EconomySilver lining for Eswatini Here’s how to fix things CORPORATE REPORT CORPORATEREPORT

FOREWORD Rebuilding Eswatini of our dreams, working together to secure the future WITH DUMISANI MASILELA erals beneficiation, tourism, services, energy, ESEPARC CHAIRMAN “Working together water, health, and education sectors. Working together we have set in motion a he Kingdom of Eswatini is in its half we have set in motion number of levers to boost the economy’s fu- century and we have every reason to a number of levers to ture growth. look to a promising future with con- On behalf of the Board, Executive and en- fidence as we honour this milestone boost the economy’s tire ESEPARC family, I wish to conclude by Tand celebrate our collective achievements. thanking His Majesty the King for the tan- The celebration of 50 years of independence future growth.” gible actions he continues to take to ensure represents a seismic shift in our development improved growth and tangible results for the agenda as a nation, as it progressively ushers Kingdom of Eswatini. I also wish to take this in a new era of equitable and inclusive eco- in the Kingdom of Eswatini. opportunity to pledge our full support to His nomic development for emaSwati. We remain committed to achieving His Maj- Majesty’s Government, the private sector, Over the years, Eswatini has made remark- esty’s vision of a dynamic industrial and glob- public institutions, and civic society organisa- able progress in promoting development ally competitive Eswatini economy, charac- tions as we come together, heeding the King’s centred inclusive growth for the country and terised by inclusive growth and development, rallying call to lend a hand in working for Es- its people. Important milestones have been innovation, decent employment, and equity. watini of our dreams. Let us all refuse to suc- reached in terms of infrastructure rollout as a This, ultimately, is an economy built on the cumb to any form of despair and adversity, but catalyst for economic growth, the creation of full potential of all. let us constantly improve the work that we do employment opportunities whilst laying the ESEPARC’s areas of focus include research to meet the needs and expectations of all the foundation for service delivery and sustainable to fine tune Eswatini’s economic strategies by citizens of our great country. livelihoods. mainly improving human capital, leveraging Be that as it may, Eswatini, like many other the country’s natural resources, boosting small I thank you. countries, is facing severe headwinds, and is and medium enterprises, and the entrepreneur- CONTRIBUTORS seized with threatening economic conditions. ial community, poverty alleviation, and find- This however has not stopped us from work- ing innovating forward-looking solutions to EDITOR ing together as a nation to find opportunities deal with climate change. BHEKI MAKHUBU in these trying times. We continue to do all we As ESEPARC we firmly believe that the can to reignite economic growth. country should align education and training PROJECT COORDINATOR/ WRITER We at ESEPARC are highly encouraged that to meet the needs of the new economy we en- MUSA NDLANGAMANDLA vision. We must strengthen partnerships with His Majesty King Mswati III continues to give ESEPARC KNOWLEDGE MANAGER impetus to efforts to attain broader prosperity technology companies, inside Eswatini and in Eswatini and finding sustainable and lasting abroad, to train large numbers of young people TEETEE ZWANE ways to stimulate economic growth and realise in digital skills so that they can take advantage the full potential of the people. of employment and entrepreneurial opportuni- Emboldened by His Majesty’s call for uni- ties in the digital economy. ty and evidence-based interventions to set The 4th Industrial Revolution is upon us and the country on a new growth path, and in the it is fundamentally transforming the way we process improve the welfare of emaSwati, we live, work and relate to one another all around shall act with greater determination to increase the world. It offers enormous opportunities, momentum on supporting government, the pri- and as Eswatini, we need to be fully prepared vate sector, public sector, and civil society in for it. order to increase economic opportunities. We Within the context of Eswatini’s economic want to ensure that no one is left behind. agenda as outlined in our economic policy blue At ESEPARC, we are geared towards provid- prints namely the National Development Strat- ing quality research, tangible evidence, and re- egy, as revised, ESEPARC supports His liable information to address Eswatini’s most Majesty’s government’s efforts to create pressing issues such as strategies to create and and implement an industrial policy ac- maintain sustainable jobs and improve the lev- tion plan whilst creating a solid man- els of business and consumer confidence. ufacturing base in Eswatini. Through ESEPARC remains steadfast in our belief our private sector supported initiatives of the importance for continued collaboration such as proudly “Made Eswatini” we between government, business, labour, and will fuel national resource mobilisa- civil society as key to growing the economy tion efforts for infrastructure,- in and creating jobs. By working together, we can formation communication tech- build an inclusive economy, which benefits all nology and innovation. This is emaSwati. In this regard, we shall continue crucial as the country seeks to support ongoing efforts by His Majesty’s to gain access to funding Government to set a framework for econom- for projects in, and not ic growth through progressive economic and limited to, manufactur- social policies. We shall continue to play our ing and the creation of facilitatory role of being the glue for efforts value-adding activi- aimed at creating an enabling environment for ties especially in the meaningful dialogue and evidence-based pol- agro-processing, icy planning, implementation, and monitoring mining and min- DUMISANI MASILELA

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ESEPARC in a Nutshell

SEPARC is the first think-tank in the country whose general purpose is to A Sample of Ongoing generate evidence to inform policy formulation in Eswatini. Projects/Studies; EIt is a semi-autonomous entity established in zz The Economic Impacts of the Lower 2008 through a joint funding arrangement be- Usuthu Irrigation Project tween the Government of Eswatini and the Af- zz Teenage Pregnancies in Eswatini rican Capacity Building Foundation (ACBF). zz A Perspective on the History of The broad context for the establishment of Innovation in Eswatini ESEPARC was to respond to the poor perfor- zz Energy Consumption in Eswatini mance of the economy of Eswatini during the zz The Economic Benefits of TVET in 1990s and 2000s. The overall objective of ES- Eswatini EPARC is to improve economic governance in zz Inequality of Opportunities in Eswatini through facilitating evidence-based A Sample of Education in Eswatini policy formulation, implementation, and Completed Projects; zz An Impact Assessment of the Small- monitoring. It also seeks to build sustainable zz Swaziland Economic Conference 2017 Scale Enterprise Loan Guarantee national capacities in the area of economic zz Public Lecture: Knocking on Moral Val- Scheme policy research and policy analysis. One of the ues to Integrate Indigenous Knowledge zz Factors Influencing the Success of main causes of the sustained poor performance with Development SMMEs of the economy of Eswatini is not only the in- zz The Socio-Economic Impact of the zz Key sector review – Agricultural and sufficient or lack of qualified local economic 2015/16 El Niño Induced Drought Manufacturing policy analysts and managers but also lack of zz Harnessing Swaziland’s Demographic zz Gender and Poverty in Eswatini. a culture of evidence-based public policy de- Dividend cision-making. For a very long time, policies zz Assessing the Impact of National Mar- were not based on what is happening on the keting Boards on Consumers and Pro- ground but tended to be abstract and almost ducers’ Welfare in Swaziland Majozi Sithole (former Minister of Finance not responsive to the needs of emaSwati. zz Swaziland Research and Development and now Governor of the Central Bank of Es- Eswatini was overly reliant on foreign tech- Statistics watini). nical consultants mostly due to lack of local zz Industry Labour Force Skills Require- “Continued sustenance of ESEPARC rests institutional and human capacity in the coun- ment Investigation entirely on top talent or good researchers, try. The establishment of ESEPARC was a zz 2016 Public Service Customer Satisfac- adequate use of our outputs by the public bold move by the Government of Eswatini to tion Rapid Assessment Report and repeat business from our core stakehold- use homegrown policy strategies. ESEPARC zz Sexual Harassment in the Private and ers. Over and above this, we mobilise resourc- is very important for the country. Think-tanks NGO Sector Workplace es through demand driven studies,” Sithole provide critical new knowledge on the per- zz The State of the National System of In- says. formance of the economy and what can be novation done to continually improve it. They also help zz Estimating the Rural and Urban Living *For details on the projects/studies in human capital development especially in Wage in Swaziland’s Handicraft Sector visit http://www.separc.co.sz policy matters and in keeping the culture of Or download our APP @ Google research high in both the public and private Playstore: ESEPARC Insights sectors. They provide useful knowledge for As a think-tank, ESEPARC is as good as the

DUMISANI MASILELA decision-makers. knowledge it produces, asserts board member

OCTOBER2018 OCTOBER2018 3 CORPORATEREPORT

COVER STORY Silver lining for Eswatini economy: Here’s how to fix things BY MUSA NDLANGAMANDLA ment shortages; rising household poverty levels at the height of growing unemploy- ith the economy on free fall ment and a country buckled by massive over the last three decades corruption, there are hidden strengths that and pressure mounting on Eswatini can tap into to create new engines public finances, there is hope of economic growth. Wyet for Eswatini to create new and real op- In conversation with The Nation maga- portunities to get the country back on track. zine, Dr Thula Sizwe Dlamini (37) gives The present global economic environment insights on how a change of mindset can does not make matters any better as it is help shape Eswatini’s narrative. fraught with trials and global economic ac- Dr Dlamini is Executive Director of Es- tivity remains subdued. Even after a decade watini Economic Policy Analysis and Re- of global financial crisis, the world - econ search Centre (ESEPARC), whose main ob- omy is struggling to regain momentum. jective is to improve economic governance Growth in advanced economies remains in the country through evidence-based pol- weak and that in developing and emerging icy formulation, implementation, and mon- economies remains way below potential. itoring. Despite the gloomy realities of cashflow “The first point of call towards turning issues; hard knocks in the health sector the ship around is to consciously invest in characterised by occasional drug and equip- mindset altering programmes to change the

