Swaziland’s economy is heavily reliant upon subsistence farming which sustains over
80 percent of the population. Subsistence farming takes place almost exclusively in rural communities where 70 percent of Swazis live. Largely as a result of poverty, the past few years have seen wavering economic growth, intensified by the economy’s inability to create new jobs. These demands have dramatically reduced the country’s capability to supply sufficient social services, namely education.

Limited access to financing has prevented Swazi’s from using farming as a solution. The country historically has had little domestic saving (8 percent of GDP) to finance investment
and foreign savings have fallen off since the 1980s and 1990s. Annual investment rates have declined from 25 percent of GDP for the period 1981-94 to 19 percent since then—
far below other low income and lower middle-income countries in the region. As a result, access to finance and resources is limited, which constrains financing of growth-enhancing investment projects.

The commercial banking system has concentrated on export financing and bypassed a large portion of the adult population. The World Bank estimates that only 35 percent of the Swazi adult population has access to a bank account— too low, given its stage of development.

There is no public credit registry, and private credit bureaus cover only 38 percent of the population. The depth of financial markets is further limited by lack of access to collateral for many borrowers.

About 60 percent of the land is held in public trust and cannot be used by farmers to secure loans to invest in increasing agricultural yields. As a result, most people who live on these lands are limited to accumulating savings in traditional assets such as livestock. With no incentives or ability to access the formal financial sector, they are forced to rely on subsistence agriculture and cannot expand ventures to a commercial level. Compounding this problem is a weak investment climate that raises the cost of capital and the rate of return investors now seek. These rates of return on capital have been inflated to levels that prevent small farms to make use of them.