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However, countries like Eswatini are currently capturing only a fraction of this growth potential and need to strategically invest in the foundational elements of their digital economy to keep pace. The Digital Economy for Africa (DE4A) Initiative forms part of the World Bank Group’s support for the African Union’s Digital Moonshot for Africa, which aspires to see every African individual, business and government be digitally enabled by 2030. The DE4A Initiative is underpinned by five principles: 1. Comprehensive: Taking an ecosystem approach that looks at supply and demand and defies a narrow, siloed approach in defining the digital economy elements and foundations. 2. Transformative: Aiming at a very different scale of ambition beyond incremental ‘islands’ of success. 3. Inclusive: Recognizing that the digital economy is for ‘everyone, in every place, and at all times’ as well as creating equal access to opportunities and dealing with risks of exclusion. 4. Homegrown: Supporting solutions anchored in the local context and unleashing the African spirit of enterprise to support more homegrown digital content and solutions. 5. Collaborative: Dealing with the digital economy requires a different, more flexible mindset, including collaboration among countries, across sectors as well as between public and private players. 5 For a successful and inclusive digital economy, or enterprise. Greater digital literacy enhances the African countries need to support the development adoption and use of digital products and services of the key foundational building blocks of the amongst the larger population. digital economy. Five foundational elements, which are synergistic, have been identified: In addition, several cross-cutting themes shape these foundational elements, which determine the ability 1. Digital Infrastructure: Digital infrastructure of creating an enabling institutional and policy provides the means for people, businesses, and environment. A clear strategy and strong leadership governments to get online, and link with local are both needed to spearhead the agenda at national and global digital services, thus connecting level. Equally, the digital economy creates new them to the global digital economy. High-quality legal and regulatory challenges, such as protecting and affordable internet connectivity is a critical consumers and their right to privacy, supporting foundational component of the digital economy. cybersecurity and data protection, as well as effective taxation and competition, which need to be effectively 2. Digital Platforms: Digital platforms offer addressed to ensure that innovative services continue products and services, accessible through digital to emerge, and guarantee their safe and affordable channels, such as mobile devices, computers, access. Moreover, for all citizens to reap the digital and the internet. They facilitate digital exchange dividends associated with the digital economy, it needs and transactions, enabling producers and users to be inclusive to ensure that anyone, regardless of to create value by interacting with each other. age, gender, income and geography has the ability to Governments, for example, operate digital access digital tools and services. platforms to offer citizen-facing government services and share information. Commercial firms Key components of the digital economy ecosystem and non-profit foundations also operate digital platforms to offer a growing array of products, services and information. APPLICATIONS LIKELY TO DEVELOP ONCE THE FOUNDATIONAL ELEMENTS ARE IN PLACE 3. Digital Financial Services: Digital financial Govtech applications services enable individuals and businesses to eCommerce conduct transactions electronically and include Open Banking: non-banks offer services such as digital payments, credit, tailored services savings, and insurance. Access to affordable and appropriate digital financial services is critical for the participation of individuals and businesses in DIGITAL ENTREPRENEURSHIP DIGITAL SKILLS the digital economy. & LITERACY PLATFORMS DIGITAL FINANCIAL SERVICES 4. Digital Entrepreneurship: Digital DIGITAL entrepreneurship and innovation create an ecosystem that helps bring the digital economy to DIGITAL INFRASTRUCTURE life, by spurring new, growth-oriented ventures, products, and services that leverage technology. By enabling the transformation of existing businesses, digital entrepreneurship contributes CROSS-CUTTING AREAS to net employment growth and helps to enhance Strong regulatory frameworks to foster competition and MDF agenda Manage risks: data privacy, cyber security competitiveness and productivity. Opportunity to empower women 5. Digital Skills: Economies require a digitally savvy MFD: Maximizing Finance for Development workforce to build robust digital economies, competitive markets and to enable individuals to access digital services and information. Digital skills constitute technology skills, together with business skills for building or running a startup 6 As part of the DE4A Initiative, ambitious, high-level targets have been established for all five foundational pillars of the digital economy, DIGITAL DIGITAL DIGITAL DIGITAL DIGITAL INFRASTRUCTURE SKILLS PLATFORMS FINANCIAL ENTREPRENEUR- SERVICES SHIP Universal All 15 year Doubling of Universal Tripling the internet old students online services access to number of new network with basic index rating for digital digitally-enabled coverage digital skills all government financial businesses competencies services created annually Affordable 100 000 All individuals Africa-wide Financing for internet graduates are able to payments venture capital for all at less in advanced prove their infrastructure to reach 25% than 2% of digital skills identity platforms of GDP GNI per capita programs digitally in place annually Interim At least 50% milestone of the population doubling regularly uses broadband the internet to connectivity access government by 2021 or commercial services 7 Table of Contents Data Collection 5 Acknowledgements 13 Diagnostic Methodology 14 Acronym List 15 Executive Brief 17 Executive Summary 19 Phased Roadmap for Key Recommendations 31 1 Introduction 38 Country Overview: Eswatini Rationale for Digital Economy Development in Eswatini Structure of this Report 2 Policy and Institutional Context of the Digital 42 Economy in Eswatini Importance of High-Level Leadership and Coordination for Digital Transformation Diagnostic Findings: Digital Policy and Legal Landscape in Eswatini Policy and Institutional Framework History of Regulatory Actions and Reforms Impacting Digital Economy Laws and Regulations Recommendations & Next Steps 3 Digital Infrastructure 50 Importance of Digital Infrastructure Diagnostic Findings: Current State of Digital Infrastructure Broadband Penetration Deployment of the Broadband Infrastructure Value Chain Analysis of Market Structure & Competition Invisible Mile: Legal, Policy and Regulatory Environment Constraints to High-Speed Internet Development Recommendations & Next Steps 4 Digital Platforms 67 Importance of Digital Platforms Diagnostic Findings: Current State of Digital Platforms Digital Public Sector Platforms in Eswatini Digital Private Sector Platforms in Eswatini Interoperability and Shared Services Coordination, Capacity Building, Utilization of Skills Recommendations & Next Steps 9 5 Digital Financial Services 82 Importance of Digital Financial Services Diagnostic Findings: Current State of Digital Financial Services Financial Inclusion and Account Ownership Savings and Credit Role of Banks in Provision of Digital Financial Services Role of Fintechs and Other Non-banks in the Provision of Digital Financial Services Policy and Regulatory Environment Infrastructure Leveraging Recurrent Payments to Increase Usage of DFS Constraints to Digital Financial Services Development Recommendations & Next Steps 6 Digital Skills 94 Importance of Digital Skills Diagnostic Findings: Current State of Digital Skills Policy Frameworks and Strategies for Digital Skills The Demand for Digital Skills The Supply of Digital Skills Policy Recommendations for Eswatini on Digital Skills 7 Digital Entrepreneurship 112 Importance of Digital Entrepreneurship Diagnostic Findings: Current State of Digital Entrepreneurship State of the Digital Entrepreneurship & Innovation Ecosystem Constraints to Digital Entrepreneurship Development Recommendations & Next Steps Conclusion: The way forward 122 8. Cross-cutting priorities References Annex 1: Key Indicators 130 Annex 2: Digital Infrastructure 131 Annex 3: Digital Platforms 132 Definitions of Digital Platform Elements Public Sector Platforms: Core Components Public Sector Platforms: Use Cases Commercial Platforms Enabling Environment Digital Platforms in Eswatini Annex 4: Summary of Digital Competences 147 10 11 List of Figures Figure 1: The digital economy can bring shared prosperity and reduced poverty 40 Figure 2. Average Price of 1GB Mobile Data in Selected SADC Countries (in US$, 2020) 53 Figure 3: Key components of Broadband Value Chain 55 Figure 4. Broadband market segmentation in Eswatini 58 Figure 5. Fixed broadband market share by service provider (2019) 61 Figure 6: Mobile-cellular market share by operator (share of total subscribers) (September 2019) 61 Figure 7. Heat Map of Public Sector Platforms in Eswatini 72 Figure 8. Current Level of Financial Inclusion 84 Figure 9. Account Ownership across Gender and Location 84 Figure 10. Number of access points per 100,000 adults 85 Figure 11 Saving Channels 86 Figure 12. Sources of Borrowing 87 Figure 13. Framework for all professions: 7 Competencies/Skills and 4 Proficiency Levels 95 Figure 14. Frameworks for ICT Professionals 96 Figure 15. Structure of Education System in Eswatini 101 Figure 16. Equipment and facilities for ICT in 624 primary and 285 secondary schools, 2017 101 Figure 17. Enrollment by type of formal public TVET program under MoET, 2016 105 Figure 18. Undergraduate enrolment by department, 2017 106 Figure 19. Global Entrepreneurship Index scores for selected indicators (1.0 is the maximum score 113 Figure 20. Small business owners in Eswatini 114 Figure 21. Broadband Speed Guide 131 List of Tables Table 1: Assessment of the strengths, weaknesses, roadblocks and opportunities of each DE4A pillar 25 Table 2: Eswatini at a glance: key top-level figures and map 31 Table 3. Four Levels of Skills and Education Level Equivalent 96 Table 4. Scarce and Abundant Technicians, and Skill Competencies and Deficiencies in the ICT industry 99 Table 5. Digital literacy programs targeting out of school youth and adults, 2020 103 Table 6. Number of students by formal public TVET institutions, 2013 and 2016 104 Table 7. Snapshot of Eswatini’s Economic Competitiveness 116 Table 8. Mapping of Entrepreneurship Activities in Eswatini 119 Table 9. Benchmarking penetration, affordability and coverage 130 Table 10. Benchmarking Targeted Download Link Speeds 131 Table 11. Summary of Digital Competences, based on EU DigComp 2.1 147 List of Boxes Box 1. Binding constraints to Internet access and usage in Eswatini 54 Box 2. Liberalization of the wholesale market–- Experience from other small states and lessons learned 60 Box 3. Rise of Digital Commerce & Marketplace Platforms in Qatar During Covid-19 63 Box 4. South Africa’s State information Technology Agency as an Example of 74 Coordination Agencies for e-Government Box 5. Digital System’s Role in Capacity and Equitable Access in Procurement 77 Box 6. Overview of Financial Sector in Eswatini 79 Box 7. Financial Access Points 85 Box 8. Connecting Educational Institutions through a Research and Education Network (REN) 98 Box 9. Pre-service and In-service training of teachers 102 Box 10. Remote learning in response to the Covid-19 pandemic 108 12 Acknowledgements T his report was researched and Nomagugu Khumalo (Temporary). prepared by a cross-sectoral task Additional contributions were provided team from the World Bank Group by Nazaneen Ali (Senior Procurement (WBG), led by Aki Enkenberg (Senior Specialist), George Daniel (Senior Digital Development Specialist), Hyea Procurement Specialist), Knut Leopold Won Lee (Digital Development Specialist) (Lead Procurement Specialist), Oleksii and Caroline Koech (Digital Development Balabushko (Senior Financial Management Specialist), and comprising of experts Specialist), Alex Twinomugisha (Senior from across different Global Practices of Education Specialist) and Minita