Namibia Swaziland

COUNTRY PROFILE 2000

Namibia Swaziland

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ISSN 1352-0857

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Comparative economic indicators, 1999

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 1

August 2nd 2000 Contents

Namibia

4 Basic data

5 Political background 5 Historical background 10 Constitution and institutions 10 Political forces 13 International relations and defence

14 Resources and infrastructure 14 Population 16 Education and health 18 Natural resources and the environment 19 Transport and communications 21 Energy provision

22 The economy 22 Economic structure 23 Economic policy 27 Economic performance

30 Economic sectors 30 Agriculture and fishing 32 Mining and semi-processing 35 Manufacturing 36 Construction 36 Financial services 39 Other services

40 The external sector 40 Trade in goods 42 Invisibles and the current account 43 Capital flows and foreign debt 44 Foreign reserves and the exchange rate

46 Appendices 46 Regional organisations 46 Sources of information 50 Reference tables 50 Population 50 Transport statistics 51 Port of Walvis Bay traffic 51 Electricity generation and sales 52 Gross domestic product

52 Gross domestic product by expenditure 53 Gross domestic product by sector 54 Government finances 55 Money supply and credit 55 Interest rates 55 Consumer price inflation 56 Cereal production 56 Livestock marketing 57 Fish catch 58 Minerals production 58 Private construction activities 59 Assets and liabilities of deposit money banks 59 Namibian Stock Exchange 60 Tourist accommodation 60 Foreign trade indices 60 Exports of goods and services 61 Imports of goods and services 62 Balance of payments, IMF series 62 Balance of payments, national series 63 International investment balance 64 External debt 64 Net official development assistance 65 Foreign reserves 65 Exchange rates

Swaziland

66 Basic data

67 Political background 67 Historical background 68 Constitution and institution 70 Political forces 71 International relations and defence

71 Resources and infrastructure 71 Population 72 Education and health 73 Natural resources and the environment 73 Transport and communications 73 Energy provision

74 The economy 74 Economic structure 75 Economic policy 76 Economic performance 77 Economic sectors

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77 Agriculture and forestry 78 Mining 78 Manufacturing 79 Construction 79 Financial services 80 Other services

80 The external sector 80 Trade in goods 81 Invisibles and the current account 83 Foreign reserves and the exchange rate 82 Capital flows and foreign debt 83 Foreign reserves and the exchange rate

84 Appendices 84 Regional organisations 89 Sources of information 92 Reference tables 92 Population census results 92 Employment 93 Transport and communications 93 Electricity statistics 93 Central government finances 94 Monetary survey 94 Gross domestic product 95 Gross domestic product by expenditure, end-Jun 95 Gross domestic product by sector 95 Consumer prices 96 Agriculture 96 Minerals production 96 Agro-industry 97 Construction, Mbabane and Manzini 97 Swaziland stock exchange, end-Jun 98 Tourism statistics 98 Exports 98 Imports 99 Destination of exports 99 Origin of imports 99 Balance of payments, IMF series 100 Balance of payments, national series 100 External debt 101 Net official development assistance 101 Foreign reserves 102 Exchange rates

Namibia

Basic data

Land area 824,269 sq km

Population 1.76m (1999 estimate)a

Main towns Population in ‘000 (1999 estimates)

Windhoekb (capital) 210 Ondangwac 65 Oshakatib 54 Walvis Bayb 45 Swakopmunda 28

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

Climate Semi-arid and subtropical

Weather in Windhoek Hottest months, January and February, 17-19°C (daily minimum and (altitude 1,833 metres) maximum); coldest months, June and July, 6-20°C; driest month, July, 1 mm average rainfall; wettest month, January, 350 mm average rainfall

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

Measures Metric system

Currency Namibian dollar (N$)=100 cents; introduced in September 1993, at par with the South African rand. Average exchange rate in 1999: N$6.11:US$1. Exchange rate on July 24th 2000: N$6.91:US$1

Fiscal year April to March

Time 2 hours ahead of GMT

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

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Political background

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

Historical background

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

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

The road to independence The UN declared Namibia a trust territory in 1945, but it was not until the 1970s that the Security Council took charge of negotiating an independence settlement with South Africa. A modern nationalist movement had emerged at the end of the 1950s, with the establishment of SWAPO under the leadership of Sam Nujoma. South Africa refused to negotiate with the party. SWAPO adopted a Marxist-Leninist programme in the 1960s, but its cultivation of ties with the Soviet bloc was mainly intended to secure Soviet support for a guerrilla campaign by the People’s Liberation Army of Namibia (PLAN).

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

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

The adoption of a party-list system of proportional voting—still in use for National Assembly elections (but not for the upper house, the National Council)—also contributed to the modest scale of SWAPO’s winning margin (it gained 57% of the vote), although it won overwhelming backing in the north. The DTA and the Damara-based United Democratic Front (UDF) were the only two opposition parties to secure significant popular backing in the election. As SWAPO had only a simple majority in the assembly, the new constitution had to be acceptable to the other parties, and Mr Nujoma was appointed as first head of state with unanimous backing. The new government, which took office in March 1990, was a blend of formerly exiled SWAPO leaders, representatives of the party’s internal leadership and white Namibians. This mix has been maintained in subsequent cabinet reshuffles, although younger SWAPO leaders have gained promotion.

SWAPO has consolidated SWAPO’s policy of national reconciliation and improving economic conditions its support in the early 1990s enabled the party to increase its support in subsequent national and local elections. But in the latter part of the decade voter turnout has declined as a result of disillusionment with falling living standards, although the opposition parties have been unable to capitalise on the electorate’s increased scepticism and SWAPO has been easily able to retain its majority support from the electorate.

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SWAPO strengthens its hold In the first elections for regional authorities in 1992, SWAPO gained 67% of the on power in the mid-1990s vote, winning outright control of six of the 13 regions, while the DTA—whose share of the vote was only slightly down on 1989, at 27%—won in Caprivi and two eastern regions. Mishake Muyongo, a Caprivian and former SWAPO vice- president, replaced a white farmer, Dirk Mudge, as DTA president in 1992, but this did little to improve the party’s credibility. SWAPO strengthened its hold on power in the December 1994 general election, when it won decisive majorities in the presidential and lower house polls (of 76% and 73% respectively). But in the local authority elections in February 1998 SWAPO’s share of the vote declined to 60% and, because only one-third of voters turned out, it failed for the first time to gain majority backing from the electorate. In 1998 Mr Muyongo was suspended by the DTA’s central committee for promoting the secession of Caprivi and, having fled to Botswana at the end of that year with a group of close associates, became totally discredited following the abortive secessionist armed attacks on Katima Mulilo in August 1999. Mr Muyongo is unlikely to return from exile in Denmark, where he was granted refugee status, as he would immediately be put on trial for treason.

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

Election results, Dec 1999

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

a Including spoilt ballots.

Sources: Directorate of Elections; The Namibian.

The elections were deemed free and fair by an EU observer mission although it expressed disquiet at the inadequacies of the electoral roll, which meant this was not used to verify voters’ entitlement to vote, particularly in view of a 34% increase since 1994 in the registered electorate to 879,000.

Important recent events

June 1997: Namibia’s bilateral debt to South Africa is formally written off.

February 1998: SWAPO’s share of the vote drops to 60% in the previously postponed local authority elections.

March 1998: The Trans-Kalahari Highway is formally opened.

July-August 1998: After initial denials, Sam Nujoma confirms that Namibian troops have been sent to support the president of the Democratic Republic of Congo, Laurent Kabila, in the war against eastern-based rebels.

October 1998: Mishake Muyongo, who had been ousted from the leadership of the Democratic Turnhalle Alliance (DTA) earlier in the year, is among 92 Namibians arrested by Botswanan police after crossing into the country with weapons. By December, some 2,000 Caprivians, including several hundred San (Bushmen), have fled to Botswana to escape government security sweeps.

November 1998: Both houses of parliament approve by the requisite two- thirds majority an amendment to the constitution enabling Mr Nujoma to stand for a third five-year term as head of state in the next election.

February 1999: Botswana grants political asylum to Mr Muyongo and a group of Caprivi secessionist leaders, including a Mafwe chief, Boniface Mamili, rejecting Namibia’s demand that they be handed over for trial on charges of treason; Mr Muyongo is eventually granted asylum in Denmark.

March 1999: A new party, the Congress of Democrats (CoD), is launched by Ben Ulenga, Namibia’s former high commissioner to the UK.

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

December 1999: Mr Nujoma is re-elected for a third five year-term with a 77% share of the vote. His main challenger, Mr Ulenga, wins only 11%.

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

January-June 2000: SWAPO’s decision to allow Angolan government troops to attack rebel União Nacional para a Independência Total de Angola (UNITA) forces from the Namibian side of the border at the end of 1999 results in increasing instability along the border region east of Rundu. Retaliatory attacks by presumed UNITA groups have caused the deaths of over 50 Namibian and some foreign tourists in the area by mid-2000. In May the government announces a dusk-to-dawn curfew along the Okavango river in a bid to improve security.

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

June 2000: The first-ever register of the personal and financial interests of MPs is to be drawn up by the National Assembly’s committee of privileges under a code of conduct that also applies to immediate relatives.

Land reform may The seizure of white farms in Zimbabwe during the first half of 2000 is unlikely accelerate to be replicated in Namibia, despite strong pressure from subsistence farmers and within SWAPO for an acceleration of the existing programme of land resettlement. A key factor is that while land is very inequitably distributed— some 4,000, mainly white, farmers own 6,400 holdings covering 36.5m ha or 44% of Namibia—most of this land is too arid for small-scale crop farming. The government has ruled out returning land to ancestral owners on the grounds this could provoke inter-tribal tensions and disrupt the predominantly livestock-based commercial farming sector. Instead, it has pursued a strategy based on purchasing land from commercial farmers for resettlement by black Namibians under the “willing-buyer, willing-seller” principle. A government spokesman reaffirmed in mid-2000 that this would remain the basis of its land policy. This is in line with the constitution, which entrenches the right to private property.

However, the process has proved both expensive and slow: as of mid-2000 the government had succeeded in purchasing only 461,000 ha for the resettlement of 27,000 Namibians on commercial land and 7,000 on communal land. Communal land, mainly in northern Namibia, covers some 34m ha of generally better-watered land, but supports some 140,000 families, just under half the total population. However, overcrowding is causing the degradation of available land while illegal fencing has increased inequalities. A commercial land reform act passed in 1999 failed to address the problem of lack of tenure— land is granted by chiefs and with no tenancy rights subsistence farmers have no collateral for loans to buy equipment. The government is seeking to make acquiring suitable land in commercial farming areas cheaper, and in May 1999 the existing commercial land reform act was amended to provide for the establishment of a new land acquisition and development fund. The SWAPO secretary-general, Hifikepunye Pohamba, warned farmers that the government’s patience was running out and that if they continued to prove unwilling to sell more land, there would be no alternative but to expropriate some land in the interest of the majority of landless Namibians. However, Mr Pohamba stressed that this would be in line with the constitution and subject to the payment of “just compensation” (which would undoubtedly turn out to be less than the full open-market price). Article 16 of the constitution in fact permits expropriation of private property in the national interest subject to such payment. Land seizures are expected to be carried out in an orderly manner and are unlikely to provoke the kind of political and economic crisis they have caused in Zimbabwe.

Constitution and institutions

The 1990 constitution is the linchpin of Namibia’s multiparty democratic system, and SWAPO has observed its provisions with one main exception (see below). The president and the 72-seat National Assembly are elected by universal adult suffrage every five years. A part-proportional closed party-list system is used for the parliamentary poll. A presidential candidate must obtain at least 50% of the vote, and the constitution used to specify that a president could only serve two successive five-year terms. However, in a move in 1997 orchestrated by senior loyalists of President Nujoma, the SWAPO National Congress decided that, as Mr Nujoma had not been directly elected in 1990, his real first term had actually started in 1994, and therefore he would be entitled to stand for a third term in 1999. In theory, the third term is a special case for Mr Nujoma, but it is unclear how future heads of state will be pre- vented from extending their terms of office in a similar fashion.

The 26-member National Council (upper house of parliament) consists of two councillors nominated by each of Namibia’s 13 regional authorities, for which elections are held every five years on a constituency basis. The main safeguard against autocracy lies in the entrenched clauses of the constitution guaranteeing fundamental human rights, including freedom of association and expression, an uncensored press, and the proscription of arbitrary arrest, detention without trial and the death penalty. The right of individual property ownership and payment of just compensation for any expropriation by the state are equally enshrined. However, the right of detainees to be produced in court within a specified timeframe, as well as other civil rights, are suspended under a state of emergency, which the president can decree without reference to parliament.

Political forces

The outcome of the 1999 elections has reinforced SWAPO’s position as Namibia’s dominant political force. The failure of the CoD to become the official opposition in parliament, as had been expected—due to the DTA and UDF forming a coalition in April 2000 with the ruling party’s tacit support—is expected to weaken the effective criticism of the government. If the DTA and UDF carry through their stated intention of forming a single party in time for the next national elections (due by end-2005), this might gain it some seats in the mainly Herero- and Damara-inhabited rural areas of eastern, western and north-western Namibia. However, it would have little impact on SWAPO’s northern stronghold. However, among the CoD’s seven MPs are some effective parliamentary performers and it is the only party likely to appeal to disillusioned SWAPO supporters. But as the 1999 election campaign made clear, SWAPO will have little compunction in pulling out all the stops to discredit the CoD, and Mr Ulenga will never be forgiven for leaving the ruling party and trying to split it.

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Main political figures

Libertina Amathila: The most senior of several women with important government posts, the health minister, Ms Amathila, is a dedicated politician with a reputation for integrity; this has survived financial scandals at the housing ministry, which she used to head. Like most cabinet members, she is a long-standing senior member of the former exiled wing of the ruling SWAPO.

Helmut Angula: Despite his demotion from finance minister to agriculture minister in 1996, Mr Angula remains an influential cabinet member. He is thought to harbour leadership ambitions, although these are being kept a well- guarded secret until the president, Sam Nujoma, has completed his term in office.

Hage Geingob: Prime minister since 1990, Mr Geingob’s populist image belies his role as a key behind-the-scenes fixer. His enthusiastic backing for Mr Nujoma’s third term could secure him the president’s official blessing as his successor, which might be enough to enable him to defeat his northern (Kwanyama) leadership rivals.

Theo-Ben Gurirab: The respected foreign affairs minister, Mr Gurirab was SWAPO’s UN representative before independence and, like Mr Geingob, is from the Damara community. His justifications for the dispatch of Namibian troops to support President Laurent Kabila of the Democratic Republic of Congo, despite initial reservations, and his support of his wife’s involvement in raising industry donations for the lavish wedding of a cabinet colleague in July 1999, have tainted his reputation.

Hidipo Hamutenya: A key member of SWAPO’s younger top leadership, Mr Hamutenya has the president’s ear on most issues. As trade and industry minister, he was the main initiator of the export-processing zone, and is a leading candidate to succeed Mr Nujoma eventually, with a strong party base as a Kwanyama.

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

Aaron Mushimba: The influential brother-in-law of Mr Nujoma, Mr Mushimba is the promoter of numerous business ventures, some of them backed by SWAPO-controlled companies.

Sam Nujoma: One of several founder members of SWAPO who went into exile in 1959, Mr Nujoma has been party leader ever since then and Namibia’s president since independence. His jovial manner is combined with a tight grip on the party, and he is set to continue as president until 2005. His third five- year term will inevitably see a further centralisation of executive power within the presidency. Although he is a northerner, Mr Nujoma is not from the predominant Kwanyama community.

Hifikepunye Pohamba: Mr Pohamba is one of Mr Nujoma’s most trusted senior colleagues from SWAPO’s days in exile. Successively home affairs and fisheries minister, he became party secretary-general in 1997, but was kept in the cabinet as minister without portfolio in a 1998 reshuffle.

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

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

A blurring between the Namibia’s privately owned press is an effective critic of the government; the government and the party daily newspaper with the largest circulation, The Namibian, is broadly pro- SWAPO, but widely reports on official corruption and mismanagement. However, despite widespread media coverage of corruption, the government has proved slow to take effective action and Mr Nujoma has been reluctant to sack ministers charged with malpractice. Many ministers and senior officials have private business interests, including shareholdings in mining and fishing companies held directly or through close relatives. A new code of conduct, approved by the National Assembly in 1999 and due to come into effect in mid-2000, will require members of parliament to disclose personal and financial interests for the first time. The register of MPs’ interests will in principle be open to public inspection; however, it has been made clear that the parliamentary committee of privileges will require written applications to inspect the files. The line between SWAPO in government and SWAPO as a political party has become increasingly blurred, and in recent years the party has become more defensive about criticism and unwilling to publish sensitive official documents.

A successor to Mr Nujoma Now that he has won a third term of office, it is anticipated that in due course has yet to emerge Mr Nujoma will sanction a contest to succeed him as party leader. In the meantime he will maintain a tight grip on the party and the government, and presidential powers seem certain to intensify, especially as security concerns along the border with Angola and in Caprivi give Mr Nujoma ample scope to justify this on the basis of national unity. While Mr Nujoma has been ready to promote younger leaders and women to senior posts, he has been reluctant to dispense with old colleagues, including those tainted by corruption or widely regarded as incompetent. Although the party structure has been democratised to some extent, Mr Nujoma—who is still in robust health at aged 71—remains very much in charge; he has never indicated a preferred successor, and a leadership contest will almost inevitably lead to divisions emerging on either

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ideological or ethnic grounds. At present the most likely contenders are the trade and industry minister, Hidipo Hamutenya, the agriculture minister, Helmut Angula, and the prime minister, Hage Geingob. The first two have the advantage of being from the party’s northern heartland. However, Mr Geingob, from the minority but influential Damara community, gained an unexpected 40% backing in a contest with the veteran Hendrik Witbooi for the party vice- presidency in 1997. The finance minister, Nangolo Mbumba, also a northerner, has been increasingly impressive as a more technocratic, but uncharismatic, politician, who might gain strong support as a compromise candidate from all sides of the party.

International relations and defence

Namibia’s initial foreign policy priority was to offset the influence of its apartheid South African neighbour by forging close relations within the rest of the region—particularly through the Southern African Development Community (SADC)—and developing international links, for example, by joining the Commonwealth. However, since 1994 relations between Namibia and South Africa have become extremely close. Namibia and Angola co-operate in the utilisation of the Kunene river for power and irrigation development, although more concrete forms of co-operation—for example in extending Namibia’s new northern rail link across the border—are only likely once the political situation in Angola has stabilised. The close political ties between SWAPO and the ruling parties in Angola and Zimbabwe led Namibia to join them in sending troops in support of the president of the Democratic Republic of Congo (DRC), Laurent Kabila, against an internal rebellion in July 1998. Relations with Botswana have been tense, due to sovereignty disputes over the uninhabited Kasikili/Sedudu island, and other islands, in the Chobe river, and Botswana’s hosting of several thousand Caprivian exiles who fled the region at the end of 1998 owing to alleged harassment by Namibian security forces. Now the dispute over Kasikili/Sedudu has been resolved in Botswana’s favour by the International Court of Justice (ICJ) and tensions in the Caprivi have abated, relations are set to improve, and several meetings with Mr Nujoma and the Botswanan president, Festus Mogae, have proved positive.

Namibia has strong commercial links with Germany, its main bilateral aid donor. The Scandinavian countries and China are the other main donors, although in mid-1999 Norway closed its aid office and announced that it would phase out all government-to-government assistance over the next five years.

Troops in DRC and on the The Namibia Defence Force (NDF), comprising former combatants from PLAN Angolan border and the colonial South-West Africa Territorial Force (SWATF), includes four motorised infantry battalions partly equipped with ex-PLAN Russian tanks of dubious serviceability. At present, the army has a maximum authorised size of 10,000; its active strength of nearly 6,000 has been expanded by the addition of unemployed ex-combatants. Since early 1999 an estimated 2,000 troops have been sent to the DRC with the bulk of the remainder on active service along the border with Angola, particularly along the section from Rundu

eastwards where attacks by União Nacional para a Independência Total de Angola (UNITA) groups have escalated since the start of the joint military offensive by Angolan and Namibian forces. The Special Field Force (SFF), a paramilitary police unit recruited from ex-PLAN combatants, is deployed in this area and also in Caprivi region to guard against any renewed secessionist attacks. A small “air wing” is equipped with unarmed aircraft and helicopters and, under a “maritime wing” development programme, construction of a naval base at Walvis Bay is planned. Most senior NDF posts are held by Kwanyama ex-PLAN commanders and state security appointments have a similar ethnic tilt.

Military forces and defence spending, 1999 (no. of troops unless otherwise indicated) Armya 9,000 Coast guard (fishery protection) 100 Defence spendingb (N$ m) 559 % of total budget 7.2

a One presidential guard battalion, four infantry battalions and one combat support brigade. b 2000/01.

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

Resources and infrastructure

Population

Namibia’s main demographic features are its low average population density of 1.7 per sq km and its young age structure; an estimated 55% of Namibians are under the age of 20. The current population growth rate of 1.6% per year will increase in the next five to ten years unless effective population planning measures are introduced. According to the 1991 census, 73% of the population live in rural areas, with some 60% residing in the seven northern regions. The most densely inhabited region is Oshana, which includes the biggest northern towns, Ondangwa and Oshakati. Khomas, which includes the capital, Windhoek, is the most densely populated region outside the north. Its population has grown by 5% per year in 1991-99, to an estimated 210,000, excluding some 10,000- 20,000 living in temporary accommodation on the outskirts The rapid increase reflects both rural migration by Namibians in search of jobs and an influx of Angolans. Windhoek’s population is projected to triple over the next 20 years. Outside Windhoek, there are less than ten towns with a population in excess of 10,000 with the fastest growth in newly proclaimed northern towns such as Ondangwa and Oshakati. The next census is scheduled for 2001.

