(AfDB)-The Board of Directors of the African Development Bank Group has approved a $47.5 million loan to the Kingdom of Eswatini. The loan will support the government's efforts to transform the economy, achieve sustainable growth, create jobs, improve service delivery, and enhance the livelihoods of its people. 

The Enhancing Economic Resilience and Competitiveness Program (EERCP) represents a strategic intervention to support Eswatini's National Development Plan (2023-2028).

This marks the first phase of a two-year program designed to strengthen the economic foundation of the southern African nation and foster sustainable growth, economic recovery, and sustainable livelihoods for Eswatini people, while addressing mounting fiscal pressures from declining Southern African Customs Union (SACU) revenues and economic headwinds.

"This operation comes at a critical juncture for Eswatini as the country navigates challenging economic conditions while implementing ambitious reforms," said Moono Mupotola, African Development Bank Deputy Director General for Southern Africa "Our support will help the Kingdom build fiscal resilience while creating an enabling environment for private sector-led growth that can generate jobs for young people and women."

Eswatini's economy faces significant headwinds, with GDP growth declining from 5% in 2023 to an estimated 3.6% in 2024, primarily due to the impact of extreme droughts on agricultural output. The fiscal deficit has widened from 1.5% in 2023 to an estimated 1.7% in 2024, driven by underperformance in customs revenues and increased public spending pressures.

With youth unemployment reaching 48.7% and overall unemployment at 35.4%, Eswatini urgently needs structural reforms to unleash the potential of its private sector and create opportunities for its predominantly young population.

The program focuses on two complementary pillars: deepening fiscal and public financial management reforms, and enhancing competitiveness to promote private sector-led, inclusive, and green growth.

 The program builds on the African Development Bank's successful track record in Eswatini, including the Support for Economic Recovery and Inclusive Growth operation and ongoing technical assistance in state-owned enterprise reforms, procurement, and the implementation of gender policy.

The Enhancing Economic Resilience and Competitiveness Program places special emphasis on promoting inclusive growth and gender equality. Environmental sustainability is integrated throughout the program.

The program is expected to deliver measurable improvements by reducing domestic arrears, increasing private sector growth in GDP, boosting renewable energy share, and improving Country Policy and Institutional Assessment scores on fiscal policy and social inclusion. The Country Policy and Institutional Assessment of the African Development Bank is a diagnostic tool that assesses, every two years, the quality of policies and the performance of institutional frameworks in the 54 African countries.

The EERCP has been developed in close coordination with the World Bank, which provides complementary financing.