Varghese the WBG. Core team members included (Consultant). Moreover, the paper has Ganesh Rasagam (Lead Private Sector benefited from the feedback received Development Specialist), Alice Zanza from Sharmista Appaya (Senior Financial (Senior Financial Sector Specialist), Elizabeth Sector Specialist), Khuram Farooq (Senior Ninan Dulvy (Senior Education Specialist), Financial Management Specialist), Natalija Kirstin Conti (Public Sector Specialist), Gelvanovska-Garcia (Senior Digital Julia Clark (ID4D Program Officer), Anne- Development Specialist), Jerome Bezzina Elisabeth Costafrolaz (Digital Development (Senior Digital Development Specialist), Specialist), Mupwaya Mutakwa (Digital Dorothee Delort (Senior Financial Sector Development Consultant), Zoe Lu (Digital Specialist), and Koji Miyamoto (Senior Entrepreneurship Consultant), Jorgen Economist), who kindly peer-reviewed the Billetoft (Digital Skills Consultant), Jesal report. Kika (Digital Skills Consultant), William Burnfield (Telecommunications Consultant) Comprehensive national stakeholder and Hugh Macmillan (Consultant consultations were undertaken in preparing on History). The core team received and finalizing the document. The team support from the WBG office in Eswatini, would like to thank the many stakeholders including Nonhlanhla Zindela (Resident whose inputs to the assessment were Representative for Eswatini, Wakhile invaluable (see detailed overleaf below). Mkhonza (Operations Officer), Simangele Batiti Nkambule (Executive Assistant) and 13 Diagnostic Methodology Data collection An in-country kickoff and fact-finding Analysis presented also draws on regional mission was undertaken in February 2020, and global benchmarking, based on in preparation of this diagnostic. A second standardized indicators that form part of mission took place in July 2022 to update the DE4A diagnostic methodology. The and validate findings. In addition to desk analysis also draws on government statistics research, these engagements allowed for and data shared by the private sector. broad stakeholder consultation with both the public and private sectors as well as civil society. Limitations and data gaps Given the nascent state of Eswatini’s digital The following stakeholders were ecosystem, there is a paucity of reliable data consulted as part of the country assessment: across the board in relation to the digital Ministry of Information, Communications, economy. The report thus draws heavily and Technology, Ministry of Finance, Ministry on data shared by stakeholders consulted of Economic and Development Planning, and international benchmarking data, Ministry of Home Affairs, Office of the Prime when available. The Covid-19 pandemic Minister – e-Government Unit, Ministry of also rendered difficult data gathering and Public Service, Ministry of Health, Ministry interactions with counterparts during report of Education, Ministry of Tinkhundla, preparation and consolidation. Eswatini Communications Commission, Eswatini Posts and Telecommunications Corporation, Eswatini Revenue Authority, Eswatini Public Procurement Agency, the Royal Science & Technology Innovation Park, Mbabane Hub, and the Central Bank of Eswatini. 14 List of Acronyms ADSL Asymmetric Digital Subscriber Line JAE Junior Achievement Eswatini AML Anti-Money Laundering JVA Joint Venture Agreement API Application Program Interface KYC Know-Your-Customer ASIT Advanced School of Information Technology LEAP Limkokwing Enterprise Acceleration Platform ASYCUDAAutomated System for Customs Data MCIT Ministry of Commerce, Industry, & Trade ATM Automated Teller Machine MDA Ministries, Departments and Agencies AU African Union MICT Ministry of Information, Communication and Technology B2B Business-to-Business MMSP Mobile Money Service Providers B2C Business-to-Consumer MNO Mobile Network Operators BDS Business Development Services MoET Ministry of Education and Training CBE Central Bank of Eswatini MOTC Ministry of Transport and Communications CFI Centre for Financial Inclusion MOU Memorandum of Understanding CFT Combating the Financing of Terrorism MP Member of Parliament CICO Cash in Cash out MSMEs Micro-, Small-, and Medium-Enterprises CMIS Client Management Information System NCSS National Clearing and Settlement Systems CSC Civil Service Commission NDP National Development Plan DE4A Digital Economy for Africa Initiative NGN Next Generation Network DFS Digital Financial Services NICI National Information and Communication Infrastructure DSL Digital Subscriber Line NPR National Population Register ECOT Eswatini College of Technology NPS National Payment System EEC Eswatini Electricity Company NREN National Research and Education Network EFT Electronic Funds Transfer OPM Office of the Prime Minister e-GP Electronic Procurement System PEPFAR U.S. President’s Emergency Plan for AIDS Relief EIC Eswatini Infrastructure Corporation PIN Personal Identification Number EIPA Eswatini Investment Promotion Agency POS Point of Sale EPTC Eswatini Swaziland Posts and Telecommunications PPP Purchasing Power Parity ESCCOM Eswatini Communications Commission REN Research and Education Network ESPPRA Eswatini Public Procurement Regulatory Agency RSTP Royal Science & Technology Innovation Park FSP Financial Service Providers RTGS Real-time Gross Settlement FSRA Financial Services Regulatory Authority SACCO Savings and Credit Cooperative Organization G2B Government-to-Business SADC Southern African Development Community GDP Gross Domestic Product SEDCO Small Enterprise Development Company GEN Global Entrepreneurship Network SIDS Small Island Developing States GNI Gross National Income SITA South African State Information Technology Agency GoE Government of the Kingdom of Eswatini SMEs Small and Medium Enterprises GSMA Global System for Mobile Communications Association SOE State Owned Enterprise HRMIS Human Resource Management Information System SRA Eswatini Revenue Authority ICT Information and Communication Technology SSA Sub-Saharan Africa ID Identification STEM Science, Technology, Engineering and Mathematics IMF International Monetary Fund TVET Technical Vocational Education and Training IMS Information Management System UASF Universal Access and Service Fund IP Intellectual Property UNDP United Nations