In a bid to boost its economy and combat a youth unemployment rate of more than 40%, Eswatini, the smallest country on mainland Africa, is slashing its corporate tax rate from 27.5% to 12.5%.
The Kingdom of Eswatini is gearing up to boost the economy and ensure that youth are employed and equipped for the future that lies ahead of them, as they face a youth unemployment rate of over 40%. Previously engulfed with numerous challenges that have threatened the economic stability of the country, we want to tell the world that change is coming to reverse the issues of today and return Eswatini back to its former glory days where growth was recorded in the double digits.
One of the ways in which Eswatini plans on boosting business in the country is through lowering corporate tax rates significantly. While corporate tax is generally high in Africa, Eswatini is planning on becoming the lowest corporate tax-rated nation on the continent. This move is a bold one for the second smallest state in mainland Africa.
Research from the Organisation for Economic Co-operation and Development (OECD) shows that in 1980, corporate tax rates around the world averaged at between 40.38% and 46.67% when weighted by GDP. Since then, countries have recognised the impact that high corporate tax rates have on business investment decisions and have lowered them. Currently, the average is between 24.18% and 26.30%, when weighted by GDP, for over 176 separate tax jurisdictions in the world.
This reduction will bode well for Eswatini, whose economy has experienced subdued growth and a decline in Foreign Direct Investment for a number of years. This move is crucial to facilitating the private sector-led recovery envisaged in our nation’s vision for growth.
I announced during my 2020 Budget Speech that we are rising to the challenge and nurturing the seeds of progress in order to unlock growth in Eswatini. A corporate tax bill is on the way to facilitate a major cut from a high 27.5% to 12.5%. This will be Eswatini’s announcement to the world that we are truly open for business.
The prime minister of Eswatini, Ambrose Dlamini, has earmarked 2020 as the year of the SMME. This distinction is to ensure that small businesses become vibrant players in the economic development of Eswatini.
Statistics show that globally, over 95% of enterprises are SMMEs and they account for 60-70% of the working population. SMMEs are the lifeline of an ailing economy because they are positioned to provide job opportunities and contribute significantly to the GDP.
The focus this year, as earmarked by the Prime Minister, is on SMME development, especially creating access to finance and markets, and empowering both youth and women with entrepreneurial skills. Our government has committed to intently building strong relations with the private sector, providing the enabling environment needed to ensure sustained growth and enhance job creation and innovation.
The 2020/21 budget also makes provision for an Investment Summit that will see investors, funders and government sit around the table for a period of six weeks to discuss business and investment opportunities, all anchored on the vision of boosting our economy.
It’s no longer business as usual in Eswatini as government renews its commitment to simplify the environment for businesses to thrive. Furthermore, safeguarding policy certainty and removing barriers and bottlenecks that impede private sector growth are taking top priority. As a result, a Delivery Unit has been set up to mandate, identify and remove all barriers and obstacles that may hamper the attraction of both foreign direct and local investments, including the execution of committed government projects.
Only time will tell whether the measures put in place in Eswatini will bear fruit. However, we remain optimistic about what the future holds for this great nation. Eswatini has immense potential, it is time that the world is re-introduced to our Kingdom. DM