1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury

S WA Z I L A N D
The Lubombo Spatial Development Initiative
The Lubombo Spatial Development Initiative (SDI),adjoining the
M aputo development corr i d o r, is a partnership of the
G overnments of Swaziland,South Africa and Mozambique and is
expected to provide the necessary growth stimulus to the
Lubombo are a .
The main focal points include areas such as the Maputo Prov i n c e
in Mozambique, the north-eastern parts of Kwa-Zulu Natal in
South Africa and eastern Swaziland.The development initiative
will open up unique opportunities to vast stretches of coastline
(about 350km), w i l d l i fe covering over 300,000 ha of game
re s e rves and significant agricultural deve l o p m e n t .The Lubombo
SDI is viewed as complementing the Maputo corr i d o r, t h e re by
c reating an exceptional investment zone. T h e re are plans to
upgrade roads joining Richards Bay in South Africa and Map u t o ;
and on the other hand, to improve the current N2 linking
R i c h a rds Bay and Lavumisa/Namacha/Goba in Swaziland to
accommodate future traffic vo l u m e.
A number of transitional tourism projects offering integrated
w i l d l i fe experiences are curre n t ly being developed in areas such
as Nduma (joining Te m b e, F u t h i , Usuthu George and cove r i n g
w i l d l i fe in all three countries), L av u m i s a - Po n gola project with
o p p o rtunities for re c reation and leisure activities, Ko s i
B ay / Ponto Do Ouro project offering opportunities for beach
re s o rts and marina, and Hlane/Mlawula W i l d l i fe Zone.
A l s o, various national projects have been deve l o p e d .T h e s e
include the Greater St Lucia Wetland Park (South A f r i c a ) ,L a ke
S i b ayi (South Africa) and nu m e rous others involving Swaziland
and Mozambique.
G overnments from all three countries have created SDI
s t r u c t u res to co-ordinate overall activities pertaining to the
Lubombo SDI. In order to accelerate participation by private
i nvestors and the forging of strategic links with the public sector,
priority has been given to an improved investment climate and
the streamlining of investment pro c e d u re s .
P r i v a t i s a t i o n
The task of privatisation in Swaziland seems less daunting than
in other SADC countries, due to the modest size of public
ow n e r s h i p. In total, some 25 enterprises are either fully or
m a j o r i t y - owned by gove r n m e n t , with a minority interest in
some smaller companies.
The process has been commenced by the commercialisation of
Swaziland Railw ay s , and the restructuring of the Swaziland
D evelopment and Savings Bank.The monopoly status granted to
the Swaziland Royal Insurance Corporation will also be lifted,
and the process of acquiring a strategic partner for the national
a i r l i n e, R oyal Swazi A i r w ays has been ongoing for some time.
F u rt h e r m o re, the restructuring of the Swaziland Post and
Te l e c o m munications Corporation, a parastatal established in
1 9 8 6 ,is on the card s .It is believed that the company will be split
into a holding company with rights over the entire netwo r k
s y s t e m ,and an operating company, which should be re s p o n s i b l e
for providing serv i c e s .A dd i t i o n a l ly, p rovision will be made for a
strategic partner to acquire a minority stake, including possibly
the issue of a cellular license.
The government has created a special monitoring unit, k n ow n
as the Public Enterprises Unit, to evaluate the performance of
specific enterprises, and to pre p a re them for commerc i a l i s a t i o n
or privatisation.The stipulated enterprises are re q u i red by law
to submit quart e r ly financial re p o rts to the unit, w i t h
recommendation sent for sanctioning by the Cabinet.
I N V E S T M E N T C L I M A T E
I nvestment incentive s
Highlights of the incentives include:
The five - year tax exemption for new manufacturing companies
i nvo l ved in exports has since been phased out. N ew tax
re fo r m s ,to be implemented soon, a re aimed at reducing the
l evel of corporate tax from 37.5 percent to 30 percent leading
to 25 percent in the medium term. F u rther tax incentives are
p re s e n t ly being considere d .
An employee training programme allows for expenses incurre d
in training personnel to be deducted for tax purposes.
Assessed losses may be carried fo r w a rd and offset against future
p ro f i t s .
An initial depreciation allowance of up to 50 percent on plant
and machinery may be claimed in the first year or spread ove r
s everal ye a r s .
A 10 percent local pre fe rence on public tenders is allowe d .
An allowance is granted for the cost of building houses fo r
e m p l oye e s .
Business sites for industrial operations are available from the
M i n i s t ry of Enterprise and Employment and Swaziland Industrial
D evelopment Company (SIDC). O n going expansion of the
M a t s apha Industrial and other sites is being carried out along
with the upgrading of the country ’s infrastructure.
E x p o rt In c e n t i ve s
The Central Bank operates an Export Credit Guarantee
Scheme established in 1991.The scheme includes pre- and postshipment
loans granted by commercial banks, which re c e i ve
guarantee bonds from the scheme as risk cove r. Swaziland has
decided not to adopt the export processing zones concept.
As a Lomé Convention signatory Swaziland enjoys pre fe re n t i a l
access to the EU for a wide range of pro d u c t s . Under the GSP,
Swaziland also has access to other major markets such as USA,
C a n a d a ,Australia and Jap a n .
Swaziland is a member of SAC U, which provides for the fre e
m ovement of goods between the member countries (Botsw a n a ,
L e s o t h o, N a m i b i a , South Africa and Swaziland). It is also a
member of the regional organisations SADC and COMESA.
Ta x a t i o n
Corporate tax rate is 37.5 percent (will be reduced to 30
p e rcent during 1999).
M a x i mum rate for individual tax is 39 perc e n t .
Withholding tax is at 15 percent (12.5 percent within SAC U ) .
Double taxation agreements exist with South A f r i c a ,M a u r i t i u s
and the United Kingdom.
Institutions Invo l ved in Investment Pro m o t i o n
Swaziland Industrial Development Corporation (SIDC), a
j o i n t ly - owned by the government of Swaziland and five
international development finance institutions, is the principal
d evelopment finance institution. Its chief activities, t h e re fo re,
i nvo l ve the provision of long-term loans, equity financing, a s s e t
l e a s i n g ,acquisition of industrial land and buildings, and prov i d i n g
technical advice and guidance to both local and international
i nve s t o r s . Some of the projects that are like ly to re c e i ve
s u p p o rt from the institution include the manu f a c t u r i n g ,m i n i n g ,
a g ro - i n d u s t ry, t o u r i s m ,c o m m e rce and service sector.
88