Development Programme IP Internet Protocol USD United States Dollars IPR Internet Property Rights VOCTIM Gwamile Vocational and Commercial Training Institute ISO International Organization for Standardization WBG World Bank Group ISOC Internet Society WEF World Economic Forum ISP Internet Service Provider WIPO World Intellectual Property Organization ITU International Telecommunication Union YERF Youth Enterprise Revolving Fund IXP Internet Exchange Point 15 16 Executive Brief R apid digital transformation has been re-shaping the global economy, changing fundamental patterns of social and economic activity, with a further acceleration during the global Covid-19 pandemic due to the increased recognition of the potential of digital transformation for building resilience in economies. The potential is huge. For example, digital transformation in the agricultural sector, which is the main source of income and livelihood for more than 70 percent of the Swazi, would significantly increase productivity gains and reduce poverty in rural areas. This diagnostic provides an assessment and recommendations on five pillars that are foundational to the development of a vibrant digital economy in Eswatini: digital infrastructure, digital platforms, digital financial services, digital skills and digital entrepreneurship. Adoption of broadband services remains low in Eswatini. Mobile broadband is the predominant way for the Swazis to access the internet, with 90 percent of the population covered by mobile broadband networks (3G plus). However, the country is characterized by a wide mobile internet usage gap (i.e., those who live within range of a broadband network but do not use internet services). In 2021, it was estimated that the mobile broadband penetration was only 35 percent, when calculated with unique subscribers. The usage gap is attributable to the lack of affordability of both fixed and mobile internet services. Unaffordable internet has also negatively impacted the rollout and usage of e-Government and e-Commerce services, as well as entrepreneurial growth, within Eswatini. Digital infrastructure in Eswatini is underdeveloped due to lack of competition in the broadband sector, as the incumbent operator, the Eswatini Posts and Telecommunications Corporation (EPTC), has a partial monopoly and exclusivity of first mile (international connectivity) and middle mile (national backbone) connectivity. As part of its Covid-19 Recovery Plan 2020, the Government of Eswatini (GoE) has renewed its commitment to complete the unbundling of EPTC as part of an effort towards liberalization of the ICT industry. The successful unbundling of EPTC would be an important first step in introducing further market competition in the sector and spurring private investment. Together with the introduction of key regulatory safeguards, the unbundling of EPTC will be a key step in improving access and affordability of broadband services in Eswatini. However, given EPTC’s recent operating and financial performance and the increasing competition within Eswatini’s telecommunications market, unbundling alone may be insufficient to ensure that EPTC’s businesses are sustainable and that Eswatini obtains the infrastructure and low-cost internet services it needs to fully realize digital economy and e-Government opportunities. This is because substantial investment and technical resources and expertise are required to deploy and upgrade wholesale networks. 17 There is a significant opportunity to strengthen Digital skills development is significantly compliance, efficiency and transparency in constrained, with limited educational curricula government and improve the experience of and quality training programs. This is further and benefits to public and private sector digital hindered by the lack of digital infrastructure in platform users in Eswatini. Currently, Eswatini is educational institutions and the high costs of internet in a feedback cycle wherein (1) user experience is connectivity, both of which pose a significant barrier sub-optimal, and platform benefits are unclear; (2) to online and remote learning, particularly for demand for platforms and incentives for investing higher education. There is an urgent need for the in them is low; thus, (3) performance remains poor. Government to establish comprehensive policies and Public sector platforms have limited availability and implementation plans for digital skills development, functionality, do not securely share essential data both to ensure its population becomes fully digitally between themselves to streamline user experience literate and to nurture a digitally competent workforce. (e.g., using the ID system to facilitate permissioned This should be complemented by plans to develop data sharing across government services), and are not the necessary digital infrastructure in educational built on secure and reliable infrastructure. Similarly, institutions. critical digital private platforms, such as e-commerce marketplaces and digital financial services, remain underdeveloped and underutilized. The government Digital entrepreneurship in Eswatini would need to urgently prioritize investments in public significantly lags due to the lack of a pipeline sector platforms and the incubation of private sector of investible ventures, integrated and impactful platforms, as well as establish clear leadership, support programs, early-stage financing, support and accountability structures to fully reap and a weak enabling environment for digital their benefits. entrepreneurship and private investments. The current public and private sector initiatives are largely uncoordinated and small-scale, with limited impact in Eswatini’s collaborative efforts in modernizing terms of reach and job creation. Nonetheless, the GoE the payments landscape have resulted in a solid is committed to supporting digital entrepreneurship financial infrastructure on which innovative through the Royal Science and Technology Park (RSTP), digital financial services can be anchored. While which houses the country’s only digital incubator and 3 in 4 adults already use mobile money, opportunities hosts the Africa e-Trade Group for Southern Africa, exist to boost the level of digital financial services to the African