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way in which emaSwati see things,” Dr Dlami- where we want to go and how we intend to get ni says. there. And, I think we are on course to do so “A ‘can-do’ mindset is necessary for Eswatini taking into consideration the National Devel- to ditch the economic ills of yesteryear. With opment Strategy (NDS), as revised.” 79% of the population below 34 years, the Considering the facts on the ground and gloss- country has a chance to introduce new concepts ing over the past year’s news media headlines, to condition the youth to see opportunities than one would be forgiven for concluding that Dr challenges.” Dlamini is living in a utopian society, far re- Dr Dlamini explains that psychological re- moved from the shambles that characterise The first point search shows that how the mind interprets latter-day Swaziland - now known as Eswatini. things depends a lot on how it perceives them. All the vital signs point to a country in distress of call towards If the mind perceives challenges, he asserts, it and with each day the drivers of the economy fails to provide solutions. seem to be more and more clueless how to deal turning the ship “The good news is that the opposite is true. with the deepening crisis. That is, if the mind sees opportunities, it imme- Ever the cautious optimist, Dr Dlamini is around is to diately springs into action, providing countless quick to point out that the current economic solutions to harness the opportunities therein. situation is not unique to Eswatini. He cites the consciously invest In my view, this is the biggest investment we example of Spain a country which some five have to make if we want to change the econo- years ago was one of Europe’s unstable econo- in mindset altering my and start engaging in productive economic mies. Spain instituted forward looking, export activities and make meaningful contributions at driven reforms to lift itself out of the worst eco- programmes to the regional, continental, and world stage,” Dr nomic crisis since the civil war in the 1930s. Dr Dlamini says. Dlamini also points to the USA which lifted it- change the way in Putting currency to the ‘can-do’ approach he self by the bootstraps to recover from the Great advocates, visitors to ESEPARC get to appreci- Depression during the same period. which emaSwati ate from the get-go that the word ‘challenges’ “These are tangible examples of how an eco- has been done away with and replaced with nomic crisis can be turned around to create vast see things, the word ‘opportunities’ as part of the organi- opportunities and engines for growth. Painful sation’s DNA. From the reception area to the as the process of reforms may be, Eswatini Dr Thula Sizwe Dlamini. boardroom, among the people and attitude to- will, in time, recover its competitive edge and wards service, there is a palpable, if indomita- remind the world that we are indeed capable of ble optimism and can-do-spirit. doing great things as we did in the 1970s and “At ESEPARC, we have trained our minds to 1980s,” Dr Dlamini says. see opportunities than challenges. Everywhere Dr Dlamini shared insights with The Nation we do research, we see tons and tons of oppor- magazine on how to put Eswatini back in the tunities.” world map. “Indeed, the key to success is to inculcate “We must do away with heavy reliance on im- mindset altering programmes to change the ported merchandise. emaSwati should focus on way in which emaSwati see things. Like any producing everyday goods and services within such programme, we have to be clear about Eswatini’s borders,” he says.

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Financing of NHTC

NHTC Budget: In 2014, government funding to NHTC plummeted caused by economic SZ SZ SZ SZ stagnation SZ SZ 14 emanating from the SZ SZ failure of the 12 agriculture sector. 10 ) E ( E 3,138,084 E7,011,892.00 8 s n

o 6

The amount allocated to the The amount allocated to the i l l i 4

NHTC on average each year by NHTC on average each year by M the Government of Swaziland the Republic of China on Taiwan 2 0

28.9% 64.6% 6.5% Years of funding is from of funding is from Proportion of Government Taiwan Students the Government of the Republic of funding from student Swaziland. China on Taiwan contribution since 2000

Where are the graduates? 48.7% of the graduates are absorbed into formal employment in the Dr Dlamini insists on the importance for pacity of job creation by TVET graduates. It various sectors of the economy the country to focus more on training job is important to realise that it is social devel- creators as opposed to job seekers. This, he opment, which includes, but is not limited says, is crucial in ensuring that the supply to, investment in human capital, that caus- of skilled labour does not surpass demand, es economic growth and not the other way 24.7% and that participation in productive econom- round,” he says. of the graduates create ic activities is not largely a function of em- their businesses ployment. This, Dr Dlamini asserts, will “Technical, vocational education and train- help the country achieve the ing (TVET) present an opportunity in this following: regard. Empirical evidence suggests that TVET contributes to job creation. However, zz Build the tacit productive ca- pacities needed to attract foreign 39.8% there is need to firm up the culture and ca- acquired employment For every relevant to their skills E 1 Summary of Results: invested by Government of Eswatini on NHTC, 60.2% acquired employment irrelevant to their skills E 4.66 accrue to the economy 0.4% continued with their studies

Recommendations

• The Centre should develop an internal strategy to rekindle interest in the ceramics, word curving, metalwork and leather courses. • Formulate a handicraft sector policy to enhance and give direction to development of economic activities and the skills required to serve the handicraft sector. • The NHTC should consider strengthening computers, electrical, and sewing skills since they are in higher demand. • Establish linkages with industry for graduate apprenticeship, and self-employment opportunities. • Invite private sector, and institutions of higher learning to present to trainees on available opportunities for business, and upgrading of skills, and as well as to instill entrepreneurship, and business acumen among trainees. • The Government of Swaziland should consider increasing funding to NHTC as a means of closing the financial gap created through the elapsing of the 40-year financial support by the Republic of China on Taiwan. Minimally, the GoS should match Taiwan’s funding of US$ 500,000 each year. 6 OCTOBER2018 OCTOBER2018 SEPTEMBERCORPORATE2018REPORT

investors. This is important because tac- it productive capacities cannot be learned in school or college or in a TVET college. These are the type of skills that are acquired through learning-by-doing and so by focus- ing on producing goods and services within Financingour borders, of NH TtheC benefits that will accrue to the economy go beyond just the actual out- NHTCputs Budget: but also imparting important skills that can only be developed by doing. In 2014, z government funding z Create and trap jobs and money locally and to NHTC plummeted open avenues for the country to conduct caused by economic SZ SZ SZ SZ stagnation SZ targeted research and development and SZ 14 emanating from the SZ SZ failure of the strengthen ‘Made in Eswatini’; 12 agriculture sector. zz Establish companies that require specialised 10 ) E ( E skills3,1 and38,0 end the8 4continued ‘brain drain’.E7,011,892.00 8 s n

z o 6

zTheExpand amount the al lindustrialocated to thebase and provideThe new amount allocated to the i l l i 4

NHopportunitiesTC on average for each country year byto develop andNH deTC- on average each year by M theploy Gov ernmenta futuristic of Swaziland yet inward looking industhe Republic- of China on Taiwan 2 trial policy. 0 zz Expand the economic base as well as the 28.9%tax-base and sweat out the64.6% value of Eswati- 6.5% Years ofni’s funding world-class is from infrastructure. of funding is from Proportion of Government Taiwan Students zz theEstablish Government a solid of base ofthe pan-Eswatini Republic of com- funding from student Swaziland.panies and industrialistsChina that will on Tgoaiwan out and contribution since 2000 conquer regional, continental, and world markets 

Where are the graduates? 48.7% of the graduates are absorbed into formal employment in the various sectors of the economy

24.7% of the graduates create their businesses

39.8% acquired employment For every relevant to their skills E 1 Summary of Results: invested by Government of Eswatini on NHTC, 60.2% acquired employment irrelevant to their skills E 4.66 accrue to the economy 0.4% continued with their studies

Recommendations

• The Centre should develop an internal strategy to rekindle interest in the ceramics, word curving, metalwork and leather courses. • Formulate a handicraft sector policy to enhance and give direction to development of economic activities and the skills required to serve the handicraft sector. • The NHTC should consider strengthening computers, electrical, and sewing skills since they are in higher demand. • Establish linkages with industry for graduate apprenticeship, and self-employment opportunities. • Invite private sector, and institutions of higher learning to present to trainees on available opportunities for business, and upgrading of skills, and as well as to instill entrepreneurship, and business acumen among trainees. • The Government of Swaziland should consider increasing funding to NHTC as a means of closing the financial gap created through the elapsing of the 40-year financial support by the Republic of China on Taiwan. Minimally, the GoS should match Taiwan’s funding of US$ 500,000 each year. OCTOBER2018 OCTOBER2018 7 CORPORATEREPORT

