I. Commercial Overview The import market in Swaziland is small. In 1992, the most recent figures available from the Central Bank, imports were valued at about 600 million dollars. Over 80% of imports come from South Africa or through South Africa. Imports of consumer goods are nearly exclusively from or through South Africa. Imports of capital goods have a more varied provenance. A decade ago the formal economy of Swaziland was almost entirely based on natural resources and the agricultural sector. Today, however, some 40% of GDP in the formal economy comes from industry. A notable increase both in food processing and in small manufacture have driven this development. The government has emphasized investment in and for the export sector with its own resources and through attracting foreign capital. Infrastructure projects to promote and sustain governmental efforts are still underway, though they have slowed in recent years as Swaziland has lost some of the advantages it enjoyed while neighboring South Africa and Mozambique were hampered politically. All the systems that a modern economy is based on are fundamentally in place in Swaziland. However, many of the systems are not very reliable from day to day nor do they reach the whole of Swazi society. Only about a third of the Swazi population partakes of these modern developments and in the formal economy. The greater part of two thirds of the population still live by traditional subsistence agriculture. The major natural resources of Swaziland are mineral deposits, extensive forests, and irrigated land in the lowveld. Coal, asbestos, gold and diamonds are all mined by foreign companies. These mines have not been developed to their full capacity. The forests are planted and are predominantly foreign owned. The forests are harvested primarily for pulp although some of the wood is used locally in construction and carpentry. The irrigated lowveld yields the main export crops - sugar and citrus fruit. Again, the production is in large measure foreign owned. Some 70 percent of Swazis live outside the urban areas. The majority are engaged in traditional agriculture based on maize and cattle raising. About 25,000 Swazis work in South Africa. The Embassy estimates that 18,000 work in mines, 5,000 in education and 2,000 in agriculture. Swaziland's major trading partner is South Africa. Close to 80 percent of Swaziland's imports come from South Africa and about 40 percent of Swaziland's exports go to South Africa. Other commercial ties are to the EU, primarily Britain, and the United States. The general legal and formal commercial structure is closely aligned with practices in South Africa and Great Britain. Swaziland is generally well disposed towards the United States. Their contacts with the United States are formed, however, more by the official American presence in Swaziland than by direct commercial contacts. There are few U.S. investors in Swaziland, and historically foreign investment has come from Great Britain and South Africa. The major opportunities for American business in Swaziland would seem to be less in exports to Swaziland and more in infrastructure project participation or direct investment, new or existing. The largest infrastructure project now in the pipeline is the Komati River Basin Project which according to the latest estimate will cost in excess of $250 million. Smaller projects in urban development are also in the works, e.g. airport infrastructure. For direct investment, the opportunities would seem to lie in the further processing and marketing of Swaziland's various agricultural products, and manufacturing/assembly operations that draw on or feed the Southern African region. There are opportunities in consulting, design management, construction, as well as in the sale of capital equipment. There are no major roadblocks to doing business in Swaziland in general. Business practices and official attitudes are open and aboveboard if a bit slow and cumbersome. Government policy generally has even favored foreign business interests over domestic ones. The general business climate is similar to South Africa, even though it is in nearly all respects much less dynamic and sophisticated. In the consumer goods sector South Africa enjoys an advantage because of proximity. English and Dutch interests in the exploitation of natural resources and agricultural production in bulk are of long standing and well entrenched. This, no doubt by networking, extends to other sectors of the economy and gives it a certain European cast, even though the official and commercial links with Britain, in particular, seem not to be inordinately strong or restrictive. While there are problems with transparency and accountability the playing field seems to be generally level if potential entrants are willing to energetically market, have the same governmental support from home, and operate by the same standards of conduct.