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Changes in US trade regulation could hit Swaziland's economy

The US's concerns over Swaziland's slow transition to democracy could affect trade between the two countries, hitting ordinary families
The US's concerns over Swaziland's slow transition to democracy could affect trade between the two countries, hitting ordinary families

The lack of democratic governance in Swaziland could now be directly impacting on the country's trade prospects.

Since January 2001, Swaziland has been eligible for the preferable treatment offered by the African Growth and Opportunities Act (AGOA) of the United States. This gives a large number of countries in sub-Saharan Africa privileged access to US markets through the removal of import duties on certain goods. This has allowed these often poor countries, to export easily and cheaply to the world's largest economy.

Last year, trade between Swaziland and the US totalled $82 million, with $59 million of that being exports to the US. The majority of these goods came from the country's garment industry, which employs around 17,000 people. However, IRIN news reports that Swaziland could soon be deemed ineligible for AGOA and some commentators warn that this could have a devastating impact on the country's economy.

Stalled democracy

Swaziland is often referred to as sub-Saharan Africa's last absolutist monarchy, where King Mswati III has complete control over government policy. Recently, human rights groups have been increasingly critical of the heavy-handed approach taken to political marches and the arrest of pro-democracy activists. In an open letter to the king, prominent groups and individuals, including Nobel Prize laureate Archbishop Desmond Tutu, have warned that these human rights violations could lead to "economic and political isolation".

This seems to be happening already, as the US is likely to take Swaziland off the list of countries which are eligible for preferential treatment under AGOA. US Ambassador to Swaziland, Makila James, has said that from January 1 2015 companies in Swaziland will have to start paying US import duties again. This is largely because the US feels that the government has failed to promote democracy and improve the human rights situation in the country. The impact on people and businesses could be profound.

A hard economic blow

The country is already suffering from the economic decline in South Africa, which is its largest trading partner, and this would be a further blow to its already weakened economy. Some companies are saying they may have to close entirely and others are threatening to move to Asia, where wages are lower. With 1.2 million people already living below the poverty line this could further entrench the issue of persistent poverty. However, this does not seem to be the prime concern of many garment factory workers.

Those interviewed by IRIN were more concerned about the incredibly low wages they are paid, which raises questions about how widely the benefits of AGOA were shared. Equally, there are some questions about how big these benefits actually are. Bilateral trade between Swaziland and the US has declined rapidly since its peak in 2005 and is now not much above pre-AGOA levels. Despite this, losing free trade privileges with the US would likely to have a major impact on people and business in Swaziland. Unfortunately, these changes already appear to be a foregone conclusion.

Hard economic times are hitting families across Swaziland. SOS Children works with the most vulnerable in three locations across the country, where we also provide a loving home for children with no one else to care for them. Find out more.