Creating Global Reach

he University of Arkansas is a low student-to-faculty ratio that promotes proud to team up with ESEPARC The leadership personal attention and close mentoring. to provide our students a unique provided by ESEPARC opportunity to learn and conduct About the Dale Bumpers College impactful research pertinent to the produces students of Agricultural, Food and Life Kingdom of eSwatini. A unique feature is the Tinterdisciplinary nature of the program, offer- Sciences: who are forever ing University of Arkansas students a study abroad experience unlike any other. Specifi- changed personally Bumpers College provides life-changing op- cally, this is a student-centered program that and professionally portunities to position and prepare graduates provides students a global classroom in which who will be leaders in the businesses associ- ated with foods, family, the environment, ag- they can experience the challenges and re- Masters students from the University of Ar- wards of working side by side with members riculture, sustainability and human quality of kansas have conducted research pertaining to life; and who will be first-choice candidates at ESEPARC. the Lower Usuthu Irrigation Project (LUSIP) It is more than study abroad: rather it engag- of employers looking for leaders, innovators, and sugarcane production in the face of cli- policy makers and entrepreneurs. The college es students with the business and immerses mate change and the role of R&D on growth them in the culture as participants rather than is named for Dale Bumpers, former Arkansas and development. University of Arkansas stu- governor and longtime U.S. senator who made observers. University of Arkansas students dents are excited to have the opportunity to have the opportunity to apply their classroom the state prominent in national and internation- conduct meaningful research while learning al agriculture. developed knowledge in a challenging envi- from the experts on the ground in Eswatini. ronment in which creativity, adaptability, and leadership are a must. About the Sam M. Walton College The leadership provided by ESEPARC pro- About the University of Arkansas: of Business: duces students who are forever changed per- The University of Arkansas provides an in- sonally and professionally, having been given The Sam M. Walton College of Business is ternationally competitive education for un- a nationally and internationally recognized both a level of confidence, self-awareness, and dergraduate and graduate students in more a greater knowledge of the broader world. Stu- leader in business education and research. than 200 academic programs. The university Since its founding at the University of Arkan- dents return home empowered and passionate contributes new knowledge, economic devel- to have an impact on the world. Students from sas in 1926, the Walton College has grown to opment, basic and applied research, and cre- become the state’s premier college of business University of Arkansas students who work in ative activity while also providing service to Eswatini experience firsthand the interdepen- – as well as a nationally competitive business academic and professional disciplines. The school. The Walton College has been ranked a dencies between the world’s food, population, Carnegie Foundation classifies the University and equitability/poverty problems. ESEPARC top 30 public business college by U.S. News of Arkansas among only 2 percent of universi- & World Report for 16 straight years, which provides students the opportunity to assess al- ties in America that have the highest level of ternative solutions to these problems, in par- ranks the school’s supply chain management/ research activity. U.S. News & World Report logistics specialty 15th and the management ticular the role of technological and policy/in- ranks the University of Arkansas among its top stitutional changes, in fostering equitable and information systems 25th among business col- American public research universities. Found- leges. sustainable development in Southern Africa. ed in 1871, the University of Arkansas com- While in Eswatini both undergraduate and prises 10 colleges and schools and maintains

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Dr Thula Sizwe Dlamini A MAN ON A MISSION

SEPARC Executive Director Dr 2000, dead set that upon comple- Thula Sizwe Dlamini is a man on tion of his studies he would return a mission to lead change by stim- to EPTC to be a technician. ulating and increasing research However, destiny had other plans for on Eswatini’s economic strategies Thula Sizwe. He proceeded to enrol with Eand influencing policy issues through- evi the University of Eswatini where he earned dence-based action. his Bachelor’s degree in Agricultural Econom- Delivery of strong platforms for free ex- ics before his voyage of discovery landed him change of ideas and innovative thinking at Rhodes University. With introspection, Thula throughout the government system, devel- Sizwe found that more than engineering, he was opment partners, and the broader Eswatini more fascinated with Economics, later changing community is the endgame for Dr Dlamini, a course in favour of a BSC Agricultural Econom- professional who has removed the word “chal- ics. He passed with flying colours in 2007. Thula lenges” from his vocabulary and replaced it Sizwe’s research speciality was on the drivers/ with the word “opportunities.” influencers of foreign direct investment (FDI) When policy makers, academics, research- into Eswatini. He concluded, at that stage, that ers, business, labour, development institutions, infrastructure availability was a major driver of civic society, and communities share ideas and FDIs into the country. Economist. At interact with research findings to identify op- However, with further interrogation of the the time, he was the portunities, confidence is restored in efforts to subject Thula Sizwe’s disposition changed only high-level economist deliver economic progress, jobs, and sustain- (improved) when he was persuaded through who was extensively pub- able livelihoods. research that strengthening the SMME sector lished. That in itself earned and prioritising the entrepreneurial commu- him a lot of respect from his nity in terms of financial and non-financial contemporaries and opened This is a glimpse of how capacity building assistance topped the list in doors for him to share his a small village go-getter terms of influencing the inflow of FDIs into vast knowledge with the a country. Investors, Thula Sizwe asserts, are world whilst acquiring more became a trailblazer in persuaded by strong activity in an economy or expertise of his own. His re- the complex world of re- key sector of that economy. search on agricultural science and In 2008 he enrolled at the University of Fort technology policy is highly respected and a point search, information anal- Hare where he obtained his honours degree in of reference in his field. ysis, and interaction with Agricultural Economics, conducting research Dr Dlamini received the Cochrane Fellow- on foreign direct investment in the agriculture ship at Michigan State University, the South vast amounts of data for sector. He passed cum laude and his disserta- African Agricultural Economics Profession- tion was titled: FDI in the Agriculture Sector al Fellowship from Cornell University and lasting solutions. of South Africa: Do GDP and Exports Matter? in 2015 was named Young Researcher of the Year at the ARC. Born in the 1980s, Thula Sizwe grew up among Thula Sizwe earned his Ph.D. in Economics from Rhodes University, serving as assistant In March 2016, he left the ARC and came his mother’s kinfolk in Nkoyoyo, just outside back to Eswatini to lead ESEPARC. Mbabane. He went to St Francis High School. lecturer and tutor coordinator and focusing research on the economic implications of mo- An avid reader – he is currently devouring Growing up he was fascinated by the world “The Value of Everything: Making and Taking of engineering, a passion fuelled when he took notonous sheep farming in Graaff-Reinert, Eastern Cape Province. in the Global Economy” by Mariana Mazzucato a gap year to do an internship with Eswati- – Dr Dlamini also enjoys hiking and 4x4 riding. ni Posts and Telecommunications Corpora- Now at the ripe age of 31, and having earned the coveted “Dr” title to his name, Dr Thula The best advice he has ever received: “In tion (EPTC). He later went on to enrol at the anything you do, give your all to it.”  Swaziland College of Technology (SCOT) in Sizwe Dlamini joined the Agriculture Research Council (ARC) in Pretoria as an Agricultural

OCTOBER2018 OCTOBER2018 9 CORPORATEREPORT

UNDP, ESEPARC team up to advance SDGs, secure futures

he importance of reliable, Eswatini. the integration of knowledge systems, accurate and impartial research For the Kingdom to effectively address economic policy research and analysis and an evidence-based the triple challenges of unemployment; in Eswatini. The UNDP, working with approach to policy making significant economic inequality and skewed ESEPARC and other stakeholders will and implementation is crucial productive capacities – such as land – there continue to support the Government to Ttowards the attainment of the Sustainable is a case to be made for strengthening continuously develop research integrated Development Goals (SDGs). evidence-based interventions for use by approaches to policymaking, planning Research of the highest standard enables government and social partners in economic and programming while strengthening effective decision making at all levels, policy formulation and implementation. institutional capacities. leads to the creation of inclusive societies These interventions are relevant to “The country has good and well articulated and is imperative towards enhancing socio- sustainable development as they take economic strategies and policies, but the economic welfare of the Kingdom of solutions from people on the ground, which onus is on the citizens and institutions to Eswatini. provides the rationale for policy direction ensure implementation. There is a real Research of the highest standard enables and strategic understanding by the country. opportunity for the country, working in effective decision making at all levels, To that end, the United Nations close collaboration with ESEPARC to leads to the creation of inclusive societies Development Programme (UNDP) has ensure implementation of such policies. and is imperative towards enhancing socio- partnered with ESEPARC, being the The UNDP and ESEPARC share aligned economic welfare of the Kingdom of only think tank in the country, to ensure goals aimed at generating evidence and