Union’s (AU) initiative to grow the digital even more impressive levels. The Digital Financial single market in the region. The weakness of the Services (DFS) ecosystem is still evolving, with existing entrepreneurship and innovation ecosystem reflects initiatives narrowly focused on the payments segment various challenges affecting the digital economy, and largely driven by mobile money. Ensuring full such as limited access to and affordability of digital interoperability between banks and non-banks, as connectivity, the disconnect between supply and well as between mobile money services, would be an demand of digital skills, and the limited adoption essential prerequisite for advancing further adoption, and use of digital platforms and DFS products. affordability, and innovation in DFS. 18 Executive Summary T his report provides an assessment of the various pillars of Eswatini’s digital economy, as part of the World Bank Group (WBG)’s Digital Economy for Africa (DE4A) initiative. Prepared to support the implementation of the Digital Transformation Strategy for Africa, approved by the African Union in February 2020, the WBG DE4A Initiative aims to help drive Africa’s digital transformation and sets out a bold vision to ensure that every African individual, business and government is digitally enabled by 2030. The initiative leverages an integrated and foundation-based diagnostic framework to examine the development of the digital economy across Africa. Based on this framework, this assessment provides a comprehensive overview of the five DE4A foundational elements in Eswatini: digital infrastructure, digital platforms, digital financial services, digital skills and digital entrepreneurship. The analysis presented in this report is based on desk research and several fact-finding missions by various WBG digital economy experts, that allowed for broad stakeholder interaction with the GoE, the private sector and other key stakeholders. This report seeks to support various government institutions and stakeholders to take stock of the current state of the digital economy and provide recommendations for further development. The digital economy offers Eswatini a range of opportunities for economic development and leapfrogging. Digital technologies are expanding access to global markets, changing business models, fostering innovation, and delivering enormous productivity gains. For example, digital transformation in the agricultural sector, which is the main source of income and livelihood for more than 70 percent of Swazi, has the potential to increase productivity gains and thus reduce poverty in rural areas. Similarly, digitalization of the health sector will better equip Eswatini to respond against a global pandemic, such as Covid-19, for example by facilitating online vaccine registration. As such, Eswatini could benefit from a digital revolution that has the potential to drive sustained and inclusive economic growth and provide much-needed jobs to its youthful workforce. The accelerating pace of technology diffusion could also provide an opportunity to unlock new channels for access to quality public and private services. The public sector plays an important dual role in this new environment, both as a user of digital technologies in delivering key products and services and as a regulator of the functions and activities associated with the digital economy. Therefore, Eswatini needs to adopt the necessary policy and regulatory reforms, including adopting the right institutional arrangements, to realize the benefits associated with digital transformation. As governments worldwide sought ways to respond to the economic and social consequences of the Covid-19 pandemic, the need for seamless and reliable digital services had never been more important. In Eswatini, the pandemic led to a sharp decline in economic growth at a time when the country had already been facing deep economic and social challenges. The pandemic, and the social distancing measures instituted to curb the crisis have brought to the forefront the importance of digital technologies, which provide the tools to facilitate human interaction and business continuity without physical interaction. 19 Laying the foundations for the digital economy in Diagnostic findings show that the potential of Eswatini will continue to be an effective response the digital economy in Eswatini has not yet been to curb the impact of major crises, such as health fully realized. A coordinated and holistic approach or climate shocks, by allowing the preservation will be needed to build an inclusive digital economy, of livelihoods and the continuity of businesses, as each of the foundations play an important role in core government functions and service delivery. their own right, but also depend upon and reinforce Furthermore, a robust digital economy and digital the others. For example, improved digital connectivity transformation in various sectors will be key for can only have a transformational impact on economic increasing Eswatini’s economic resilience and opportunity and inclusive growth when combined with facilitating its recovery from future shocks. For improved digital skills and literacy, access to digital example, access to affordable and reliable internet payments and other financial services, and support has been the lifeblood of Eswatini’s economy during to digital entrepreneurs. The government’s ability to the pandemic. In addition, ensuring the continuity of develop digital platforms and leverage technology government services and core government functions for improved efficiency and service delivery is key through digital technologies has been essential to to enable the interlinkages between the pillars and safeguarding the welfare of the Swazi population. create synergetic effects. The combined effect of these This is all the more so as the country’s reliance on improvements is larger than their sum. digital technologies will grow in the “new normal,” which encompasses remote working and digital Below is a summary of key findings across the government. Similarly, supporting the development five foundational pillars of the digital economy of digital infrastructure and connectivity for education in Eswatini. institutions is critical