Reliable and affordable electricity and internet remain key priorities for government in order to stimulate private sector growth and productivity, the Minister declared, to which end government intends to expedite national plans for promoting the local production of electricity and to ensure that end-users are the primary beneficiaries of Eswatini’s burgeoning cyber-scape. He said that government will continue to promulgate pro-business policies in an effort to bolster the operating environment, which in turn will enhance the potential of the private sector to contribute towards economic growth and employment creation. In conclusion, Minister Rijkenberg summed up by stating that a vibrant private sector will lead to improved food security, access to affordable internet and communication services, a thriving renewable-energy industry, increased tourism and full utilisation of the kingdom’s preferential trade agreements.
FDI ARRIVALS
One such quota- and tariff-free agreement is the Common Market for Eastern and Southern Africa (COMESA) comprising 21 countries and 560-million potential consumers, and which was reportedly one of the factors behind food-processing megacompany, Kellogg-Tolaram (Pty) Ltd (K-T), deciding to establish a manufacturing-base in Eswatini. To date, a specially designed, 18 000 m² factory-shell reportedly worth E220-million has been erected at Matsapha industrial town outside Manzini, and machinery valued at E200-million shipped in from the USA. When unpacking the project to media representatives, the Minister of Commerce, Industry and Trade, Manqoba Khumalo, said that the above would constitute phase one, the manufacturing of noodle-based foodstuffs: phases two and three, when introduced, will see the expansion of operations to include a cereals-processing plant and thus witness additional investment.
Economic Benefits include:
• K-T Eswatini will post export-revenues running into billions of Emalangeni
• Local company, Roots Construction, was awarded the tender to build the massive site
• In accordance with a buyback clause in the fully enforceable Memorandum of Agreement, K-T Eswatini shall within three to five years purchase the factory shell: government says that it intends to reinvest that money in additional factory shells and get more people employed
• K-T Eswatini almost immediately began recruiting, this in a drive to train key staff ahead of the opening date
• K-T Eswatini sees the kingdom as a hub and a launchpad into Africa, including exploration of COMESA’s potential
• K-T Eswatini is already serving as an advocate for the kingdom: talks with a significant American company that wishes to supply the US from Southern Africa were said to be at an advanced stage
• K-T Eswatini will generate employment opportunities throughout all of its phases, from an initial 260 direct jobs to over 600 come Phase II
• Spinoffs to SMEs, i.e. support services such as transport, maintenance, catering, security, cleaning, consultancy, etc, will result in a significant number of indirect jobs
• Local suppliers: K-T Eswatini will source some of its input materials locally, and develop local suppliers where possible
• Agriculture: in Phase II, K-T Eswatini will be adding cereals to the production lines, which should incentivise local farmers to increase their output, of maize in particular Minister Khumalo concluded the Q & A with affirmations:
• Kellogg’s, and by extension K-T, is both a sound investment and the calibre of investor worth fighting for…Eswatini needs high quality, long-term employment and credible investors
• The risk factor is minimal…the appropriate type of investment for the creation of sustainable jobs
• Government urges the nation to support the project and celebrate the breakthrough, as more is coming
• Perception-wise, landing K-T conveys a strong sentiment abroad – Eswatini is open for business!
What the investors said:
• Kellogg Company’s new, long-term partnership with leading food company, Tolaram Africa, will significantly increase Kellogg’s presence in the growing African market and advance the company’s breakfast, snacks and emerging market strategies to drive future growth
• As a region that is experiencing explosive growth, with a population of almost one billion people and an economy that is expected to more than double over the next 10 years, Sub-Saharan Africa provides tremendous opportunity for Kellogg Company
• Tolaram Africa has built a highly successful consumer-products business and today is one of the largest food companies in Nigeria…it has a great track record of building beloved consumer brands and fuelling their growth, so this partnership is an excellent strategic fit for Kellogg
• Kellogg is a world leader in its categories and has successfully built brands that are synonymous with it: Tolaram Group is thus pleased to have entered into this partnership as we share similar values and an aligned vision for Africa, a continent in which we have been operating for over 35 years
Filling the Power-Pool
Eswatini has officially welcomed another new foreign direct investor, the Australia-based independent power producer (IPP) and renewable energy storage operator, Frazium Energy (Pty) Ltd, whose Robert Frazer was introduced to dignitaries, stakeholders and the media at an event hosted by the Eswatini Investment Promotion Authority (EIPA). To paraphrase Frazium Energy’s official profile:
• Large-scale Solar PV and Battery Energy Storage System IPP focused on developing, owning and operating renewable energy projects globally: investment appetite includes developing countries
• Primary interest lies in projects that are able to combine Solar PV and battery energy storage
• Primary target is to focus on utility-scale Solar PV projects that are able to be combined with large-scale battery energy storage systems, so is constantly on the lookout for combined solar with storage opportunities worldwide
• Preference for flow batteries due to their longevity, positive environmental attributes and overall competitive levelized cost of energy, which is a measure of a power source that allows comparison of different methods of electricity generation on a consistent basis, and can also be regarded as the minimum constant price at which electricity must be sold in order to break even over the lifetime of a project
• Active throughout the entire process, from opportunity identification and validation, solution design, obtaining approvals and licences, building and operating
• Seeks to add value to renewables by the incorporation of storage, thereby enabling them to become a viable alternative to fossil fuel baseload or peaker generation
• Projects are designed to maximise the use of renewable energy for baseload reliability, energy utilisation, smoothing and peak shaving
It was said at the launch that Frazium Energy’s presence in Eswatini – on 50 ha of Swati Nation Land at Edwaleni – will create over 100 new employment opportunities and, during phase one alone, inject an estimated E1.5-billion into the local economy. The primary site will reportedly comprise a 25 Megawatts (MW) Solar Farm, a 25-50MW/100MWh Vanadium Redox Flow Battery Farm, and a plant capable of manufacturing 10 million litres of electrolyte per annum. Robert Frazer disclosed that South Africa’s ESKOM and the Southern African Power Pool are intended purchasers of the output: no mention was made of what part it will play in the kingdom’s electricity scenario.
The Minister of Commerce, Industry and Trade, Manqoba Khumalo, disclosed at the launch that landing Frazium Energy was the culmination of a year-long series of engagements involving his departments, EIPA and the German Chamber of Commerce. He described said engagements as “part of government’s aggressive approach to luring investors who fall within the targeted sectors as outlined in the Strategic Roadmap to 2022…I’m excited that EIPA has been able to migrate an investment interest into a concrete project”. Minister Khumalo concluded by requesting the necessary support from all government entities and regulatory bodies to afford the project the means it requires to succeed. EIPA CEO, Sibani Mngomezulu, in a brief address celebrated the partnerships that gave birth to the project.
Robert Frazer highlighted that Eswatini’s strategic geographical location will make it easy to access the large and growing Southern African electricity market, and the kingdom is therefore the ideal destination for his company’s project. He singled out the close proximity of Mpumalanga’s raw materials, as well as the harbours in Mozambique and KwaZulu-Natal. Also of great importance, he said, is that the country’s political environment remains stable, as evidenced by “the Australian government giving Eswatini the same safety rating as Germany”. Frazer concluded his remarks by suggesting that when phase two of the investment is implemented, the project’s total value to Eswatini could escalate to as much as E7-billion.
ANNUAL SHOWCASE
The Eswatini International Trade Fair (EITF) – which a few years ago celebrated its Golden Jubilee edition – routinely attracts a total of more than 200 vendors and exhibitors, the latter including companies from the USA, RoC-Taiwan, Indonesia, Tanzania, Zimbabwe, Lesotho and Botswana. As is customary, His Majesty King Mswati III officially opens the 10-day-long showcase, and he consistently stresses the need for Emaswati conducting business to look beyond the country’s borders. With the most recent addition to Eswatini’s already-substantial list of preferential markets being the long-negotiated Africa Continental Free Trade Area, the King pointed out that with a population of more than one billion consumers and a combined GDP exceeding US$3-trillion, continental Africa should become Eswatini’s primary trading terrain. He also urged EITF organizers to maintain the important practice of devising an annual theme which emphasises that ‘Eswatini is Open for Business’.
Minister of Commerce, Industry and Trade, Manqoba Khumalo, used EITF as the vehicle to launch the Export Readiness Manual: he said that with government adopting an export-led economic strategy, businesses of all sizes will through the document be capacitated with regard to export-related subjects such as the expectations and demands of global markets. Furthermore, as the kingdom’s domestic market is relatively small, the manual is “a strategic imperative that will drive the growth of exports to other countries and allow local export-ready businesses to take advantage of the ever-increasing number of accessible-market configurations”. Khumalo stressed that the manual was strategically tailored to answer the questions that local private sector companies would have with regard to requirements in the various markets to which Eswatini has access, would be relevant to small, medium and large businesses, and thus “a perfect complement to government initiatives to boost the growth of the economy by assisting our companies to better understand processes that relate to exports”.
The manual resulted from a joint initiative between government, the European Union (EU) and COMESA: it covers strategic markets such as the USA’s African Growth and Opportunity Act (AGOA), Economic Partnership Agreements (EPA) with the EU and UK, the Africa Continental Free Trade Area (AfCFTA) and COMESA. Focal points include adhering to customs formalities, standards and the rules of origin, as well as a self-check list for businesses aspiring to engage in export trade. Minister Khumalo urged the private sector to make use of the manual in order to understand the finer points of exporting goods and services and thereby position themselves accordingly. He concluded by stating that the Export Readiness Manual highlights the key support institutions that the private sector could consult with regard to understanding export processes.
Meet and Greet
An innovative feature of EITF – and which supports its theme – is the Business Lounge on Hall #1 Deck: hosted by First National Bank (FNB) in conjunction with EIPA, the platform is described as providing the ideal space for networking, meetings and strengthening business connections, an ‘office away from the office’. Its open-plan design features meeting-pods for up to four people around one table, full ITC availability and knowledgeable support staff. Also partnering at the debut occasion was the Small Enterprises Development Company (SEDCO) which brought its long-accumulated knowledge to share with start-up business owners. The triumvirate thus saw EIPA responsible for investors who were seeking opportunities, SEDCO supporting local entrepreneurs in search of investors, and FNB unpacking the requirements for accessing finance. Once-off interactions included Eswatini Revenue Authority’s session entitled ‘Enhancing Tax Compliance for SMEs’, and the National Agricultural Marketing Board’s presentation on ‘Accessing Markets for Agricultural Producers’. Post-event, EIPA said that the Business Lounge had brought many value-add benefits to the Trade Fair experience.
PARTNERS IN TRADE
Britain has committed to continue supporting Eswatini beyond Brexit. Newly-appointed High Commissioner to Eswatini, John Lindfield, when presenting letters of credence to His Majesty King Mswati III at Lozitha Palace, said that Britain will be reopening its standalone embassy in the kingdom, which evinced a commitment to strengthening the existing bilateral relations with Eswatini. Lindfield emphasised that this includes working to ensure that Britain’s departure from the European Union (EU) does not lead to any disruption to its trade with the bloc comprising Southern African Customs Union (SACU) Member States and Mozambique. He recalled how the Trade Ministers of Britain, SACU countries and Mozambican agreed to create a bilateral framework that replicates the effects of the existing EU-Southern African Development Community (SADC) Economic Partnership Agreement (EPA), then reported that said group “had made good progress and looked forward to concluding the Agreement as soon as possible”.
The High Commissioner said that British ministers understand that the EPA plays an important role in encouraging bilateral trade between the UK and Eswatini, as well as supporting regional integration within SACU. “The UK is committed to ensuring that these benefits continue as we leave the EU, and furthermore is working in partnership with Eswatini and others to provide this continuity in order to protect our businesses and consumers,” he said. Continuing, Lindfield name-checked Eswatini as one of the countries in which Britain wants to expand its support and assist in achieving even more. The relationship between Eswatini and Britain has remained strong in the years since 2005, he said, “but with a renewed focus on Africa, re-establishing a permanent British High Commission in Eswatini has been an important priority”. Presenting his letters of credence at Lozitha Palace was the first step towards that, Lindfield told His Majesty, before expressing his hope that “in the not too distant future” they will be able to celebrate the opening of an actual High Commission building.
AGOA and Beyond
In Eswatini, the USA’s discretionary African Growth and Opportunity Act (AGOA) has long supported thousands of jobs in the textile and apparel industry, with the majority of employer-companies being of Asian origin and drawn to invest in the kingdom by the opportunity to benefit from quota- and duty-free exports to the US market. American businesses have meanwhile enjoyed less trade with Africa, to the point where US companies from the manufacturing and other sectors vociferously called on their government to make its trade-and-investment support services easier to access. Statistics showed that even though Africa was one of the fastest growing continents, trade between America and Africa had since 2014 declined by 32 percent, yet grown with other trade regions of the world.
With AGOA due for presidential renewal or cancellation in 2025, a new trade vehicle was unexpectedly launched. Named ‘Prosper Africa’, it purportedly sought to change the status quo and implied that AGOA would be superseded: the newcomer arrived amid growing attention being given to the African continent by the likes of mainland China, which had just pledged US$60-billion in aid while already boasting an ever-growing footprint of largescale infrastructure projects. Six months after the official introduction of Prosper Africa, it was unpacked for Heads of Government and other stakeholders at the 12th US-Africa Business Summit, during the opening session of which the Deputy Secretary in the US Department of Commerce, Karen Dunn Kelley, began her address with a reminder that AGOA was never touted as a permanent fixture. She described Prosper Africa as a more country-specific approach to doing business in Africa, one that would benefit companies, investors and workers in both Africa and the United States.
Eswatini’s Minister of Commerce, Industry and Trade, Manqoba Khumalo, was after the presentations reported as saying it was clear that America has no intention of extending AGOA beyond 2025, and in order for the kingdom to formulate its strategic response to the new development, government’s first task was to gain a full understanding of Prosper Africa, such as how to access funds and how they compare with other facilities in terms of the cost of the money.
The Minister said that, somewhat unlike AGOA, Prosper Africa seemed to be more bilateral with countries and companies, as opposed to trading blocs which, while it may affect the ideals and objectives of the new AfCFTA, opens doors to US companies that may wish to have a more investment type relationship through the Public Private Partnership (PPP) method. Khumalo said that Eswatini’s PPP framework was yet to be fully tested, so the new dispensation will allow government to “step it up” and leverage on Prosper Africa. He concluded by declaring that seeing as Prosper Africa sets out to address the unique needs of a country, it was now up to Eswatini to design what could benefit it the most from the programme. (The kingdom meanwhile continues apace with initiatives aimed at deriving optimum value from AGOA, and which are detailed in previous editions of The Eswatini Review.)