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Population statistics, 1991

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

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

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

English, which is the official language and is predominantly used in business, is the first language of only 1-2% of the population, and is spoken fluently by fewer than 10% of Namibians. There are four principal indigenous languages. Oshivambo and its dialects—of which Kwanyama and Ndonga are the main ones—are spoken in the four north-central regions and by a high proportion of black urban residents in the south, as northern Namibians formed the back- bone of the colonial era migrant labour system and now have residential rights in the towns or continue to work on a partly seasonal basis (for example in the fishing industry). Nama, a Khoisan “click” language, is spoken by people in southern Namibia and by the Damara, who together make up about 12% of the population while Herero and Rukavango are each the main language for some 9% of Namibians. The Herero and Damara are almost equally split between town dwellers and rural communities, mainly in the Omaheke/ Otjizondjupa regions and the Erongo/Kunene regions respectively. Lozi, the language of the Barotse of western Zambia, is spoken by most Caprivians. Afrikaans, which is widely understood, is the first language for 10% of Namibia’s population, including mixed-race (coloureds) and Basters (a distinct coloured community inhabiting Rehoboth to the south of Windhoek with its own fiercely prized traditions), as well as two-thirds of the 85,000 or so white

residents, the remainder of whom are of German ancestry (about one-quarter) and of English-speaking South African origin. (Reference table 1 gives population data for 1995-99.)

Education and health

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

A national education system has been successfully established—education now receives the biggest share of government spending, peaking at 28% of the total in 1997/98—and there has been an extensive rural school-building programme. However, personnel costs absorb 65% of expenditure on education, and the N$2bn (US$344m) allocated in the 2000/01 budget represented a reduced share of 24% (N$1.7bn for basic education and N$300,000 for higher education). While school enrolment has increased by one-quarter since 1990, drop-out rates remain high, and less than one-quarter of pupils go on to secondary-level education.

School and higher education enrolments, 1998

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

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

Source: CBS, Statistical Abstract, 1999.

Shortly after independence the medium of instruction was changed from Afrikaans to English, a language in which most local teachers were not qualified to teach, while the subsequent replacement of South Africa’s matriculation curriculum by the Cambridge International General Certificate of Secondary Education (IGCSE) has proved very costly to implement, owing to the need to import teaching materials. In mid-2000, one-half of the 1,800 teachers in Kavango region lacked any formal qualifications, for example. At present, some 30,000 Namibians have gained higher or further education qualifications. The University of Namibia (Unam) has experienced financial difficulties since its establishment in 1993 because of poor administrative

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controls and insufficient funding for its ambitious development programme, but it has produced some 4,000 graduates. Almost half the 550 degrees and diplomas awarded in 1998 were for educational courses, while management and administration accounted for two-thirds of the 651 diplomas and certificates awarded by the Polytechnic that year.

Greater access to The government’s declared priorities are to increase access to clinical facilities healthcare facilities in rural and deprived urban areas, and reduce vulnerability to poverty-related prioritised illness by expanding primary care services. Public spending on health was increased substantially after independence, but has remained level in real terms for the past four years. In 2000/01 the N$925m allocated to health (excluding social services) accounted for an unchanged 11% of total expenditure. But almost 60% of this is absorbed by personnel costs, leaving insufficient money for hospital maintenance, medical equipment, drugs and supplies.

Health facilities, Dec 1998 (no. of facilities unless otherwise indicated) Southerna Centralb North-westc North-eastd Total Hospitals 18 16 11 9 54 State 9 13 9 5 36 Otherse 9 3 2 4 18 Clinics 47 48 80 60 235 State 33 46 80 56 215 Otherse 14 2 0 4 20 Health centres 7 3 12 11 33 State 7 2 12 11 32 Otherse 1 0 0 0 1 Total 72 67 103 80 322 Population servedf (‘000) 434 278 259 793 1,764 Bed capacityg 2,247 1,088 2,300 800 6,435 Beds per ‘000 5.2 3.9 8.3 1.0 3.6 Bed occupancyg (%) 53 46 74 72 62

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

Source: CBS, Statistical Abstract, 1999.

As of 1998 hospital bed availability averaged just under four per 1,000 people, down from seven in 1993, as despite an expansion in local health centres and clinics, the building of hospitals with permanent healthcare services has not kept pace with population growth. Marked regional disparities persist, with most facilities in the north-east and north-western health regions comprising district hospitals and health centres without specialised services, while there is no national insurance provision for Namibians who are not covered by private/employee medical schemes.

AIDS has become the The incidence of AIDS has increased rapidly since the first victims were main killer identified in 1986, and UN-assisted government programmes have, as else-

where in the region, failed to check the spread of the disease. A report by the Joint UN Programme on AIDS-HIV (UNAIDS) and the World Health Organisation (WHO) in 1998 estimated that 20% of the population aged between 15 and 49 were infected with the HIV virus, while a subsequent report published in 2000 predicted that AIDS could claim the lives of half of all 15- year-olds. Recorded cases of HIV infection as of end-1998 exceeded 40,000, and UNAIDS estimated the cumulative death toll at 14,000. The UNICEF (UN Children’s Fund) Progress of Nations Report for 2000 stated that Namibia had the world’s fifth highest HIV infection rate among those aged 15-24, afflicting 20% of females and 9% of males. The epidemic has reduced average life expectancy from 57 years in 1990 to 52 as of 1997, and over 30% of Namibians are not expected to live to aged 40. In 1996 AIDS overtook tuberculosis as the main killer disease; there were 1,539 registered deaths from AIDS in 1998, compared with 847 from tuberculosis and 723 from malaria, which is endemic in the north.

Natural resources and the environment

A harsh climate offsets the Climate and geology have endowed Namibia with abundant natural resources. rich resource endowment However, low average rainfall, rapid water evaporation rates because of high mean temperatures, and the absence of perennial rivers except along the northern and southern borders, mean that Namibia is highly susceptible to drought. Rainfall is at its lowest along the coastal Namib Desert and in the southern interior, where it averages less than 100 mm per year; small stock- farming is the predominant economic activity in these areas. Over the central and north-central inland plateau, which covers about half the country, rainfall increases to 200-400 mm. The plateau includes open savannah with tree and shrub cover, which supports extensive cattle ranching, and cereals in some fertile valleys. In the flatter north and north-east, rainfall averages around 400-600 mm, but soil cover is generally thin, and arable farming is mainly on a subsistence basis, with the best growing conditions along the Okavango river and in eastern Caprivi.

Mineral deposits are found sporadically throughout Namibia, but the largest concentrations are in the extreme south-west (diamonds and base metals), the central Namib region (uranium, gold, marble and semi-precious stones) and the north-eastern Otavi highlands (copper and other base metals). The cold, nutrient-rich south-east Atlantic, fed by the Benguela current, spawns abundant quantities of edible pelagic and white fish, shellfish and other marine resources.

Water is increasingly scarce Over the past decade water resources have come under unprecedented pressure, with extraction rates increasingly exceeding aquifer replenishment levels because of recurrent drought and rising demand. Demand in Windhoek has soared as a result of population growth, and water-saving measures have had only a limited impact. The Namwater parastatal is implementing progressive tariff increases in an attempt to attain full cost-recovery on new water- supply schemes; several major projects are being implemented in the north and the innovative Windhoek wastewater reclamation plant is being upgraded.

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To avert the prospect of Windhoek running out of water, in the mid-1990s the government brought forward a N$1bn project to draw water from the Okavango river with a 200-km pipeline linked to the main Eastern National Water Carrier (ENWC) bulk supply system at Grootfontein. This raised concerns in neighbouring Botswana that annual extraction of 20m cu litres would sharply reduce the flow of water into the Okavango delta, its main tourist attraction. The replenishment of most Namibian dams with the good rains of 1996-97 led to the postponement of the project until a full assessment of the Okavango river system has been completed and Botswana’s consent for the project secured. The good rains of 1999-2000 have further reduced the urgency for additional water for the capital in the near term. Supplies to coastal centres are also under pressure, and a contract for the first desalination plant in southern Africa, to be located in Swakopmund, is expected to be awarded by the end of 2000.

Transport and communications

Thanks to Namibia’s generally well-maintained network of 5,000 km of tarred and 27,000 km of gravel roads, combined with efficiently operated rail, harbour and air services, the economy is largely free from transport bottle- necks. Road links to Namibia’s eastern neighbours have been significantly improved by the construction of the Trans-Kalahari and Trans-Caprivi tarred highways; the former, via Botswana, was completed in 1998, cutting the road distance between South Africa’s Gauteng region and Walvis Bay by 425 km. However, usage of the route has remained below expectations, with South African and Namibian hauliers complaining that Batswana officials are levying high customs and other duties while the lack of any petrol-filling stations on the long stretch through western Botswana has also proved a deterrent. The Trans-Caprivi highway is due to be completed during 2000, although, until a bridge across the Zambezi river is built, trucks will continue to be ferried across by pontoon.

The TransNamib multimodal transport parastatal established prior to independence was restructured in 1997 into separate divisions covering the railways, the country’s largest road-haulage fleet and shipping services. TransNamib’s loss-making national airline subsidiary, Air Namibia, was hived off as a separate entity in 1998 and is ultimately due to be privatised. The 2,400-km metre-gauge railway network carries more than 1m tonnes of freight a year. Efforts to revive passenger traffic by upgrading the service are beginning to bear fruit, and a luxury Desert Express between Windhoek and Swakopmund catering for tourists was launched in 1998. A start was made in early 2000 on construction of the northern rail extension project, a 248-km line linking Tsumeb to Ondangwa. This is to be completed in over four years at an estimated cost of N$288m, part financed by concessional loans from China and Kuwait.

Air Namibia faces growing In view of Namibia’s large size and widely separated population centres an competition efficient air service has always been a vital part of the national transport

system. Since independence, regional and international air links have been established by the national carrier, Air Namibia, which has direct flights to Frankfurt and to London. Although both passenger and freight traffic (including fresh fish exports) have steadily expanded, yields have remained low and the airline has incurred persistent operating losses owing to mis- managed fleet upgrading, which landed it with excessive leasing fees and interest costs. In 1999 the government provided a guarantee for the purchase of a new Boeing 747 Combi direct from the manufacturers with part-funding from the US Export-Import Bank, to replace a leased 767. The 747 is operating Air Namibia’s international routes, with Munich to be added as a third destination in November 2000. A programme to upgrade facilities at Namibia’s main airports was launched in 1999 by the newly established Namibia Airports Company (NAC). These upgrades include lengthening the runway at Walvis Bay airport so it can handle wide-bodied aircraft with the aim of making it second in importance after Windhoek’s Hosea Kutako International Airport. (Reference table 2 shows trends in transport operations.)

Walvis Bay is being Namibia’s main port of Walvis Bay currently handles some 2m tonnes/year of developed as a regional cargo—about one-fifth of it containerised—but has an estimated capacity of hub port 10m t/y. It is being expanded with the aim of making it a major regional hub by the Namibian Ports Authority (Namport) under a N$350m development programme that also includes the upgrading of the smaller harbour at Lüderitz. A new container terminal with 380 ground slots able to handle 20- and 40-foot containers was completed in 1999. In 2000 Namport commenced a dredging project due for completion by the year-end to deepen the port from 10 metres to 12.8 metres, which will enable accommodation of container vessels of between 2,200 and 2,400 TEUs. The next Walvis Bay project will involve expanding the existing “Synchrolift” dry-docking facility. A new 500-metre long multipurpose quay was completed at Lüderitz in 1999 and the port channel dredged to 8 metres. To promote greater usage of Walvis Bay for regional imports and exports via the trans-Kalahari and trans-Caprivi highways, a Walvis Bay Corridor Group, made up of private-sector firms, associations and government bodies, has been set up. (Reference table 3 gives data on cargo traffic at Walvis Bay.)

Telecommunications Namibia has one of Africa’s most modern and efficient telephone systems; there is a core fibre-optic network and 90% of all lines are digital, with exchange automation almost complete. Telephone penetration is high by African standards, at just over one per 20 inhabitants in 1996, although the number of business and public connections is more than double that of residential connections. Telecom Namibia, a commercialised parastatal, funds its large capital-investment programme out of its own resources. Since 1995 an earth satellite station and international switching centre in Windhoek have connected Namibia directly to the global telecommunications system, and a new fibre-optic link to South Africa is under construction. This has facilitated rapid growth in Internet usage, and most government departments and businesses have e-mail addresses. To promote competition, Telecom Namibia is due to lose its monopoly service provider status in 2000. A mobile phone net-

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work operated by Mobile Telecommunications (MTC), a joint venture between Telecom Namibia and Swedish interests, covers most of the country.

Energy provision

Namibia imports all its petroleum requirements as refined products, and electricity generation by the state-owned Namibia Power Corporation (Nampower) is the main form of primary energy production, although wood and charcoal are used extensively by rural households. Most of Namibia’s electricity supply is normally derived from the 240-mw hydropower station at Ruacana on the Kunene river, but in recent years generation has been erratic owing to low water flow caused by recurrent drought and unrepaired water control facilities upstream in Angola. In years of poor river flow, Nampower imports electricity from South Africa, with the 120-mw Windhoek coal-fired station and smaller Paratus station at Walvis Bay kept on standby. In 1998/99 Ruacana was able to provide 57% of the 1,198 gwh generated due to good rains; this enabled a 27% reduction in imported power. To improve supply security, construction of a second and larger 400-mw inter-connector and related substations with the South African grid between Windhoek and Aries was started in 1999. The final stage is due to be commissioned by September 2000. Nampower is actively pursuing plans to expand generating capacity to meet growing domestic usage and favourable regional export opportunities. But a go-ahead for building a new dam and 450-mw hydropower station downstream from Ruacana at Epupa Falls has been postponed because of repeated failures to convene a meeting of the Angola/Namibia permanent joint technical commission due to the Angolan government’s preoccupation with the civil war. The dam remains controversial on environmental grounds. (Reference table 4 shows electricity production and consumption.)

Energy balance, 1999 (m tonnes oil equivalent) Elec- Oil Gas Coal tricity Other Total Primary supply Production 0.00 0.00 0.00 0.30a 0.10 0.40 Imports 0.75 0.00 0.03 0.23a 0.00 1.01 Exports 0.00 0.00 0.00 0.01 0.00 0.01 Total 0.75 0.00 0.03 0.52a 0.10 1.40 Net transformationb 0.00 0.00 –0.01 –0.36 0.00 –0.37 Final consumption 0.75 0.00 0.02 0.16c 0.10 1.03

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

Source: Energy Data Associates.

Kudu gas could transform While the Epupa project has yet to be formally shelved, Nampower is the energy equation increasingly focussing on the proposed Kudu gas-to-power project. Development of the Kudu gasfield offshore from the mouth of the Orange river—the largest find in southern Africa—would make Namibia a significant

energy exporter. In 1999 further evaluation by the Kudu permit holder, Shell Exploration and Production Namibia (SEPN), confirmed reserves of more than 20trn cu feet (560bn cu metres). Initially Shell, in partnership with Nampower, Escom and the UK’s National Power, proposed a first-phase development to supply a 700-750-mw combined-cycle station at Oranjemund with an exportable surplus to South Africa, and a pipeline to export gas to the South African market under a second phase. This proposal had to be abandoned in 1998 when Escom pulled out, citing cost concerns. The current proposal is for a complex of three integrated power plants, one in Oranjemund and two in the Cape Town vicinity, built on a private-public partnership basis as Cape Town municipality wants to develop gas-fired capacity for household supply and industrial developments at Saldhanha Bay independently of Escom.

Kudu was one of five offshore four-year exploration permits awarded in Namibia’s first petroleum licensing round in 1992, but results elsewhere have proved disappointing. A second round in 1995 attracted much less interest, partly because of sparse well data, and, despite some easing of the already favourable licence terms—no signature bonus is payable in contrast to Angola— a third round at the end of 1998 was equally unsuccessful, with no formal bids made. In 1999 the government announced an open licensing system under which applications for exploration periods will be accepted at any time, and in mid-2000 the first award, for an offshore permit in the Namibe basin, was made to a consortium led by a US firm, Vanco International.

The economy

Economic structure

Main economic indicators, 1999

Real GDP growth (%) 2.9 Consumer price inflationa (av; %) 8.6 Current-account balance (N$ m) 940 Foreign debt (US$ m) 146b Exchange rate (N$:US$) 6.11 Population (m) 1.76c

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

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

Productive capacity in the Namibian economy is concentrated in primary sector activities—mining, large-scale commercial livestock farming and fishing—although services accounts for the major share of GDP. World market prices for diamonds and uranium—Namibia is the eighth largest value producer and the fourth largest volume producer respectively—are major influences on the economy, as mining contributes just under one-fifth of GDP at constant factor cost. The manufacturing base remains small, with fish and meat processing the largest individual subsectors, although beverages, other

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food products, metal and pre-cast concrete products, furniture, paints, detergents, and leather goods are also produced. Government services accounted for just over one-quarter of GDP in 1999. Namibia’s abundant natural resources, excellent infrastructure and access to regional and overseas markets provide competitive advantages and considerable potential for developing a more diversified economy. Insufficient labour skills and high transportation costs are the main disadvantages.

Due to the high disposable incomes enjoyed by a minority of Namibians— predominantly, but no longer exclusively, white—private consumption is still the largest component of GDP by expenditure, accounting for around 50% in most years. With a relatively high average income per head, Namibia’s main economic problem is not an absence of wealth, but the highly uneven distribution of income. Only a minority of Namibians are involved in the commercial economy, while the historic pattern of land ownership means the majority of Namibians are landless or small-scale subsistence farmers. A 1993/94 National Household Income and Expenditure Survey (NHIES) showed that 10% of households had average incomes per head of N$30,000 (about US$8,500 in 1994), while the average for all other households was N$1,500, of which one-third had less than N$500. (Reference table 5 shows nominal and real GDP per head, while Reference tables 6-7 give a breakdown of GDP by expenditure and sector.)

Comparative economic indicators, 1999

South Namibia Africa Swaziland Botswana Lesotho GDP (US$ bn) 3.04 131.14 1.21 5.03 0.90 GDP per head (US$) 1,820 3,050 1,266 3,130 402 Real GDP growth (%) 2.9 1.2 3.1 8.5 4.5 Consumer price inflation (av; %) 8.6 5.1 5.9 7.1 8.7 Current-account balance (US$ m) 171 –465 34 243 –315 Exports of goods fob (US$ m) 1,450 28,361 829 2,703 200 Imports of goods fob (US$ m) 1,500 24,611 1,003 2,034 910 Source: EIU.

Economic policy

Since independence the government’s main policies have been aimed at achieving sustainable economic growth and a real increase in income per head, diversifying the narrowly based productive sector and expanding employment opportunities. Namibia’s first five-year National Development Plan (NDP 1), covering 1995/96-1999/2000, set a 5% average annual real growth target, which proved unattainable. NDP2, due to be published by the end of 2000, is likely to set a more modest target, but with an increased emphasis on poverty alleviation and employment creation through promotion of small and medium-size enterprises (SMEs). The government has continued to eschew any major state intervention, aiming to promote sustainable development by facilitating foreign direct investment (FDI) inflows into priority sectors—

natural resource value added, non-traditional manufacturing and tourism— through partnership with the private sector and an attractive commercial environment. However, it has expanded the role of the state with the creation of a number of new parastatals—including Namwater, Namibian Ports Authority (Namport) and Namibia Airports Authority—while at the same time outsourcing some central government functions, most recently with the setting up of a company to handle road maintenance and construction. Although most parastatals are obliged to operate on commercial lines, no formal privatisation programme has been implemented so far apart from the planned eventual privatisation of Air Namibia. But in mid-2000 the cabinet approved a position paper from the finance, and trade and industry ministries for divestiture and equity dilution in state-owned enterprises. This is to include the establishment of an empowerment trust to hold shares for the purpose of broadening ownership and a full-scale review of existing business operations by parastatals. Poverty alleviation has been addressed mainly by raising the proportion of public spending devoted to health, education and infrastructure, but this has increasingly conflicted with the parallel commitment of main- taining fiscal stability and progressively reducing the budget deficit to 3% of GDP. Black empowerment and affirmative action are progressively being implemented, although progress in the private sector is slow; a 1999 survey found some 75% of participating Namibian firms had no formal programme in place and that blacks held only 8% of middle-management positions.

Because of a sizeable bilateral debt owed to South Africa, external borrowing was largely restricted to concessional bilateral credits for capital development projects; large multilateral credits have not been sought, as Namibia does not qualify for least developed country (LDC) status. However, the country is now better-placed to borrow on international markets; total external liabilities were substantially reduced when the South African debt was written off completely in 1997, and foreign currency risk remains minimal.

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

The government has put in place a number of separate investment incentive packages for manufacturing and export-orientated activities, but in the April 2000 budget statement, it was announced that a review of these was to be carried out, along with a separate one into the tax system. Changes could involve modifications to the export-processing zone (EPZ) regime launched in 1995, as in practice many firms granted EPZ status have failed to implement projects owing to inadequate financing and unrealistic business plans.

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The investment incentive regime

Foreign Investment Act (1990): All sectors of the economy are open to foreign investors; no local participation requirement; full protection of investments; free repatriation of profits subject to Common Monetary Area (CMA) rules as long as the South African rand remains legal tender in Namibia.

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

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

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

The burden of the Partly due to a reintegration of the former second-tier authorities into one civil service central authority at independence and the establishment of new regional councils, Namibia is burdened by an oversized civil service, which accounts for an unsustainably high proportion of government spending. Personnel costs— 44% of total estimated expenditure for 2000/01—are the main reason why the government has been unable to achieve a budgetary surplus in any single fiscal year since independence. The position was exacerbated by the government’s decision to provide public-sector jobs to some 9,000 unemployed ex- combatants in 1999. This brought the authorised civil service establishment to 85,000 in 2000/01, with over half the posts in education and defence, while the number actually employed rose by 12%, to 75,000. Despite repeated pledges to curb the rising cost, cutting staff numbers is highly politically sensitive, as most post-independence appointments were of indigenous Namibians. The finance minister, Nangolo Mbumba, announced a freeze on pay rises in 1999 and only a modest increase the following year, but the hopes of restraining growth in personnel costs to the 1% forecast in the 2000/01 budget look unrealistic in the light of higher wage demands by public-sector unions.