to ensure the continuity of learning in case of school closures. Finally, powering digital financial services and online payments are one Digital Infrastructure way to ensure the continuous operation of businesses and commercial activities. Mobile broadband has been the predominant way in which people and businesses in Eswatini use internet services, but overall penetration The Government of the Kingdom of Eswatini rates remain low. In 2021, the mobile broadband is cognizant of the importance of digital penetration rate was estimated at only 35 percent transformation. The Information Communications (unique subscribers). This is particularly low when Technology (ICT) sector has been recognized as considering that around 90 percent of the population a driver for economic growth and sustainable are covered by mobile broadband networks (at least development and, consequently, is highlighted as a 3G). The high usage gap (i.e., those who live within national priority in Eswatini’s National Development range of a broadband network but do not use internet Plan (NDP) 2019-2022. Following the outbreak of services) is largely explained by the lack of affordability Covid-19, the GoE has also identified the ICT sector of both fixed and mobile internet services. This lack as one of the critical enablers for the fulfillment of its of affordability is in turn due to incomplete market Post Covid-19 Recovery Plan. However, this has not liberalization and lack of competition, combined with yet translated into ICT sector reforms and investments. the lack of access to submarine cables, as Eswatini Key priorities and investments identified in the recovery is a land-locked country. Unaffordable internet has plan include unbundling EPTC, leveraging the Royal also negatively impacted the rollout and usage of Science and Technology Park (RSTP), creating a single e-Government and e-Commerce services, as well as center of excellence for the government, developing entrepreneurial growth, within Eswatini. the country’s internet exchange point (IXP), and establishing a national payment gateway. Overall, little progress has been made so far on these fronts, as will be further described below. 20 Digital infrastructure in Eswatini is special emphasis needs to be placed on increasing underdeveloped, mainly due to the lack of the demand for broadband services through targeted competition in the broadband sector. This is interventions and thus increase digital inclusion. This because the incumbent operator, EPTC, has partial could include demand-side subsidies for handsets exclusivity in the first mile (international connectivity, and tablets and low- or zero-interest loans for devices, although other players have begun to bypass EPTC as well as large scale digital awareness and literacy and procure their own internet capacity) and middle campaigns. mile (national backbone) of the broadband value chain. While the unbundling of EPTC to separate its wholesale and retail functions was initiated as early as Digital Platforms 2013, no effective progress has been made so far. The GoE has renewed its commitment to the unbundling Public Digital Platforms: There is a significant of EPTC and included it as one of the enablers for opportunity to strengthen compliance, efficiency liberalizing the ICT industry in its Covid-19 Recovery and transparency in the public sector by Plan, published in 2020. Unbundling EPTC will be an improving public sector platforms in Eswatini. important first step in fostering a more competitive The assessment found that Eswatini needs to upgrade broadband market and developing incentives for or re-implement major public administration systems, private sector investment in underserved areas, such as Financial Management Systems, Payroll, as well as advancing the GoE’s efforts to lower e-Procurement, Revenue Systems, and Human broadband prices. Successful unbundling and Resources Mechanisms to improve government improved affordability will be only be realized effectiveness and accountability. In the absence of a by the introduction of regulatory safeguards and whole-of-government approach to e-Government, oversight measures, such as wholesale price control, several digital government platforms have been nondiscriminatory access to wholesale networks and developed to fulfill specific functions for the relevant clear market definitions of the broadband value Ministries, Departments and Agencies (MDAs) chain. Even after the unbundling of EPTC, however, involved. However, these do not take into account the the GoE should consider an array of options to pursue full set of business processes and end uses, nor have further liberalization and privatization and effectively they enabled connectivity with other public sector increase private investment and market competition. In platforms. Furthermore, government infrastructure is particular, given EPTC’s recent operating and financial not sufficiently robust to support the desired system performance and the increasing competitiveness of upgrades. For example, Eswatini has an integrated Eswatini’s telecommunications market, unbundling civil registration and national identification (ID) alone may be insufficient to ensure that EPTC’s system based on the National Population Register businesses are sustainable or that Eswatini obtains (NPR), although the absence of necessary legal and the low-cost internet services needed to fully realize regulatory frameworks and technical capacity has digital economy and e-Government opportunities. been a constraint to deploying a modernized ID This is because substantial investment and technical system at scale. resources and expertise are required to deploy and upgrade wholesale network. There is also an opportunity to improve the Investments are also needed to improve digital experience of and benefits to public and private infrastructure. The country needs massive investments sector digital platform users in Eswatini. Currently to modernize backbone infrastructure, which still there is an incomplete feedback cycle wherein user includes a significant share of copper cables, as well experience is sub-optimal and the benefits of using as cross border bandwidth and capacity. For mobile platforms remain unclear, leading to reduced demand broadband, there is room to further increasing access for platforms and insufficient incentives to further to high-speed, good quality internet services by invest in them. Public sector platforms are limited in expanding 4G/LTE networks to the remaining lagging availability and functionality, do not securely share regions of the country. While this will be mainly driven essential data across platforms to streamline user by private investment, the GoE must work to ensure experience (e.g., using ID to facilitate permissioned the expansion of mobile networks in rural and remote data sharing across government services), and are areas in order to narrow the digital divide. In addition, not built on a secure and reliable infrastructure. 