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knowledge on economic policy effectiveness to enable informed decision making in the Kingdom of Eswatini,” says Sithembiso Gina, Programme Specialist at UNDP. This, she says, is also important as it informs the process of evaluating and monitoring of policies reforms and national development interventions, so that solutions based and forward-looking actions can be undertaken to improve high and broader impact and reach. For the promotion of inclusive growth and sustainable development, the UNDP plays an important role in providing advisory and technical support services to improve the macroeconomic environment, strengthen national research and analysis capacity, and promote sustainable livelihoods. This outcome focuses on advisory services to promote economic diversification. To further the objective of national development, the UNDP and ESEPARC work in close collaboration on a 12-month graduate research programme that gives graduates intensive on-the-job training, the opportunity to network with their counterparts from all over the world and opens the door for the exchange of ideas with peers from around the world. This research programme is a powerful tool to harness human capital resources and promote career orientation, research skills, personal development and leadership competencies.Gina explains that in the internship programme which started in 2016, there has been participation of nine Masters and Bachelors graduates that have been attached to ESEPARC. Meanwhile, the UNDP supports the Kingdom of Eswatini mainly in three priority pillars, namely; • Inclusive economic growth and sustainable development; • Resilience and risk reduction, incorporating sustainable natural resource management; and • Governance, equity and citizen participation. UNDP promotes the use of disaggregated data, to ensure that national programmes, policies and strategic actions address relevant development issues at local level and respond to the statistical requirements of the Agenda 2030 in facilitating the sustainable development goals (SDGs). It is along the premise of advancing, particularly SDG17 which emphasises partnerships for transformative development, which , ‘requires partnerships between governments, the private sector and civil society. These inclusive partnerships built upon principles and values, a shared vision, and shared goals that place people and the planet at the centre, are needed at the global, regional, national and local level.” Worth noting is that the collaboration with ESEPARC is one of the ways in which the UNDP is working towards ensuring its role to maximise impact and help to shift the development trajectory of the Kingdom of Eswatini onto a higher path. The collaboration between UNDP and ESEPARC, is one of the interventions aimed at adopting innovative approaches that apply research and knowledge management tools to enhance the delivery of public services and contribute to unlocking new resources for sustainable development.

OCTOBER2018 OCTOBER2018 11 CORPORATEREPORT

Turn to Cannabis, Umhlabelo, Cassava to boost Eswatini economy …the tried and tested umhlabelo (ledebouria oviatifolia) a traditional mixture of herbs usually prescribed to strengthen bones and heal fractures is also listed as an ideal candidate to catapult Eswatini into the medicinal research hub of the world.

he ongoing debate about the need to ESEPARC has added another dimension to hemp. Cannabis and hemp hold many economic strengthen research and lift the cap the discourse with calls to add industrial hemp opportunities for emaSwati both on the farm and on cannabis shines the spotlight on to the mix. The organisation describes indus- at the industrial level,” Dr Dlamini says. the big elephant in the living room trial hemp as a magical crop made in heaven. “If sugarcane does the wonders it does for regarding efforts to reignite the ail- “There is no other way to explain it. It beats our economy without Eswatini conducting Ting economy and ensure economic freedom all sources of natural fibre known to humanity. It research and development, just imagine how for the people of Eswatini. can grow anywhere; uses much less water than much more income and wealth Eswatini could timber, and make pretty much everything you make through conducting research on canna- see in a house or office from carpets to sofas, -in bis and industrial hemp.” The call is to waste cluding providing fibre for making a variety of According to The Guardian, hemp cuts cho- industrial products such as car body parts, dash- lesterol, reduces people’s exposure to toxins, no more time in boards, industrial clothes, shoes, etc. It’s easy can ease joint inflammation, proves more positioning Eswatini and straightforward to grow,” says Executive durable than concrete, and can provide the Director Dr Thula Sizwe Dlamini. economy with much-needed jobs for farmers as a Global Hub in He says cannabis and hemp could be used and manufacturers. “This wonder of the world as a strategic lever to turn inclusive economic exists – it’s hemp. But it is illegal to grow in Medicinal Research transformation from political rhetoric to tangi- [many countries],” The Guardian laments. using cannabis, which ble results in improving the lives of the major- Hemp and marijuana both are cannabis plants ity of the people. – in fact, both are cannabis sativa. Hemp, how- grows freely like ‘weed’ “Introduce new fibre, medicinal, and cash ever, contains virtually no THC (the psycho- crops. We see a movement around the world that active ingredient in pot), so smoking it will in the country. is leading to the commercialisation of a variety not get one ‘stoned.’ Yet industrial hemp has of crops, not the least cannabis and industrial endured 80 years of purgatory and prohibition

12 OCTOBER2018 OCTOBER2018 CORPORATEREPORT

S Q A B A

Kingdom of Eswatini Ministry Of Information Communication & Technology

Eswatini Research and Development Statistics: Findings from the 2015/16 Eswatini National Research and Experimental Development (R&D) Survey

If sugarcane does Background the wonders it does • The Kingdom of Eswatini’s revised National Development Strategy (NDS) (2016) commits the country to drive social and economic development by intensifying efforts and investment Key for our economy into research, science, technology and innovation (STI). • The ultimate goal is to use R&D to inspire large gains in Eswatini spends Findings E138 560 250.81 on productivity, especially in the agricultural and manufacturing R&D activities. This is sector (GoS, 2016). equivalent to 0.26% of without Eswatini • Therefore the need to provide information on the science Gross Domestic technology and innovation indicators as a starting point for Product (GDP) in 2016 E1 = USD13.6 monitoring progress in scientific and technological conducting research development and for formulating responsive STI policies. and development, Survey Results Research and Experimental Development (R&D) Expenditure by sector

just imagine how 60 55.87 Who funds R&D? 50

s 43.14 • Development partners contribute

n 38.52 40 33.5% towards funding of R&D

much more income i l o activities

M 30 • The government of Eswatini E 20 provides 41.7% of the funds for R&D while local businesses contribute and wealth Eswatini 10 1.6%. Higher Education on the other 1.02 0 hand is the source of 20.7% of R&D Governmnet/ Private/ non- Business Higher Education expenditure, while private and public profit Entreprise non-profit organisations contribute could make through 2.5%. conducting research on cannabis and and equipment) other structures) industrial hemp R&D Expenditure distributed by activity Dr Thula Sizwe Dlamini. 64% 20% 8% 7% 1%

at the hands of [many governments]. $ $ However, it should be understood that legalisa-

tion of these crops is just the first step. Labour costs Current Capital (land, Capital (vehicles, Capital (software) Expenditure buildings and plant, machinery “We need infrastructure so these crops can be other structures) and equipment) processed and manufactured on a large scale. But, as conventional wisdom around the world con- Research Funding areas

firms, legalisation will attract investors and finan- Most of the R&D expenditure in the country goes towards applied research. ciers and viable markets. This industry should be grown from the ground up,” Dr Dlamini says. 100.0 89.3 In another matter, ESEPARC Senior Research Fel- 90.0 low, Dr Thabo Sacolo points to cassava and umhla- 80.0 70.0 63.72 58.8 belo as other crops the country could consider grow- 60.0 55 45.2

% ) 50.0 ( 40 43.1 ing at a large scale: for example, cassava to reduce 40.0

the amount of imported wheat in the production of 30.0 25.0 21.99 20.0 16.3 11.7 14.29 bread and umhlabelo for medicinal research. 10.0 4.5 6.2 5 Dr Sacolo says cassava has vast potential to 0.0 Government Private or Business Higher Total transform the economy and improve food security or public non-profit enterprise Education in Eswatini. He cites Nigeria as one such country Basic Applied Experimental Development reaping the rewards of investment in exploring wide varieties of cassava, adding that a green rev- Funding for the private Public R&D focuses The higher education sector Industry on the other olution in the agricultural sector can be achieved. or no-profit sector goes largely on; focuses on; hand invests in; towards Dr Sacolo says research shows the benefits of 41.1% - Economics and 26.4% - Agricultural sciences, 50.0% - Agriculture 67.2% - Health sciences business 21.4% - Natural Sciences 47.5% - Electrical large-scale production in the manufacturing in- 14.9% - Economics and 19.1% - Natural sciences collectively engineering dustry to embrace cassava production and use it business collectively 18.2% - Educational Sciences 2.5% - Other fields of 7.5% - Clinical Medicine 7.6% - Health Sciences 14.1% - Health Sciences Science as a by-product. 7.5% - Other Medical 8.3% - Earth and 19.9% - Other fields of Science sciences Environmental “Experts confirm that if more cassava flour is 2.9% - Other fields of Sciences sciences 23.9% - Other fields of used in the production of bread this would impact Science on the income and livelihood of small-scale farm- ers. Lots of money is used to import wheat flour

OCTOBER2018 OCTOBER2018 13 CORPORATEREPORT

into Eswatini for bread production. And bread is one of those everyday goods with a guaranteed market for income generation if emaSwati could just jump on the opportunity. There are plenty of opportunities in cassava fortified with vitamins and proteins that can be pro- cessed as flour and used to bake bread and other pastries,” he says. Meanwhile, Dr Dlamini insists that all these crops could literally change the economic landscape for the coun- try, forever. “However, for this to happen we need government to intervene by providing an enabling environment and guide- lines for commercialising these crops in Eswatini. In the case of cassava, the private sector could lead the way and government could help by providing incentives to economic agents who will operationalise the production of cassa- va for milling and import substitution purposes,” he says. Dr Dlamini adds that incentives would be to encourage the private sec- tor to introduce the necessary technol- ogy for harvesting and milling cassava to make this happen. “The same goes for Industrial Hemp, cannabis, and umhlabelo where the fo- cus should be to propel ‘Made in Es-

The roots of Protea Caffra (siCabala) are used to make a decoction called “umhlabelo” which is applied to speed the healing of broken bones.

