Doing Business in Eswatini (Previously Swaziland)
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doing business in Eswatini (previously Swaziland) country profile international treaties and memberships government Executive: The king is the chief of state and the prime minister is the international and African Development Bank Group structure head of government. The monarchy is hereditary. The prime minister regional African Continental Free Trade Area Agreement is appointed by the monarch from among members of the house of organisations and African Union assembly. Cabinet is recommended by the prime minister and customs unions Common Monetary Area (“CMA”) confirmed by the monarch. Common Market for Eastern and Southern Africa (“COMESA”) Legislative: Eswatini has a bicameral parliament. Commonwealth of Nations Judicial: The highest courts are the Supreme Court and the High Group of 77 Court. The subordinate courts are the magistrates' courts and the International Monetary Fund National Swazi Courts for administering customary / traditional laws Organisation of African, Caribbean and Pacific States (jurisdiction restricted to customary law for Swati citizens). Southern African Customs Union Next Parliamentary elections: September 2023. Southern African Development Community economic data Nominal GDP (USD billions): 3.85 United Nations GDP per capita (USD): 3 414.81 World Bank Group Inflation rate (% change): 4.12 World Customs Organization Government revenue (% of GDP): 27.24 Eswatini receives preferential treatment under the following agreements: Government gross debt (% of GDP): 47.93 http://ptadb.wto.org/Country.aspx?code=748 bilateral Eswatini has investment treaties in force with Germany and the United *Source: IMF (December 2020) investment treaties Kingdom. Treaties have been signed with Egypt, Kuwait, Mauritius and Taiwan Eswatini's national development strategy, which expires in 2022, Province of China but these have not yet entered into force. prioritises increases in infrastructure, agriculture production and economic diversification. investment-related African Growth and Opportunity Act Eswatini’s main industries include soft drink concentrates, coal, agreements / Cotonou Agreement forestry, sugar processing, textiles and apparel. institutions Multilateral Investment Guarantee Agency Eswatini’s main export partner is South Africa. The main export World Trade Organization commodities include soft drink concentrates, sugar, timber, cotton yarn, refrigerators, citrus and canned fruit. dispute resolution Convention on the Settlement of Investment Disputes (ICSID Convention) Eswatini’s main import partners are South Africa and China. The main Permanent Court of Arbitration import commodities include motor vehicles, machinery, transport equipment, foodstuffs, petroleum products and chemicals. intellectual A comprehensive list of IP-related treaties signed by Eswatini is available property (“IP”) at: http://www.wipo.int/wipolex/en/profile.jsp?code=sz risk ratings World Economic Forum global competitiveness index (2019): 121/141 treaties Please see further detail under the trade marks section below. World Bank ease of doing business (2020): 121/190 Corruption perception index (2019): 113/180 1 doing business in Eswatini (previously Swaziland) legal regime fine not exceeding SZL250 000, or imprisonment for a term not exceeding five years, or both. Further, a penalty of up to 10% of the total turnover of applicable legal Eswatini’s legal system is based on Roman-Dutch-based common law and the merging parties may be imposed by the Eswatini Competition regime customary law. Commission. dispute resolution While official government intervention or arbitration is available on request, Eswatini is a member of the regional competition body, COMESA. most disputes are settled through the Industrial Court. COMESA regulates merger control. Merger activities in Eswatini should be The government accepts binding international arbitration of investment conducted with COMESA in mind. disputes between foreign investors and the state. prohibited practices The Competition Act prohibits any category of agreements, decisions or Eswatini is a member of the International Centre for Settlement of concerted practices which have, as their object or effect, the prevention, Investment Disputes (ICSID), although there is no specific legislation restriction or distortion of competition to an appreciable extent in the providing for the enforcement of ICSID awards. country or in any substantial part. land acquisition, About 60% of land is Swazi National Land, held by the monarchy in trust There is currently a Competition (Amendment) Bill which is in the process planning and use for the people of Eswatini. Control of the use of this land is generally of being assessed by Eswatini lawmakers. No date for the enactment of delegated to local chiefs. the Bill has been announced and it may be subject to substantial further In terms of to the Constitution, the Land Management Board is responsible changes. for vetting and approving applications by non-citizens to acquire land in Cartel conduct (such as price fixing, market division and collusive Eswatini. tendering) and minimum resale price maintenance are prohibited by the The new Constitution bars the vesting of land ownership by foreign-owned Competition Act. companies or foreigners, unless ownership was attained before the The Competition Act prohibits abuses of dominance. promulgation of the Constitution on 8 February 2006. The Eswatini Competition Commission operates a corporate leniency programme for a firm that voluntarily discloses the existence of any competition agreement or practice which is prohibited by the Competition Act and merger control The Competition Act, 2007 (the “Competition Act”) regulates merger cooperates with the Eswatini Competition Commission in its investigations. control in Eswatini. Any conduct that is in contravention of the Competition Act attracts The Eswatini Competition Commission published a new Competition criminal and penal liability, being a fine of SZL250 000 or imprisonment (Amendment) Bill in August 2020 which is in the process of being not exceeding five years, or both. Further, a penalty of up to 10% of the assessed by Eswatini lawmakers. No date for the enactment of the Bill has total turnover of enterprises or persons that contravene the Act may be been announced and it may be subject to substantial further changes. imposed by the Eswatini Competition Commission. The Competition Act defines a merger as the acquisition of a controlling COMESA regulates prohibited practices in the COMESA Common Market. interest in any trade involved in the production or distribution of any goods Activities in Eswatini should be conducted with this regional competition or services; or any asset which is or may be utilised for or in connection body in mind. with the production or distribution of any commodity. employment There are no merger thresholds in Eswatini. The merger filing fee charged is 0.1% of the combined annual turnover or immigration Expatriates working in Eswatini must hold a valid work permit. assets, whichever is greater. The amount charged for notification of a In terms of Eswatini’s localisation policy, when applying for a work permit, merger shall not exceed SZL600 000 for any single merger notified. an employer must demonstrate that there is no Swati with adequate Mergers where the combined global turnover or assets of the merging qualifications and experience to fill the position, and that the employer has parties is SZL8-miilion or less (small mergers) are exempt from payment instituted a training plan in terms of which the particular position would of filing fees. eventually be localised. The Eswatini Competition Commission will take public interest local employment vs In terms of Eswatini’s employment legislation, an employee may be considerations into account in making a determination on a merger. secondment seconded to Eswatini, as it is not a legal requirement for either local or Eswatini is a pre-implementation regime, therefore approval must be foreign employees to be employed by a local entity in Eswatini to work in sought from the Eswatini Competition Commission prior to implementation Eswatini, provided that their contracts of employment comply with local of the proposed transaction. laws. Any person who implements a merger in contravention of the Competition Employees may be seconded for a specific period of time and the Act commits an offence which attracts penal and criminal sanctions of a secondment cannot be indefinite. 2 doing business in Eswatini (previously Swaziland) In terms of Eswatini’s immigration legislation, employment by a local entity If an enterprise’s turnover exceeds the VAT registration threshold (see may be a prerequisite for applying for a work permit. ‘tax’ below), it should also specifically apply for VAT registration. fixed-term contracts Fixed-term contracts are allowed in terms of the Employment Act and no Eswatini National Every employer must register with the ENPF for purposes of making social and temporary special rules apply to such fixed term contracts. Provident Fund security contributions. employment Although labour broking is currently allowed, it has become very unpopular (“ENPF”) Although no specific registration is required per employee, the employer is services and is being discouraged due to significant pressure from unions seeking obliged to submit the name of all employees and their remuneration on a to protect their members. However,