 1,029.2 1,060.7 Machinery & transport equipment 1,221.0 1,319.3 1,822.9 1,855.6 1,933.9 Miscellaneous manufactured item 461.2 676.6 594.1 590.1 630.6 Unclassified commodities 58.8 80.2 95.0 89.8 100.6 Total imports 4,894.7 5,435.3 6,404.9 6,640.0 6,795.2

a Data may differ from those cited in the text, as the CBS reports imports in calendar years, whereas the CSO reports imports in fiscal years.

Source: CBS, Quarterly Review, March 2001.

Reference table 19 Destination of exports (E m unless otherwise indicated; fob) 1995 1996 1997 1998 1999a South Africa 1,768.2 2,437.8 2,593.2 3,462.6 4,067.9 % of total 58.4 68.3 74.0 65.4 72.0 Mozambique 94.4 183.7 181.8 583.0 208.7 US 76.6 117.6 84.8 277.8 195.4 UK 187.9 245.5 74.3 234.1 382.8 France 122.8 151.1 19.3 229.4 168.1 EU 509.9 563.7 430.7 644.0 789.9 Rest of SADCb 303.6 355.8 364.9 769.4 366.2 NAFTA 80.6 117.8 85.0 278.0 195.6

a Preliminary. b Includes other SACU members.

Sources: CSO, Annual Statistical Bulletin; Department of Customs and Excise.

Reference table 20 Origin of imports (E m unless otherwise indicated; cif) 1995/96 1996/97 1997/98 1998/99 1999/2000a South Africab 4,298.2 4,370.4 4,440.1 5,365.1 6,305.4 % of total 96.3 90.3 82.9 84.0 88.8 Japan 21.4 61.8 101.7 124.3 40.6 UK 30.9 35.9 92.7 78.3 239.8 Singapore 21.5 48.7 80.1 94.3 29.6 US 4.0 58.0 46.6 69.1 18.9 EU 68.7 191.5 293.4 319.0 362.7 NAFTA 5.4 61.5 54.4 101.7 81.7 a Preliminary. b Including products from other countries obtained from South African distributors.

Sources: CSO, Annual Statistical Bulletin; Department of Customs and Excise.

Reference table 21 Balance of payments, IMF series (US$ m) 1995 1996 1997 1998 1999 Merchandise exports fob 867.8 849.4 960.1 966.1 941.3 Merchandise imports fob –1,064.4 –1,054.4 –1,088.6 –1,082.6 –1,052.1 Trade balance –196.6 –205.8 –128.5 –116.5 –110.8 Services: credit 151.8 100.8 124.5 107.0 71.8 Services: debit –209.5 –240.8 –244.5 –190.5 –173.2 Income: credit 162.6 200.8 182.7 159.3 173.6 Income: debit –82.0 –68.7 –43.6 –108.9 –78.7 Current transfers: credit 257.2 268.7 231.2 243.4 239.6 Current transfers: debit –113.3 –108.9 –112.7 –110.6 –105.0 Current-account balance –29.7 –53.1 9.0 –16.8 17.2 Source: IMF, International Financial Statistics.

Reference table 22 Balance of payments, national series (E m) 1996 1997 1998 1999 2000 Merchandise exports fob 3,651.4 4,423.1 5,351.1 5,749.3 6,329.5 Merchandise imports fob –4,309.7 –4,775.4 –5,623.9 –6,090.4 –7,047.1 Services: credit 433.3 573.5 596.7 590.5 405.4 Services: debit –1,035.0 –1,128.2 –1,178.0 –1,147.7 –1,200.8 Income: credit 863.1 841.8 880.8 1,060.9 1,013.9 Income: debit –295.2 –205.6 –731.2 –512.9 –618.4 Net current transfers 687.1 546.0 734.1 778.7 769.6 Current-account balance incl others –223.4 1.0 –386.9 45.1 –347.9 Source: Central Bank of Swaziland, Quarterly Review.