21 Commercial Digital Platforms: Critical private digital platforms, such as e-commerce Digital Financial Services marketplaces and digital financial services, Eswatini’s collaborative efforts in modernizing remain underdeveloped and thus underused in the payments landscape for more than two Eswatini. Many Micro, Small and Medium Enterprises decades have laid a solid financial infrastructure (MSMEs) may lack the awareness and knowledge of on which innovative digital financial services can how to use such platforms. In addition to removing be anchored. Even though around 94 percent of the the regulatory roadblocks that impede the availability adult population in Eswatini have access to a mobile of infrastructure and affordable connectivity, the phone and 3 in 4 of these adults use mobile money, government should also promote the use of private further opportunities still exist to expand the use of digital platforms, such as e-commerce platforms, by digital payments. However, these opportunities would leveraging its hosting role of the Africa e-Trade Group most likely be constrained by factors including the low in partnership with the African Union (AU) and the percentage of the population with a reliable source recently launched continental e-commerce platform, of income; the dominance of cash as a preferred Sokokuu, as well as through the development of an payment instrument; low levels of financial literacy e-commerce strategy. and trust; and absence of merchant acceptance points for DFS. The relevant authorities have committed to promoting digital solutions and improving access to Underlying these challenges is the lack of financial services, which is demonstrated through the commitment to implementing legal and policy establishment of a financial technology (Fintech) unit reforms for the digital economy and a low at the Central Bank of Eswatini (CBE), issuance of an level of investment in building and utilizing enabling regulation on mobile money, the ongoing existing technical capacity in the public and review of the legal and regulatory framework for private sectors. The government needs to urgently payments and digital financial services, guidelines for prioritize investments in its public sector platforms regulatory sandboxes, and the hosting of a Fintech and the incubation of private sector platforms, as challenge to encourage firms and individuals to well as establishing clear leadership, support and develop innovative solutions. Nevertheless, despite accountability structures for developing public sector the Government’s commitment, adequate and platforms in order to fully reap their benefits. The sustainable funding to support these individuals and government should ensure that both public and firms is lacking. private platforms become interoperable with DFS. A strategic approach also needs to be taken to improving the reliability of infrastructure and the This report finds that achieving full interoperability leveraging of shared services. In addition, for any of between banks and non-bank payment service these platforms to be successful, low-cost broadband providers is a key prerequisite for expanding access is required across Eswatini. the usage of DFS and realizing the potential of a cashless society in Eswatini. As authorities work towards full interoperability, consideration should be given to making this part of a broader focus on retail payments and to focusing on additional aspects of the digital economy, such as fast payments, payment aggregation, mobile money, agent network interoperability, and expanding access channels. 22 Furthermore, the GoE can take the lead in reducing Given that systematic linkages between higher the use of cash by digitizing government payments— education and training and the labor market are government-to-business (G2B) and government-to- underdeveloped, a considerable effort is required individuals (G2P)—as it is one of the biggest users to improve labor market information to help guide of the payment system. In addition, establishing an skill development strategies and plans, including enabling framework that supports digital signatures for digital skills. A supply-and-demand analysis is and the verification of identity information would help needed to inform a human resource development to address not only the challenges brought about plan for digital skills, around which employers and by Covid-19 restrictions, which led to reliance on training institutions could coalesce. In the meantime, traditional manual and paper-based processes in continuing to increase the number and quality of ICT financial services, but would also make DFS delivery professionals in the country is imperative to increase safer and more efficient. the base of more sophisticated digital skills, which will have a positive impact across all economic sectors. Digital Skills Despite the growing demand for and importance Digital Entrepreneurship of digital skills in Eswatini, digital skills development is significantly hampered by the After Lesotho, Eswatini’s entrepreneurship limited availability of adequate educational ecosystem is the least developed in the Southern curricula and quality training. This problem is Africa region. The private sector in Eswatini largely further compounded by the lack of digital infrastructure consists of micro-entrepreneurs and businesses that in education institutions, with only 10 percent of tend to be operated by subsistence entrepreneurs. primary schools and 60 percent of secondary schools According