Recent budgets have shown a persistent propensity for overspending, necessitating the tabling of an additional budget before the end of the financial year. However, the finance minister, Mr Mbumba, appears determined to reign in spending growth; the 2000/01 budget estimates provided for a 9% rise in total spending, below the 13% rise of the preceding year (original estimates). The forecast budget deficit would be trimmed to N$761m from a revised N$882m (US$128m) for 1999/2000, representing 3.7% of the 2000/01 projected GDP, down from 4.6% the previous year. Capital spending and parastatal on-budget lending was raised by 17% to a forecast N$1.3bn for 2000/01; this covers spending on projects through the State Revenue Fund (SRF), with an additional N$500m allocated for capital development projects directly funded

by donors via the National Planning Commission (NPC). (See Reference tables 8-10 for historical budget data, money supply and interest-rate figures.)

Government finances, 2000/01

N$ m % changea Total revenue 7,686 10.6 of which: customs & exciseb 2,877 28.4 income tax on individuals 1,405 20.7 general sales tax 1,025 13.9 non-mining companies 635 42.0 diamond miningc 185 –7.5 Total expenditure 8,447 9.0 Recurrent 7,189 7.7 of which: personnel costs 3,719 3.0 Capitald 1,258 16.7 Balance –761 –3.7 Main spending areas Education & culture 1,717 5.8 Health & social services 1,279 16.6 Works, transport & communications 531 –27.9 Agriculture, water & rural development 460 6.5

a Over original estimates for preceding fiscal year. b Namibia’s share of revenue from the Southern African Customs Union (SACU). c Income tax and royalty payments to the government. d Includes lending and equity participation.

Source: Ministry of Finance, State Revenue Fund, Estimate of Revenue and Expenditure for the Financial Year Ending March 31st 2001.

Domestic public debt Namibia’s public debt profile is unusual for an African country in that sharp growth in domestic liabilities rather than external borrowing is the main cause of indebtedness. This is primarily a result of regular issues since 1992 of internal registered stock (IRS) and Treasury bills on the domestic market to finance the budget deficit. At the end of 1999 domestic liabilities of this type amounted to N$4.1bn, or 84% of Namibia’s total outstanding public debt (the balance comprising external debt) of N$4.8bn, 21% higher than at the end of 1998, and equivalent to 23% of GDP. In fact, the true level of public domestic debt is even higher as the central bank calculates that the addition of govern-

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ment-guaranteed loans to state-owned enterprises would increase the end-1999 total to N$6.7bn, or 36% of GDP. This upward spiral in domestic debt has reversed the fall in overall public debt that followed cancellation of the pre-independence bilateral debt owed to South Africa. Overall public debt fell by 12% in 1997 to N$2.9bn—the year in which the pre-independence external debt was written off the central bank’s books—but rose by 34% to N$3.9bn in 1998 owing largely to increased domestic debt (N$3.4bn). In May 1998 the government eased its short-term debt-repayment obligations by consolidating all outstanding IRS issues into three longer-maturity bonds worth N$1.6bn, due for redemption in 2002-10 at an interest rate of 12% per year. Domestic debt interest repayments were estimated at N$520m in the 2000/01 fiscal year, up from N$479m in 1999/2000.

Economic performance

Real GDP growth An average annual real GDP growth rate of just under 5% in 1991-95 was has slowed sufficient to allow a real increase in GDP per head of 1.5% per year over the period. Output growth in diamond mining, fishing and fish processing, construction activities, tourism, and financial services more than offset contrac- tions in agriculture caused by two severe droughts, and fluctuating output by the rest of the mining industry. However, in 1996-99 average real growth rate almost halved to 2.7% owing to slower growth in fishing output and an overall decline in mining output, excluding diamonds. Growth in GDP per head was thus negative in each year, falling to below the 1994 level. The government officially projects growth at just under 5% in 2000—slightly lower than the EIU’s projection—based on continued expansion in offshore diamond output, a resumption of base metal mining and smelting at Tsumeb, and a recovery in livestock marketing. Growth remains heavily influenced by the external trade balance—which according to revised data from the Bank of Namibia has been in deficit since independence—as real gross domestic expenditure (GDE) expanded by only 3% per year in 1992-99. Private consumption’s share of GDE has remained relatively constant, at 45-50% in 1992-99, while gross domestic fixed investment grew by an average of just over 2% per year, recording the strongest growth in 1994-96 due to expansion of white fish-processing capacity. Investment growth subsequently waned with the fall-off in fishery investments and slower real increases in mining and finance capital formation.

Gross domestic product (% real change; rounded figures) Annual average 1999 1995-99 Agriculture 3.3 –6.1 Mining 3.4 2.6 Fishing 4.4 6.5 Manufacturing (incl fish processing) –0.7 2.0 Construction 2.7 –5.2 Financial services –0.1 4.4 GDP at factor cost 2.6 2.9 Source: CSO, Preliminary National Accounts 1999.

Inflationary pressures have From a peak of 18% in 1992 the annual inflation rate progressively decelerated continued to ease until 1998, the year-on-year rate falling to 6.2% in that year, the third successive year of single-digit increases. However, inflation rose in 1999 to 8.6% as although rises in food prices remained modest, the impact of the previous year’s South African rand depreciation increased the cost of most other items. Inflation was set to move slightly higher again during 2000 owing mainly to the impact of higher global oil prices. The downward trend of inflation during the late 1990s reflected the impact of South Africa’s tight monetary policy, which is replicated in local interest rates. (The Namibian economy is closely linked to South Africa through the Multilateral Monetary Area, and the Namibian dollar is tied to the rand at par.)

Consumer price inflationa (Dec 1992=100; period averages) Weights % annual change (%) 1998 1999 Food 28.4 2.7 5.6 Beverages & tobacco 4.1 16.7 14.9 Housing, fuel & power 8.3 9.2 34.1 Clothing & footwear 4.4 10.8 6.1 Household goods 10.2 5.7 5.9 Transport & communications 20.7 3.2 13.5 Recreation & education 4.1 5.8 9.6 Healthcare 1.4 10.6 3.7 Miscellaneous 6.9 11.6 6.3 All items 100.0 6.2 8.6 By source Domestic goods & services 52.1 6.1 7.3 Imported tradeables 47.9 6.3 10.1

a Interim consumer price index for Windhoek only.

Source: CBS.

An abatement in food price increases has been the major factor in reducing Namibia’s overall inflation rate as food has been the dominant weighting in the basket of goods used to determine the local consumer price index (CPI). This measures price changes in Windhoek only and is officially designated as

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interim; a planned national index will eventually cover most population centres and compare urban and rural price trends. Because of higher transport costs and different consumption patterns outside the capital, Namibia’s true inflation rate is probably around 1 percentage point above the level recorded by the present CPI. (Reference table 11 shows historical trends in consumer and food price inflation.)

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

Employment by sector, 1994a

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

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

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

Economic sectors

Agriculture and fishing

Subsistence farmers grow Agriculture’s share of GDP at constant factor cost had declined to 6.5% in 1999 most of the cereal crop compared with 10% in the early 1990s, owing to the cumulative impact on livestock output and crop harvests of three severe droughts, the latest during the 1997/98 (July-June) growing season. Nonetheless, an estimated 49% of the labour force continue to be employed in farming, and 70% of the population

are partly dependent on agriculture for their livelihood. Although most of the cereal crop is rain-fed maize and millet, Namibia also produces wheat under irrigation in the south. In recent years production of irrigated grapes and citrus fruits along the north bank of the Orange river has expanded, with plans to commence commercial date production elsewhere in the near future. There are extensive forests of teak and other hardwoods in the north-east, and illegal timber-felling and smuggling are difficult to control.

Cereal shortfalls are Namibia normally imports about half its cereal requirement, although in manageable drought-free years coarse grain output covers about 70% of demand, the bulk of it a local millet variety (mahangu), which is grown by an estimated 150,000 northern subsistence farmers. Apart from some irrigated maize in Okavango, all subsistence crops are rain-fed and highly susceptible to drought. Average yields have remained low. By planting a larger area in the drought-free 1996/97 agricultural year, subsistence farmers produced a record 117,100 tonnes of millet, and the total coarse grain harvest of 166,500 tonnes covered two-thirds of domestic requirements for the 1997/98 marketing year (May-April). Both millet and maize output fell by over two-thirds in the 1997/98 agricultural year owing to drought, and recovered only partially, to 70,600 tonnes (48,200 tonnes of millet, 22,400 tonnes of maize) in 1998/99. The 1999/2000 coarse grain harvest is provisionally forecast at 127,000 tonnes (78,000 tonnes of millet and 49,000 tonnes of maize) owing to generally good rains during the growing season. Some commercial farmers in the rainfed Otavi valley have started growing millet and the irrigated winter wheat crop from the Hardap dam averages 3,000-5,000 tonnes. Despite recurrent drought, Namibia’s overall food security situation has generally been satisfactory, with commercial imports by local milling firms normally making up the shortfall between cereal demand and local supply without recourse to international food aid. The 126,000-tonne cereal import requirement (maize and wheat) for the 1999/2000 marketing year was covered in this way. The import requirement for 2000/01 is tentatively forecast at 131,000 tonnes, the increase reflecting lower opening stocks and increased provision for closing stocks, including 11,000 tonnes of on-farm subsistence millet/sorghum. (Reference table 12 shows trends in cereal production.)

The livestock sector is set Livestock ranching usually contributes well over two-thirds of commercial for a recovery farming output, but the recent drought cycle has had a serious impact on the subsector. Most of the 1.5m commercial cattle are concentrated to the north and east of Windhoek, with sheep farming predominant in the south. Recently, farmers have diversified into ostrich breeding, and the first ostrich- products plant—which has export-processing zone (EPZ) status—was opened in 1998 at Keetmanshoop. Cattle are marketed for slaughter in the export- approved abattoirs of the Meat Corporation (Meatco) for sale to the EU under Namibia’s 13,000-tonnes/year Lomé Convention export quota, or sold live, along with most sheep, to South Africa. Cattle held by subsistence farmers north of the “red line” along the Etosha Pan—an artificial boundary designed to curb the spread of foot-and-mouth disease—are not certified for export marketing. A record 498,000 cattle were marketed in 1996 as farmers increased herd offtake in the wake of the 1995/96 drought, but marketing had fallen to

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275,000 head in 1998—of which, however, a higher proportion, 55%, were slaughtered locally and the rest shipped live to South Africa—because of herd restocking. This process was largely completed in 1999 and with the cattle herd now at the long-term average of 2m head, there should be a strong recovery in 2000. Marketing of sheep, almost all of which are shipped live to South Africa, declined from 1.1m head in 1996 to 894,000 in 1998. (Reference table 13 gives data on livestock marketing and slaughtering levels.)

Fishing is expanding In 1991-93 the fishing industry recorded strong output growth, averaging 29% more slowly annually, and was a major contributor to overall economic growth. However, since the record 784,000-tonne catch in 1993, levels have declined owing to adverse oceanic conditions that have made the government cautious in setting total allowable catches (tacs) for the main controlled species: pilchard, hake, mackerel, crab, rock lobster and latterly, orange roughy. Improved stocks of pilchard and hake led to output growth of 21% in 1998, but this fell to only 4% for 1999. The outlook for 2000 is no better, due to a sharp contraction in the pilchard tac and a modest cut in the hake tac, although catch ceilings for horse mackerel were raised substantially. Fish-processing output—mainly canned pilchard and partially processed hake—contracted by 39% in 1996, but recovered strongly in 1997-98 with 32% average annual growth owing mainly to higher treatment rates of hake, the most valuable species, which is landed wet for semi-processing by onshore factories prior to export. To date over N$400m (US$60m) has been invested in new hake-processing capacity at Walvis Bay, the centre of the fishing industry, and by Spain’s Pescanova at Lüderitz, with a further N$200m invested in locally owned fishing vessels. The fishing fleet increased from 214 vessels in 1991 to 309 in 1996, two-thirds of which are Namibian-flagged vessels, with the remainder mainly comprising Russian (mackerel) and Japanese (crab) vessels, although most mackerel is now caught by the jointly owned NamSov company. (Reference table 14 gives data on fish catches.)

Catches continue to be set At independence the government proclaimed a 200-km exclusive economic at conservative levels zone (EEZ) and banned fishing by foreign trawlers except those chartered by Namibian quota-holding companies. The government maintains a strict conservation regime by setting annual total allowable catches in line with regular fish biomass surveys; these often lead to lower catch ceilings than the industry estimates would be feasible. New exploitation rights providing entitlement to annual quotas by licensees were awarded in 1994, with most of the formerly South African-controlled companies restructured to bring in Namibian partners. Of the 150 exploitation rights, which range from four to ten years and are held by 120 firms, new entrants hold 40%. That the sector is still attractive to investors was demonstrated by the fact that more than 400 applications were received for replacement four-year rights at the end of 1997. The allocation of quotas to companies within the overall catch limit is not fully transparent, but the government maintains that there is no need for an independent entity to determine allocations despite revelations that substantial donations were made by fishing firms in mid-1999 towards the wedding of the fisheries and marine resources minister. The government has

stated that Namibian firms transferring their quota entitlements to third parties without authorisation may have their rights cancelled.

A post-1997 recovery In 1997 the fish biomass generally recovered, enabling the government to proved shortlived increase tacs once more, but this upturn has not been maintained. The 1999 hake tac was initially raised by 15%, to 190,000 tonnes, and during the season to 210,000 tonnes, with an estimated doubling of the biomass in the previous three years to 603,000 tonnes. Other tacs were also raised, with the exception of the deep-sea orange roughy resource, which has come under pressure since the start of commercial trawling in 1997, when it looked as if it might rival hake as a foreign-exchange earner. The main company involved, Gendor, a partnership between New Zealand’s Sealord and local firms, had opened an export processing facility at Walvis Bay, but with successive cuts in the roughy tac has now diversified into the hake sector. For the 2000 fishing season, pilchard, hake and roughy tacs were all cut, with a particularly severe impact on the shore-based canning industry. This will only be partially offset by an increase in the tac for mackerels, which have a much lower export value. Nevertheless, earnings from the export of fish of all types rose by 5% to a record N$2.3bn in 1999, or 30% of total exports. White fish export earnings totalled N$1.9bn, 84% of the total, the bulk comprising hake exports to Spain.

Total allowable catches (tonnes) 1999 2000 % change Pilchard 55,000 15,000 –72.7 Hake 210,000a 194,000 –7.6 Horse mackerel 375,000 410,000 9.3 Orange roughy 6,000 2,400 –60.0

a Revised upwards from original tac of 195,000 tonnes.

Source: Ministry of Fisheries and Marine Resources.

Mining and semi-processing

Most non-diamond mineral The importance of mining to Namibia’s economy has decreased since output has declined independence, mainly because—with the notable exception of diamonds, and to a lesser degree, fluorspar and salt—output of most minerals has declined or remained static owing to unfavourable prices and lower grades, while several planned major developments have yet to get under way. Mining’s contribution to GDP at constant factor cost averaged 19% over 1990-99, and it still generates the biggest share of Namibia’s foreign-exchange earnings, but the industry remains largely an enclave with few downstream linkages to other economic sectors. Mine closures and increasing mechanisation have caused a contraction in mining employment of almost two-thirds over the past 15 years, to 5,400 as of 1999—this included some 2,000 jobs lost with the suspension of operations at Namibia’s major base/precious metals producer, Tsumeb Corp., in 1998. However, short-term prospects are currently looking bright: offshore diamond production is continuing to expand, the Tsumeb mines and smelter are to be

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re-opened under the ownership of a new local consortium in mid-2000, and Anglo American is to soon decide on the development of the planned US$280m Skorpion zinc mine and refinery in the extreme south. Exploration expenditure has remained buoyant, and spending by members of the local chamber of mines rose by over a third in 1999 to a record N$175m, of which N$113m was spent on diamond exploration.

A new minerals act in 1993 guarantees security of tenure to holders of mining rights, although there is widespread ministerial discretion for the negotiation of special agreements. A new diamond act will come into effect in 2000, providing for strictly controlled trading in rough stones and “restricted areas” where diamond mining or bulk sampling takes place, including offshore mining vessels. The government is also opening up most of the 26,000-sq km Diamond Area 1, the Sperrgebiet (forbidden territory) in the southern Namib desert, for general minerals exploration; there is considerable potential for zinc and other base metals in the south-eastern sector adjoining the existing Rosh Pinah zinc mine and planned Skorpion zinc mine and refinery.

Production of main minerals, 1999 (tonnes unless otherwise indicated) Diamonds (‘000 carats) 1,639 Uranium oxide 3,095 Gold (kg) 2,008 Fluorspar 57,300 Salt 503,000 Zinc concentrates 69,900 Sources: CSO; Chamber of Mines of Namibia; individual producers.

Offshore diamond sector Diamonds, over 95% of which are of exceptionally fine gem quality, are mined continues to expand onshore from alluvial deposits in Diamond Area 1, north and east of Oranjemund, by Namdeb Diamond Corporation, in which the government and De Beers Centenary became equal partners under a 1994 agreement. However, the future of Namibia’s diamond industry increasingly lies offshore, with recoveries by De Beers Marine (Debmarine), which acts as Namdeb’s con- tractor in the huge Atlantic 1 deepwater concession along the southern coast, and two smaller independent producers accounting for a record 56% of Namibia’s total output of 1.64m carats in 1999. Despite Namdeb’s introduction of innovative dredging technology and the mining of new alluvial deposits inland along the north bank of the Orange river at Auchas, and, imminently, Daberas, onshore recoveries are steadily declining owing to the depletion of the higher-grade deposits that have been mined for more than 70 years.

Output set to exceed 1m Provided the global diamond market’s strong recovery of 1999 is maintained, carats by 2001 Namibia’s offshore output is set to exceed 1m carats by 2001. This is due to continued incremental increases in output (514,000 carats in 1999) by Debmarine, which was expected to fully commission a sixth mining vessel equipped with a second-generation seabed crawler system by mid-2000, and higher output by the UK-based Namibian Minerals Corporation (Namco). In 1999 Namco established itself as Namibia’s (and hence the world’s) biggest

offshore diamond producer after Debmarine by more than doubling production from its Lüderitz Bay mining concession to 257,000 carats and taking over Ocean Diamond Mining (ODM), a longer-established Cape Town-based company with extensive mining and exploration rights around Namibia’s 14 Penguin Islands along the southern coast. Namco is using a specially designed remote-controlled subsea crawler, and a second vessel with a new, improved seabed crawler is due to be commissioned by the year-end. Namco is also improving the productivity of the mining vessels taken over from ODM and carrying out a major sampling and exploration programme in its enlarged concessions. However, an initial 400,000-carat production target for 2000 has been revised downwards to 225,000-250,000 carats owing to difficult mining conditions encountered in the first half of the year. This makes it likely that the planned 600,000-carat target for 2001 will be scaled down to some 400,000 carats. However, with Canada’s Diamond Fields International (DFI) expected to confirm plans for a mining operation of some 100,000-150,000 carats annually on its Lüderitz permit, which adjoins that of Namco, by the end of 2000, overall offshore production will almost certainly exceed 1m carats in 2001.

Uranium After almost halving in 1991-92 because of weak global prices, uranium oxide production from the large but low-grade Rössing mine recovered in 1996-97 to around 70% of the operation’s 4,500-tonne-rated capacity in order to meet higher delivery commitments, mainly to France. However, production was trimmed again in 1998-99 owing to renewed price weakness. Plans for returning to full output have been postponed until 2002 at the earliest. Rössing, in which the UK’s Rio Tinto holds a 69% interest and the government 3.5%, is implementing a programme to reduce costs by 20% involving voluntary redundancies and investment in improved operating methods; in 1999 despite lower output and turnover, Rio Tinto’s share of net earnings almost doubled to US$19m. Despite the unfavourable short-term market prospects, an Australian company, Acclaim Uranium, has purchased the nearby Langer Heinrich deposit, formerly explored by South Africa’s Gencor in the later 1970s to early 1980s, where ore reserves are smaller but of higher grade.

Zinc Apart from diamonds, the main prospect for reviving growth in the mining sector is through the exploitation of the substantial zinc reserves in the extreme south. Namibia’s sole existing zinc mine, Rosh Pinah, plans to expand capacity following the formation in 1999 of a new joint venture between South Africa’s Iron and Steel Corporation and a local consortium, PE Minerals. A full feasibility study of the nearby Skorpion zinc deposit has identified proven reserves of 18m tonnes of high-grade zinc, and Anglo American Base Metals had completed additional drilling and testwork as of the end of 1999 with a go-ahead for the project due in the second half of 2000. This would be Namibia’s biggest mining project since the Rössing mine was opened in the mid-1970s, and would provide a major boost to the economy of southern Namibia. The Skorpion development will comprise an open-cast mine and an onsite refinery (the latter has been granted EPZ status), for production of 150,000 t/y of zinc metal. (Reference table 15 shows mineral production trends).

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Manufacturing

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

A 1994/95 census of manufacturing establishments identified 280 firms and total employment of 18,000 in the sector. About half of the workforce were employed in the food industry, with metal, wood and furniture enterprises each employing some 10%. The census established that manufacturing’s share of GDP had previously been underestimated; this has been adjusted upwards in the most recent national accounts. However, at constant prices manufacturing’s share has risen only modestly, from 12% in 1992 to 13% in 1999. Government hopes that the EPZ regime would kick-start the development of new export-orientated manufacturing capacity have yet to be fulfilled. Although, as of mid-1999, 75 firms had been granted EPZ status, 19 had withdrawn for various reasons and only 19 had actually started operations— mainly at Walvis Bay, which has set up a dedicated EPZ area near the commercial harbour, and Oshikango in the north—resulting in total investment of N$259m and the creation of 1,200 jobs. The Offshore Development Company (ODC), a private company set up to promote the EPZ, projects investment could reach N$8bn and result in the creation of 4,000 jobs if the 37 companies currently planning operations fully implement their projects.

Most existing capacity Local manufacturing capacity is mainly in the hands of Namibian-owned or remains locally owned based firms, and the government gives preference to investors establishing locally registered companies with Namibian partners. One of the most successful locally owned firms, Namibia Breweries (Nambrew), which operates two breweries and a soft-drinks bottling plant, is a subsidiary of the country’s biggest and long-established non-mining private company, Ohlthaver and List. Nambrew, which produced a record 1m hectolitres of German-style lagers in 1999/2000, is the only licensed producer and has a 90% share of the local beer market. It has also made significant inroads into South Africa’s premium lager sector, in which it has a 25% share. South African Breweries (SAB) has made aggressive forays into the Namibian market—Nambrew is almost the only independent brewery left in southern Africa—but the government continues to refuse it permission to open a Namibian brewery. The only heavy industry is the cement factory at Otjiwarongo, in which Lafarge South Africa acquired a majority stake in 1998. The plant normally produces some 70,000 t/y, supplying around 30% of the Namibian market. However, it was closed indefinitely at the end of 1999 owing to the emission of excessive dust by outdated equipment, and a planned upgrading has yet to be scheduled.

Construction

The construction sector has Private construction recorded strong growth in 1992-94, but growth then begun to recover slowed markedly, with two years of negative growth in 1997-98 owing to high real interest rates and reduced capital outlays by the government. In 1999 the sector recorded growth of just under 3% as lower interest rates stimulated private-sector building activities. A stronger performance is anticipated for 2000, helped by a real increase in government capital spending. The value of approved building plans and completions reached record levels in 1995, but subsequent high real mortgage rates caused a drop in residential property developments, traditionally the main focus of building activity. The value of commercial and industrial building completions, which expanded to almost half the 1995 total, has also dropped off. (Reference table 16 shows trends in private construction activities.)

Financial services

A small but profitable Banking activities have recorded strong growth in turnover and profitability banking sector since independence, while the range of local financial institutions has expanded. Merchant banking and asset management firms have set up local operations to tap into the increased domestic liquidity provided by the partial repatriation of pension fund and insurance assets from South Africa (see below). Total assets of the four main commercial banks more than doubled in 1994-99, to N$10bn, while growth in total deposits rose to N$8.2bn in 1999, with demand deposits accounting for 51% of this. Pre-tax net income of the banking industry totalled N$372m in 1999, 19% up on the previous year, while the return on assets was 3.9%, up by 0.3 percentage points on 1998. Domestic credit is determined largely by the lending capacity of the banking system, but growth in lending to the private sector, particularly credit to businesses, has slowed markedly in the last three years owing to high prevailing interest rates. Despite the downward movement in interest rates during 1999, overall credit growth to business was only 1%, while lending to individuals—predominantly mortgage loans—increased by 10%. In consequence, individuals’ share of credit rose from 41% as of the end of 1998 to 43%, while the share of credit to the commercial and services sector, the major component of business borrowing, declined slightly from 29% to 28% as of the end of 1999.

A new Banking Institutions Act of 1998 has brought the legal framework into line with international banking and supervisory standards, particularly the Core Principles for Effective Banking Supervision recommended by the Basle Committee. The Bank of Namibia (the central bank) has enhanced supervisory powers, including rights to investigate the finances of banking institutions and take action against those conducting illegal banking activities, while the bank licensing process has been streamlined. New, more flexible, capital adequacy and liquidity requirements have been adopted, with the former more sensitive to risk profiles of the different assets of banking institutions, and an overall

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requirement for 10% of total liabilities to the public to be in the form of liquid assets. As of 1999, the central bank stated that all banking institutions had continued to meet the new capital-adequacy requirements (in line with the Basle Accord on Risk-Weighted Capital Adequacy), with a ratio of qualifying capital to risk-weighted asset of 14.4%, compared with the stipulated minimum of 8%.

First National Bank Namibia (FNBN) and Standard Bank Namibia, with assets of over N$2bn each at the end of 1999, have the largest branch networks. FNBN was floated on the stock exchange in 1997 and, unlike Standard, is no longer wholly owned by its South African parent group. The Commercial Bank of Namibia (CBN), a subsidiary of Geneva-based Société financière pour les pays d’outre-mer (SFOM) and South Africa’s Nedcor Bank, and Bank Windhoek, in which South Africa’s ABSA Bank is the main shareholder, had assets of over N$1.5bn each. Namibia’s sole building society, Swabou, had end- 1999 assets of N$1.2bn, extending N$929m in loans and advances during the year, a rise of 15% on 1998. (Reference table 17 gives historical data on commercial banks.)

Private-sector lending by commercial banks (N$ m; end-period) 1998 1999 % change % of total Agriculture & forestry 317 446 40.7 6.0 Fishing 345 457 32.5 6.1 Mining & quarrying 204 79 –61.3 1.1 Manufacturing 335 178 –46.9 2.4 Building & construction 917 992 8.2 13.3 Commercial & services 2,090 2,087 –0.1 28.1 Individuals & others 2,891 3,196 10.5 43.0 Total 7,099 7,434 4.7 100.0 Source: Bank of Namibia, 1999 Annual Report.

An insurance sector The insurance and pensions sector, in which South African mutual societies are undergoing rapid change the biggest participants, was reshaped by 1995 regulations requiring a proportion of assets traditionally invested on the South African market to be reinvested locally. A minimum 35% of Namibian-generated funds must now be invested in specified local assets, and this has provided new opportunities for local asset management firms. Pension funds alone had some N$8bn under management at the end of 1999, including the Government Institutions Pension Fund, which had a portfolio valued at over N$4.5bn. The local insurance industry continues to oppose the formation of a state-owned company, Namibia National Reinsurance Corporation (NamibRe), to which they would have to cede a set percentage of each short-term policy and 25% of their reinsurance contracts, at present mainly placed in South Africa. The establishment of NamibRe has been successively postponed, but negotiations were resumed following a decision by the High Court in mid-2000 to put on hold its judgement in a case brought by Swabou to have parts of the law creating NamibRe declared unconstitutional on the grounds that it amounted to effective nationalisation of part of the industry.

The Namibian Stock Since it was established in October 1992 with one listed share, the Namibian Exchange Stock Exchange (NSX) has become Sub-Saharan Africa’s second largest in terms of market capitalisation after the Johannesburg Stock Exchange (JSE). This is mainly because a number of leading blue-chip South African stocks are dual- listed on the NSX (these account for 98% of total capitalisation). The total number of listed stocks remained unchanged at 41 in 1999, as three new dual- listings were balanced by de-listings. But both capitalisation and share turnover value rose strongly in 1999 to a record N$334bn and N$1.8bn respectively owing to positive market sentiment producing higher share values, while the overall index rose by 66% to 292 at the end of 1999 compared with a year earlier. Local market capitalisation also rose sharply, by 72%, to N$4.3bn, although local company listings (defined as Namibian-owned firms or companies predominantly doing business in Namibia) remained unchanged at 15. (Reference table 18 gives data on stockmarket activity.)

Namibian Stock Exchange, 1999 (year-end; domestic companies only unless otherwise indicated) Listed companies (no.) 15 Incl South African cross-listed shares 41 Market capitalisation (N$ bn) 4.3 Incl South African cross-listed shares 333.9 Market capitalisation (US$ bn) 0.7 Incl South African cross-listed shares 54.7 Turnover ratioa (%) 0.5 Average price/earnings ratio 14.5 Average dividend yield (%) 3.0

a Total value traded annually divided by total market capitalisation.

Sources: Bank of Namibia; Namibian Stock Exchange.

Other services

Overseas tourist arrivals The number of visits by overseas tourists has increased sharply since have increased sizeably independence, helped by the inauguration of direct air links with Germany and the UK. Tourism is stated by the central bank to have become the third highest contributor to total GDP (excluding the government sector), after mining and fishing. Although South Africa remains the predominant source of tourists, European and non-African visitors now account for one-quarter of total arrivals. Namibia’s spectacular desert landscapes and wildlife in the 5,000- sq km Etosha national park in the north are among the prime attractions. Although 1997 is the latest year for which detailed visitor arrival figures have been published, a 9.5% growth in tourist arrivals was recorded during 1998, fractionally less than in the preceding year. However, the adverse security situation along the north-eastern border since the end of 1999 and killing of French tourists in early 2000 due to the incursion of União Nacional para a Independência Total de Angola (UNITA) forces and the stationing of Angolan government troops are likely to have sharply reduced growth this year. Many local tourist lodges have been closed and Namibia’s international reputation as

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a safe destination has been badly dented. (Reference table 19 gives data on tourism.)

There is a wide range of quality private accommodation available, ranging from three- and four-star hotels in Windhoek and Swakopmund, to numerous pensions and guest-farms. Northern Namibia’s first four-star hotel opened at Ondangwa in mid-2000.

Tourist arrivals, 1997

‘000 % of total South Africa 188 37.5 Angola/Botswana/Zambiaa 183 36.5 Other Africa 13 2.6 Germany 55 11.0 UK 13 2.6 Other Europe 33 6.6 Others 17 3.4 Total 502 100.0

a Overnight visitors, excluding returning residents but including those visiting friends and relatives.

Source: Ministry of Environment and Tourism.

The external sector

Trade in goods

Diamonds and fish are the Namibia’s economy has always been highly export-oriented, and foreign trade top export earners in goods still accounts for over 80% of GDP, with the value of transactions far exceeding the value of goods traded within Namibia’s small domestic market. Most raw material commodities are exported in unprocessed or semi-processed form, and the principal exports—rough diamonds, uranium oxide, blister copper, semi-processed hake and beef—therefore remain highly susceptible to trends in global market prices, which, along with the South African rand’s fluctuations, are the main determinants of foreign-exchange earnings.

The value of total exports rose by 66% over 1990-94, mainly owing to strong growth in diamond and fish output volumes. In 1995-99 export volume growth was more modest, and the 48% increase in overall earnings to N$7.6bn (US$1.1bn) in 1999 was largely a result of the favourable impact on local- currency receipts of the rand’s depreciation against the US dollar. In US dollar terms, export value actually declined by 12% between 1995 and 1999, despite higher diamond and uranium export volumes, sales of which are both US dollar-denominated. Diamond earnings grew by just over a third during the period to N$2.5bn, (the equivalent of just over 33% of total exports). After sliding by 13% in 1998 due to the imposition of quotas on exports from producer countries by De Beers’ Central Selling Organisation (CSO), diamond exports rebounded by 17% in 1999 owing to the lifting of quotas and

expanded offshore production. Fish exports confirmed their position as Namibia’s second most important foreign-currency earner, and, when processed meat exports are included, the overall value of manufactured products has contributed the largest share of total exports since 1998.

Foreign trade

N$ m % of total Exports, 1999a Diamondsb 2,524 33.2 Manufactured products 2,585 34.0 Food & live animals 1,183 15.6 Other minerals 1,183 15.6 Total incl others 7,602 100.0 of which: fishc 2,269 29.8 Imports, 1997d Food, live animals, beverages & tobacco 1,862 24.1 Machinery, electrical goods 1,158 15.0 Vehicles & transport equipment 1,134 14.7 Chemical, plastic & rubber products 868 11.2 Textiles, clothing & footwear 582 7.5 Metal & metal products 582 7.5 Total incl others 7,722 100.0

a Preliminary. b Includes central bank allowance for smuggled stones, currently estimated at 5% of production. c The central bank presentation of exports includes unprocessed and some semi- processed fish under the food and live animals category, and some semi-processed and all processed fish (exported as a finished product) under the manufactures category without providing a breakdown. Figures for exports published by the CBS show a complete breakdown for fish exports, the bulk of which are classified as “prepared and preserved fish”, from which the total given here is derived. d Updated import figures have yet to be published.

Sources: Bank of Namibia, 1999 Annual Report; CBS, Preliminary National Accounts 1999.

Between 1990 and 1999, minerals’ share of total exports declined from 59% to 49%, while the contribution of fish exports more than doubled to nearly 30%. Sales of hake alone to the main Spanish export market almost doubled in value between 1993 and 1997 from US$78m to US$156m. Further planned expansion in offshore diamond production, the resumption of blister copper exports from the Tsumeb smelter and continued growth in white fish exports should underpin export growth in the short term, offsetting continued uranium market weakness. By 2002 mineral exports should also be boosted by the start of sales of refined zinc from the planned Skorpion mine and refinery. (Reference table 21 shows trends in exports, and Reference table 22 trends in imports.)

There is a persistent Namibia’s strong propensity to import has resulted in a structural deficit on the foreign trade deficit merchandise trade balance since independence. A revised balance-of-payments methodology was introduced by the Bank of Namibia (the central bank) in 1998 relating to transactions within the Southern African Customs Union (SACU), which had the effect of increasing merchandise import values. Namibia imports most production inputs, intermediate goods—including fuels and lubricants—consumer products and foodstuffs. South Africa is the source

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Namibia 41

of 80-90% of its imports by value, including virtually all commodities (except petroleum products), although many items are re-exports from overseas suppliers. Food, beverages and, increasingly, machinery and transport equipment, are the biggest import categories. Bilateral trade between the two countries still accounts for some two-thirds of Namibia’s total foreign trade, although Namibia’s major export market is the EU—mainly the UK (rough diamonds, beef and fish), Spain (hake) France (uranium)—which accounts for over 60% of exports by value.

The sliding value of the South African rand and the performance of key commodity prices are the major factors influencing Namibia’s terms of trade. These deteriorated in 1990-95 as import prices increased more rapidly than export prices. Strong export prices led to an improvement in 1996, which was more than reversed the following year. In 1998-99 the terms of trade improved once more, mainly owing to a strengthening in global demand for diamonds and other mineral commodities, a buoyant hake price, and a reduced rate of increase in import prices. (Reference table 20 gives various foreign trade indices.)

Main trading partners, 1997

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

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

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

Invisibles and the current account

Namibia has run a current-account surplus since independence thanks mainly to consistently high net transfers offsetting a persistently large net outflow on invisibles. A sizeable narrowing of the trade deficit and a continued rise in SACU transfers accounted for a record current-account surplus of N$940m in 1999, more than double that recorded the preceding year. Net investment income has stayed positive since 1990 owing to sizeable remitted earnings on pension and life assurance assets in South Africa, which continue to exceed repatriated profits and dividends paid to foreign parent companies. However, the surplus more than halved during 1999 owing to higher levels of reinvested profits by local mining companies in particular.

Tourism and net transfers The main weakness in Namibia’s current account is the invisibles outflow, are crucial which has averaged over N$800m a year since 1990. Were it not for higher local expenditure by increasing numbers of overseas tourists during the past decade and the rising inflow of SACU customs receipts—which reached a record N$2.2bn in 1999—there would have been an overall current-account deficit in most years. The services deficit was reduced significantly in 1997 and held down in 1998 owing to a reduction in transport costs as a result of lower outlays for chartering fishing vessels and substantially higher net travel receipts. However, it increased again in 1999 when chartering outlays rose owing to increased mid-water fishing operations, for which a higher proportion of vessels are foreign-owned. Net insurance costs, and deficits on business, administrative, financial and communications services, have continued to grow with the expanding global connections of the Namibian private sector. The expansion in tourism has boosted the net travel surplus to an average of N$1.1bn in 1997-98 and to N$1.2bn in 1999.

Net investment income averaged over N$250m per year in 1990-99, but recent years have seen a tailing off in income receipts from pension fund and life assurance investments in South Africa owing to progressive asset localisation requirements. Inflows of remitted profits and dividends are low, because of the modest foreign holdings by Namibian-domiciled companies, and while income reinvested by foreign direct investors in Namibia has risen, the combined inflow of N$31m in 1999 was dwarfed by pension and insurance receipts of N$1.1bn. The net investment surplus is likely to remain modest because of anticipated static pension and life assurance receipts, although the same process is also curtailing capital outflows (see Capital flows and foreign debt). A more worrying prospect is that SACU receipts, which account for the bulk of the public transfers net inflow, will decline as external tariffs on most European imports begin to be reduced from around 2003 under the EU-South Africa free- trade agreement (FTA) and progressive global trade deregulation. (Reference tables 23-24 show historical balance-of-payments data.)

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Namibia 43

Capital flows and foreign debt

Since 1990—the earliest year for which figures have been calculated— Namibia’s capital account has been characterised by a persistent deficit, reflecting large outflows to South Africa. The main component, averaging N$960m a year in 1990-98, was made up of Namibian pension fund and life insurance premiums invested in South African assets—combined outflows stabilised at N$1.3bn in 1998 and 1999. Net inflows have been normally recorded on portfolio and foreign direct investment (FDI), and short-term investment transactions, which are also mainly with South Africa, along with foreign aid receipts for capital projects. However, in 1999 the capital-account deficit more than trebled to N$600m compared with the preceding year, owing to increased outflows of long- and short-term investment. The deficit on other long-term investment almost doubled to N$1bn because the Namibian banking sector’s improved liquidity position, past debt burdens and relatively flat business activities led to banks repaying substantial amounts of long-term debt. Similarly, the short-term investment deficit more than doubled in 1999 as banks sent excess funds to South African parent companies, in the process increasing their foreign assets by N$329m while simultaneously reducing net foreign liabilities by N$592m, leaving the net foreign asset position of commercial banks at N$500m, the highest levels since 1997. FDI rose by a record 63% to N$695m in 1999, reflecting a substantial increase in reinvested retained earnings, mainly by mining companies, which more than offset reduced equity capital investment, due to a decline in offshore oil exploration (see Reference table 25 for Namibia’s international investment balance).

External debt obligations External debt transactions have accounted for only a small share of capital are very modest flows as, under a 1992 rescheduling agreement, Namibia did not have to service principal payments on the N$800m bilateral debt to South African financial institutions it inherited at independence. These government-guaranteed liabilities—which totalled N$1.4bn including capitalised interest owed—were written off completely in 1997 under a debt-cancellation agreement offered by South Africa’s then president, Nelson Mandela, in 1994. Redemption payments on non-rand-denominated debt remain low at present, as post-independence borrowings have been predominantly on concessional terms. The net impact of the write-off was to slash Namibia’s stock of outstanding external debt to N$354m as of end-1997. Until then the book value of external debt had continued to increase because the South African debt was rolled up as capitalised interest and redemptions, and transferred to a Bank of Namibia facility with the South African Reserve Bank. Because of renewed borrowing, public external debt had more than doubled by end-1999 to N$729m, of which 61% was bilateral debt, although this comprised only 15% of Namibia’s total outstanding public debt (domestic plus external). In its 1999 annual report, the central bank commented that while the total debt was still manageable and within international norms, the rate at which it has been increasing over the past years raised “some concern”.

Private debt has fallen After almost trebling to N$345m at the end of 1997, private debt has fallen again. Owing to the repayment of a large syndicated loan, private external debt fell to only N$182m as of the end of 1998, the latest available figure. A full breakdown of external debt—including private debt—was not shown in the central bank’s 1999 annual report. Namibia currently benefits from a low external debt-service ratio, at 2.8% for 1998 according to central bank data, although debt service rose sharply in that year to N$240m. Most outstanding public external debt is on concessional terms, so the currency risk factor is negligible. Namibia therefore benefits from a good credit risk rating, which should enable it to borrow on international markets as necessary to fund its share of the cost of major projects like the Kudu gasfield development and Epupa hydropower scheme. (Reference table 26 gives central bank data for external debt; Reference table 27 gives OECD data on net official development assistance.)

Foreign reserves and the exchange rate

Namibia has only accumulated foreign reserves in its own right since 1993, when the Namibian dollar was introduced; holdings before that were the country’s share of South Africa’s foreign-exchange reserves. IMF data show that Namibia’s foreign reserves have continued to increase at a steady, albeit modest, rate from US$251m at end-1997 to US$305m at the end of 1999. Foreign reserves as recorded by the central bank totalled N$1.9n at the end of 1999, up by one-quarter on their year-earlier level, and provided about eight weeks’ import cover, up from five to six weeks during 1995-97. (IMF and central bank data for foreign reserves are shown in Reference table 28.)

The Namibian dollar is As the Namibian dollar is pegged to the South African rand at par, its nominal pegged to the rand external value is determined on the basis of the latter’s cross rates against major foreign currencies, and it has therefore steadily lost value in line with the rand’s depreciation. As a part of the Multilateral Monetary Area, Namibia is not able to adjust the exchange rate in line with domestic economic conditions and balance-of-payments considerations, should these vary significantly from those of South Africa. Namibia also has to apply the foreign-exchange control regulations applied by the South African Reserve Bank. (Reference table 29 shows trends in exchange rates.)

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Namibia 45

Appendices

Regional organisations

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

Sources of information

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

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

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

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

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

Annual reports by the Bank of Namibia, the Chamber of Mines of Namibia, De Beers Centenary, the Meat Corporation of Namibia (Meatco), Namibian Minerals Corporation (Namco), Namibia Power Corporation (Nampower), Namibian Ports Authority (Namport), Namibian Stock Exchange (NSX), Rio Tinto, TransNamib

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

Bank of Namibia, Monthly Developments in Monetary Statistics and Prices

Bank of Namibia, Quarterly Bulletin

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

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

Central Bureau of Statistics, Statistical Abstract 1999.

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

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

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

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

The Namibian (daily), Windhoek

Namib Times (twice weekly), Walvis Bay

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

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

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Namibia 47

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

Namibia is not yet featured in the World Bank’s Global Development Finance, and a standard international tabulation of the country’s external debt is therefore lacking. This will hopefully be remedied in due course following the writing-off from the central bank’s books of the inherited bilateral debt to South Africa in 1997. Trade publications are an invaluable source of information on sectoral developments in mining and fishing, while since independence most of Namibia’s European and other overseas trading partners have published separate statistics for bilateral trade with the country, which previously were lumped together with those for South Africa (with the main exception of the UK). It should be noted that there is one major discrepancy in the treatment of Namibian exports to the UK. The official UK foreign trade statistics do not separately record imports of rough diamonds from Namibia (or from Botswana and South Africa), despite the fact that the bulk of these are sold in London by De Beers’ Central Selling Organisation (CSO). This is because De Beers obtained a dispensation from the UK authorities during the 1970s that diamonds imported into the UK for sale by the CSO would not be shown according to country of origin in order to protect market confidentiality and, almost certainly, in order to make tracking of diamond exports from Namibia and South Africa more difficult were these ever to be the subject of economic sanctions by a UK government. Rough diamonds from southern African producers are flown first to Switzerland, although only a small proportion are sold to the diamond industry there and shipped on to the UK. As a consequence, the UK official figures significantly undervalue the true value of bilateral trade with Namibia, as the main categories of Namibian imports shown are beef and fish.