Reference table 23 External debt (US$ m unless otherwise indicated; end-period) 1995 1996 1997 1998 1999 Public & publicly guaranteed long-term debta 223.0 219.6 210.1 222.5 205.5 Official creditors 222.7 219.6 210.1 222.5 205.5 Multilateral 121.6 129.5 133.3 148.1 144.3 Bilateral 101.1 90.1 76.7 74.5 61.1 Private creditors 0.3 0.0 0.0 0.0 0.0 of which: commercial banks 0.0 0.0 0.0 0.0 0.0 Total external debt 234.9 221.7 368.2 250.8 258.4 Long-term debta 223.0 219.6 210.1 222.5 205.5 Short-term debt 11.9 2.1 158.1 28.2 52.9 of which: interest arrears on long-term debt 1.3 0.2 0.1 0.1 0.1 Use of IMF credit 0.0 0.0 0.0 0.0 0.0 Total debt service 21.6 33.1 31.5 23.4 30.6 Principal 16.1 21.0 16.3 14.4 18.7 Interest 5.5 12.0 15.1 9.1 11.9 Ratios (%) Total external debt/GNP 17.4 16.6 25.4 18.7 19.2 Debt-service ratiob 1.8 2.9 2.5 1.9 2.6 Short-term debt/total external debt 5.1 1.0 42.9 11.2 20.5 Concessional long-term loans/ long-term debt 71.0 69.5 38.2 57.1 50.7 a Long-term debt is defined as having original maturity of more than one year. b Debt service as a percentage of earnings from exports of goods and services.

Source: World Bank, Global Development Finance.

Reference table 24 Net official development assistancea (US$ m) 1995 1996 1997 1998 1999 Bilateral 37.7 20.6 16.3 16.8 14.9 of which: US 12.0 11.0 2.0 10.3 0.8 Japan 5.6 10.2 9.3 6.2 4.6 Germany 8.9 4.4 –1.0 –2.3 0.2 UK 5.3 –6.6 3.2 4.3 6.2 Multilateral 17.8 9.8 10.3 13.6 14.1 of which: ADF 2.9 –2.7 2.8 2.7 3.7 EU 7.4 8.5 4.0 8.0 8.9 WFP 1.5 0.0 0.0 0.0 0.0 Total 55.5 30.4 26.6 30.4 28.9 of which: grants 44.3 42.0 30.4 34.2 23.2

a Disbursements minus repayments. Official development assistance is defined as grants and loans with at least a 25% grant element, provided by OECD and OPEC member countries and multilateral agencies, and administered with the aim of promoting development and welfare in the recipient country. Aid from the former Eastern bloc is excluded.

Source: OECD, Geographical Distribution of Financial Flows to Aid Recipients.

Reference table 25 Foreign reserves (US$ m; end-period) 1996 1997 1998 1999 2000 Foreign exchange 241.2 282.8 346.0 363.6 340.1 SDRs 8.5 8.0 8.4 3.3 3.2 Reserve position in the IMF 4.3 4.1 4.2 9.0 8.5 Total reserves excl gold 254.0 294.8 358.6 375.9 351.8 Source: IMF, International Financial Statistics.

Reference table 26 Exchange rates (annual averages) 1996 1997 1998 1999 2000 E:US$ 4.30 4.61 5.53 6.11 6.94 E:£ 6.72 7.55 9.15 9.89 10.49 E:DM 2.85 2.66 3.15 3.34 3.27 ¥:E 25.45 26.26 23.83 18.54 15.31 E:SDR 6.23 6.34 7.50 8.34 9.14 E:Ecu 5.38 5.21 6.22 6.52 6.39 E:P 1.30 1.27 1.31 1.33 1.36 Sources: EIU; IMF; South African Reserve Bank.

Editors: Paul Gamble (editor); David Cowan (consulting editor) Editorial closing date: August 1st 2001 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected]