unctad/dite/wid country profile - swaziland · from the central bank of swaziland. the...

Swaziland A. Definitions and sources of data

The data on the annual inflows of foreign direct investment (FDI) in Swaziland were gathered from the Central Bank of Swaziland. The International Monetary Fund provides additional data in its balance of payments statistics. The Government of Swaziland established the Swaziland Industrial Development Company Limited (SIDC) in order to promote and protect FDI. SIDC functions as the investment center of Swaziland. The Companies Act and the Registration of Business Act, 1993 governs establishment and operation of FDI. The Act provides the incentives for foreign companies operating in the country. FDI projects have to receive the approval of the Ministry of Commerce and Industry.

The main incentives granted to foreign investors in Swaziland are fiscal in nature. The use of foreign currency is controlled. Capital repatriation, remittances of dividends and royalties are subject to the approval of the Central Bank of Swaziland. A number of opportunities remain untapped in many sectors. In an attempt to make Swaziland the preferred destination for FDI, continuous improvements towards the creation of an enabling environment have been fruitful. Some of these achievements to date, amongst many, include the centralization of vital business processes such as business registration, trading licenses, work permits, factory shells identification, etc all under the Swaziland Investment Promotion Authority.

The business environment and infrastructure in Swaziland lends itself to a wide and varied range of businesses. In particular, manufacturing, agriculture, processing, tourism, have been found to be most suited to a Swaziland environment mainly because of the preferential entry to markets such as the United States and European Union countries.

The Companies Act legislation distinguishes between partnerships, foreign companies, public and private companies. This legislation is in the process of being revised to bring it in line with current/modern practices. Public and private companies are limited by their share capital. Public companies have the letters 'Limited' after their name whereas private companies have the letters 'Proprietary Limited'. The most common type of investment is through private companies. The Articles of Association of such companies include the following clauses:

· a restriction of the right to transfer shares

· membership limited to a maximum of 50, excluding employees of the company

· any offer for subscriptions of any shares or debentures to the public is not allowed. Instead of operating through a subsidiary, a foreign company may operate through a branch in Swaziland, and as such is classified as an external company. It is obligatory to register with the Registrar of Companies; and companies must in any event comply with the provisions of the Companies Act.

Swaziland prohibits nationalization of foreign-owned property, and foreign firms receive national treatment. The economy depends largely on export production run by foreign majority-owned firms in such industries as wood pulp, sugar, and soft drink concentrate. Both residents and non-residents may hold foreign exchange accounts, but residents face quantitative limits. Payments and transfers are subject to controls but are not usually restricted. Except for equity investments by non-residents, the Central Bank of Swaziland must approve all inward capital transfers. Most other capital transactions that require documentation are controlled, prohibited or face quantitative limits.

Posted November 2006

Swaziland has concluded a number of double taxation agreements. The most significant are with South Africa and the United Kingdom. The agreements concern dividends, interest, royalties and fees. The government had traditionally participated in the regional integration schemes both at the sub-regional and regional levels. As of the end of the 2003, the country belonged to several of the existing bodies such as the African Union and the New Partnership for Africa's Development, South African Development Community, Southern African Customs Union and is eligible for the United States' market access initiative for African countries - the Africa Growth and Opportunity Act, the Everything But Arms initiative and the generalized system of preferences. It is also a member of World Trade Organization.

UNCTAD WID Country Profile: SWAZILAND of 16

B. Statistics on FDI and the operations of TNCs

Table 1. Summary of FDI

(Millions of dollars)

Variable Inward Outward1. FDI flows, 2002-2005 (annual average) 18.9 3.02. FDI flows as a percentage of GFCF, 2002-2005 (annual average) 5.6 0.93. FDI stock, 2005 814.0 72.64. FDI stock as a percentage of GDP, 2005 32.1 2.9Source: Based on tables 3, 4a and UNCTAD, FDI/TNC database.


Table 3a. FDI flows, by type of investment, 1980-2005


Inward investment Outward investment

Year

1980 1.7 3.3 21.4 26.5 .. 0.5 8.5 9.01981 2.5 12.3 22.3 37.1 -1.6 1.0 5.9 5.41982 2.4 13.5 -29.5 -13.6 -0.8 0.6 -2.6 -2.91983 0.9 -1.5 -5.0 -5.7 -0.7 0.8 -0.2 -0.11984 0.1 3.6 1.3 5.0 1.5 1.8 1.7 5.01985 -0.6 8.4 3.9 11.7 -1.5 3.2 1.0 2.71986 1.9 21.2 7.0 34.2 0.0 .. 1.4 1.51987 5.3 45.8 6.3 57.5 4.9 .. 4.3 9.31988 13.6 9.4 33.8 56.9 2.4 .. 3.8 6.31989 19.4 50.2 2.9 72.5 2.8 .. 11.0 13.81990 -0.2 32.8 -3.0 28.5 - .. 3.2 3.11991 15.0 27.4 43.0 85.4 0.2 .. 15.5 15.71992 15.1 28.3 40.9 84.4 -0.7 .. 3.8 3.11993 8.8 61.6 1.5 71.9 -0.9 .. 9.7 8.71994 10.3 57.7 -4.7 63.3 0.9 .. 57.4 58.31995 31.6 -1.1 13.0 43.5 3.4 .. 26.6 30.01996 27.1 -8.0 2.7 21.8 4.3 .. -15.4 -11.11997 4.2 -25.0 5.8 -15.1 -6.6 .. -3.4 -10.01998 9.3 73.0 26.5 108.8 0.8 .. 22.2 23.01999 1.4 36.5 62.4 100.3 -1.4 .. 13.8 12.42000 -21.2 63.5 48.0 90.6 -0.7 .. 17.2 16.62001 6.9 52.9 -8.7 51.4 0.0 .. -18.4 -18.52002 -9.5 71.8 28.3 90.1 -0.4 .. -0.3 -0.12003 -3.8 -25.7 -31.5 -61.0 -0.4 .. -10.1 -10.52004 -4.1 31.7 32.7 60.3 - .. 1.2 1.22005 -3.4 17.3 -27.7 -13.8 0.1 .. 21.3 21.4

Note : FDI flows: IMF for 1980-1985 and Central Bank of Swaziland for 1986-2005.Source : UNCTAD, FDI/TNC database.

Equity Reinvested earnings

Intra-company

loansTotal Equity Reinvested

earnings

Intra-company

loansTotal


Year

1980 1.7 3.3 21.4 26.5 .. 0.5 8.5 9.01981 2.5 12.3 22.3 37.1 -1.6 1.0 5.9 5.41982 2.4 13.5 -29.5 -13.6 -0.8 0.6 -2.6 -2.91983 0.9 -1.5 -5.0 -5.7 -0.7 0.8 -0.2 -0.11984 0.1 3.6 1.3 5.0 1.5 1.8 1.7 5.01985 -0.6 8.4 3.9 11.7 -1.5 3.2 1.0 2.71986 3.1 21.1 6.9 31.1 .. 3.3 -1.1 2.31987 4.3 45.7 6.3 56.3 -0.2 3.5 3.3 6.71988 9.9 7.2 33.6 50.6 2.4 4.6 5.2 12.31989 14.0 50.0 3.2 67.2 2.8 1.6 11.2 15.61990 -0.2 33.3 -3.0 30.1 .. 4.4 3.2 7.61991 15.0 24.2 43.0 82.1 0.2 9.3 15.5 25.01992 15.2 31.4 40.7 87.3 -0.7 30.1 3.8 33.21993 8.8 61.6 1.6 71.9 -1.0 19.1 9.7 27.81994 10.3 57.7 -4.7 63.3 0.9 6.5 57.4 64.71995 31.6 -1.1 21.3 51.8 3.4 1.6 15.6 20.61996 27.1 -8.1 2.7 21.7 4.3 4.7 -15.4 -6.51997 3.9 -25.2 6.0 -15.3 -6.6 1.1 -6.4 -12.01998 9.3 73.0 70.4 152.7 0.8 0.9 22.2 23.91999 1.4 36.6 62.4 100.4 -1.4 0.8 13.8 13.22000 -21.2 64.5 48.1 91.4 -0.7 0.7 17.2 17.22001 38.0 -0.2 -9.4 28.4 0.0 0.6 -18.2 -17.62002 -8.5 71.2 26.1 88.8 -0.4 0.9 -0.3 0.22003 -3.8 -25.7 -31.5 -60.9 -0.4 0.7 10.1 10.52004 -4.8 36.6 36.6 68.4 0.0 .. 3.6 3.6

Source: International Monetary Fund, Balance of Payments CD ROM, August 2006.


Intra-company

loansTotalEquity Reinvested

earnings

Intra-company

loansTotal

Table 3b. FDI flows, by type of investment, 1980-2004




Table 4a. FDI stock, by type of investment, 1980-2005


Inward Investment Outward Investment

Year

1980 .. .. .. 243.4 .. .. .. 19.01981 .. .. .. 280.5 .. .. .. 24.41982 .. .. .. 228.7 .. .. .. 18.31983 .. .. .. 199.0 .. .. .. 15.31984 .. .. .. 126.5 .. .. .. 11.81985 .. .. .. 104.2 .. .. .. 8.81986 47.9 73.9 37.2 157.6 6.3 .. 7.8 13.91987 59.7 131.9 48.8 241.3 6.9 .. 13.4 20.41988 61.5 116.0 71.8 249.3 7.9 .. 14.5 22.41989 77.7 160.7 70.4 308.1 10.3 .. 25.1 35.31990 268.8 .. 66.6 335.7 10.2 .. 28.1 38.31991 293.8 .. 105.5 399.1 9.8 .. 41.8 51.61992 304.6 .. 133.1 437.3 8.1 .. 41.1 49.21993 341.4 .. 121.1 462.2 6.4 .. 46.3 52.61994 395.4 .. 111.4 506.1 6.9 .. 101.8 108.61995 414.4 .. 121.1 535.4 10.2 .. 125.4 135.51996 340.4 .. 96.8 437.6 11.9 .. 83.5 95.51997 307.8 .. 98.6 406.6 5.2 .. 77.2 82.41998 333.3 .. 148.3 480.8 5.0 .. 85.0 89.91999 355.1 .. 203.2 557.9 3.4 .. 94.7 98.02000 327.4 .. 209.2 536.6 2.2 .. 92.7 94.92001 246.1 .. 124.4 374.3 1.4 .. 45.3 46.62002 399.0 .. 208.0 607.0 1.4 .. 62.8 64.02003 488.0 .. 235.9 724.0 1.5 .. 93.6 95.12004 608.0 .. 320.2 928.2 1.7 .. 108.0 109.72005 561.0 .. 253.0 814.0 1.6 .. 71.0 72.6

Source : UNCTAD, FDI/TNC database. Note : FDI stocks: 1980 is estimated by subtracting flows from the stock of 1981. 1981-1985 are based on the IMF. 1986-2005 data are based on Central Bank of Swaziland.


Intra-company

loansTotal Equity Reinvested

earnings

Intra-company

loansTotal


Year

1981 188.0 92.5 280.5 17.4 7.0 24.41982 176.2 52.6 228.7 14.7 3.6 18.31983 157.1 41.9 199.0 12.3 3.0 15.31984 99.6 26.9 126.5 8.7 3.2 11.81985 78.7 25.5 104.2 5.4 3.4 8.81986 117.5 37.2 154.7 6.3 3.2 9.41987 191.6 48.8 240.4 6.9 13.4 20.31988 177.6 71.9 249.4 7.9 14.6 22.51989 238.4 70.7 309.2 10.3 25.1 35.41990 268.8 67.0 335.8 10.2 28.1 38.31991 293.8 105.8 399.6 9.8 41.9 51.61992 304.6 133.1 437.7 8.1 41.1 49.21993 341.4 121.1 462.5 6.4 46.3 52.61994 395.4 111.4 506.8 7.0 101.9 108.81995 414.5 121.1 535.6 10.2 125.4 135.61996 340.5 96.8 437.3 11.9 83.5 95.41997 307.8 98.6 406.4 5.1 77.2 82.31998 333.3 148.3 481.6 5.0 85.0 90.11999 353.0 203.2 556.2 3.4 94.7 98.12000 326.7 209.3 536.1 2.2 92.7 94.92001 230.8 124.0 354.8 1.4 45.0 46.32002 399.2 208.2 607.4 1.4 62.8 64.22003 485.9 235.0 721.0 1.5 93.2 94.72004 609.7 319.2 928.8 1.7 114.1 115.8

Source: International Monetary Fund, Balance of Payments CD ROM, August 2006.

Intra-company

loansTotalEquity and Reinvested

earnings

Intra-company

loansTotal Equity and Reinvested

earnings

Table 4b. FDI stock, by type of investment, 1981-2004




Economy 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004Germany -1.2 .. .. .. .. -1.4 .. .. .. .. .. .. .. .. ..United States 1.0 1.0 .. 24.0 .. .. .. .. -28.0 24.0 21.0 -10.0 .. .. 11.0Source : UNCTAD, FDI/TNC database.Note: Data are based on information reported by the economies listed above

Economy 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004China .. .. 0.1 .. .. .. .. .. .. .. .. .. .. .. ..Malaysia .. .. .. .. .. .. .. .. .. .. .. .. 0.3 .. ..Portugal .. .. .. .. .. .. .. .. .. .. .. .. .. 0.1 ..South Africa .. .. .. .. 0.8 .. .. .. .. .. .. .. .. .. ..United States .. .. .. .. .. .. .. .. .. .. .. .. .. .. -3Source : UNCTAD, FDI/TNC database.Note: Data are based on information reported by the economies listed above

Table 11. FDI stock in the host economy, by industry, 1993

Sector/industry 1993Total 456

Primary 57.7Agriculture, hunting, forestry and fishing 52Mining, quarrying and petroleum 5.7

Secondary 275Tertiary 123

Finance 12.2Other services 111

Source : Central Bank of Swaziland, unpublished

Table 12a. FDI stock in the host economy, by geographical origin, 1993

Region/economy 1993Total 63

Developed developed economies 63Europe 59

European Union 25 59Belgium 1Denmark -2Germany -1Netherlands 8United Kingdom 53

Other developed economies 4Japan 4

Source : Central Bank of Swaziland, unpublished

Economy 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004South Africa .. .. .. .. .. .. .. .. .. .. .. 12.9 31.5 141.1 ..United Kingdom .. 157.1 142.1 131.8 137.5 .. .. .. .. .. .. .. .. .. ..United States 4.0 5.0 .. 90.0 .. .. .. 34.0 6.0 46.0 59.0 45.0 .. 65.0 72.0Source : UNCTAD, FDI/TNC database.Note: Data are based on information reported by the economies listed above

Table 6. FDI flows in the host economy, by geographical origin, 1990-2004


Table 9. FDI flows abroad, by geographical destination, 1990-2004




Table 12b. FDI stock in the host economy, by geographical origin, 1990-2004



Table 14. FDI stock abroad, by industry, 1993

Sector/industry 1993Total 94.3

Primary 2.7Agriculture, hunting, forestry and fishing 0.8Mining, quarrying and petroleum 1.9

Secondary 75.9Tertiary 15.7

Other services 15.7Source : Central Bank of Swaziland, unpublished

Economy 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004Portugal .. .. .. .. .. .. .. .. .. .. .. .. 0.1 ..South Africa .. .. .. .. .. .. .. .. .. 22.7 43.8 17.5 23.5 ..United Republic of Tanzania .. .. .. .. .. .. .. 0.2 .. .. .. .. .. ..United States 1 .. .. .. .. .. .. .. .. .. .. .. .. -3Source : UNCTAD, FDI/TNC database.Note: Data are based on information reported by the economies listed above.