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

IMF, International Financial Statistics (monthly)

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

UNDP, Namibia Human Development Report, 1998.

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

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

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

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

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

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

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

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

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

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

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

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

Namibian Government, www.republicofnamibia.com, official government website containing general and economic information with a write to President Nujoma feature.

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

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

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

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Namibia 49

Reference tables

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

Reference table 1 Population (mid-year; ‘000 unless otherwise indicated) 1995 1996 1997 1998 1999 Population 1,544 1,570 1,596 1,622 1,648 % change, year on year 1.71 1.68 1.66 1.63 1.60 Population by age group 0-14 690 699 709 716 724 15-64 789 806 822 842 859 65 & over 65 65 65 64 65 Source: US Bureau of the Census, International Data Base.

Reference table 2 Transport statistics

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

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

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

Reference table 3 Port of Walvis Bay traffica (‘000 tonnes unless otherwise indicated) 1993/94 1994/95 1995/96 1996/97 1997/98 Cargo landed 902 1,110 1,215 1,156 1,148 Petroleum products 435 580 719 677 645 Fish productsb 61 107 108 110 136 Coal 148 154 47 52 67 Maize & wheat 80 62 130 30 36 Sugar 3945515649 Cement 19 20 19 20 16 Malt 7 9 11 15 14 Vehicles 4 11 19 9 2 Other 109 122 111 187 183 Cargo shipped 622 665 653 630 718 Salt bulk & bagged 352 370 297 325 496 Fish products 104 109 76 78 73 Copper & lead 51 39 38 34 44 Fluorspar 32 53 35 31 29 Manganese ore 0 29 104 63 15 Marble & granite 20 14 11 13 14 Others 63 51 92 86 47 Cargo transshipped 95 32 38 37 41 Totalc 1,620 1,808 1,906 1,822 1,908 Containerised cargo (%) 19.8 18.4 18.0 18.0 15.1

a Years ending March 31; in 1997 Namport changed its financial year to end on September 30; figures for 1997/98 are on a twelve-month comparative basis. b Landings of fish by Namibian and foreign fishing vessels. c Totals may not add because of rounding.

Source: Namibian Ports Authority, Annual Reports.

Reference table 4 Electricity generation and salesa (m kwh unless otherwise indicated) 1995 1996 1997 1998 1999 Total supply 2,015 1,951 1,949 2,211 2,106 Ruacanab 1,134 854 610 992 1,192 Van Eckc 115 18 17 11 27 Imports 758 1,078 1,319 1,207 887 of which: Escomd 758 1,078 1,319 1,192 869 Zesco n/a n/a n/a 15 18 Paratus 8 1 3 1 2 continued

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1995 1996 1997 1998 1999 Total sales 1,784 1,731 1,700 1,904 1,863 Domestic consumers 1,502 1,525 1,699 1,881 1,807 Municipalitiese 868 913 963 1,028 1,060 Mines 631 656 596 668 562 Rural 139 132 140 185 185 Exportsd 146 30 1 23 56 Sales revenuef (N$ m) 309 375 274 331 337

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

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

Reference table 5 Gross domestic producta

1995 1996 1997 1998 1999b Total (N$ m) At current prices 11,760 13,481 15,037 16,598 17,807 At constant (1990) prices 7,611 7,771 7,970 8,212 8,453 % change, year on year 3.2 2.1 2.6 3.0 2.9 Per head (N$) At current prices 7,338 8,205 8,866 9,485 9,865 At constant (1990) prices 4,775 4,730 4,699 4,693 4,683 % change, year on year 0.1 –0.9 –0.6 –0.1 –0.2

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

Source: CBS, Preliminary National Accounts 1999.

Reference table 6 Gross domestic product by expenditure (N$ m unless otherwise indicated; constant 1990 prices) 1995 1996 1997 1998 1999a Private consumption 3,895 3,917 4,086 4,297 4,554 % change, year on year 18.3 0.6 4.3 5.2 6.0 % of total 51.2 50.4 51.3 52.3 53.9 Government consumption 2,259 2,298 2,355 2,446 2,489 % change, year on year 0.1 1.7 2.5 3.9 1.8 % of total 29.7 29.6 29.5 29.8 29.4 Gross domestic investment 1,696 1,834 1,493 1,642 1,647 % change, year on year 3.5 8.1 –18.6 9.9 0.3 % of total 22.3 23.6 18.7 20.0 19.5 Change in stocks –70 –57 –44 164 –87 % contribution to growth –3.7 0.2 0.2 2.6 –3.0 % of total –0.9 –0.7 –0.6 2.0 –1.0 continued

1995 1996 1997 1998 1999a Gross domestic expenditurec 7,829 8,036 7,927 8,629 8,701 % of total 102.3 103.4 99.5 105.1 102.9 Exports of goods & services 4,788 5,124 5,122 4,792 5,106 % change, year on year 11.0 7.0 0.0 –6.5 6.6 % of total 62.9 65.9 64.3 58.4 60.4 Imports of goods & services –5,006 –5,389 –5,079 –5,208 –5,354 % change, year on year 13.9 7.6 –5.7 2.5 2.8 % of total –65.8 –69.3 –63.7 –63.4 –63.0 GDP at market prices 7,611 7,771 7,970 8,212 8,453

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

Source: CBS, Preliminary National Accounts 1999.

Reference table 7 Gross domestic product by sector (N$ m unless otherwise indicated; constant 1990 prices) 1995 1996 1997 1998 1999a Agricultureb 521 573 509 477 493 % change, year on year –1.8 9.9 –11.1 –6.4 3.3 % of total 7.6 8.2 7.1 6.5 6.5 Fishing 307 312 306 370 386 % change, year on year 7.5 1.6 –2.0 20.9 4.4 % of total 4.5 4.5 4.3 5.0 5.1 Mining & quarrying 1,291 1,339 1,391 1,342 1,388 % change, year on year 5.2 3.8 3.9 –3.5 3.4 % of total 18.9 19.2 19.4 18.3 18.4 of which: diamond mining 904 940 939 955 1,042 % change, year on year 7.1 3.9 –0.1 1.7 9.2 % of total 13.2 13.5 13.1 13.0 13.8 Manufacturingc 922 856 972 1,008 1,001 % change, year on year 0.6 –7.2 13.6 3.7 –0.7 % of total 13.5 12.3 13.5 13.7 13.3 of which: fish processing 238 145 228 243 228 % change, year on year –7.8 –39.1 56.9 6.9 –6.2 % of total 3.5 2.1 3.2 3.3 3.0 Construction 221 238 175 153 157 % change, year on year 2.6 7.8 –26.5 –12.7 2.7 % of total 3.2 3.4 2.4 2.1 2.1 Electricity & water 103 85 56 76 93 % change, year on year 24.5 –17.4 –34.7 35.9 22.8 % of total 1.5 1.2 0.8 1.0 1.2 Wholesale & retail trade 478 487 515 508 531 % change, year on year 4.5 1.8 5.7 –1.3 4.6 % of total 7.0 7.0 7.2 6.9 7.0 Hotels & restaurants 128 120 151 171 174 % change, year on year 13.7 –6.2 25.6 13.1 1.9 % of total 1.9 1.7 2.1 2.3 2.3 continued

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Namibia 53

1995 1996 1997 1998 1999a Transport & communications 394 422 469 496 509 % change, year on year 10.6 7.1 11.0 5.7 2.7 % of total 5.8 6.1 6.5 6.7 6.8 Finance & real estate 562 600 644 680 680 % change, year on year 2.2 6.7 7.4 5.6 –0.1 % of total 8.2 8.6 9.0 9.3 9.0 Government services 1,685 1,717 1,768 1,846 1,896 % change, year on year –0.1 1.9 3.0 4.4 2.7 % of total 24.7 24.6 24.6 25.1 25.2 Social & community services 65 66 65 63 63 % change, year on year –0.7 1.3 –1.4 –2.6 –0.3 % of total 1.0 0.9 0.9 0.9 0.8 Other producers 153 156 159 161 163 % change, year on year 2.0 2.0 1.6 1.8 1.0 % of total 2.2 2.2 2.2 2.2 2.2 GDP at factor cost 6,832 6,973 7,181 7,351 7,534

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

Source: CBS, Preliminary National Accounts 1999.

Reference table 8 Government financesa (N$ m unless otherwise indicated) 1997b 1998b 1999b 2000c 2001d Tax revenue 4,114 5,106 5,501 6,391 6,935 of which: income tax on individuals 847 966 1,241 1,280 1,405 diamond mininge 90 505 161 200 185 non-mining companies 282 406 540 440 625 general sales tax 664 756 885 905 1,025 customs & excise 1,349 1,560 1,805 2,241 2,877 Non-tax revenue 512 530 647 598 671 of which: diamond royalties 160 199 199 205 240 Grants 50 54 37 139 80 Total revenue 4,676 5,690 6,186 7,128 7,686 Expenditure 5,567 6,129 6,936 8,009 8,447 Current 4,838 5,262 6,103 6,814 7,189 Capitalf 729 867 833 1,196 1,258 Overall balance –891 –439 –749 –881 –761 % of GDP 6.4 2.8 4.4 4.6 3.6

a Fiscal years ending March 31st. b Budget outturns. c Revised budget estimates. d Budget projections. e Diamond royalty payments. f Includes net lending and equity participation.

Source: Ministry of Finance.

Reference table 9 Money supply and credit (N$ m unless otherwise indicated; year-end) 1995 1996 1997 1998 1999 Demand deposits 1,582 2,517 2,563 3,316 4,166 Currency in circulation 240 283 336 365 423 Money (M1) 1,822 2,800 2,898 3,681 4,598 % change, year on year 8.3 53.7 3.5 27.0 24.9 Quasi-money 2,926 3,250 3,603 3,525 4,028 Money (M2) 4,748 6,050 6,501 7,206 8,626 % change, year on year 26.0 27.4 7.5 10.8 19.7 Domestic credit 5,269 6,946 7,704 8,774 10,349 Claims on central government 686 221 68 112 459 Claims on other public sectora 91 91 166 162 153 Claims on private sector 4,743 5,663 6,554 7,129 7,434 Claims on other financial institutionsb 75 18 24 15 11 Net foreign assets –326 954 892 1,356 2,288

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

Source: Bank of Namibia, 1999 Annual Report.

Reference table 10 Interest rates (%; end-period) 1995 1996 1997 1998 1999 Bank ratea 17.50 17.75 16.00 18.75 11.50 Prime overdraft rateb 19.00 20.70 20.00 23.55 16.70 Deposit ratesb 12.00 12.90 12.00 13.76 8.57 Lending ratesb 19.00 19.90 19.60 22.31 17.51 Treasury billsa 14.10 16.52 15.31 18.32 11.53

a Bank of Namibia. b Commercial banks.

Source: Bank of Namibia, 1999 Annual Report.

Reference table 11 Consumer price inflationa (Dec 1992=100; annual averages) 1995 1996 1997 1998 1999 All items index 127.9 138.2 150.4 159.7 173.4 % change, year on year 10.0 8.1 8.9 6.2 8.6 Food price indexb 129.2 137.8 148.4 152.4 163.3 % change, year on year 11.6 6.7 7.7 2.6 7.2

a The weightings for commodities were revised and the indices rebased in 1993, using information obtained from a 1995 household expenditure survey of the Windhoek municipal area (including the previously excluded Katutura and Khomasdal suburbs). b Food is the biggest component of the all- items index, with a 28.4% weighting.

Source: CBS.

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Namibia 55

Reference table 12 Cereal productiona (‘000 tonnes) 1994/95 1995/96 1996/97 1997/98 1998/99 Millet & sorghumb 40.7 64.5 117.1 38.5 48.2 Maize 13.1 18.2 49.4 13.8 22.4 Commercial areasc 9.0 10.0 34.9 9.0 16.0 Communal areasd 4.1 8.2 14.5 4.7 6.4 Wheate 2.7 4.1 6.3 5.0 3.2 Total 56.5 86.8 172.8 57.3 73.8

a July-June crop years. b All produced in northern communal farming areas: Caprivi, Okavango, Ohangwena, Omusati, Oshana and Oshikoto regions, except 1,700 tonnes produced commercially for the first time in 1998/99. c Rain-fed and irrigated. d Mainly Okavango irrigated and Caprivi rainfed. e Mainly commercially irrigated.

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

Reference table 13 Livestock marketing (‘000 head) 1994 1995 1996 1997 1998 Cattle 395 408 498 227 275 Locally slaughtered 216 215 219 134 152 Abattoirsa 182 185 191 102 132 Butchers 34 30 28 32 20 Live exports to South Africab 179 193 279 93 123 Small stockc 857 942 1,060 954 894 Locally slaughtered 211 174 131 88 72 Abattoirsd 115 53 2 – – Butchers 96 121 129 88 72 Live exports to South Africac 646 768 929 866 822 Pigse 35 33 32 27 n/a Total 1,287 1,383 1,590 1,208 1,169f

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

Sources: CBS, Statistical Abstract 1999; Meat Board of Namibia, Annual Reports.

Reference table 14 Fish catcha (‘000 tonnes) 1994 1995 1996 1997 1998 Purse seine net fishingb 177 145 116 134 128 of which: pilchard 116 43 1 28 69 horse mackerel 34 51 91 88 25 anchovy 25 48 1 3 3 Trawling/coastal fishingc 462 410 388 351 n/a of which: hake 102 120 122 104 141 mackerel 331 260 230 213 n/a monk 12 10 10 10 n/a tuna 3221n/a Ring & bow net fishing 3.7 2.2 2.0 1.7 2.6 Crab 3.6 2.0 1.7 1.5 2.3 Rock lobster 0.1 0.2 0.3 0.2 0.4 Experimental trawld –49n/an/a Total incl others 643 561 515 487 n/a

a Declared fish catches within Namibia’s exclusive economic zone (EEZ), including foreign trawlers chartered by Namibian quota-holding firms. b Inshore pelagic catch, mainly landed for local canning or reduction to fishmeal and oil. c Bottom trawling and long-lining, mainly hake, monk, kingklip and sole; mid-water trawling, mainly mackerel (exported unprocessed); coastal long-lining and pole, tuna. d Orange roughy, alfonsino and other deep-water species.

Source: Ministry of Fisheries and Marine Resources.

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Namibia 57

Reference table 15 Minerals production (‘000 tonnes unless otherwise indicated) 1995 1996 1997 1998 1999 Diamondsa (‘000 carats) 1,378 1,390 1,418 1,440 1,639 Goldb (kg) 2,099 2,190 2,433 1,882 2,008 Silverc (tonnes) 69 42 39 23 0 Copper, blister (99% Cu) 29.8 16.6 16.0 8.0 0 Lead, refined metal 26.8 8.5 0.5 0.2 0 Cadmium, refined metalc 15 14 2 0 0 Arsenic trioxide, refined metalc 1,136 1,159 1,232 175 0 Zinc, concentrate 59.3 69.7 74.6 78.6 69.2 Pyrite, concentrate 103.1 90.7 93.7 28.2 0 Manganese ore 98 93 40 0 0 Fluorspar, concentrate 36.9 32.3 23.2 42.1 57.7 Lithium oresd 2.6 2.0 0.6 0.2 n/a Salte 429.8 302.3 490.5 507.3 502.7 Marble 16.9 12.7 13.7 9.8 n/a Semi-precious stonesf (tonnes) 437 918 439 189 n/a Uranium oxide (tonnes) 2,378 2,886 3,425 3,257 3,171

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

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

Reference table 16 Private construction activities (N$ m unless otherwise indicated) 1994 1995 1996 1997 1998 Plans approved Units (no.) 5,343 4,736 4,188 3,788 4,167 Value 639.6 666.9 606.1 513.2 483.7 Residential 279.2 287.5 184.7 139.9 222.3 Commercial/industrial 155.7 215.2 391.8 179.8 77.1 Othersa 204.7 164.2 246.8 193.6 184.3 Buildings completed Units (no.) 5,090 3,394 3,418 2,509 2,867 Value 454.4 644.0 506.1 346.8 382.8 Residential 244.2 225.1 194.6 111.1 147.6 Commercial/industrial 86.9 279.7 154.1 64.7 110.5 Othersa 123.3 139.2 157.5 171.1 124.7

a Includes alterations.

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

Reference table 17 Assets and liabilities of deposit money banksa (N$ m; year-end) 1995 1996 1997 1998 1999 Assets 5,481 6,808 8,217 8,821 10,006 Reserves 175 226 276 266 511 Foreign assets 141 350 537 548 878 Claims on government 256 461 660 702 1,020 Claims on other banks 75 7 24 15 11 Claims on private sector 4,743 5,673b 6,554 7,129 7,434 Othersc 91 91 166 162 153 Liabilitiesd 5,481 6,808 8,217 8,821 10,006 Demand deposits 1,582 2,517 2,563 3,316 4,166 Time & savings deposits 2,926 3,251 3,603 3,525 4,037 Foreign liabilities 501 295 839 681 418 Central government deposits 74 78 218 173 89 Capital & reserves 432 644 783 917 1,201 Other items (net) –37 15 204 194 86 Bonds 4 9 7 6 8

a The data cover the operations of the country’s four commercial banks: Bank Windhoek, Commercial Bank of Namibia, First National Bank Namibia, Standard Bank Namibia. b Figures as in source. c Comprises non-financial sector public enterprises and regional councils. d Totals may also include credit from Bank of Namibia.

Source: Bank of Namibia, 1999 Annual Report.

Reference table 18 Namibian Stock Exchange (year-end) 1995 1996 1997 1998 1999 No. of listed companies 23 27 33 41 41 of which: domestic shares 10 12 13 15 15 Market index (Oct 1992=100) 225a 218 226 176 292 Market capitalisation N$ bn 69.6 76.0 154.8 159.4 333.9 US$ bn 19.2 17.7 33.6 28.8 54.6 No. of shares traded (m) 14.6 68.6 67.2 107.2 193.6 Turnover value (N$ m) 240 660 901 1,035 1,828

a A new calculation method was introduced in July 1995 to avoid previous inaccuracies caused by new share listings and suspensions.

Sources: NSX.

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Namibia 59

Reference table 19 Tourist accommodation (‘000 room-nights sold unless otherwise indicated) 1994 1995 1996 1997 Total 546 622 682 656 Khomas regiona 151 183 194 211 Coastal regionb 134 162 167 138 Average room occupancy (%) 40 40 41 43 Hotels & lodges 299 354 372 338 Average room occupancy (%) 42 44 44 47 Rest campsc 177 177 197 207 Average room occupancy (%) 46 41 42 44

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

Sources: CBS; Ministry of Environment and Tourism.

Reference table 20 Foreign trade indices (1990=100) 1995 1996 1997 1998 1999 Value of exports 199 244 255 268 303 Volume of exports 152 162 162 152 162 Export prices 131 150 157 176 188 Value of imports 186 223 245 266 284 Volume of imports 123 132 125 128 132 Import prices 151 169 196 208 216 Terms of trade 8789808587 Source: CBS, Preliminary National Accounts 1999.

Reference table 21 Exports of goods and services (N$ m; fob) 1995 1996 1997 1998 1999 Live animals & animal products 547 689 400 454 429 of which: cattle 271 386 126 157 152 sheep & goats 148 143 144 179 145 Fisha 26 17 14 14 14 of which: tuna 22 13 10 10 10 Minerals 2,650 3,344 3,600 3,183 3,957 Diamondsb 1,763 2,328 2,495 2,150 2,529 Copper 250 154 194 52 0 Gold 99 118 123 102 118 Zinc 45 73 116 118 167 Uranium & all others 493 671 672 761 867 continued

1995 1996 1997 1998 1999 Manufactured products 1,918 2,195 2,267 3,003 3,199 of which: prepared & preserved fish 1,254 1,220 1,447 2,142 2,255 white fishc 747 1,014 1,081 1,712 1,902 canned fishd 390 34 191 273 170 rock lobster & crabe 79 126 134 94 118 fish meal & fish oil 34 40 33 56 55 meat & meat preparations 368 445 316 494 692 Electricity 4 0 0 2 3 Total exports of goods incl others 5,145 6,245 6,282 6,656 7,602 Purchases by non-residents 1,060 1,315 1,597 1,659 1,826 Other services 83 135 154 133 146 Total exports of services 1,143 1,450 1,752 1,792 1,972

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

Source: CBS, Preliminary National Accounts 1999.

Reference table 22 Imports of goods and servicesa (N$ m; cif) 1993 1994 1995 1996 1997 Food, live animals, beverages & tobacco 1,103 1,129 1,205 1,499 1,862 Textiles, clothing & footwear 274 340 426 540 582 Wood, paper & paper products 251 331 367 384 425 Mineral fuels & lubricants 583 435 318 414 456 Chemical, plastics & rubber 387 533 617 802 868 Metal & metal products 255 373 462 526 582 Machinery & electrical goods 451 769 1,107 1,146 1,158 Vehicles & transport equipment 798 762 998 1,179 1,134 Others 455 378 479 524 655 Total imports cif 4,558 5,049 5,980 7,012 7,722 Central bank adjustments 91 –61 96 117 70 Freight & insurance –330 –460 –549 –593 –678 Imports of goods, fob 4,362 4,993 5,615 6,636 7,566 Imports of servicesa 1,586 1,663 2,012 2,513 2,473 Residents’ purchases abroad 233 274 325 383 462 Fishing vessel charters 315 292 250 307 235 Other services 1,038 1,098 1,437 1,824 1,777

a Totals do not always add in source.

