Fuel queues, battered economies collide - Times of Eswatini

Eswatini is sliding into a perfect storm. Fuel queues that snake for hours through Mbabane and Manzini are not merely inconveniences—they are symptoms of a deeper economic hemorrhage that threatens the kingdom's stability and sends ripples across Southern Africa's supply chains.

The immediate cause is straightforward: foreign exchange scarcity. Eswatini's lilangeni has weakened sharply against the US dollar, making fuel imports—priced in dollars—prohibitively expensive for the state fuel company. But the real diagnosis requires looking deeper into fiscal mismanagement, declining customs revenue from the Southern African Customs Union (SACU), and an overdependence on South African infrastructure.

**How did Eswatini reach this breaking point?**

For two decades, Eswatini relied on SACU revenue—tariffs collected on goods flowing through South Africa—to fund government operations. At peak, SACU transfers represented 60% of state revenue. That revenue has collapsed. Simultaneously, the government payroll bloated, subsidies on fuel and electricity became unsustainable, and foreign reserves evaporated. By late 2023, Eswatini's central bank held less than one month's worth of import cover—a red-line indicator of currency crisis risk.

The fuel shortage is the visible manifestation. Without dollars, the fuel importer cannot pay suppliers. Without fuel, transport halts. Without transport, food, medicines, and manufactured goods cannot reach markets. Inflation accelerates. The currency weakens further. A doom loop tightens.

**What are the economic implications for the region?**

Eswatini is small (population ~1.2 million) but strategically positioned. It is a crucial transit corridor for South African exports to Mozambique and beyond. Fuel shortages ripple northward: Mozambique's manufacturers lose reliable logistics. South African truck operators face delays at the border. Port traffic at Maputo—dependent on cross-border trucking—faces congestion. These are not abstract trade flows; they are the arteries of regional commerce.

For investors, Eswatini signals a broader risk: the fragility of SACU-dependent economies. Lesotho and Botswana face similar revenue pressures. If Eswatini's crisis deepens—a currency peg break, formal debt default, or IMF intervention—it will validate warnings about Southern Africa's fiscal trajectory that rating agencies have been flagging since 2022.

**What can reverse the crisis?**

Three paths exist, none easy. First: emergency IMF support, which requires austerity (public sector wage cuts, subsidy removal) that invite social unrest. Second: a sharp currency devaluation to boost export competitiveness and reduce import demand—painful but potentially stabilizing. Third: structural reform—privatizing state enterprises, broadening the tax base, eliminating corruption—which takes years while the crisis unfolds in months.

Current indications suggest a muddle-through approach: rationed fuel distribution, price controls, and appeals to SACU neighbors for emergency support. This buys time but does not solve the underlying fiscal collapse. The queues, therefore, are likely to persist into 2025 unless decisive policy action—or external bailout—materializes soon.

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