Stalled roads, classrooms, water schemes and agricultural projects are exposing a deeper problem in Eswatini: government can approve development faster than the Treasury can reliably pay for it. The consequences stretch from contractors and jobs to public confidence in one of Southern Africa’s most politically distinctive states.
MBABANE — Eswatini has launched ambitious roads, promised new classrooms, expanded rural water schemes and placed infrastructure at the centre of its development programme. But across the kingdom, some of that construction is now standing still.
Government projects worth more than E600 million have reportedly stalled because the cash needed to pay contractors has not flowed at the pace promised in approved budgets.
The affected projects reach well beyond roads. They include schools, water infrastructure, livestock dipping tanks and other community facilities, with delays touching the ministries responsible for health, education, agriculture, public works and economic development. Contractors are waiting for payments, workers are losing income and some government officials have reportedly struggled even to obtain fuel to inspect construction sites.
Among the projects caught in the slowdown are the Lugaganeni-Ekukhanyeni road and Maloma-KaHlatsi Highway. The former carries particular symbolism. King Mswati III launched the Lugaganeni-Kukhanyeni-Luve development in late 2025 as part of a package intended to demonstrate government’s response to demands for better service delivery. Less than a year later, the road became an example of the very cash-flow difficulties threatening that programme.
The problem is therefore larger than E600 million. It is the return of a fiscal weakness Eswatini has been fighting for at least a decade.
A crisis Eswatini has seen before
Government cash-flow problems are not new. The International Monetary Fund traced a significant accumulation of unpaid government invoices back to 2016. By March 2019, central-government arrears had reached roughly 7 per cent of GDP, reflecting budgets in which expenditure commitments were not always matched by available financing, combined with weaknesses in expenditure controls.
By 2018, reports of delayed supplier payments had become severe enough that the government was described as effectively operating from one revenue injection to the next. Supplier arrears at the time were reported at about E3.1 billion. The same period produced a government-wide hiring freeze as authorities tried to contain a public-sector wage bill that had become difficult to sustain.
The official record is unusually candid. Eswatini’s own fiscal planning documents later acknowledged that cash-flow disruptions had caused construction projects to stall, contractors to leave sites and claims and penalties to accumulate. Government warned that delayed payments could themselves make projects more expensive, because contractors eventually claim financing costs and penalties.
The National Development Plan for 2023/24 to 2027/28 went further, acknowledging that persistent deficits and volatile revenue had resulted in debt and arrears accumulation, to the point where arrears had become a recurring feature of the public finances. Among the reforms it identified as necessary were stronger public-investment management and better cash-flow planning.
That makes the current E600 million freeze particularly uncomfortable: the problem has long been diagnosed.
Budgets can be balanced on paper, but construction needs cash
Officials quoted by the Times of Eswatini have suggested that the immediate problem should not simply be interpreted as government having no money. Public Works Principal Secretary Thulani Mkhaliphi pointed instead to the timing of payments and coordination of projects. Too many projects can simultaneously reach construction milestones requiring substantial payments, creating a Treasury bottleneck even where the expenditure has formally been approved. That distinction matters — but only up to a point.
For a contractor who has paid workers, hired machinery, bought materials and borrowed from a bank, the difference between an unfunded budget and badly timed cash flow is largely academic. The invoice remains unpaid.
And Eswatini enters this latest episode with little room for complacency. The 2026/27 budget estimates revenue and grants of about E31.9 billion against expenditure of roughly E36.9 billion, leaving a financing requirement of just over E5 billion. The World Bank estimates that the fiscal deficit had already widened sharply in 2025, partly because Southern African Customs Union revenue fell by about 21 per cent, while recurrent and capital spending exceeded expectations. Government debt rose to around 44 per cent of GDP.
This exposes one of Eswatini’s central economic vulnerabilities.
The SACU problem
For decades, Eswatini has depended heavily on receipts from the Southern African Customs Union. When SACU revenues are strong, government finances can improve quickly. When they fall, the opposite happens just as quickly. That volatility encourages a dangerous cycle: spending programmes expand during good revenue years, while projects and suppliers absorb the shock when income subsequently weakens.
The World Bank has repeatedly warned that Eswatini’s public-sector-led growth model and dependence on volatile SACU transfers make fiscal management difficult. A revenue stabilisation fund has been established specifically to reduce this exposure, but the challenge remains substantial. Eswatini also has less monetary-policy freedom than many countries because the lilangeni is pegged to the South African rand, which is also legal tender. The arrangement provides stability and facilitates trade with South Africa, but it places even greater importance on disciplined fiscal management at home. The kingdom is deeply integrated with the South African economy. The IMF estimates that more than 60 per cent of its exports go to South Africa and that a one percentage-point slowdown in South African growth could cut Eswatini's growth by about 0.6 percentage points.
Contractors have become government's shock absorbers
The effect of cash shortages does not remain inside Treasury. It is transmitted into the private economy. In November 2025, unpaid government suppliers complained that some invoices had gone unpaid for months. Business representatives said firms were struggling to pay employees, taxes, rent and bank loans. Some suppliers said they had turned to informal lenders simply to stay afloat. Finance Minister Neal Rijkenberg said government was releasing E130 million to reduce outstanding payments and acknowledged that arrears, once around E6 billion, were still fluctuating between approximately E1 billion and E2 billion. That episode came with assurances that new borrowing and subsequent SACU receipts would improve cash flow. Yet the present project delays suggest that clearing the stock of old arrears is only one part of the solution. Unless the underlying system matches project awards, construction schedules and Treasury liquidity, new arrears can simply replace those that have been paid off.
There is also a contradiction between Eswatini’s industrial policy and its payment practices. In July, Cabinet announced that local contractors should receive greater priority in major government infrastructure projects so that more construction spending stays inside the domestic economy. But prioritising local firms achieves little if those firms must finance government while waiting months for payment.
Senate President Lindiwe Dlamini made the problem explicit earlier this year, warning that contractors borrow to perform government work and are then expected to meet tax obligations even when government itself has not paid them. She cautioned that such a system could damage the construction industry and fuel wider discontent.