Sources: CBS, National Accounts 1983–98; Preliminary National Accounts 1999.

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Namibia 61

Reference table 23 Balance of payments, IMF series (US$ m) 1995 1996 1997 1998 1999 Goods: exports 1,320.4 1,418.4 1,403.7 1,343.3 1,278.3 Goods: imports –1,406.3 –1,548.2 –1,530.9 –1,615.0 –1,450.9 Trade balance –85.8 –129.7 –127.1 –271.7 –172.9 Services: credit 259.0 315.3 337.4 380.1 327.0 Services: debit –468.3 –551.5 –580.9 –533.7 –456.9 Income: credit 213.8 374.0 319.2 252.0 226.7 Income: debit –159.8 –235.1 –249.0 –180.6 –165.9 Current transfers: credit 349.2 426.9 437.3 462.2 418.2 Current transfers: debit –22.7 –23.9 –21.0 –18.0 –14.7 Current-account balance 85.3 175.9 115.8 90.4 161.8 Direct investment abroad 6.1 3.5 21.7 –0.7 2.2 Direct investment in Namibia 98.0 153.0 128.7 91.0 96.2 Portfolio investment assets –17.0 –5.1 –8.1 –14.6 –11.1 Portfolio investment liabilities 64.2 82.2 31.2 26.0 –4.4 Other investment assets –301.0 –428.0 –411.2 –289.9 –175.5 Other investment liabilities 47.6 –10.9 63.8 116.7 –53.1 Financial-account balance –102.1 –205.3 –174.0 –71.4 –145.6 Capital account nie credit 43.8 40.7 42.5 33.9 24.2 Capital account nie debit –0.6 –0.6 –0.5 –0.5 –0.4 Capital account nie balance 43.2 40.1 42.0 33.4 23.8 Net errors & omissions 48.5 13.4 39.1 15.3 15.7 Overall balance 75.0 24.2 22.9 67.8 55.8 Source: IMF, International Financial Statistics.

Reference table 24 Balance of payments, national series (N$ m) 1995 1996 1997 1998 1999a Merchandise exports fob 5,145 6,245 6,281 6,656 7,602 of which: diamonds 1,767 2,318 2,495 2,161 2,524 Merchandise imports fob –5,615 –6,636 –7,566 –8,236 –8,693 Trade balance –471 –390 –1,285 –1,580 –1,091 Non-factor services, net –868 –1,063 –722 –872 –976 of which: transport –712 –861 –830 –779 –864 travel 683 878 1,074 1,094 1,201 Investment income, net 581 327 351 506 231 Transfers, netb 1,483 1,845 2,050 2,393 2,776 of which: foreign aid inflows 266 366 343 445 401 SACU receipts 1,092 1,301 1,560 1,805 2,241 debits (mainly SACU) –59 –62 –55 –58 –59 Current-account balance 724 719 394 447 940 continued

1995 1996 1997 1998 1999a Capital transfersc 146 181 154 252 271 Direct investment 568 649 383 434 710 Portfolio investment 280 134 86 –56 –34 Other long-term investment –1,623 –1,540 –992 –615 –1,042 of which: pension fundsd –645 –904 –748 –722 –850 life assuranced –488 –479 –439 –562 –430 Short-term investment 74 –94 221 –190 –506 of which: banks 100 –415 349 –169 –592 Capital-account balance –556 –672 –148 –174 –600 Errors & omissions –81 51 66 37 9 Overall balance 87 99 312 309 349

a Provisional. b Including compensation for employees. c Mainly foreign aid receipts for capital projects. d Previously classified as portfolio investment.

Source: Bank of Namibia, 1999 Annual Report.

Reference table 25 International investment balancea (N$ m; year-end market values) 1993 1994 1995 1996 1997b Namibian assets 8,765 9,878 9,821 9,814 9,758 Direct investment abroadc 269 56 54 61 69 Portfolio investmentd 399 585 601 603 612 Reserve assetse 454 718 808 906 1,219 Other assetsf 7,643 8,519 8,358 8,244 7,858 Namibian liabilities 7,478g 8,424 9,461 10,495 11,394 Direct investment in Namibiah 5,065g 5,674 6,229 6,987 7,704 Portfolio investment 752 876 1,091 1,035 1,195 Other liabilitiesi 1,661 1,874 2,141 2,473 2,495 Net position 1,287 1,454 360 –679 –1,636

a Values of Namibian assets revised downwards because of lower valuation of other assets including pension funds. b Provisional. c Of which equity capital is the largest component. d Mainly debt securities and unit trusts. e Mainly currency and bank deposits. f Of which pension fund and life insurance assets are the biggest components. g The reduction reflects the government’s acquisition of half the equity shares in Namdeb Diamond Corporation. h Of which equity holdings represent around 75%, reinvested earnings 15%, debt because of affiliated enterprises 10%. i Mainly government debt securities. Including Bank of Namibia loan facility for rescheduled bilateral debt with South Africa.

Source: Bank of Namibia, 1997 Annual Report; updated data was not published in the 1998 or 1999 Annual Reports.

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Namibia 63

Reference table 26 External debt (N$ m unless otherwise indicated; year-end) 1995 1996 1997 1998 1999 Public debt 1,281 1,365 354 545 729 of which: bilateral 439 403 212 335 448 multilateral 58 85 142 210 281 Bank of Namibia facilitya 784 877 0 0 0 Private debt 101 95 345b 182 n/a of which: financial institutions 44 46 219 47 Total debt outstanding 1,382 1,440 699 728 n/a % of GDP 11.4 10.5 4.6 4.5 n/a Total debt servicec 142 180 26 240 n/a Debt-service ratiod (paid) 2.3 2.4 0.3 2.8 n/a

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

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

Reference table 27 Net official development assistancea (US$ m) 1994 1995 1996 1997 1998 Bilateral 112.5 147.7 136.4 122.9 128.7 of which: Germany 27.6 51.5 43.1 26.6 36.1 Sweden 15.0 14.3 16.8 14.9 12.5 Norway 11.4 10.8 16.6 11.8 11.0 Finland 9.3 7.9 7.7 7.6 6.0 Denmark 9.3 8.5 6.6 6.3 8.3 Multilateral 24.6 43.9 51.4 41.6 51.5 of which: AfDF 5.1 3.3 2.4 1.9 3.0 EU 8.8 24.1 36.6 31.5 40.7 UNICEF 4.0 3.8 3.6 1.6 1.7 Totalb 137.1 191.6 187.9 164.6 180.1 of which: grants 130.0 169.2 164.4 145.7 132.3

a Disbursements minus repayments. Official development assistance is defined as grants and loans with at least 25% grant element, provided by OECD and OPEC member countries and multilateral agencies, and administered with the aim of promoting development and welfare in the recipient country. b Some totals may not add because of rounding.

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

Reference table 28 Foreign reserves (end-period) 1995 1996 1997 1998 1999 Total reserves excl golda (US$ m) 220.98 193.87 250.53 260.25 305.49 Foreign exchangea 220.94 193.81 250.47 260.18 305.42 SDRsa 0.02 0.02 0.02 0.02 0.02 Reserve position in IMFa 0.03 0.04 0.04 0.05 0.05 Foreign reservesb (N$ m) 808 906 1,219 1,527 1,877

a IMF data. b Bank of Namibia data.

Sources: IMF, International Financial Statistics; Bank of Namibia, 1998 Annual Report.

Reference table 29 Exchange rates (annual averages) 1995 1996 1997 1998 1999 N$:US$ 3.65 4.36 4.62 5.49 6.11 N$:£ 5.73 6.82 5.19 9.08 9.89 N$:DM 2.55 2.87 3.18 3.11 3.33 Pta:N$ 37.7 29.5 31.7 27.29 25.48 ¥:N$ 28.74 25.17 26.03 23.78 18.61 N$:SDR 5.42 6.73 6.57 8.25 8.45 N$:P 1.32 1.31 1.29 1.31 1.32 N$:Z$ 0.43 0.42 0.43 0.26 0.16 Sources: Bank of Namibia; South African Reserve Bank; IMF.

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Swaziland 65

Swaziland

Basic data

Land area 17,364 sq km

Population 1,010,000 (2000 EIU estimate)

Main towns Population in ‘000 (1998 EIU estimates)

Greater Manzini 74 Mbabane (capital) 60

Climate Subtropical; near-temperate on Highveld

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

Languages Siswati and English

Measures Metric system

Currency Lilangeni, plural emalangeni (E)=100 cents. Average exchange rate in 1999: E6.11:US$1. Exchange rate on July 24th 2000: E6.91:US$1.

Fiscal year April 1st to March 31st

Time 2 hours ahead of GMT

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

Political background

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

Historical background

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

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

A traditional electoral system (tinkhundla), under which candidates must be independent of any political party, was instituted in 1978. Following public protests the king launched a review of the system in 1991, which rejected multiparty democracy. Legislative elections in 1993 and 1998 failed to still popular dissent. There was a rash of strikes led by the Swaziland Federation of Trade Unions (SFTU) in 1994-97, and periodic confrontations between dissenters and the police continue. An attempt by the government to appease its critics with the formation of a Constitutional Review Commission (CRC) in 1996 has failed because of the commission’s royalist make-up and its slow progress to date. The original two-year remit to produce a new constitution was extended, but in early 2000 the king demanded that the CRC complete its work by the end of October.

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Swaziland 67

Important recent events

February 1997: During a month-long strike four union leaders are detained amid some violence. South African trade unions publicly support the Swaziland Federation of Trade Unions (SFTU).

April 1997: The Swaziland border is blockaded for a day by South African, Swazi and Mozambican trade unions.

October 1997: A strike called by the SFTU receives little support and is called off after two days. Teachers begin a strike that lasts into November.

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

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

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

November 1998: The building housing the deputy prime minister’s office in Mbabane is damaged in an explosion; an unknown group claims responsibility and makes further threats in the face of condemnation across the political spectrum.

November 1998: The NNLC elects a new president, Obed Dlamini.

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

October 1999: The king relents on the CRC deadline.

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

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

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

Constitution and institutions

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

Under the tinkhundla system, nominations to the House of Assembly are conducted by a show of hands within 55 local areas. Three candidates are then chosen by secret ballot before a final secret ballot decides the winner. The king appoints the remaining ten members of the House of Assembly and 20 of the 30 members of the Senate; the other ten are nominated by parliament. The

king appoints the prime minister, has to approve the cabinet and may legislate by decree. Swaziland continues, in effect, to have two governments: the prime minister and cabinet (together with the civil service) in Mbabane, and the traditional authorities in the royal palace.

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

The Industrial Relations Act

Labour legislation has been the subject of serious controversy for several years. The Industrial Relations Act (IRA) of 1996 did not conform to an agreement reached by government, business and labour representatives. By allowing for individuals instigating stayaways to be indicted, it upset trade union leaders, four of whom were arrested for their part in the mass stayaway of January 1996. The act was soon declared null and void and the union leaders were acquitted. However, their trial focused international trade union attention on worker rights in Swaziland, leading to a complaint against Swaziland being filed with the International Labour Organisation (ILO) and the US government being petitioned for Swaziland to be removed from the list of eligible beneficiaries of the generalised system of trade preferences (GSP).

The government promised a prompt amendment to the act, but a new bill (drafted with ILO participation) was gazetted only in August 1998, just as parliament was dissolved pending the October election. The alternative of enacting the legislation by royal decree was not followed despite growing international pressure and business and labour frustration. The bill was eventually tabled in parliament in May 1999 and was passed with some reluctance by the House of Assembly in July and the Senate in September; both houses objected to international trade union pressure. Speedy royal assent was expected, but in May 2000 it transpired that the king had referred the bill to the Swazi National Council, which proposed certain amendments. With Swaziland facing ILO and US threats of action for the fifth successive year, a joint sitting of parliament passed the bill in June. Immediate royal assent enabled the act to be submitted to the ILO within days, but the ILO as well as US trade representatives are insisting that the SNC amendments be deleted.

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

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Swaziland 69

Political forces

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

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

Main political figures

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

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

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

Albert Shabangu: Minister of foreign affairs and trade; modernist with strong links to the king; possibly being groomed for the premiership; a shrewd strategist who is influential in cabinet. He is also the former leader of the Swaziland National Association of Teachers (SNAT).

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

Barnabas Mhlongo: Former minister of commerce, industry and tourism; a businessman and deputy president of the Ngwane National Liberatory Congress (NNLC).

Obed Dlamini: Former prime minister, trade unionist and member of the Senate; now president of NNLC.

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

Mario Masuku: President of Pudemo; enjoys the support of radicals and the Swaziland Youth Congress.

Marwick Khumalo: MP for Lobamba, the traditionalist heartland; close to the royal family but outspoken; he could give traditionalists a modern tinge.

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

International relations and defence

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

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

Resources and infrastructure

Population

The 1997 census revealed a total resident population of just under 930,000. In addition, there were 51,000 absentees, mainly men working in South Africa. The population growth rate fell to 2.9% per year between 1986 and 1997 because of a decline in fertility rates and the repatriation of Mozambican refugees.

The population is almost entirely Swazi, with a small minority of other Africans (mostly Mozambican and South African), Europeans and people of mixed race (“coloureds”). The main religion is Christianity, although many people also follow traditional beliefs. (See Reference table 1 for population census data and Reference table 2 for employment data.)

EIU Country Profile 2000 © The Economist Intelligence Unit Limited 2000 Swaziland 71

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

Education and health

Basic indicators for all levels of education have improved greatly since independence, and the literacy rate is now 74% for both sexes. Education is the second largest element of recurrent government expenditure, accounting for an average of 25% between 1995/96 and 1999/2000. Unfortunately, the emphasis has been on quantitative expansion rather than on quality, and the system is not producing the skills required to boost economic growth and increase competitiveness.

Swaziland has above-average infant mortality rates compared with countries with similar income levels, although an expanded immunisation programme has improved the position since 1989. Swaziland has 105% of its required calorie supply, compared with an average of 89% for Sub-Saharan Africa. As in neighbouring countries, however, the spread of HIV and AIDS has substantially reduced average life expectancy and, together with malaria, it is putting pressure on the health budget.

Natural resources and the environment

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

Transport and communications

There is a good network of roads, and the main Mbabane-Manzini road has been improved to motorway standard. Swaziland Railway is one of the few profitable railways in Africa. It depends largely on through-traffic from the north to the ports of Richards Bay and Durban, although it has diversified by expanding services to the Mozambican port of Maputo. Swaziland is served by a joint-venture airline between the government and a South African carrier that operates the Manzini-Johannesburg route.

Telecommunications are poor by South African standards, but the cellular phone network, opened in late 1998, has grown more rapidly than anticipated. The Internet penetration level (there were some 4,000 dial-up subscribers in 2000) is higher than in most African countries. Radio and television are state- controlled, although the only national newspaper is independent and generally opposes government policy. (For background data on transport and communications see Reference table 3.)

Energy provision

Most electricity is purchased from South Africa, with the balance generated at hydroelectric stations. Although the electricity grid has spread to most areas, rural households still depend heavily on wood, which accounts for some 61% of energy needs, followed by petroleum products (23%), electricity (12%) and coal (4%). Electricity remains unreliable and relatively expensive, but a new line from South Africa through Swaziland to Maputo should provide the country with adequate capacity for 30 years. (For electricity statistics see Reference table 4.)

Energy balance, 1999 (m tonnes oil equivalent) Oil Coal Electricity Other Total Production 0.00 0.26 0.05a 0.41 0.72 Imports 0.12 0.02 0.16a 0.00 0.30 Exports 0.00 –0.26 0.00 0.00 –0.26 Total 0.12 0.02 0.21a 0.41 0.76 Net transformationb 0.00 0.00 –0.15 –0.08 –0.23 Final consumption 0.12 0.02 0.06c 0.33 0.53

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

Source: Energy Data Associates.

The economy

Economic structure

Main economic indicators, 1999

Real GDP growtha (%) 3.l Consumer price inflation (av; %) 5.9 Population (‘000) 984 Current-account balance (US$ m) 34 Total external debt (US$ m) 244 Exchange rate (av; E:US$) 6.11

a Year beginning April 1st 1999.

Source: EIU.

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

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

Comparative economic indicators, 1999

Swaziland South Africa Namibia Botswana Lesotho GDP (US$ bn) 1.21 131.14 3.04 5.03 0.90 GDP per head (US$) 1,266 3,050 1,820 3,130 402 Real GDP growth (%) 3.1 1.2 2.9 8.5 4.5 Consumer price inflation (av; %) 5.9 5.1 8.6 7.1 8.7 Current-account balance (US$ m) 34 –465 171 243 –315 Exports of goods fob (US$ m) 829 28,361 1,450 2,703 200 Imports of goods fob (US$ m) 1,003 24,611 1,500 2,034 910 Source: EIU.

Economic policy

Since independence, Swaziland has adhered to prudent macroeconomic management, which led to average real growth rates of GDP and GDP per head of over 6% and 3% per year respectively between 1968 and 1993, slowing to 3% and less than 1% respectively between 1993 and 1999. However, economic policymaking cannot be divorced from the country’s complex political structure. The proposals for policy changes that have been made are essentially technocratic and in line with standard contemporary macroeconomic thinking. However, they are opposed by more conservative elements of the ruling elite who have been able to delay economic reforms. Thus, privatisation has been extremely slow—to date, only the sales of the airline, dairy and water parastatals have been completed. The reform programme adopted in fiscal year 1995/96 (April-March) is aimed at attracting foreign investment and diversifying revenue sources. The latter is critical since a new Southern African Customs Union (SACU) revenue-sharing formula and the Southern African Development Community (SADC) free-trade agreement will ultimately have an adverse impact on customs revenue. (See Reference table 5 for historical central government accounts and Regional organisations for information on the SACU and the SADC.)

Monetary links with Autonomy in monetary and fiscal policy has been restricted by Swaziland’s South Africa close association with South Africa in the SACU and the Common Monetary Area (CMA), and by the openness and small size of the economy—especially the narrowness of the export base—which render it vulnerable to exogenous shocks. Interest rates cannot diverge significantly from those prevailing in South Africa while the lilangeni remains at par with the South African rand because of the free movement of funds in the CMA. Although Swaziland has the legal right to break the parity condition, this is unlikely to occur. (For background data on money supply and interest rates see Reference table 6.)

Central government finances, 1999/2000a (E m) Total revenue 2,436.4 Current revenue 2,351.9 of which: SACU receipts 1,221.5 taxes on net income & profit 628.7 s a l e s t a x 306.2 Grants 84.6 Total expenditure 2,680.0 Current expenditure 2,094.0 Capital expenditure 536.6 Net domestic lending 49.4 Overall balance –243.6 Financing Domestic 193.1 Foreign 50.5

a Fiscal year April-March, budget estimates.

Source: Central Bank of Swaziland.

Economic performance

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

Gross domestic producta (constant 1985 prices) Annual average 1998/99 1993/94-1998/99 Annual growth rate (%) 2.7 3.4 Agriculture (% of GDP) 9.9 9.7 Manufacturing (% of GDP) 36.2 36.3

a Estimates.

Sources: Ministry of Economic Planning and Development; Central Bank of Swaziland.

The influence of drought Owing to the openness of the economy and the importance of agricultural- and world markets based exports, GDP is strongly influenced by climatic conditions and world market prices. Below-average rainfall and depressed world demand for the country’s primary exports marked the first half of the 1990s. Crop production and GDP then improved, but GDP growth slowed in 1998 mainly because of the effect on exports of difficulties in the South African and Asian economies, before recovering again in 1999.

A decline in attractiveness Political change in South Africa has eroded some of Swaziland’s advantages in to foreign investors attracting foreign investment, which had been diverted to the kingdom to avoid international sanctions against its neighbour. Moreover, investor confidence has been damaged by labour unrest since 1995. Because of these developments there has been little major new investment in productive industries since 1990. (For background data on GDP see Reference tables 7-9.)

Inflation and wages Because of Swaziland’s strong monetary and trade relationships with South Africa, inflation has tended to broadly follow trends in South Africa. The rate has been falling since 1994 and is relatively low by regional standards. (For historical inflation data see Reference table 10.)

Inflation (% change) Annual average 1999 1995-99 Consumer prices 5.9 8.0 Source: CSO.

Economic sectors

Agriculture and forestry

Agriculture’s share of GDP has fallen from about one-third at independence to just over 10% in 1998/99. There are two forms of land tenure and production, Swazi Nation Land (SNL) and Title Deed Land (TDL). Because it is dependent on rainfed cultivation, SNL is highly vulnerable to drought. It produces the maize crop, and accounts for 80% of all cotton growers and 81% of the total cattle herd. Cattle on SNL are of mainly social significance—few of them go for commercial slaughter. Only drastic reform of the land tenure system will encourage the transformation of SNL agriculture. (See Reference table 11 for historical data on agricultural production.)

Output of main crops, 1997/98 (tonnes) Sugarcane 3,885,574 Citrusa 79,000 Pineapplesa 11,075 Maize 107,200 Seed cotton 16,891

a Calendar year 1996.

Sources: Central Bank of Swaziland, Annual Report; Ministry of Economic Planning and Development, Development Plan 1996/97- 1998/99.

Land tenure

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

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

Mining

The mining and quarrying sector has declined in both relative and absolute terms since 1980, when the country’s only iron ore mine closed. Mining’s share of GDP fell from 10% in the 1960s to less than 1% in 1998/99. Asbestos production is to soon cease, leaving the sector confined to coal mining and quarried stone for use in domestic construction (see Reference table 12 for historical data on minerals production).

Manufacturing

Until the mid-1980s commercial agro-processing (sugar, woodpulp, citrus, pineapples, cotton and meat) accounted for about 80% of manufacturing production. (For data on agro-industry see Reference table 13.) The manufacturing sector has since diversified, particularly in the late 1980s. The Coca- Cola concentrate plant relocated to Swaziland from South Africa in 1986 during the sanctions and disinvestment period, while a number of other companies located in Swaziland to take advantage of cheap refined sugar, which is processed into confectionery, syrups and mixes for export to South Africa. The textile industry has expanded significantly despite facing increased competition as a result of trade liberalisation. The most recent manufacturing success has been Masterfridge, which produces refrigerators for the South African and international markets.

Construction

Statistics on the construction sector are unreliable and sometimes contradictory. The sector contributed 5% to GDP in 1998/99, compared with an average of 3% over 1990-96. Since 1996/97 construction activity has been stimulated by major capital expenditure on road projects and the Komati Basin scheme. There is a chronic shortage of adequate urban housing. To tackle this the government is implementing the Urban Development Project, which provides new land and upgrades plots for sale to residents at nominal prices. (See Reference table 14 for data on construction in Mbabane and Manzini.)

Financial services

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

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

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

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

SIDC project finance, 1998/99 (E m) Approvals 57.6 Commitments 30.1 Disbursements 7.8 Source: Swaziland Industrial Development Company.

Other services

Tourism Tourism was an important revenue earner for Swaziland when gambling was illegal in South Africa. With the legalisation of casinos there, and increased competition for South African tourists from the growing Mozambican tourism industry, the sector’s growth rate has declined in recent years. Swaziland’s main attraction now lies in marketing itself as part of a regional trip. The country’s participation in trilateral development initiatives with South Africa and Mozambique could help to promote it as a destination for European and North American tourists who, together with the conference business, are considered the main potential market. (For historical data see Reference table 16.)

Retail Swaziland has a well-developed retail and wholesale sector, which is dominated by branches of the leading South African chain stores.

The external sector

Trade in goods

The economy is extremely open. In 1998/99 the foreign trade/GDP ratio was estimated at 184% and the exports/GDP ratio at 80%. The trade balance has been in deficit since 1989 as the value of imports has grown more rapidly than that of exports. The substantial depreciation in recent years of Swaziland’s currency, which is linked at par to the South African rand, has had a relatively limited impact on the balance of trade. Most exports are either priced in foreign exchange or sold to South Africa, so the effect on the volume of exports has not been significant. Currency depreciation has increased the cost of all goods originating from outside the Common Monetary Area (CMA), but 85-95% of imports are normally obtained from South Africa. Although the bilateral trade deficit with South Africa has widened, Swaziland continues to record a trade surplus with the rest of the world.

Sugar and woodpulp have been the leading exports since the 1960s, with sugar dominating until it was overtaken by soft-drink concentrate in 1993. In recent years the export base has been diversified through non-traditional products such as soft-drink concentrate, sugar-based products, paper products, textiles and refrigerators. However, the export base has stagnated in the late 1990s because of a decline in foreign direct investment (FDI). Thus, 40% of exports are still either sugar or sugar-based products. Woodpulp earnings suffered in 1998 and 1999 as a result of unfavourable world market conditions, especially in Asia, but have now recovered. (See Reference tables 17 and 18 for a commodity breakdown of exports and imports.)

Main exports and importsa (E m; fob) Exports 1999 Imports 1998 Miscellaneous edibles 2,092.8 Machinery & equipment 1,549.9 Woodpulp 554.0 Manufactures classified by material 1,004.3 Sugar 629.0 Food & live animals 933.5 Consumable finished goods 1,021.7 Chemicals & chemical products 817.1 Citrus & canned fruit 175.9 Inedible crude materials 288.0 Coal, asbestos & diamonds 100.0 Mineral fuels & lubricants 697.6 Total incl others 5,689.3 Total incl others 6,404.8 a Latest available figures.

Source: Central Bank of Swaziland, Quarterly Review.

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

Key trading partners (E m) Exports to: 1998 Imports from: 1998/99 South Africa 3,462.6 South Africa 5,365.1 Mozambique 584.0 Japan 124.3 US 277.8 Singapore 94.3 UK 234.1 Taiwan 87.9 France 229.4 UK 78.3 Source: Department of Customs and Excise.

Invisibles and the current account

The current account oscillates between deficit and surplus. Both the trade and the services account are usually in deficit. The outflow of invisibles consists largely of royalties, licensing fees, advertising, market research and merchand- ising expenses. The major services export is tourism, inflows from which increased by 15% in 1998, to E167m (US$30m). Swaziland is a net importer of a range of transport (especially shipping), financial and technical services.

A net outflow of interest, The income account is usually in surplus, although this fell to E279m in 1998. profit and dividends The surplus is attributable mainly to remittances from Swazi migrant workers employed in South Africa. Despite both the acceptance of a South African offer of permanent residence to mineworkers and the decline in mining employment as marginal gold mines close, remittances rose from E385.9m in 1997 to E483.2m in 1998. The main outflows are dividends and distributed earnings. Interest earnings relate mainly to Swaziland pension funds invested in South Africa and offshore placements by the Central Bank. Total interest earned rose by 24% to E556m in 1998.

Current transfers have historically been positive, and consist largely of payments from the SACU common revenue pool administered by the South African Reserve Bank (SARB). The large net inflow of transfers helps offset the deficit in the goods and services balance, but revenue is expected to decline as a result of further tariff liberalisation in line with World Trade Organisation (WTO) obligations, Southern African Development Community (SADC) free trade and, from 2006, changes in the SACU revenue-sharing formula. This could lead to a deterioration in the overall current-account position. (Reference tables 21 and 22 give balance-of-payments data.)

Current account national estimates, 1999 (E m) Goods: credit 5,760.9 Goods: debit –6,438.6 Balance on goods –677.7 Services: credit 438.7 Services: debit –953.5 Balance on services –514.8 Income: credit 1,060.9 Income: debit –481.1 Net income 579.8 Current transfers: credit 1,463.6 Current transfers: debit –641.8 Net current transfers 821.8 Current-account balance 209.1 Source: Central Bank of Swaziland, Quarterly Review.

Capital flows and foreign debt

The financial account (excluding reserves) recorded a net outflow in 1993-95, coinciding with the opening up of South Africa to international investment. There were net inflows in 1996 and 1997, the latter attributable mainly to a modest increase in direct investment from a shift in the ownership of large assets from Swaziland to South Africa, especially the sale of Lonhro’s interests to a South African company, Illovo. However, there was again a net outflow in 1998. Foreign investment in new undertakings continued at a low level, but the downward trend in reinvested earnings was reversed in 1998.

Total public and publicly guaranteed external debt remained fairly steady in 1988-92 but has subsequently risen in local-currency terms as a result of the depreciation of the lilangeni and the drawdown of loans for various infrastructure and agricultural projects. The depreciation of the lilangeni led to a slight increase in external debt service in 1997/98, but Swaziland’s debt/GDP and debt-service ratios remain consistently low by developing country standards, reflecting cautious government borrowing. (See Reference table 23 for World Bank data on external debt and Reference table 24 for data on inflows of aid by donors.)

Total public and publicly guaranteed debt, end-Mar 2000 (E m unless otherwise indicated) Multilateral organisations 993.8 Foreign governments 545.9 Total external debt 1,539.7 Central government 1,486.9 Parastatals 52.8 Total debt service 44.1 Debt service/export of goods & services (%) 3.1 Total debt/GDPa (%) 19.1

a End-1999.

Source: Central Bank of Swaziland, Quarterly Review.

Foreign reserves and the exchange rate

Swaziland’s foreign reserves have remained stable in the 1990s at about US$300m. This reflects the central bank’s reliance on the SARB for exchange- rate management, and a relatively conservative economic policy. According to the IMF’s International Financial Statistics, total reserves stood at US$376m at the end of 1999. (See Reference table 25 for historical data on international reserves.)

The lilangeni is pegged at par to the South African rand. As such, Swaziland is tied to the exchange controls of the CMA, which have been gradually relaxed in the late 1990s. Companies can now invest up to E50m in other countries with a special allowance for other SADC countries of E250m. Individuals can now invest up to E750,000 (US$520,000) abroad. (See Reference table 26 for historical exchange-rate data.)

Appendices

Regional organisations

Organisation of African The OAU was founded in 1963 by 30 African nations to promote solidarity and Unity (OAU) higher living standards, to defend the sovereignty of member states and to eliminate colonialism. Another 21 signatories have since joined, the last of which was South Africa in 1994. Morocco left in 1985. The OAU is committed to creating an Africa-wide customs union and to removing tariff and non- tariff barriers by 2004. The organisation has been criticised for lacking effectiveness —little real action results from its policy decisions––and has been hampered for years by severe budgetary problems.

The foreign ministers of member states meet twice a year to discuss the implementation of the organisation’s accords. The issues raised are dealt with at the annual assembly of heads of state, which meets in June or July. The annual conference is hosted by the member state that is due to hold the chairmanship of the organisation for the next year. The 2000 conference took place in Togo, where the Togolese president, Gnassingbé Eyadéma, assumed the chairmanship of the organisation. There have, in addition, been three extraordinary conferences of heads of state: the first was in 1970 to discuss the Angolan crisis; the second, in 1980, sought to address the continent’s economic problems; and the third, in 1990, attempted to address the problem of African debt.

The OAU is committed to the creation of an African economic community (AEC) according to the Lagos Plan of Action drawn up in 1980. This was originally scheduled to be in place by 2000, but at the 27th summit of heads of state in Abuja, Nigeria, in June 1991 this target was postponed to 2025. The AEC treaty, signed at the summit, outlined six stages, including the removal of tariff and non-tariff barriers to trade and the establishment of a continent-wide customs union by 2004. A commitment was also made to establish an African common market, with a central bank and single currency, by 2031.

The problem of conflict resolution has come to dominate the annual summit of heads of state. At the 1992 summit the OAU was criticised for never having successfully resolved a conflict in any of its member states. The possibility of establishing a military force to observe and monitor ceasefires negotiated by the OAU has been raised by several heads of state, and in 1996 the UN proposed a programme to strengthen African capacity for peacekeeping through the OAU. However, no formal commitment has been made. The issue has been particularly pressing in the wake of renewed ethnic violence and border disputes since the mid-1990s, notably the Great Lakes crisis, the Ethiopian-Eritrean war, and the civil wars in the Democratic Republic of Congo, Guinea-Bissau and Sierra Leone. In 1996 the OAU agreed to imposed sanctions on Burundi following a military coup although an earlier proposal to send a military force was never implemented. The attempted secession of Anjouan island from Comoros remains unresolved despite diplomatic efforts by the OAU in 1999, including a threat to intervene militarily. Otherwise the

OAU’s main initiatives for conflict resolution are focused on the war between Ethiopia and Eritrea and the conflict in the DRC, which involves seven African states as direct combatants. Following several failed peace initiatives, the OAU’s council of ministers endorsed President Patrick Chiluba of Zambia as mediator in the conflict in 1999.

Any move to step up the activity of the OAU is hampered by the organisation’s severe budgetary problems. In November 1995 the ten worst debtor countries, owing US$16.5m between them, were barred from speaking or voting at any OAU meeting. By 1999 this list had been reduced to eight. The return of full rights is conditional upon their paying a large part of their arrears.

Common Monetary Area In July 1986 with the signing of the Trilateral Monetary Agreement between (CMA) South Africa, Lesotho and Swaziland, the former Rand Monetary Area (RMA) became the Common Monetary Area (CMA). Namibia was automatically a member of the CMA before independence, by virtue of its administration by South Africa. The new post-independence government decided to remain in the CMA and to maintain use of the South African rand until the Namibian dollar was introduced in September 1993. Unlike Botswana, which left the CMA in 1976, Namibia has so far chosen not to pursue its own, flexible exchange-rate policy. The Namibian dollar, like the lilangeni (Swaziland) and the loti (Lesotho), remained at par with the rand in late 1995, and there was no immediate prospect of change. Although no longer legal tender in Lesotho and Swaziland, the rand still circulates freely in both countries. It has remained legal tender for a transitional period in Namibia, but the governor of the Bank of Namibia (the central bank) has said the use of South African banknotes and coins will be phased out over the next two to three years. Foreign-exchange regulations and monetary policy throughout the CMA continue to reflect the influence of the South African Reserve Bank.

Southern African Customs SACU is a customs union linking Botswana, Lesotho, Namibia, Swaziland (the Union (SACU) “BLNS” states). SACU is the oldest and most formal regional economic grouping in Southern Africa, dating back to 1910. The customs union, administered by South Africa, gathers excise duties on local production and customs duties on member states’ imports from outside the SACU area, which are then paid to all states in quarterly payments via an agreed formula. Historically imports have been subject to very high tariffs to protect industries within the union, particularly in South Africa, although they have been reduced in recent years as South Africa reforms its trade policy to meet World Trade Organisation (WTO) guidelines and as part of the EU-SA free-trade agreement. The BLNS states still depend on South Africa for most of their imports and, more crucially, on the privileged access to the South African market that their goods enjoy.

Negotiations to reform SACU have been under way for several years. Although several deadlines to reach a new agreement have been set, to date none have been met and no new formal deadline was set. The main problem in reaching a new agreement is to reform the revenue-sharing formula that governs the allocation of collected duties to each member country and provides a substantial “compensatory” element to the smaller BLNS states. This is a

fundamental issue for all parties. In South Africa’s case, in recent years it has had to pay an ever larger compensatory payment to the BLNS states because the value of their imports has grown faster than its own and due to the stabilisation component of the current formula that determines the distribution of the revenue pool. Moreover, South Africa has had to do this at a time when it is facing budgetary constraints of its own and the pressing need to push ahead with economic development. Meanwhile, the BLNS governments, especially Lesotho and Swaziland, depend heavily on their share of redistributed SACU receipts for their budgetary revenue.

Negotiations to phase out the SACU agreement in favour of a wider free-trade arrangement to incorporate the Southern African Development Community (SADC) have stalled in the last 18 months and will now be tied up in the wider issue of the EU reaching a free-trade agreement not only with SACU, but also with the other SADC states in line with the Fiji convention. In the meantime, the EU will make aid and trade concessions available to the smaller BLNS countries to help allay fears that their markets will be flooded by cheap EU imports following on from the signing of a bilateral free-trade agreement between South Africa and the EU early in 2000.

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

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

Although SADC voted in 1994 to set up a regional rapid-deployment peacekeeping force—and there are longer-term plans for a regional development bank, a common currency and a regional parliament—the group’s main focus in recent years has evolved around energy and trade issues. In regard to energy, the aim has been to interlink the countries’ power grids and considerable progress has been made in this area to date. As for trade issues, on January 25th 2000 the SADC Trade Protocol came into effect, having been ratified by all member states. This aims to remove tariff and non-tariff barriers to trade within the region within eight years. However, progress will

still depend on the speed with which individual member governments actually dismantle their existing barriers to trade. Of these, only South Africa has made concrete commitments to progress, agreeing to reduce its tariffs substantially over the eight-year period. Progress in reducing tariff barriers within the region is also likely to be complicated by the fact that the EU and South Africa have now successfully concluded their own free-trade agreement, and many of the other SADC countries, particularly members of SACU, feel threatened that they could be flooded with cheap European imports. However, now that the EU and African, Caribbean and Pacific (ACP) states have replaced the Lomé Convention with the new convention, it is now clear that all SADC member states will have to decide whether the SADC as a region is to have a free-trade agreement with the EU, or whether they wish to negotiate individual free-trade agreements on a bilateral basis.

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

Common Market for The Common Market for Eastern and Southern Africa (Comesa), which is Eastern and Southern based in Lusaka, Zambia, is the successor organisation to the regional Africa (Comesa) Preferential Trading Area (PTA), and came into force on December 8th 1994 after the 12 member states ratified the integration treaty. Comesa is a weaker rival to the SADC and includes Angola, Burundi, Comoros, DRC, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. The 21 members have a total population of 380m and a combined GDP of US$170bn. South Africa’s decision not to join the organisation, which aims to liberalise trade between the member countries, has given the SADC the stronger hand. Mozambique and Lesotho withdrew from Comesa in 1997 to concentrate on their membership of the SADC. Tanzania, which is a member of both the SADC and the East African Community (EAC), has given notice that it will quit by July 2000.

The original PTA, which was launched in 1981, aimed to liberalise trade and encourage co-operation in industry, agriculture, transport and communications. Comesa’s main aim now is the formation of a monetary union with a single currency and a common central bank. The first step is the creation of a free-trade zone, which is targeted for the end of October 2000. This is

optimistic. Intra-Comesa tariffs varied from Madagascar’s 1.6% to Egypt’s 38.7% according to July 1999 figures. Many members are loath to reduce tariffs further for fear of undermining local industries—Tanzania’s main reason for wishing to leave—and fiscal revenue. A trade dispute caused by Kenya’s unwillingness to reduce tariffs on certain Egyptian exports provides a clear example of this. Another constraint has been the strict “rules of origin”, which stipulate that preferential treatment can be granted only to goods produced by companies that are managed by, and 51% of whose equity is held by, nationals of a member state. Further progress towards free trade will be difficult while several Comesa members are supporting different sides in the war in the DRC, and two, Ethiopia and Eritrea, are directly fighting each other. However, some countries, for example Zambia, are factoring the reduction in tariff revenue associated with the removal of tariff barriers into their budgetary calculations for 2000.

In general, commitment to the organisation and its financing is rather frail. The administration budget is heavily dependent on Kenya and Zimbabwe, and meetings are frequently cancelled. The civil strife in many member countries has also impeded attempts at regional integration. Further attempts at crossborder investment promotion, monetary harmonisation and the like have been superseded by EAC and SADC initiatives.

Under the old PTA, a multilateral clearing facility was established in Harare, Zimbabwe, in February 1984. A PTA monetary unit of account (UAPTA), equivalent to the SDR, was used to settle debts between members every two months, the balances being payable in US dollars. The UAPTA was replaced by the Comesa dollar, which is fixed to the US dollar, in 1997. Intra-Comesa trade totalled US$4.2bn in 1998, only about 6.5% of members’ global trade. The reasons for this small share include the distortions arising from widespread crossborder smuggling, a lack of political commitment and weak balance-of- payments and foreign reserve positions. In some cases there are hardly any official trade links between member states—Kenya, Malawi, Tanzania, Uganda, Zambia and Zimbabwe accounted for nearly 70% of the total trade between members of Comesa in 1998.

A PTA Trade and Development Bank was established in 1986, but only became operational in 1989. Now renamed the Comesa Trade and Development Bank, its headquarters have been relocated from Bujumbura (Burundi) to Nairobi (Kenya). As well as the African Development Bank, 15 Comesa members hold shares in the bank; total share capital was increased to US$5bn in June 1999.

The EU-ACP Convention The Lomé Convention afforded a group of 71 African, Caribbean and Pacific (ACP) countries preferential trade and aid links with the EU. The Convention Lomé IV, which was signed in 1989, replacing previous agreements signed in 1975, 1979 and 1984, expired in February 2000. Finalising 18 months of negotiations, a new Convention was to be signed in Fiji, until a military coup in May 2000 ousted the elected government of the country, making the capital, Suva, an unsuitable venue. The Convention was eventually signed on June 23rd in Cotonou (Benin).

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

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

In any event, 33 African countries classified as least developed countries (LDCs) will still be given the option of entering the EU generalised system of preferences (GSP), and by 2004, one year before the GSP is to be renegotiated, the EU will assess which other ACP countries are not in a position to enter a RFTA. Unlike the Lomé Convention, the GSP, which benefits all developing countries, complies with the rules of the World Trade Organisation since it is based on the dual principles of non-reciprocity and non-discrimination.

As far as aid is concerned, the European Development Fund (EDF) will remain the main source of multilateral EU aid to the ACP countries. The ninth EDF will total ¤13.5bn (US$12.9bn). In addition, some ¤10bn left undisbursed from previous programmes will remain available until 2007. An additional ¤1.7bn will come from the European Investment Bank. Under the new Convention, the Stabex fund—which covers losses of earnings caused by a fall in prices or a decline in production of the main ACP agricultural exports—and Sysmin—a special financing facility for countries reliant on the export of minerals—will be phased out.

Sources of information

National statistical sources The Central Statistical Office (CSO) in Mbabane is the main source of government publications. Its most important publications are: • Annual Statistical Bulletin; • Employment and Wages (annual); • Annual Agricultural Survey; • Education Statistics (annual); • Census—agriculture, population, industries (sporadic).

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

From government ministries, the most important publication is the rolling three-year Development Plan from the Economic Planning Office of the Ministry of Economic Planning and Development. However, work on the 1998/99-2000/01 issue was delayed, and the last published Plan covers the period 1997/98- 1999/2000. The Ministry intends to publish the last two issues as well as the current Plan (for 2000/01-2002/03) before the end of 2000. The Ministry of Finance produces the annual Budget Speech and Estimates for the Year, which is a detailed exposition of revenue and expenditure contained in the budget. The Ministry of Public Works and Transport publishes an annual Transport Bulletin. The annual Business Report of the Swaziland Industrial Development Company contains useful information for investors.

