Historical background

Autonomy for the Swazis of southern Africa was guaranteed by the British in the late 19th century; independence was granted in 1968. Student and labor unrest during the 1990s pressured King MSWATI III, the world's last absolute monarch, to grudgingly allow political reform and greater democracy, although he has backslid on these promises in recent years. A constitution came into effect in 2006, but political parties remain banned. The African United Democratic Party tried unsuccessfully to register as an official political party in mid 2006. Talks over the constitution broke down between the government and progressive groups in 2007. Swaziland recently surpassed Botswana as the country with the world's highest known HIV/AIDS prevalence rate.

Economic overview

In this small, landlocked economy, subsistence agriculture occupies approximately 70% of the population. The manufacturing sector has diversified since the mid-1980s. Sugar and wood pulp remain important foreign exchange earners. In 2007, the sugar industry increased efficiency and diversification efforts, in response to a 17% decline in EU sugar prices. Mining has declined in importance in recent years with only coal and quarry stone mines remaining active. Surrounded by South Africa, except for a short border with Mozambique, Swaziland is heavily dependent on South Africa from which it receives more than nine-tenths of its imports and to which it sends 60% of its exports. Swaziland's currency is pegged to the South African rand, subsuming Swaziland's monetary policy to South Africa. Customs duties from the Southern African Customs Union, which may equal as much as 70% of government revenue this year, and worker remittances from South Africa substantially supplement domestically earned income. Swaziland is not poor enough to merit an IMF program; however, the country is struggling to reduce the size of the civil service and control costs at public enterprises. The government is trying to improve the atmosphere for foreign investment. With an estimated 40% unemployment rate, Swaziland's need to increase the number and size of small and medium enterprises and attract foreign direct investment is acute. Overgrazing, soil depletion, drought, and sometimes floods persist as problems for the future. More than one-fourth of the population needed emergency food aid in 2006-07 because of drought, and nearly two-fifths of the adult population has been infected by HIV/AIDS.