Table 15. FDI stock abroad, by geographical destination, 1991-2004


Tables 21 and 28. The Number and Assets of foreign affiliates of Swaziland TNCs in the United States, 1990-1991

Table no. Variable 1990 199121 Number 2 228 Assets 4 4

Source : UNCTAD, FDI/TNC database.Note: Data are based on information reported by the United States

Table no. Variable 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 200323 Number 2 2 2 2 2 2 2 2 2 2 2 2 2 235 Employees 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 .. .. .. .. ..40 Wages and salaries 1 1 1 1 2 2 2 2 3 .. .. .. .. ..50 Value added a .. .. .. .. 81 82 40 52 88 .. .. .. .. ..

Source : UNCTAD, FDI/TNC database.Note: Data are based on information reported by the economies listed abovea Majority-owned affiliates of United States TNCs.

(Number, thousands of employees, millions of dollars)

Tables 23, 35, 40 and 50. The Number, employees, wages and salaries and value added of affiliates of Swaziland TNCs in the United States, 1990-2003

(Number, millions of dollars)


Table 88. Largest affiliates of foreign TNCs in the host economy, 2004

(Millions of dollars and number)

Company Home Economy Industry Sales Employees

A. Industrial

Bromor Foods United Kingdom Food products and beverages .. ..Castrol Swaziland United Kingdom Petroleum .. ..Swaziland Bottling United Kingdom Food products and beverages .. ..Swaziland Breweries United Kingdom Food products and beverages .. ..

B. Tertiary

Beral Swaziland United States Wholesale trade .. 240 a

Amerika Samoa Bank Australia Other services .. ..Handigas United Kingdom Wholesale trade .. ..Kilpatrick United Kingdom Construction .. ..Zao Kuehne + Nagel Switzerland Other services .. ..

C. Finance and insurance Assets Employees

Standard Bank Swaziland South Africa Finance 96 448 b

First National Bank of Swaziland South Africa Finance 57 230 c

Nedbank (Swaziland) United Kingdom Finance 47 178 b

Amerika Samoa Bank Australia Finance .. ..

a Estimate. b 2001. c 2002.

Sources : The Banker's Almanac, 2003 (London, Reed Information Services, 2003); Thomson Analytics(http://analytics.thomsonib.com/); Who Owns Whom database (https://solutions.dnb.com/wow).


C. Legal frameworks for transnational corporations I. National framework In Swaziland, an number of national, bilateral and multilateral legal instruments exist to regulate the activities of transnational corporations and foreign direct investors. The key instruments in the country include the following: Companies Act of 1912 Source: Globe Africa: Swaziland Investment Policy (http://www.globeafrica.com/Swazi/swazi2.htm). Patents, Designs and Trade Marks Act No. 72 of 1936, as amended by L. 5/1969 (no longer applicable to Trademarks). Note: registration of European Patents (UK) under existing legislation. Source: WIPO (http://www.wipo.org). Income Tax Act of 2000 Source: SADC Review: http://www.sadcreview.com). Industrial Relations Act 2000 Source: SADC Review: http://www.sadcreview.com). Swaziland Investment Promotion Authority (SIPA), 1998. Source: SADC Review: http://www.sadcreview.com). Fair Trading Act [year]. Source: SADC Review: http://www.sadcreview.com). Merchandise Marks Act No. 24 of 1937. Source: WIPO (http://www.wipo.org). Trade Marks Act of 1981. Source: WIPO (http://www.wipo.org). Trade Marks Act (Date of Commencement) Notice No. 101 of 1994. Source: WIPO (http://www.wipo.org). Registration of United Kingdom Trade Marks Rules No. 72 of 1936. Source: WIPO (http://www.wipo.org). Merchandise Marks Regulations No. 24 of 1937. Source: WIPO (http://www.wipo.org). Trade Marks Regulations (Legal Notice No. 47) of 1989. Source: WIPO (http://www.wipo.org). II. International Framework A. Swaziland is a party to the following multilateral and regional instruments: Paris Convention for the Protection of Industrial Property of 1883 (Revised at Brussels in 1900, Washington in 1911, The Hague in 1925, London in 1934, Lisbon in 1958 and Stockholm in 1967, and as amended in 1979). Signed in 1994. Convention on the Settlement of Investment Disputes between States and Nationals of other States of 1965. Entered into force on 14 October 1966