The public enterprise unit of the Ministry of Finance produces a quarterly report on the status of these enterprises. Information is also available in the annual reports of the public enterprises, of which the following are particularly useful: • Swaziland Railway Board; • Swaziland Electricity Board; • Swaziland Posts and Telecommunications Corporation

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

Other sources include:

Ernst & Young, Doing Business in Swaziland, Mbabane (updated annually)

Fisher Hoffman Sithole, Swaziland Tax Guide, Mbabane (updated annually)

Swaziland Review of Commerce and Industry, Manzini, (annual)

C Forsyth Thompson, Swaziland Business Yearbook, Mbabane (annual)

Swaziland Sugar Association, Annual Report, Mbabane

Swaziland Sugar Association, Swaziland Sugar Journal, Mbabane (monthly)

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

IMF, International Financial Statistics

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

World Bank, Global Development Finance

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

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

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

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

Z R Ginindza, King Mswati III, Manzini, 1987

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

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

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

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

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

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

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

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

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

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

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

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

Reference tables

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

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

Reference table 2 Employment

1994 1995 1996 1997 1998a Formal employment 94,071 94,797 94,766 95,681 91,874 Private sector 63,332 63,835 63,497 64,122 59,983 Public sector 30,739 30,962 31,269 31,559 31,891 Informal employment 15,553 16,133 16,877 17,063 17,311 Total employment 109,624 110,930 111,643 112,744 109,185 % change, year on year –0.8 1.2 0.6 1.0 –3.3 Migrant mineworkers 15,892 15,304 14,725 12,960 10,336 Male 60,729 61,939 63,540 62,020 58,666 Professional & technical 5,246 4,439 4,331 4,805 4,514 Administrative & managerial 3,156 3,666 3,751 3,925 3,548 Clerical 7,889 6,873 7,674 7,426 7,313 Skilled 3,808 4,471 4,261 3,991 4,137 Semi-skilled 8,275 8,016 7,334 8,516 8,168 Unskilled 32,355 34,474 36,189 33,357 30,986 Female 26,561 25,096 26,324 26,162 28,402 Professional & technical 6,908 6,750 6,827 7,431 6,860 Administrative & managerial 977 1,273 1,193 1,187 1,315 Clerical 5,759 4,897 5,285 5,190 5,342 Skilled 105 134 175 204 153 Semi-skilled 1,721 1,153 1,114 1,555 2,810 Unskilled 11,091 10,889 11,730 10,595 11,922

a Provisional.

Sources: Central Bank of Swaziland; CSO.

Reference table 3 Transport and communications

1994 1995 1996 1997 1998 Rail transporta Freight carried (m tonnes) 3.9 4.3 4.1 4.0 3.8 Tonne-km (m) 675.2 742.8 684.4 670.0 652.7 Transit traffic (%) 78.3 77.5 79.9 78.6 79.5 Profit (E m) 10.2 12.8 11.7 8.3 –0.0 Road transport User cost coverage ratio (%) 29.4 27.7 39.1 31.9 n/a Government vehicles 4,084 3,759 3,707 4,319 3,685 Private vehicles 61,286 66,359 69,987 74,569 n/a Fuel consumption (m litres) 198.2 209.5 208.3 213.2 208.8 Air transport (Matsapha airport) Aircraft movements 8,305 7,971 3,097 7,247 10,396 Passengers 77,246 59,675 53,983 54,957 62,656 Passengers RSNACb 47,959 51,426 45,262 33,327 38,652 Loss RSNACb (E m) –7.7 –6.4 –8.7 –20.7 –1.6 Posts & telecommunications No. of direct exchange lines 17,519 19,000 21,130 22,602 25,073 Telecoms revenue (E m) 64.7 79.5 97.6 110.8 120.6 Telecoms profit (E m) 17.1 16.9 42.6 43.8 52.3 Posts revenue (E m) 7.1 7.6 8.3 9.6 10.4 Posts profit (E m) –1.8 –1.8 –2.5 –1.6 –1.4

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

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

Reference table 4 Electricity statistics (gwh unless otherwise indicated) 1995 1996 1997 1998 1999 Energy generation 706.8 703.6 789.8 800.0 830.7 Hydroelectric 109.0 118.5 191.0 192.9 189.6 Diesel-powered 0.8 2.0 0.8 1.5 1.4 Purchased from South Africa 597.0 583.1 598.0 605.6 639.7 Energy sold 603.2 585.0 671.7 694.7 718.6 Operating surplus of Swaziland Electricity Board (E m) 13.3 13.4 37.2 24.8 23.5 Source: Swaziland Electricity Board, Annual Report.

Reference table 5 Central government finances (E m; fiscal years Apr-Mar) 1995/96 1996/97 1997/98 1998/99 1999/2000a Total revenue 1,455.1 1,704.1 2,038.8 2,275.0 2,436.5 Current revenue 1,447.7 1,684.0 2,020.5 2,230.3 2,351.9 of which: SACU receipts 744.2 852.7 1,007.1 1,076.3 1,221.5 taxes on income & profit 393.3 485.6 528.9 581.8 739.6 sales tax 172.8 207.1 254.8 275.4 306.2 Grants 7.5 20.2 18.3 44.7 84.6 continued

1995/96 1996/97 1997/98 1998/99 1999/2000a Total expenditure 1,386.9 1,760.3 1,854.7 2,282.2 2,680.0 Current expenditure 1,128.8 1,465.2 1,503.8 1,731.9 2,094.0 Capital expenditure 253.3 293.1 322.8 483.0 536.6 Net domestic lending 4.8 2.0 28.1 67.3 49.4 Overall balance 68.3 –56.2 184.1 –7.1 –243.6 Financing Domestic –80.6 41.4 –226.1 –191.2 193.1 Foreign 12.3 14.8 42.0 198.3 50.5 a Budgeted.

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

Reference table 6 Monetary survey (Em unless otherwise indicated; end–period) 1995 1996 1997 1998 1999 Currency in circulation 80.3 90.8 109.0 107.2 137.0 Demand deposits 282.8 332.1 382.8 393.6 525.7 Money (M1) 363.1 423.0 491.8 500.9 662.7 Savings & time deposits 864.3 1,005.0 1,213.3 1,423.7 1,562.6 Money (M2) 1,227.4 1,427.9 1,705.0 1,924.5 2,225.3 % change, year on year 3.9 16.5 19.4 12.9 15.6 Net foreign assets 1,023.5 1,465.8 1,710.0 2,457.7 2,741.9 Credits to state, net –599.6 –804.0 –952.8 –1,441.3 –1,541.0 Credits to private sector, net 878.3 936.3 1,076. 1,139.8 1,238.6 Interest rates (%; year-end) Central Bank discount rate 15.00 16.75 15.75 18.00 12.00 Treasury bills 12.76 14.17 13.54 13.65 8.50 Bank deposits 31 days 9.80 11.15 10.25 12.50 6.75 12 months 11.90 13.40 11.75 14.13 8.00 Prime lending rates Swaziland 18.00 19.75 18.75 21.00 15.00 South Africa 18.50 20.25 19.25 23.00 15.50 Source: Central Bank of Swaziland, Quarterly Review.

Reference table 7 Gross domestic product

1993/94 1994/95 1995/96 1996/97 1997/98 Total (E m) At current market prices 3,225 3,771 4,597 5,243 6,045 At constant (1985) factor cost 1,166 1,206 1,244 1,289 1,337 % change, year on year 3.1 3.4 3.2 3.6 3.7 Per head (E) At current market prices 3,792 4,289 5,062 5,591 6,243 At constant (1985) factor cost 1,649 1,651 1,647 1,652 1,659 % change, year on year –0.1 0.1 –0.2 0.3 0.4 Source: Ministry of Economic Planning and Development.

Reference table 8 Gross domestic product by expenditure, end-Jun (current prices; E m) 1993 1994 1995 1996 1997 Private consumption 1,595.1 1,914.5 2,313.9 3,072.6 3,228.6 Government consumption 781.0 874.0 951.0 1,185.8 1,639.2 Gross fixed capital formation 829.4 1,176.6 1,530.8 1,530.0 1,997.0 Change in stocks 29.0 33.9 37.4 47.2 54.4 Exports of goods & services 2,733.6 2,970.6 3,814.6 4,265.2 4,947.3 Imports of goods & services –2,742.7 –3,199.1 –4,051.5 –4,858.4 –5,821.1 GDP at market prices 3,225.4 3,770.5 4,596.2 5,242.5 6,045.4 Source: IMF, International Financial Statistics.

Reference table 9 Gross domestic product by sector (E m; constant 1985 prices) 1994/95 1995/96 1996/97 1997/98 1998/99 Agriculture & forestry 130.0 123.4 150.9 151.6 154.1 Mining 23.6 22.9 14.7 17.9 22.8 Manufacturing 437.6 456.3 466.8 491.5 498.9 Construction 44.1 54.9 57.9 64.0 71.0 Trade, hotels etc 106.7 118.3 123.3 130.3 139.1 Transport & communications 77.9 80.3 79.9 81.6 83.5 Financial services real estate 81.2 87.5 92.9 100.5 100.8 Owner-occupied dwellings 31.4 31.9 32.7 33.6 35.2 Government services 216.1 209.7 205.2 204.0 203.6 Other services 57.8 59.2 64.6 66.0 68.7 GDP at factor cost 1,206.3 1,244.4 1,289.0 1,341.0 1,377.7 Source: Ministry of Economic Planning and Development.

Reference table 10 Consumer prices (1996=100; annual averages) 1995 1996 1997 1998 1999 Index Aa 89.1 100.0 109.2 117.7 124.5 Index Bb 89.1 100.0 111.5 120.0 129.5 All groups indexc 90.1 100.0 109.2 118.0 125.0 Inflation (%) All groupsd 12.3 6.5 7.2 8.0 5.9 South African inflation 8.7 7.4 8.6 6.9 5.7

a Middle- and high-income groups in Mbabane and Manzini. b Low-income groups in Mbabane and Manzini. c Not an average of A and B, covers a wider income range. d Correction of figures in source.

Source: Central Bank of Swaziland, Quarterly Review.

Reference table 11 Agriculture (Apr-Mar unless otherwise indicated) 1993/94 1994/95 1995/96 1996/97 1997/98 Production (‘000 tonnes) Sugarcane 3,647.2 3,884.6 3,437.7 3,694.0 3,886.6 Maize 97.7 76.0 135.0 85.0 107.2 Seed cotton 7.5 6.2 14.0 16.2 16.9 Citrusa 104.1 85.0 87.2 81.4 79.0 Value (E m) Cotton 12.0 11.5 30.4 38.4 42.2 Citrusa 96.1 94.0 124.4 123.8 122.7 Cattlea (‘000) No. of cattle 626.4 642.0 656.5 658.5 659.7b No. of cattle slaughtered 60.1 69.4 42.5 51.1 56.0

a Calendar years 1994-96. b Provisional.

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

Reference table 12 Minerals production

1995 1996 1997 1998 1999 Volume Asbestos (tonnes) 27,914 26,014 25,888 27,693 22,912 Coal (tonnes) 171,666 128,973 203,115 410,021 426,299 Diamonds (ct) 61,076 0.0 0.0 0.0 0.0 Quarried stone (cu metres) 113,962 221,237 455,753 453,334 250,193 Value (E m) Asbestos 49.4 57.9 64.1 56.8 n/a Coal 8.4 7.9 10.6 24.2 n/a Diamonds 25.4 23.7 0.0 0.0 0.0 Quarried stone 3.6 5.1 16.1 12.4 n/a Total 86.8 94.6 90.9 93.4 n/a % change –11.8 9.0 –3.9 2.8 n/a Sources: Central Bank of Swaziland, Annual Report; Department of Geological Survey and Mines.

Reference table 13 Agro-industry (all years Apr-Mar and all units in tonnes unless otherwise indicated) 1994/95 1995/96 1996/97 1997/98 1998/99 Sugar Production 485,155 421,997 470,988 475,785 474,578 Domestic sales 173,446 182,895 205,555 237,050 279,122 Exports 275,400 244,495 214,080 225,998 220,663 Export value fob (E m) 433.8 492.1 587.2 580.3 616.5 Woodpulpa Production 164,734 170,857 115,045 179,560 163,229 Exports 174,909 160,296 130,635 170,616 256,549 Export value (E m) 252.9 440.7 240.1 272.7 310.5 continued

1994/95 1995/96 1996/97 1997/98 1998/99 Canned fruit Production 13,733 14,897 16,993 17,324 19,644 Domestic sales 55 200 277 200 200 Exports 20,817 15,933 14,668 18,977 23,557 Export value fob (E m) 47.5 49.6 53.7 68.1 95.0 Meat Production 3.7 3.7 3.3 3.9 4.6 Domestic sales 3.1 1.9 2.9 4.2 4.7 Exports 1.0 0.9 1.0 0.7 0.6 Export value fob (E m) 13.6 13.9 15.4 11.6 12.9

a Calendar years 1994-96.

Source: Central Bank of Swaziland, Annual Report.

Reference table 14 Construction, Mbabane and Manzini (E m unless otherwise indicated) 1995 1996 1997 1998 1999 Building plans approved Residential 43.9 34.1 26.0 24.8 31.7 Industrial 17.9 17.5 27.4 9.6 21.5 Total incl others 62.8 52.9 57.0 34.4 53.2 % change 34.5 –15.8 7.8 –39.6 54.7 Buildings completed Residential 14.9 6.3 7.0 9.7 8.5 Industrial 12.8 1.4 6.5 14.2 5.8 Total 27.7 7.8 13.5 23.9 14.3 % change 74.2 –71.8 73.1 77.0 –40.2 Source: Central Bank of Swaziland, Quarterly Review.

Reference table 15 Swaziland stock exchange, end-Jun

1996 1997 1998 1999 2000 Index (1990=100) 179.6 240.5 65.6 70.1 n/aa % change 36.6 33.9 –72.7 6.9 n/aa Market capitalisation (E m) 2,016 2,823 466 535 549 No. of listings 5 5 5 6 6

a Index has been recalculated, revised figure not yet available.

Source: Swaziland Stock Exchange.

Reference table 16 Tourism statistics

1995 1996 1997 1998a 1999a Bed nights sold 404,231 400,000 415,000 424,116 436,966 Total receipts (E m) 128.3 118.3 170.0 179.0 185.0 Average expenditure (E per day per person) Sun International 280 330 251 259 262 Protea Hotels 310 260 289 313 325 Others 250 250 255 277 280

a Provisional.

Source: Central Bank of Swaziland, Annual Report.

Reference table 17 Exports (E m) 1993 1994 1995 1996 1997 Food & live animals 691.7 814.7 1,017.6 1,430.4 1,336.5 Beverages & tobacco 520.4 433.8 49.1 95.5 59.3 Crude inedible material 350.9 694.0 635.5 439.3 402.6 Minerals, fuels & lubricant 5.0 21.9 5.1 3.2 13.0 Animal & vegetable oils & fat 0.7 4.2 5.7 18.5 23.7 Chemicals & chemical products 11.9 44.7 593.8 427.5 440.3 Manufactured items classified by material 201.3 277.7 215.0 320.8 344.7 Machinery & transport equipment 177.5 168.3 247.5 468.3 527.1 Miscellaneous manufactured items 193.2 242.6 257.9 362.3 342.9 Unclassified commodities 3.5 2.7 2.8 5.0 12.4 Total exports 2,156.1 2,704.7 3,030.0 3,570.9 3,502.5 Source: CSO, Annual Statistical Bulletin.

Reference table 18 Importsa (E m cif) 1993/94 1994/95 1995/96 1996/97 1997/98 Food & live animal 451.5 532.7 732.7 718.5 804.0 Beverages & tobacco 64.4 190.0 121.6 99.7 116.7 Crude inedible materials 136.7 130.4 184.9 204.6 231.6 Mineral, fuels lubricants 309.9 313.6 369.1 637.3 610.1 Animal & vegetable oils & fats 16.1 48.9 30.9 62.2 69.5 Chemicals & chemical product 306.0 405.2 756.2 527.5 606.6 Manufactured items classified by material 528.3 626.8 711.4 699.2 885.1 Machinery & transport equipment 802.2 835.0 1,057.2 1,366.1 1,414.5 Miscellaneous manufactured item 331.2 385.6 464.0 459.1 531.5 Unclassified commodities 60.5 56.8 36.4 65.3 84.3 Total imports 3,006.9 3,525.2 4,464.3 4,839.6 5,354.0 a Data may differ from those cited in the text, as the CBS reports imports in calendar years, while the CSO reports imports in fiscal years.

Source: CSO, Annual Statistical Bulletin.

Reference table 19 Destination of exports (E m unless otherwise indicated; fob) 1994 1995 1996 1997 1998a South Africa 1,489.3 1,768.2 2,437.8 2,593.2 3,462.6 % of total 55.1 58.4 68.3 74.0 65.4 Mozambique 176.3 94.4 183.7 181.8 584.0 US 102.4 76.6 117.6 84.8 277.8 UK 290.9 187.9 245.5 74.3 234.1 France 117.3 122.8 151.1 19.3 229.3 SACU 1,537.6 1,803.7 2,455.2 2,596.8 3,467.0 EU 545.2 509.9 563.7 430.7 644.0 Rest of SADC 289.5 268.1 338.4 361.3 765.0 NAFTA 128.0 80.6 117.8 85.0 278.0

a Preliminary.

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

Reference table 20 Origin of imports (E m unless otherwise indicated; cif) 1994/95 1995/96 1996/97 1997/98 1998/99a South Africab 3,093.5 4,298.2 4,370.4 4,440.1 5,365.1 % of total 87.8 96.3 90.3 82.9 84.0 Japan 59.7 21.4 61.8 101.7 124.3 UK 51.8 30.9 35.9 92.7 78.3 Singapore 29.3 21.5 48.7 80.1 94.3 US 40.7 4.0 58.0 46.6 69.1 EU 170.6 68.7 191.5 293.4 319.0 NAFTA 44.7 5.4 61.5 54.4 101.7

a Preliminary. b Including products from other countries obtained from South African distributors.

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

Reference table 21 Balance of payments, IMF series (US$ m) 1994 1995 1996 1997 1998 Merchandise exports fob 790.9 867.8 849.5 864.3 790.1 Merchandise imports fob –831.5 –1,009.4 –1,050.1 –1,041.3 –940.7 Trade balance –40.6 –141.6 –200.6 –177.0 –150.6 Services: credit 112.8 151.8 100.8 126.8 116.8 Services: debit –201.7 –208.7 –236.8 –244.5 –190.8 Income: credit 138.5 162.6 200.8 181.6 188.4 Income: debit –155.0 –82.0 –68.7 –44.6 –87.8 Current transfers: credit 250.8 246.8 267.9 222.2 218.9 Current transfers: debit –94.2 –108.1 –109.2 –112.2 –102.0 Current-account balance 10.7 20.9 –45.9 –47.8 –7.1 Source: IMF, International Financial Statistics.

Reference table 22 Balance of payments, national series (E m) 1994 1995 1996 1997 1998 Merchandise exports fob 2,807.5 3,146.3 3,651.4 4,423.1 5,339.7 Merchandise imports fob –2,934.0 –3,727.4 –4,309.7 –4,775.4 –5,623.8 Services: credit 400.7 550.8 433.3 573.5 591.8 Services: debit –716.9 –759.7 –1,035.0 –1,128.2 –1,053.5 Income: credit 491.7 589.7 863.1 841.8 880.8 Income: debit –550.4 –297.5 –295.2 –201.1 –601.8 Net current transfers 559.2 522.1 687.1 546.0 734.1 Current-account balance incl others 6.6 –107.8 –223.4 45.5 –83.1 Source: Central Bank of Swaziland, Quarterly Review.

Reference table 23 External debt (US$ m unless otherwise indicated; end-period) 1994 1995 1996 1997 1998 Public & publicly guaranteed long-term debta 210.2 223.0 219.6 210.1 222.5 Official creditors 209.6 222.7 219.6 210.1 222.5 Multilateral 117.6 121.6 129.5 133.3 148.0 Bilateral 92.0 101.1 90.1 76.7 74.5 Private creditors 0.5 0.3 0.0 0.0 0.0 of which: commercial banks 0.0 0.0 0.0 0.0 0.0 Total external debt 219.6 234.9 221.7 368.2 250.7 Long-term debta 210.2 223.0 219.6 210.1 222.5 Short-term debt 9.4 11.9 2.1 158.1 28.2 of which: interest arrears on long-term debt 3.0 1.3 0.2 0.1 0.1 Use of IMF credit 0.0 0.0 0.0 0.0 0.0 Total debt service 26.1 21.6 33.1 31.5 23.4 Principal 19.9 16.1 21.0 16.3 14.4 Interest 6.2 5.5 12.0 15.1 9.1 Ratios (%) Total external debt/GNP 21.0 17.4 16.7 25.5 18.8 Debt-service ratiob 2.5 1.8 2.9 2.7 2.1 Short-term debt/total external debt 4.3 5.1 0.9 42.9 11.3 Concessional long-term loans/ long-term debt 69.7 71.0 69.4 38.2 57.1 a Long-term debt is defined as having original maturity of more than one year. b Debt service as a percentage of earnings from exports of goods and services.

Source: World Bank, Global Development Finance.

Reference table 24 Net official development assistancea (US$ m) 1994 1995 1996 1997 1998 Bilateral 27.5 37.7 20.6 16.3 16.8 of which: US 10.0 12.0 11.0 2.0 10.3 Japan 7.1 5.6 10.2 9.3 6.2 Germany 6.1 8.9 4.4 –1.0 –2.3 UK 2.2 5.3 –6.6 3.2 4.3 Multilateral 28.5 17.8 9.8 10.3 13.6 of which: ADF 11.5 2.9 –2.7 2.8 2.7 EU 9.7 7.4 8.5 4.0 8.0 WFP 2.2 1.5 0.0 0.0 0.0 Total 55.9 55.5 30.4 26.6 30.4 of which: grants 41.5 44.3 42.0 30.4 34.2

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

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

Reference table 25 Foreign reserves (US$ m; end-period) 1995 1996 1997 1998 1999 Foreign exchange 285.0 241.2 282.8 346.0 363.6 SDRs 8.8 8.5 8.0 8.4 3.3 Reserve position in the IMF 4.5 4.3 4.1 4.2 9.0 Total reserves excl gold 298.2 254.0 294.8 358.6 375.9 Source: IMF, International Financial Statistics.

Reference table 26 Exchange rates (annual averages) 1995 1996 1997 1998 1999 E:US$ 3.63 4.30 4.61 5.53 6.11 E:£ 5.73 6.72 7.55 9.15 9.89 E:DM 2.53 2.85 2.66 3.15 3.34 ¥:E 25.95 25.45 26.26 23.83 18.54 E:SDR 5.52 6.23 6.34 7.50 8.34 E:Ecu 4.69 5.38 5.21 6.22 6.52a E:P 1.31 1.30 1.27 1.31 1.33 E:Z$ 0.42 0.43 0.38 0.25 0.16

a E:¤.

Sources: EIU; IMF; South African Reserve Bank.

Editor: Paul Gamble Editorial closing date: August 2nd 2000 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected]