Transparency of the Regulatory System
In general, the laws of the country are transparent, including laws to foster competition. The Swaziland Competition Act came into force in 2007, and the Competition Commission Regulations came into effect in 2011. The Swaziland Competition Commission (SCC) is a statutory body charged with the administration and enforcement of the Competition Act of 2007. The legal and regulatory environment is underdeveloped, but currently growing as the GKoE has recently established additional regulatory bodies in the financial, energy, communications, and construction procurement sectors. These bodies generally attempt to emulate the regulatory practices of South Africa or Britain.
Eswatini’s rule-making and regulatory authority lies with the central government and may be delegated by the relevant line ministry to a department, parastatal, or board. The primary custodian of policy and regulation is the minister responsible for the relevant law. All laws, regulations, and policies are applied at a national level. There are no regulatory processes managed by nongovernmental organizations or private sector associations. Regulatory enforcement actions can be reviewed through the court system, and court rulings are publicly available.
Adherence to the International Financial Reporting Standard (IFRS) is required for listed companies, financial institutions, and government-owned companies. It remains optional for small and medium enterprises.
Proposed laws and regulations are published in the government Gazette and have a public comment period of thirty days prior to a bill’s presentation to parliament. Ministries sometimes consult with selected members of the public and private sectors through stakeholder meetings. Most draft regulations are not available online, but can be acquired in hard copy through the government printing office for a fee. Regulations are generally developed and reviewed through various stakeholder consultations. The use of science and data to inform regulatory reform is not widespread.
Foreign investors coming into the country can join Business Eswatini on equal footing with Eswatini nationals. Business Eswatini often serves as the link between the private sector and the government. There are no informal regulatory processes that apply to foreign investors.
Eswatini public finance and debt obligations are published online through the budget estimates book as well as the Central Bank of Eswatini’s annual report.
International Regulatory Considerations
Eswatini is part of four distinct economic blocks: the Common Monetary Area (CMA), the Southern African Customs Union (SACU), the Southern African Development Community (SADC), and the Common Market for Eastern and Southern Africa (COMESA). The standards of membership in these blocks are primarily based on British law and have been domesticated accordingly into each context.
Eswatini is a member of the WTO and notifies all draft technical regulations to the WTO Committee on Technical Barriers to Trade. Eswatini signed and ratified the Trade Facilitation Agreement (TFA) in 2016 and has begun implementing its requisites. The TFA entered into force in February 2017 and requires prompt and transparent publication of trade-related information. Eswatini developed a trade portal in partnership with the World Bank to make reliable trade-related information accessible to the private sector. The GKoE approved the portal, which now is at the data collection stage.
Legal System and Judicial Independence
Eswatini has a dual legal system consisting of a set of courts that follow Roman-Dutch law and a set of national courts that follow Swati law and custom. The former consists of a Court of Appeals (Supreme Court) and a High Court, in addition to magistrate’s courts in each of the four districts. The traditional courts deal with minor offenses and violations of traditional Swati law and custom. Sentences in traditional courts are subject to appeal and review at the Court of Appeals and High Court. The western-style court system enforces contracts and property rights.
The country has various written commercial and contractual laws. Commercial and contractual disputes are handled in the magistrate court or High Court depending on the amount in controversy. There are currently no specialized commercial courts; however, the government is in the process of establishing a Small Claims Bench. Specialized Industrial Courts hear industrial relations matters.
The constitution and law provide for an independent judiciary, and the courts are generally independent of executive control or influence in nonpolitical criminal and civil cases not involving the royal family or government officials. The current judicial process is procedurally competent, fair, and reliable, although the capacity of the judiciary to handle cases in a timely manner is extremely limited, creating significant case backlogs.
Enforcement of laws and regulations is appealable up to the Supreme Court.
Laws and Regulations on Foreign Direct Investment
The Swaziland Investment Promotion Act of 1998 established EIPA and provides for the freedom of investment, protection of investment, and non-discrimination on the part of the government with respect to investors. The Competition Act of 2007 proscribes anti-competitive trade practices and specifies requirements for mergers and acquisitions, and protection of consumer welfare. The new economic recovery strategy (Revised National Development Strategy) has emphasized the need to promote further reforms in order to facilitate investment.
