Eswatini awaits big decisions. The kingdom’s fiscal policies are undergoing an alteration that could influence economic stability and lay the foundation for sustained growth. For too long, the country has relied on unpredictable revenue streams, leaving the government vulnerable to financial shortfalls. Now, with a firm commitment to strengthening domestic revenue mobilization, the future Eswatini’s fiscalization system will emerge as the main driver to guaranteeing that every lilangeni owed to the state is collected efficiently.
The latest World Bank report, Eswatini Public Finance Review (PFR): Leveraging Fiscal Adjustment for Better Development Outcomes, underscores the importance of fiscal reforms in addressing structural constraints to economic growth and improving living standards. The five reform pathways outlined in the report provide a roadmap to increasing revenue streams, enhancing market competition, improving expenditure efficiency, and strengthening public investment and health systems. These measures collectively aim to place Eswatini on a sustainable and inclusive development trajectory.
5 Key Takeaways
- Fiscalization for Economic Stability: Eswatini is shifting towards a structured fiscal policy to ensure efficient revenue collection and reduce reliance on volatile external revenue streams like SACU transfers. The goal is to strengthen domestic revenue mobilization for long-term economic stability.
- Modernization of Tax Administration: The Eswatini Revenue Service (ERS) is implementing advanced technologies such as ASYCUDA, ORMB, and TaxEase to enhance tax collection and compliance. A specialized tax unit for high-net-worth individuals and streamlined tax procedures aim to increase revenue efficiency.
- Challenges in Connectivity and Digital Infrastructure: With internet penetration at 58.3%, fiscalization must account for businesses operating in areas with unreliable connectivity. An effective system should prevent fraud and record all transactions by including offline functionality, regardless of internet access.
- Balancing Compliance and Business Growth: Eswatini’s fiscalization reforms must support both large enterprises and SMEs, ensuring fair taxation without overburdening smaller businesses. Measures such as a presumptive tax regime and VAT registration threshold adjustments aim to encourage compliance while fostering a healthy business climate.
- Fiscalization as a Driver of Development: Beyond revenue collection, fiscalization plays a key role in economic growth by creating transparency, boosting investor confidence, and funding essential public services like healthcare, education, and infrastructure. A fair and consistent tax system strengthens trust between businesses and the government.
Fiscal Policy as an Instrument for Macroeconomic Stability
Historically, prudent fiscal policies and foreign capital inflows during South Africa’s international isolation drove Eswatini’s growth. However, the economic landscape has evolved, with consumption playing a more significant role in growth than investment. This shift has heightened the need for fiscal policies that promote stability and external competitiveness. Expansionary fiscal policies have contributed to fiscal deficits and the accumulation of expenditure arrears, prompting the government to implement fiscal consolidation measures since 2019 and the Fiscal Adjustment Plan (FAP) in 2021.
To sustain economic growth and competitiveness, Eswatini must continue its commitment to fiscal prudence. Key measures include reducing the state’s footprint in the economy, particularly through state-owned enterprise (SOE) reform, eliminating expenditure arrears to the private sector, addressing wage disparities between public and private sectors, and operationalizing the Revenue Stabilization Fund to cushion against the volatility of Southern African Customs Union (SACU) transfers.
Government Focus on Economic Transformation
During the Budget Speech for the 2025/2026 financial year, Eswatini’s Minister of Finance, Honorable Neal Rijkenberg, laid out an ambitious plan centered on economic transformation, fiscal stability, and strategic investments. Under the theme “Transformation for Growth,” the Minister projected an impressive GDP growth of 8.3%, positioning Eswatini among the fastest-growing economies globally.
A key pillar of the budget is fiscal management and stabilization, with the Stabilization Fund playing a crucial role in shielding the economy from revenue fluctuations. Through usage of this fund, the government has maintained a balanced budget without severe spending cuts, ensuring financial sustainability. However, a significant challenge remains in public sector expenditure, as 31% of the budget is allocated to civil servant salaries. This substantial commitment highlights the government’s reliance on a large public workforce while raising concerns about long-term fiscal sustainability.
Enhancing Revenue Streams While Promoting Market Competition
Eswatini’s revenue system is characterized by volatility and procyclicality, heavily influenced by SACU transfers. Despite relatively high tax rates compared to peer countries, domestic revenue mobilization remains low. Addressing this challenge requires reforms to improve tax administration and reduce tax expenditures, which currently exceed 10 percent of GDP. The tax system is burdened by high incentives, exemptions, and evasion.
Key reforms could include establishing a specialized tax unit for high-net-worth individuals, streamlining tax registration and payment procedures, and improving SOE financial performance to enhance tax compliance. These measures would not only increase domestic revenue but also alleviate budgetary pressures.
Strengthening Public Financial Management and Expenditure Efficiency
Public sector expenditure in Eswatini accounts for approximately 30 percent of GDP, with recurrent spending—particularly on wages—dominating the budget. Despite efforts under the FAP to moderate wage spending, expenditure arrears persist, and capital spending remains low. The introduction of a new Financial Management Information System is a positive development in improving public expenditure management.
However, the government needs to implement further reforms to enhance budget preparation, improve execution and commitment controls, eliminate arrears, reform SOEs, and enhance public procurement through electronic solutions. These steps would support fiscal consolidation while ensuring efficient allocation of resources, particularly in social sectors vital for human capital development.
Eswatini’s Fiscalization: Domestic Revenue Mobilization as a Saviour
The Eswatini Revenue Service (ERS) is leading this charge, prioritizing modernization to improve tax collection and enforcement. From deploying customs scanners to integrating fiscalization technology, the ERS is reshaping how revenue is collected. Recent upgrades, such as the enhanced Automated System for Customs Data (ASYCUDA) and the adoption of the Oracle Revenue Management and Billing (ORMB) system, signal a major leap in efficiency. These innovations, paired with self-service platforms like TaxEase, are making compliance simpler and more accessible for businesses and taxpayers alike.
Yet, for Eswatini’s fiscalization to reach its full potential, it must fit the country’s unique economic landscape. A rigid, one-size-fits-all tax system will not work. Eswatini needs a fiscalization model that smoothly integrates with both the formal and informal sectors and includes small and medium enterprises (SMEs) despite bureaucratic hurdles. The ERS has taken commendable steps in this regard, introducing a presumptive tax regime for SMEs and adjusting the VAT registration threshold to encourage compliance without overburdening smaller businesses. Striking this balance between enforcement and accessibility is vital, an effective tax system should not just collect revenue but also create a business climate where enterprises can grow and contribute fairly. Next step is finalizing the procurement process and deciding which fiscalization solution will fit best the Kingdom’s B2C environment.
The Internet Divide: A Challenge to Fiscalization
One significant challenge remains: connectivity. In early 2024, there were 708.2 thousand internet users in Eswatini at the start of the year, when internet penetration stood at 58.3 percent. While Eswatini’s digital transformation is well underway, many businesses operate in areas with unreliable internet access. A tax system that depends entirely on online connectivity risks excluding those in remote regions or creating loopholes for tax fraud. This is where a more adaptive approach is needed. Eswatini must implement a fiscalization model that smoothly integrates with both the formal and informal sectors and prevents the exclusion of small and medium enterprises (SMEs) due to bureaucratic hurdles. Without this, gaps in compliance will persist, allowing businesses to manipulate records before syncing data once back online.
A system designed to function regardless of connectivity would provide the airtight compliance necessary to secure revenue collection. Whether in the heart of Mbabane or in rural trading hubs, the system should capture every taxable transaction in real-time. This is not just about enforcing tax laws. It is about fairness. A well-structured fiscalization model warrants that all businesses, regardless of size or location, contribute equitably to national development.
The RegTech Perspective: Adapting Eswatini’s Fiscalization
A truly modern fiscalization system must work for everyone. The challenge of connectivity in Eswatini highlights a crucial gap in digital public infrastructure. If tax compliance relies solely on constant internet access, the system will inevitably exclude businesses that cannot afford stable connections or operate in areas with limited coverage. This divide is precisely where a well-designed RegTech solution can make the difference.
The key lies in going for fiscalization technology that operates both online and offline, assuring that tax records remain tamper-proof even when temporarily disconnected. Secure, hardware-backed fiscal devices, along with encrypted storage and automatic synchronization when internet access is restored, most effectively prevent fraud. A system that allows businesses to continue operating without disruption while maintaining data integrity will give Eswatini the best of both worlds: compliance and accessibility.
Countries that have adopted similar models, such as Rwanda with its Electronic Billing Machine (EBM) system, have demonstrated the effectiveness of integrating offline capabilities. These systems make certain that tax records remain accurate, even in remote areas, and create an unbroken chain of trust between businesses and tax authorities. Eswatini has already taken great strides in fiscal digitalization; now is the moment to ensure that these efforts leave no room for manipulation and revenue loss.
The Bigger Picture: Eswatini’s Fiscalization as a Driver of Growth
Beyond compliance, Eswatini’s fiscalization has the potential to shape the broader economy. A transparent and efficient tax system builds investor confidence, reassuring businesses that they are operating in a fair environment. When companies see the consistent application of tax laws, they are more likely to invest and expand, knowing that competitors cannot gain an unfair advantage by evading taxes.
Fiscalization also strengthens the government’s ability to fund public services. Schools, healthcare, infrastructure—these essential sectors rely on tax revenue. By closing loopholes and ensuring that all businesses pay their fair share, Eswatini can redirect funds to where they are needed most. The country has already seen how improved tax policies, such as the reduction of Company Income Tax from 27.5 percent to 25 percent, can create a more favorable economic climate. When coupled with a robust fiscalization system, these reforms can drive sustainable development without placing undue strain on businesses.
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