Convention Establishing the Multilateral Investment Guarantee Agency of 1985, entered into force on 12 April 1988. Marrakesh Agreement Establishing the World Trade Organisation of 15 April 1994. Entered into force on 1 January 1995. Agreement on Trade-Related Investment Measures. General Agreement on Trade in Services. Agreement on Trade Related Aspects of Intellectual Property Rights. Treaty Establishing the Market for Eastern and Southern Africa (COMESA), 1993. Fourth ACP - EEC Convention (Lome IV) of 1989, entered into force on 1st March 1990. Southern Africa Development Community (SADC). Partnership Agreement between the Members of The African, Caribbean and Pacific Group of States, of the one part and the European Community and its member states, of the other part signed in Cotonou, Benin on 23 June 2000. B. Bilateral treaties 1. Bilateral investment treaties for the protection and promotion of investments: United Kingdom 1968, South Africa 1972, Sweden 1972, Mauritius 1994. 2. Bilateral treaties for the avoidance of double taxation: Germany 1990, United Kingdom 1995, Taiwan Province of China 1998, Mauritius 2000.


D. Sources of information Official Central Bank of Swaziland (www.centralbank.sz). Swaziland Industrial Development Company (www.sidc.co.sz). Secondary BusinessMap (2000). "The other challenge" of FDI, in SADC Investor Survey – Complex Terrain

(Johannesburg: Business Map), pp 123 - 134.

Crush, J. (1987). The Struggle for Swazi Labour 1890-1920 (Kingston: McGill-Queen’s University

Press).

Economist Intelligence Unit (EIU) (2002a). Country Profile: Swaziland (London: EIU Ltd.).

___________________(2002b). Country Report: Swaziland (London: EIU Ltd.), April.

___________________(2005a). Country Profile: Swaziland (London: EIU Ltd.).

___________________(2005b). Country Report: Swaziland (London: EIU Ltd.), April.

Ernst & Young (2002). "Doing Business in Swaziland" (Mbabane: Ernst & Young).

Hussey, R & H (2001). Jumbo Tourist Guide-Swaziland (London: Africa Book Centre).

International Monetary Fund (IMF) (2006). IMF's Sub-Saharan Africa Regional Economic Outlook, March 10, 2006. (Washington D.C.: IMF).

Ruffer, Tim, S. Jones and S. Akroyd (2002). "Development Box Proposals and Their Potential Effect on

Developing Countries." Mimeo, (London: U.K. Department for International Development).

Soderbom, M. and F. Teal (2004). "Size and Efficiency in Africa Manufacturing firms: Evidence from Firm-Level Panel Data." Journal of Development Economics, 73. pp 369 - 394.

Standard Bank Group (1999). "FDI in SADC financial services: follow the leaders", mimeo.

(http://www.treasury.gov.za/documents/fiscu/summits/1999/finance.pdf).

Turco, M. (1994). Visitors’ Guide to Swaziland (Johannesburg: Southern Book Publishers).

United Nations Conference on Trade and Development (UNCTAD) (2003). FDI in Landlocked Developing Countries at a Glance 2002 (Geneva: UNCTAD/ITE/IIA/2003/5).

___________________(2005a). Investor-Disputes Arising from Investment Treaties: A Review. UNCTAD Series of International Investment Policies for Development (UNCTAD/ITE/IIT/2005/4).


___________________(2005b). A Survey of Support by Investment Promotion Agencies to Linkages. Advisory Studies No. 18 (UNCTAD/ITE/IPC/2005/12).

United States Trade Representative (2006). 2006 Comprehensive Report on U.S. Trade and Investment

Policy Toward Sub-Saharan Africa and Implementation of the Africa Growth and Opportunity Act: The Sixth of Eight Annual Reports, May 2006. (Washington D.C.: US Government).

Whiteside, A. W. (ed.) (1989). Industrialization and Investment Incentives in Southern Africa

(London: Pietermaritzburg, University of Natal Press), pp. 16-244.

World Bank (2002). Global Economic Prospects and the Developing Countries 2003: Investing to Unlock

Opportunities (Washington D.C.: World Bank).

World Economic Forum (2000/2001). Africa competitiveness report (New York: Oxford University

Press).


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