In February 2018, the GKoE enacted the Special Economic Zones (SEZ) Act in an effort to attract foreign direct investment. The benefits for an SEZ investor include: a 20-year exemption from all corporate taxation, followed by taxation at the rate of 5 percent; full refunds of customs duties, value-added tax, and all other taxes payable in respect of goods purchased for use as raw material, equipment, machinery, and manufacturing; unrestricted repatriation of profits; and full exemption from foreign exchange controls for all operations conducted within the SEZ.
Competition and Anti-Trust Laws
The Swaziland Competition Commission (SCC) was established in 2007 to encourage competition in Eswatini’s economy by controlling anti-competitive trade practices, mergers, and acquisitions; protecting consumer welfare; and providing an institutional mechanism for implementing these objectives. The Swaziland Competition Act (http://www.compco.co.sz/documents/Competition%20Act%202007%20scanned18%20Februry%202010.pdf ) and Competition Commission Regulations (http://www.compco.co.sz/documents/Competition%20Commission%20Regulations%20Notice%202010.pdf ) are available online. All entities must submit their merger and acquisition plans to the SCC for prior approval. The SCC has the power to not only investigate and regulate, but also to issue administrative decisions relating to mergers, competition, and anti-trust. There have been no rulings against foreign investors since the establishment of the Swaziland Competition Commission.
Expropriation and Compensation
The law prohibits expropriation and nationalization. The Swati constitution narrowly limits the GKoE’s powers to deprive a landowner of “property or any interest in or right over property,” except where “necessary,” conducted pursuant to a court order, and compensated by the “prompt payment of fair and adequate compensation.” Anyone whose property interests are threatened by expropriation is also expressly granted due process rights under the constitution. There have been no recent cases of foreign-owned businesses being expropriated, and, when disputes have arisen in the past, there has been due process through Swati institutions and/or international tribunals.
ICSID Convention and New York Convention
Eswatini is a member state of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). It is not a signatory to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. There is no specific legislation providing for enforcement of awards under international conventions, but the Swati legal system has effectively enforced court decisions and international arbitration awards in the past.
Investor-State Dispute Settlement
Eswatini is a member state of the International Centre for the Settlement of Investment Disputes (ICSID Convention) and the Multilateral Investment Guarantee Agency (MIGA). Eswatini, as a member of SACU, signed a Trade, Investment and Development Cooperative Agreement in 2008 with the United States. There have been no claims under this agreement.
There have been at least two major investment disputes involving foreign investors in the past ten years, but none involving U.S. citizens.
The Eswatini government accepts binding international arbitration of investment disputes between foreign investors and the state. All government agreements with international investors/parties include venue and choice of law provisions. Local courts recognize and enforce foreign arbitral awards issued against the government, but do not have jurisdiction against the king, who is constitutionally protected.
Eswatini has not had any reported incidents of extrajudicial action against foreign investors.
International Commercial Arbitration and Foreign Courts
The only alternative dispute resolution (ADR) mechanism available to settle disputes between two private parties is in the labor sector. The Conciliation, Mediation and Arbitration Commission (CMAC), which is governed by the Industrial Relations Act of 2000, resolves employer-employee disputes. Eswatini does not have a domestic arbitration body to deal with investment or commercial disputes.
Local courts recognize and enforce foreign arbitral awards and judgments of foreign courts.
SOEs are rarely involved in investment disputes. In the last 10 years, there has been only one such dispute involving an SOE (telecommunications), and it was a trade restraint matter in which the SOE lost the case. There have not been any complaints about the court processes, and court records are available online for public scrutiny at: https://www.swazilii.org/ .
The Insolvency Act of 1955 is the law that governs bankruptcy in Eswatini. The insolvent debtor or his agent petitions the court for the acceptance of the surrender of the debtor’s estate for the benefit of his creditors. Creditors need to petition with the court and provide documents supporting their claim. Bankruptcy is only criminalized if the debtor, trustee, or sole owner does not comply with the requirements of the creditor. For example, if he/she fails to submit documents or declare assets, or if he/she obstructs or hinders a liquidator appointed under the Act in the performance of his functions, then he/she could be found guilty of an offense.
The most widely used credit bureau in Eswatini is Transunion.
In the World Bank’s 2020 Doing Business Report, Eswatini ranks 121 out of 190 economies for ease of resolving insolvency.