14 OCTOBER2018 OCTOBER2018 CORPORATEREPORT

watini’ forward. In describing the value of the Royal Science and Technology Park, His Majesty King Mswati III likened it to a dam that harvests water and discharges it to down- stream users for agricultural production, etc. His Majesty explained that the onus was now on emaSwati to produce downstream. I see cannabis research as part of the crops whose research could literally put Eswatini on the world map, and remind the world that we are indeed capable of doing great things as we did in the 1980s.” 

ESWATINI EXPORTS

OCTOBER2018 OCTOBER2018 15 CORPORATEREPORT Nation urged to buy ‘Made in Eswatini’ products, services

It is time we all get uying locally manufactured goods real goods and services that can proudly be said and products is at the heart of cre- to have been “Made in Eswatini”. into the bandwagon ating sustainable jobs, spurring “It is time we all get into the bandwagon of of supporting ‘Made economic growth and boosting the supporting ‘Made in Eswatini’ and stop the export market. middlemen mentality that has seen us export in Eswatini’ and In its 2nd year, this flagship project driven by ES- our jobs and hard-earned incomes to other na- BEPARC and First National Bank (FNB) continues tions in exchange for retail goods that do not stop the middlemen to make major inroads in terms of localisation and add any wealth or value for money to liveli- mentality that has promoting the country’s manufacturing sector. hoods of emaSwati,” he says. seen us export “The proudly ‘Made in Eswatini’ initiative In another matter, ESEPARC Acting Research also goes a long way in promoting the spirit of Fellow, Tengetile Hlophe explains that the our jobs and hard- excellence and showcasing locally manufac- proudly ‘Made Eswatini’ initiative goes beyond tured good quality products at good prices. It is just emaSwati being encouraged to buy and earned incomes about deconstructing the structure of the econ- support locally manufactured goods. to other nations in omy and prioritising those social and economic “Beyond that, the initiative seeks to encourage activities that can induce income generation and large enterprises and companies with a strong exchange for retail wealth creation by and for emaSwati in Eswati- economic muscle and resources to support local goods that do not ni,” says ESEPARC Research Economist, Man- entrepreneurs and local manufacturers engage galiso Mohammed. in value creation in the economy. This speaks add any wealth or “Think about it for a moment. The government to empowering small local businesses through value for money is the biggest driver of the economy. What does processes and systems that encourage merit and this mean? That we are a consuming nation. excellence,” Hlophe says. to livelihoods of That in itself is not a bad thing. In fact, for the She says some of the results of such enterpris- emaSwati economy to grow you need consumers hence es development partnerships is strengthening of the need to revive aggregate demand (consumer the national interest. ESEPARC Research buying power). However, the opportunity is in “The proudly ‘Made Eswatini’ initiative also Economist, - Mangaliso who produces the goods and services we con- goes a long way in meeting the country’s goals Mohammed sume in Eswatini,” Mohammed says. related to viable business principles across all “And the answer is both shocking and painful: levels of the economy. This includes the local up to about 80% of the commodities we use on manufacturing sector and export portfolio. The a daily basis come from outside our borders.” initiative also promotes economic inclusivity Mohammed says the country needs entrepre- in participation and ownership of a meaningful neurs and a business culture that can see emaS- stake by emaSwati in the mainstream econo- wati engaging in the laborious production of my. Over and above that, the proudly ‘Made

16 OCTOBER2018 OCTOBER2018 CORPORATEREPORT

Eswatini’ initiative promotes good customer relations including post service care and leads to quick lead and turnaround times. It also cements the creation and maintenance of reliable supply chains, niche products requirements; and quality assurance,” Hlophe says. A highlight of the proudly ‘Made in Eswatini’ initiative is the active involvement of learners in activities that in- culcate an enterprising and entrepreneurial mind-set. The young people are involved in this mind-set altering programme to encourage them to think outside the box for innovative solutions to address the socio-economic challenges faced by emaSwati. A major component of the initiative is through the ESEPARC/ FNB Essay Com- petition which seeks to encourage youth participation in national economic development in Eswatini. Launched in 2017, the essay competition provides a platform for encouraging young people to participate in national eco- nomic dialogue with a focus on harnessing their views to inform national policy. Its purpose is to engage high school learners in thoughtful reflection about economic development in Eswatini and among citizens based on the learners’ youthful insights 

Financing of NHTC

NHTC Budget: In 2014, government funding to NHTC plummeted caused by economic SZ SZ SZ SZ stagnation SZ SZ 14 emanating from the SZ SZ failure of the 12 agriculture sector. 10 ) E ( E 3,138,084 E7,011,892.00 8 s n

o 6

The amount allocated to the The amount allocated to the i l l i 4

NHTC on average each year by NHTC on average each year by M the Government of Swaziland the Republic of China on Taiwan 2 0

28.9% 64.6% 6.5% Years of funding is from of funding is from Proportion of Government Taiwan Students the Government of the Republic of funding from student Swaziland. China on Taiwan contribution since 2000

Where are the graduates? 48.7% of the graduates are absorbed into formal employment in the various sectors of the economy

24.7% of the graduates create their businesses

39.8% OCTOBER2018 OCTOBERacquired 2018employment 17 For every relevant to their skills E 1 Summary of Results: invested by Government of Swaziland on NHTC, 60.2% acquired employment irrelevant to their skills E 4.66 accrue to the economy 0.4% continued with their studies

Recommendations

• The Centre should develop an internal strategy to rekindle interest in the ceramics, word curving, metalwork and leather courses. • Formulate a handicraft sector policy to enhance and give direction to development of economic activities and the skills required to serve the handicraft sector. • The NHTC should consider strengthening computers, electrical, and sewing skills since they are in higher demand. • Establish linkages with industry for graduate apprenticeship, and self-employment opportunities. • Invite private sector, and institutions of higher learning to present to trainees on available opportunities for business, and upgrading of skills, and as well as to instill entrepreneurship, and business acumen among trainees. • The Government of Swaziland should consider increasing funding to NHTC as a means of closing the financial gap created through the elapsing of the 40-year financial support by the Republic of China on Taiwan. Minimally, the GoS should match Taiwan’s funding of US$ 500,000 each year. CORPORATEREPORT NEW ESEPARC HOME

SEPARC has relocated to a and research that will enhance the eco- policy research and policy analysis,” new office building to- ac nomic welfare of the Kingdom of Es- says ESEPARC Executive Director Dr commodate the rapid growth watini. Thula Sizwe Dlamini. in the think tank’s operations “We were fortunate to find such an The relocation adds impetus to ES- and future expansion plans ideal and well-served space for our new EPARC’s vision to become the think Eas part of its forward-looking strategic offices. This is good for our expanding tank of think tanks. The offices will -al direction. list of partners and our team. Our new low ESEPARC more room to innovate The new ESEPARC premises are lo- location and enhanced operational effi- and find new ways to make the organ- cated in Plot 874 Mbabane Township ciencies will help us continue to grow isation’s work more efficient, impactful Ridge Street. This reflects the organisa- and develop to keep pace with the needs and user friendly. The idea is to expand tion’s strategic intent to be the preferred of our partners to build sustainable na- ESEPARC’s footprint as the first choice think-tank for quality policy analysis tional capacities in the area of economic research provider in economic policy 

18 OCTOBER2018 OCTOBER2018 CORPORATEREPORT ESEPARC Staff Team Building

OCTOBER2018 OCTOBER2018 19 CORPORATEREPORT

All Hands on Deck: Tips to Heal 5 Eswatini’s Economy s the dark clouds of uncertainty tunities to leverage education for self-develop- read, write and count will provide a better continue to hang over the econ- ment and self-empowerment. future for their families and countries. With omy, threatening to bring the “Through education, young people will con- improved education, so many other areas are country to its knees, ESEPARC tinue to be empowered to play a meaningful positively affected. In short, education has the urges the nation to close ranks role in society and pursue their dreams, ensure power to make the world a better place. The and come up with solutions to replenish confi- economic growth, and achieve sustainable same is true for Eswatini,” she says. Adence in the future. livelihoods,” Mgabhi says. Meanwhile, ESEPARC Executive Director ESEPARC’s Education Policy Analyst Gu- Another ESEPARC researcher, Thembu- Dr Thula Sizwe Dlamini says government and gulethu Mgabhi says one of the most powerful menzi Dlamini, who points out that providing social partners should rise above their differ- tools to strengthen the country’s development all children with early childhood development ences and work together on a reform agenda journey is education. She calls on emaSwati, opportunities, is part of Eswatini’s vision, that puts Eswatini first, demonstrate a capacity particularly young people, to take education echoes her. to change, and restore hope among citizens. very seriously and to use all available oppor- “Experts say girls and boys who learn to Below are five tips Dr Dlamini shares to help

20 OCTOBER2018 OCTOBER2018 CORPORATEREPORT

Eswatini grow the economy and expand the its research facilities should lead the way in economic pie: positioning Eswatini as the foremost provid- 1. Address skills mismatch and high youth er of cannabis research in the world. 2. unemployment. Invest more on technical 5. Increase financial and technical support to vocational education and training and give Small Micro and Medium Enterprises and young emaSwati skills they can commercial- Eswatini’s entrepreneurial community. SM- ise for their own benefit. Prioritise the kind MEs are a critical component of the econo- of skills needed in line with the behavioural my. They contribute about 34% of govern- attributes of emaSwati. ment revenue through tax and help address 3. Diversify the economy to do away with too unemployment by creating more jobs. The much dependency on sugarcane. Introduce government does acknowledge this and has new fibre, medicinal, and cash crops. We see made some effort to support their growth. Through education, a movement around the world that is lead- There is room for improvement and more ing to the commercialisation of a variety needs to be done. young people will of crops that were considered a no-go area in yesteryears, not the least cannabis and Bonus tip continue to be industrial hemp. Other crops with a lot of Corruption has become endemic in the country economic potential include cassava and in- and it undermines socio-economic growth and empowered to play digenous herbs. sustainable livelihoods. We need a comprehen- 4. Government should provide an enabling en- sive study to determine the extent and impact a meaningful role in vironment through appropriate legislation, of corruption in Eswatini. A study would iden- market avenues, and regulatory mechanisms tify the sectors and private and public processes society for the commercialisation of new cash crops. that are vulnerable to corruption. In addition, For diversification of the economy to- hap ESEPARC Education Policy Analyst the study would estimate the economic cost of Gugulethu Mgabhi pen, we need government to intervene by corruption in Eswatini and provide recommen- providing the guidelines for commercialis- dations on targeted action steps to curb the issue ing these crops (industrial hemp, cannabis,  and cassava). In the case of cassava and in- dustrial hemp, the private sector could lead the way and government could help by pro- viding incentives to economic agents who will operationalise the production of cassava for milling and import substitution purposes. The private sector could also lead the way in the introduction of technology for growing and harvesting hemp. Incentives are need- ed to encourage the private sector to intro- duce the necessary technology to make this happen and, in the process, bring jobs into Eswatini. Cannabis for medicinal research could prove a good and worthwhile invest- ment in the future. The government through

OCTOBER2018 OCTOBER2018 21 CORPORATEREPORT

Inside Eswatini’s E20 billion shadow economy

He estimates that Eswatini’s informal econo- In order to retrieve the ‘cash hidden under the bed, beneath my, what some describe as the underground economy, is worth E20.5 billion. stones, and in the bushes’ the country urgently needs policy According to Dr Dlamini, the shadow econo- reforms to create and strengthen its institutions with a view my is part of economic activity in the country involving goods and services which are paid to lessen the regulatory burden, corruption, and bureaucracy. for in cash, and usually not subjected to taxa- tion or formal structures. The shadow economy, he opines, can act as an employer of last resort where people cre- ate job opportunities for themselves during harsh economic conditions. “The shadow economy has acted as a buf- fer by providing employment creation and income generating opportunities for people that were severely affected by drought and economic crisis over the past 16 years,” Dr Dlamini says. He says ESEPARC did a study on the size and development of the shadow economy in Eswatini and found that, that is where the majority of people are operating. The study, whose findings were published in November 2017, is titled: “Quantifying the size and development of the shadow economy in SEPARC Executive Director Dr Thula the shadow economy with the view to tap into Swaziland.” ESEPARC researchers Mcebo Sizwe Dlamini says time has come for its resources and facilitate transition into the Zikalala and Dr Thabo Sacolo conducted it. the country to harness the benefits of mainstream economy. Dr Dlamini says they found that the scale E of the sector was around 37.4% of GDP and

22 OCTOBER2018 OCTOBER2018 CORPORATEREPORT

accounts for E20.5 billion that never ics, fruit and vegetable vendors, Do-It- makes it to the banks. Incidentally, the Yourself handymen and women, and country’s official budget for 2018 stands even dealers in illicit substances such as at E21 billion. cannabis. The study, according to Dr Dlamini, Dr Thabo Sacolo (ESEPARC Senior Re- sought to quantify the size and the de- search Fellow) supports Dr Dlamini’s velopment of the shadow economy in assertions, explaining that direct tax, Eswatini over a period of 16 years using indirect tax, importance of agriculture, the multiple indicators multiple caus- regulation, and self-employment are the es (MIMIC) model. main causes of the shadow economy in He explains that from the MIMIC model Eswatini. results it can be concluded that the shad- “Contrary to prior expectations, unem- ow economy accounts for a significant ployment has no impact on the magni- proportion of the official economy, how- tude of the shadow economy in Eswati- ever, its contribution has been declining ni. Therefore, it can be concluded that a at a slow rate over time. high level of unemployment in Eswatini “The results show that the shadow does not directly translate into a relative- economy in Eswatini accounted for 39 ly large size of the shadow economy,” Dr The shadow economy percent of the GDP at the beginning of Sacolo says. has acted as a buffer by the period of our analysis and declined gradually to 37.4 percent in 2016. This He notes that this was consistent with providing employment means that if all these economic activ- Hassan and Schneider (2015) who also ities were registered and regulated they found the same result for the Egyptian creation and income would contribute an additional 37.4 economy. percent to the current GDP value of the “This may be explained by the change in generating opportunities country. In economic values it means the mind set by emaSwati as they opt to start country’s GDP would increase by E20.5 their own small businesses as opposed for people that were billion (from E54 billion to E75 billion) to seeking employment or waiting for severely affected by if all the informal businesses were tran- someone to hire them,” Dr Sacolo says. sitioned to the mainstream economy,” Dr Meanwhile, Dr Dlamini continues to drought and economic Dlamini says. explain that the state should find a way Participants in the shadow economy in- to harness opportunities for growth and crisis over the past 16 clude some hawkers, backstreet mechan- facilitate ways for people in the shadow years

Dr Thula Sizwe Dlamini.

OCTOBER2018 OCTOBER2018 23 CORPORATEREPORT

economy to contribute to national efforts for compliance with taxation requirements and ployment on shadow economy the gov- economic development. sharing of information. The other angle to ernment can create an enabling envi- “We can conclude that the shadow economy approach the matter is how to minimise risk ronment, which would ultimately make accounts for a massive proportion of the of- associated with the shadow economy such as self-employment easier and positively ficial economy hence, may lead to negative criminal activity, fraud, pirate taxis, structures reduce unemployment while directly con- externalities such as reducing the tax revenues on Swazi Nation Land, money laundering, and tributing to reducing the size of the shad- and ultimately hindering development pros- cross-border illicit dealings. ow economy. pects of the country.” The stronger the country is hit by the econom- • To reduce the tax burden and incentivise However, the shadow economy can also create ic crisis, the more the shadow economy will businesses to transition from the shadow a stimulating effect by providing income gen- grow. Whether it’s called the black market, economy into the formal economy, poli- eration opportunities because income obtained grey market, or just the shop down the street, cy makers should focus on reducing the from informal activities was ultimately spent it’s about connecting people with goods out- overall taxation, especially the indirect in the formal economy. The shadow econo- side of official channels. Some stuff happens in taxation. my contributes to the dynamics of the formal the underground economy because it’s illegal, • To reduce the incidence of agricultur- economy by creating markets that would not but a lot of the money that moves around this al producers to operate in the shadow be possible such as small-scale production and way is exchanged for pretty mundane goods economy it is imperative that agricultural services,” Dr Dlamini says. and services. marketing boards improve their incentive He also warns against using a blanket ap- ESEPARC recommendations mechanisms such as the pricing system, proach to deal with participants in the shadow transparency, amongst other things, in or- economy, saying there is a broad scope of ac- regarding the shadow der to incentivise producers to sell their tivities and range of behaviours within the sec- economy: products to the marketing boards. This tor. This points to a need to develop a diverse can ultimately encourage agricultural range of responses. • Policy reforms by formalising of the producers to commercialise their agricul- “The advent of the 4th Industrial Revolution shadow economy are necessary to be able tural production because they have viable and developments in the digital and informa- to reduce the size and the development of market through which they can sell their tion space is seen to be fuelling changes and the shadow economy. Most essentially, products. expansion in the shadow economy. That is policy makers need to develop policies • By creating an enabling environment that why the state needs to be pro-active because that focus on the quality of institutions nurtures small businesses to transition failure to do so could cause new societal dif- (regulations) by creating democratic and into the formal economy the tax base of ficulties and undermine tax compliance more transparent institutions with lesser regula- the country can be broadened. This aligns widely. This can be achieved by engaging the tory burden, corruption, and bureaucracy. with the Political-Economic school of players in the shadow economy in order to stay This will be able to restore the confidence thought that the shadow economy can ahead of the game,” Dr Dlamini says. and trust of the economic agents in the only be beneficial to the economy only He insists that the authorities could consider overall system of the country and to be if harnessed and brought into the main- approaching the matter not with the view to able to have effective strategies to reduce stream economy  punish the players in the shadow economy, the shadow economy in Eswatini. but to raise awareness on the importance of • In order to reduce the impact of self-em-

24 OCTOBER2018 OCTOBER2018 CORPORATEREPORT

OCTOBER2018 OCTOBER2018 25 CORPORATEREPORT Data is King

esearch Economist of ESEPARC Mangaliso Mohammed says mas- tering data and proper manage- ment of the information highway are intrinsically linked to Eswa- Rtini’s objectives for industrialisation, job cre- ation with vast socio-economic and education- al opportunities. Data, according to Mangaliso Mohammed, is a strategic resource for any country. People need information to make informed de- cisions about their lives; therefore, promotion of access to information is also an important component of ESEPARC’s daily work. information to data collectors, so that the right “However, the country needs to streamline re- In an interview with The Nation magazine, policies are developed to address actual social search activities at the national budget level, Mohammed concludes that accessible, reli- and economic challenges in Eswatini. so that a percentage of the budget is clearly able, real-time and truthful information is the Hlophe laments the fact that the country con- set for R&D. Details matter. A recent nation- currency of today and the future. tinues to lag behind in terms of efforts to reach al R&D survey shows that while government Through providing evidence and statistics on and/or surpass the international benchmark set is the largest funder of R&D in the country, the indicators for Research and Development for the national budget percentage in support this is not targeted towards the strategic goals (R&D) ESEPARC is informing government of R&D. of the National Development Strategy, as re- policy development. The international benchmark is 1% of GDP as vised, which include the funding and conduct “We also use the results to advocate for the world leaders see R&D as the fuel behind the of agriculture research.” funding of R&D through the publication of attainment of the Sustainable Development research papers and presentations at different Goals (SDGs). “As well, while the government is the highest fora. We translate the evidence into everyday Hlophe explains that research shows that Es- funder of R&D, that money is still very low at language for the public,” Mohammed says. watini spends E138 560 250.81 on R&D ac- 0.26% of GDP compared to the regional and Meanwhile, Tengetile Hlophe, who is an Act- tivities. continental target of 1% of GDP.” ing Research Fellow at ESEPARC, explains “This is equivalent to 0.26% of Gross Domes- that the organisation tries to engage all stake- tic Product (GDP) in 2016,” she says. She adds that funding for higher education is holders in the country on the opportunities for Further details on this matter are contained in equally low, which compromises the ability of the production of knowledge for development, the Swaziland Research and Development Sta- the higher education sector from engaging in  especially in science, technology, and innova- tistics: Findings from the 2015/16 Swaziland the conduct of R&D tion (STI) in Eswatini as it is relatively new. National Research and Experimental Develop- “This is where research and data mining are ment (R&D) Survey. most important. Data is a strategic resource for “This is one of the main drivers of investment The country needs any country. It provides information for poli- in the new knowledge, technology and think- cy makers and the public to track government ing that drives innovation at country level. So, to streamline investments, progress, and be able to assess if governments want to know how well they the impact of the different policy strategies,” are doing on innovation, they really need to research activities Hlophe says. know how well they are doing on R&D,” says “It also helps in making informed decisions Silvia Montoya, Director of the UNESCO In- at the national on future projects and identifying the needs stitute for Statistics. and niche areas for further investments. As Though, like many developing countries, Es- budget level, so the country moves towards being a knowl- watini is lagging behind in terms of investment edge-based economy, data is becoming more in R&D, though the landscape is changing. that a percentage and more important for decision making at “The Ministry of ICT through the Department both the household and national level.” of Research Science Technology and Inno- of the budget is The Centre ensures that the public has access vation is working tirelessly to create interna- to its information through its different media tional partnerships that will facilitate resource clearly set for R&D platforms and online resource centre. How- sharing and collaborative work in research and ever, both public and private institutions and development. The country has also invested Acting Research Fellow at the general public need to be aware of the im- in the establishment of the Royal Science and ESEPARC Tengetile Hlophe portance of information and play their role in Technology Park,” Hlophe says. ensuring that they give adequate and precise

26 OCTOBER2018 OCTOBER2018 CORPORATEREPORT

Here are some of the conference’s takeaways 10 Things You 1. To address Eswatini’s issue of lack of implementation of its well-articulated economic strat- egies the country should upskill human capital, particularly civil Need to Know from servants and break them down into short-term, deadline driven workable plans; 2. Define the country’s competi- tive edge and identify ‘winner’ Eswatini Economic economic sectors. Diversify economic activity to do away with over-reliance on the sugar industry; 3. Upscale investment in R&D, Conference STEM education, artisanry and big data; swatini’s inaugural economic con- debates and high-level networking, the confer- 4. Support SMEs and the entre- ference hosted by ESEPARC on ence addressed a wide range of issues crucial to preneurial community. Push for 25-27 October, 2017. It was hosted Vision 2022. maximum delivery, coverage of in collaboration with the Central proudly ‘Made Eswatini’ initia- Bank of Eswatini (CBE); the Uni- In all the discussions one message came out tive; versity of Eswatini (UNESWA) with funding loud and clear; social partners should do every- 5. Strengthen initiatives for energy Esupport from the United Nations Development thing to reignite investor and consumer confi- and water security; Programme and was a turning point in the dence and reinforce the strength of institutions 6. Adhere to fiscal rules, fight cor- country’s efforts to spur economic recovery and commitment to good governance models. ruption. Allow credit rating insti- and growth. The theme was “Turning the Key: Another crucial point is to send a clear message tutions to rate the country; Path to Economic Recovery and Sustainable that Eswatini is open for business, and through 7. Facilitate seamless participation Growth in Swaziland.” It brought together interventions by the investment institutions, is of the private sector in the do- leaders and key stakeholders to discuss and committed to creating an enabling environment mestic and international markets; come up with lasting solutions for economic for investment and trade. To this end efforts 8. Upscale resource injection and growth, poverty alleviation and sustainable job should be strengthened to drive efficiencies in generation for rural develop- creation. It succeeded in deepening understand- a one-stop facility to assist potential investors ment; ing of vital topics around the economy, advance with the procedures required to meet regulatory 9. Deal effectively with climate innovative solutions and provide new opportu- requirements to grow the economy and create change; and nities for businesses and entrepreneurs. In pan- jobs. 10. Promote industrialisation and a el discussions, break-away sessions, interactive knowledge-based economy

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Empower Young Scientists SEPARC says the country needs to dren with uncapped data bundles, where possi- by ‘big data’ as machines, through artificial deliberately promote and inculcate ble, so that they would run free in experiment- intelligence, take over the way we do business a culture of science, technology, and ing with the internet, new applications, and the and the way we live. It is about making science innovation (STI) at a very young age latest innovations in the digital world. part of our daily life and discourse, be it at and in all schools in Eswatini. ESEPARC calls for increased platforms to home, at school, at work, or just when we are The organisation calls on Eswatini to increase rekindle hope in a world of unending possi- hanging out with friends. Computers are run- Einvestment in the development of young peo- bilities, saying the world looks to the science ning the world and will continue to do so for ple in STI and to strengthen the country’s con- community to lead the way in harnessing the many years to come,” says Tengetile Hlophe. tribution in Southern African Science Agenda. immense potential of young people. “If learners want to be relevant in the econo- It encourages parents to support their chil- “The economy of the future will be driven my of the future, they should make the computer

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their friend and use technology to get smarter coordination of research. and be ahead of the changes that are taking • Eswatini should institutionalise R&D place in the global economy,” Hlophe says. surveys to sustain the continuous col- “Technology is not all about social media lection of STI data, which will help in or selling on Facebook or having a huge fol- strengthening statistics and lead to the lowing on twitter. Consider for a moment that development of responsive STI policies with full-scale automation of the economy, a and STI programming initiatives. bulk of the jobs that will go burst are those • Reinforce efforts geared towards demon- that employ a majority of the people. While strating the value of engaging in R&D to data will definitely not be a problem in the fu- industry by showing the kinds of incen- ture, learners need to understand that the new tives that are in place to support R&D business language is programming,” she says. activities in Eswatini particularly given In programming, ESEPARC says, lie the the successful completion and opening tools for data mining, data analytics, and data of the Royal Science and Technology handling. Park. “I would encourage all learners to learn • Increase investment into R&D with a computer programming and to use their com- special focus on investing on equipment puters (smartphone) to learn new things every and machinery to curb underemploy- The economy of day. Parents are advised to provide unlimited ment of existing researchers. access to wi-fi for this to work,” says Dr Thu- • Introduce a national PhD programme the future will la Sizwe Dlamini and form linkages with regional and Dr Dlamini says emaSwati should not see international research institutions to ex- be driven by ‘big themselves only as consumers of technology, pedite the development of researchers in but also as developers and producers of technol- the fields of science, technology, - engi data’ as machines, ogy and innovations, explaining that the youth neering, and mathematics (STEM). is the most valuable resource for the country. • Deliberately target women in STI re- through artificial Fast Facts on R&D Eswatini search initiatives to ensure a gendered • Development partners contribute 33.5% national research agenda. intelligence, take towards funding of R&D activities • Develop incentives (monetary or other- • The government of Eswatini provides 41.7% wise) to entice young researchers to stay over the way we of the funds for R&D while local businesses in research  contribute 1.6%. Higher Education on the do business and other hand is the source of 20.7% of R&D expenditure, while private and non-profit or- the way we live, ganisations contribute 2.5%. • Eswatini should strengthen the National Acting Research Fellow at Research System, by introducing the Es- ESEPARC Tengetile Hlophe watini National Commission for Research, Science, and Technology as planned. The Commission will help in the planning and

OCTOBER2018 OCTOBER2018 29 CORPORATEREPORT Strong Private Sector Crucial to Eswatini’s Growth Plan he future of Eswatini’s economic wakes up to the benefits of having an organ- growth and that of its people is isation that can produce knowledge on what closely tied to a strong and vi- is working and what needs to change, they brant private sector. will begin to realise that ESEPARC is their And, in order to ensure max- strongest ally in all matters economic policy Timum results for economic growth, there and economic planning.” should be close cooperation with the public Meanwhile, Dr Dlamini (Executive Di- sector in pursuit of the common goal of ad- rector) points out that Eswatini has made a vancing the country’s economic prospects, lot of progress in the last 50 years, and a lot deliver quality services and opportunities. more still needs to be done. The central role of the private sector in fa- “We see the private sector as a vital part- cilitating growth and restoring confidence in ner in providing funding support for the economy has not escaped ESEPARC. different activities that have to happen at “The private sector is involved at ESE- ESEPARC for Eswatini to continually im- PARC. For example, from time to time, we prove its understanding of how the economy get jobs from private companies – be it con- works. Currently we offer Research Chairs ducting experiments for them or research (targeted funding support for economic to inform business decisions – and we are research in a specific area) in a variety of grateful for their support,” says Thembu- sectors and we look forward to collaborat- From time to time, menzi Dlamini, an associate researcher at ing with the private sector to operationalise ESEPARC, who focuses her research on en- these Chairs” we get jobs from trepreneurship in the SMME sector. Meanwhile, ESEPARC says strengthen- She notes though that there is room for ing Private Public Partnerships (PPPs) to be private companies improvement in terms of cooperation, par- able to spur economic growth and fast-track ticularly in terms of providing real support delivery on this important mandate is cru- – be it conducting given the value the organisation indirectly cial. Clearly, the state fiscus will not be able brings to the private sector through ESE- to shoulder the growing infrastructure needs experiments for PARC’s impact on public policy in Eswa- of the country. Therefore, the time has come tini. for the nation to actively engage in PPPs. them or research “We are in ongoing engagement to im- There are several factors at play that are prove mutual benefit. We are grateful to our important towards attracting PPP funding to inform business current partners and invite others to follow and they include a well-established and ef- suit and join us in developing the policies fective regulatory legislative environment; decisions – and we that will sustain our economy for the next the institutional, human and technical re- 50 years,” she says. “For example, FNB is source capacity to implement PPPs, and a are grateful for committed to the creation of a brain trust strong cooperation between government and in Eswatini, and their continued support to all social partners  their support,” our initiatives is encouraging,” Dlamini ex- plains. ESEPARC researcher, “We are confident that as the private sector Thembumenzi Dlamini

30 OCTOBER2018 OCTOBER2018 CORPORATEREPORT How Eswatini lost the economic axe head How lack of think- tanks like ESEPARC saw Eswatini miss out on golden opportunity to ‘make hay whilst the sun shines’ in the 1970s and 1980s as South Africa buckled under apartheid and Mozambique faced a crippling civil war. BY MUSA NDLANGAMANDLA ers in their various fields around the world. years the country’s economy is threatened with Economic Justice Lead at Oxfam South Afri- collapse. Over the years its unemployment rate t is easy to understand why each country ca, Thembinkhosi Dlamini says: “During this has reached double digit figures and the GDP needs to have a strong think-tank, par- time we were the gem of the South. Some of is shrinking to all-time lows. The health sys- ticularly on economic strategies, to give the notable achievements is that we built uni- tem has all but collapsed and the education evidence-based advice on public policy versities, we built the first tarred roads and a system leaves a lot to be desired. decision making; as they assist States railway line, we had a vibrant national airline The country did not have the capacity and Iidentify and seize opportunities for growth. and numerous firms of international repute. required skills to analyse policy and inform For the Kingdom of Eswatini (formerly We brought in the sugar estates and mills, es- public policy with evidence and concrete re- known as Swaziland) such a lesson came a tad tablished the third largest man-made forest in search going forward. When the tables turned late, particularly in the three decades after in- the world, our public transport system and lo- Eswatini saw mass exodus of companies and dependence in 1968. The lack of a think-tank gistics terrain was efficient.” the skilled human capital. The government, at like ESEPARC cost the country a great deal However, as luck would have it, the coun- the time, could have done something to stop in terms of maximising the geopolitical and try seemed not to have the wherewithal the mass disinvestment from the country. economic climate of the time, thus losing vast to lock-down these opportunities whilst it But, according to ESEPARC Executive Di- opportunities to secure and keep foreign direct had the chance. As a result of an absence of rector Dr Thula Sizwe Dlamini, all is not lost investment. forward-looking investment policies, pro- and Eswatini’s prospects to return to its days of In the 1970s and 1980s leading up to the grammes and strategies, most of these com- glory are real and tangible. He says ESEPARC end of apartheid and the ushering in of a new panies divested when South Africa opened up is well poised to facilitate progress following democratic dispensation in South Africa, the and Mozambique returned to peace. His Majesty King Mswati III’s call for attain- Kingdom found itself in a vantage position to We failed, as a country, to sharpen our axe ing broader prosperity in Eswatini and finding attract and keep on a long-term basis, inter- head or retrieve the proverbial axe head when lasting ways to stimulate economic growth. national investors who wanted to tap into the it fell into the river Jordan. We failed to come “As a think tank, we are as good as the South African market, yet not be saddled with up with homegrown strategies and make a knowledge we produce. Continued sustenance the stigma of racial segregation. business case for the country’s economic strat- of ESEPARC rests entirely on top talent or To the east of the country is Mozambique, egies to be marketed widely to the internation- good researchers, adequate use of our outputs which at a similar period was marred by a civil al business sector. by the public, and repeat business from our war which wreaked havoc on the country and Dlamini (Thembinkhosi) concedes that on core stakeholders,” Dr Dlamini says. deterred investors for 16 years until 1992. paper, the Kingdom of Eswatini, had (and By establishing ESEPARC, government en- Eswatini was seen as an oasis of peace and continues to have) what appears to be the best gaged in a bold move to push research and stability, thereby attracting powerful investors. economic strategies. amass critical new knowledge and tools on Some of these investors included Salora, Finn- “However, as espoused during ESEPARC’s how to improve the economy continually. ish electronics manufacturing company; YKK Economic Conference, these economic strate- “Through the activities of ESEPARC the (still present), Beral, Castrol and Bromor gies have so far not had a significant impact country is able to make informed decisions. Foods, to name but a few. The country at the to yield meaningful economic outcomes. This is crucial to move us away from being time had booming business and the economy Combined with a number of factors, including a consuming, importing economy to become was on full swing. changes in climate patterns, the end result has one that is led by new knowledge. We will be The ripple effect of such economic vibran- been the undermining of the country’s efforts able to work together to develop new products cy was that the country had the best education to lift the people out of poverty. and services which in turn would stimulate system and tertiary institutions in the Southern The economy has since the later 1980s been growth and ensure sustainable livelihoods,” African region. This saw Africa’s elite sending on free fall. The situation has become so bad he says  their children to our schools and university, that the economic maladies are eating away with their progeny going on to become A-list- at the fibre of our being as a nation. Over the

OCTOBER2018 OCTOBER2018 31 OUR NEW OFFICES ESEPARC

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Plot 874 Mbabane Township General enquiries: [email protected] Ridge Street Research outputs: [email protected] P. O. Box 8804, Mbabane Conference: [email protected] Eswatini H200 Seminars/workshops: [email protected] Tel: (+268) 2404 9077/2823/3033 Website: www.separc.co.sz | Mobile App: SEPARC Insights

CORPORATE REPORT 2018