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Swaziland: Strong Rand Squeezes Exporters, Layoffs Increase

Published date:
Friday, 03 December 2004

Worker layoffs in Swaziland are proliferating at year's end as a result of the strong South African rand, to which the Swazi currency, the lilangeni, is linked.

"The situation is intense, and a few factories have already closed down because they are running at a loss. The manufacturing process is quite expensive, and these companies are getting very little income through exports," said Robert Maxwell, a spokesman for the textile industry.

Swaziland's textile industry has dominated the small country's manufacturing sector. Thirty-five companies, mostly owned by foreign investors from Taiwan, employed about 30,000 workers at the beginning of the year. Last month alone, 3,500 workers lost their jobs, and the industry has experienced a 30 percent drop in exports this year.

"Any benefits Swaziland enjoys from participation in the United States trade scheme, AGOA [African Growth and Opportunities Act], like making Swazi goods cheaper on the US market because we don't pay import taxes ... are wiped out by the higher cost of the goods because of the rand," a plant manager at the Matsapha Industrial Estate, 30 km east of the capital, Mbabane, told IRIN.

The slump in the value of the US dollar boosted the rand to a five-year high of R5.75 this week. Supported by surging commodity prices, the rand has gained 15 percent against the dollar this year, making it the second-best performing currency against the greenback. The lilangeni is valued at one-to-one with the rand.

As the rand strengthens against the dollar, Swaziland's other commodities, such as sugar, the country's top export, and services, are suffering. In the light of declining profits, the Royal Swaziland Sugar Corporation (RSSC) plans to dismiss 700 workers, and other sugar plantations have similar plans.

In a move that has foreign investors worried, King Mswati personally ordered the RSSC not to fire any workers. "I am saying that the king did order the stalling of the retrenchments ... whosoever goes ahead with them will be disregarding the king's order," Prince Mbuyazwe Dlamini, Mswati's brother, told the Times of Swaziland.

The Swaziland Chamber of Commerce and Industry is concerned that royal intervention in employment issues will be one more reason for foreign investors to shy away from Swaziland. "We already have an Industrial Court in place to handle cases of unlawful or unfair dismissal," said a source with the chamber.



“AGOA Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Swaziland’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.

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