to the Global Entrepreneurship Indicators connected to the internet, in addition to high internet (GEI), Eswatini lags behind its peers in startup skills, connectivity costs, which pose a significant barrier networking, technology absorption, and its business to online and remote learning. Furthermore, there environment is not conducive to entrepreneurship. is no global policy for the use of ICT in education; Various public and private sector efforts are largely this would help articulate an implementation plan to uncoordinated and small-scale, and thus have limited build digital skills at various levels and specify targets impact in terms of reach and job creation. The Small to measure improvements in the education system. Enterprise Development Company (SEDCO) within While there are several different policies that address the Ministry of Commerce provides business advisory broad issues related to ICT in education, they are not support to a range of MSMEs, with mixed outcomes. coordinated in terms of their implementation, nor do SEDCO currently does not provide targeted support they provide operational details to guide investments. for digital businesses. In addition, a comprehensive Additionally, the understanding of labor market needs monitoring and evaluation program for existing and demand for individuals with different kinds and business support programs is absent, which makes it levels of digital competencies is scarce, which further challenging to collect data on how many of these firms prevents the deployment of targeted interventions. and startups have successfully scaled their businesses and attracted commercial financing. The weak To support a digitally literate population and entrepreneurship and innovation ecosystem is also digitally competent workforces, the GoE should the result of weaknesses in other parts of the digital first establish comprehensive policies and economy, such as the limited access and affordability implementation plans for digital skills. These of digital connectivity, the disconnect between digital policy measures should be complemented by plans skills needs and supply, and the limited adoption and to develop the necessary digital infrastructure in use of digital platforms and DFS products. The lack educational institutions and ensure that all major of adequate protection for Intellectual Property Rights education and resource institutions are connected to (IPR) is also of concern. the internet. 23 This lack of progress is due to underlying issues related The GoE’s commitment to supporting digital to poor strategy design and weak political buy-in, but entrepreneurship is evidenced by the estab- also a lack of effective institutional coordination and lishment of the RSTP , a parastatal agency un- inadequate resources to support implementation. The der the Ministry of Information, Communication absence of a clear strategy has in turn had an adverse and Technology (MICT), which includes an incu- effect on the effectiveness of existing institutions, as bation center for digital and digitally enabled key MDAs lack strategic direction and a shared vision. firms. RSTP is currently Eswatini’s only digital incuba- tor, providing world-class facilities for digital startups, including co-working spaces and meeting rooms. Addressing remaining regulatory gaps and RSTP is well positioned to act as an entrepreneurship strengthening implementation of the legal ecosystem hub and builder to strengthen collabora- and regulatory framework. While the laws tion and co-creation across the ecosystem, as well as addressing cybercrime, data protection and to foster stronger links to the Southern African eco- electronic trade were recently enacted, the system. In particular, there is an opportunity for the corresponding regulations and regulatory GoE to strengthen the regional integration of digital bodies now need to be created. Regulatory reforms markets by leveraging its hosting role of the Africa are also needed to facilitate digital transactions and e-Trade Group (housed within RSTP) and Sokokuu, the e-commerce platforms such as an enhanced IP continental e-commerce platform for Africa, with the framework, consumer protection, and so forth. As aim of expanding market access for MSMEs. To ef- discussed above, the prolonged unbundling process fectively leverage RSTP and facilitate the emergence of EPTC, the stalling of legislation that could facilitate of dynamic startup ecosystem, concerted efforts are improved broadband infrastructure, and resulting required to improve entrepreneurship education and legal action have resulted in the high cost of internet skills, build a pipeline of talent and ideas, and pro- access. Digital transformation has been further vide integrated financial and non-financial support to undermined by the lack of capacity and resources early-stage ventures. for line ministries’ legal staff to draft legislation that incorporates relevant aspects of international best practice. Cross-Cutting Issues Although the planned Eswatini Digital Strategy Bridging the urban-rural digital divide. Apparent and ICT Master Plan and existing policy differences have emerged between rural and frameworks (such as the e-Government Strategy) urban populations in terms of access to digital help to clearly assign roles and establish a infrastructure and digital services. While official strategy to guide institutions to advance the data on the urban-rural divide is not readily available, digital economy, several cross-cutting challenges anecdotal evidence from relevant stakeholders remain. Addressing these issues would help Eswatini suggests that access to key digital infrastructure and strengthen its ability to deal with individual challenges services is largely limited to the urban population in identified under the five pillars. Eswatini. This issue is compounded by differences in education and levels of financial literacy, that act as an additional barrier to access to services such as digital Improving institutional coordination. Although financial services. Addressing these issues will require Eswatini is making progress towards its digital concerted effort on the part of authorities as well as vision, there is no comprehensive whole-of- the crafting of policies aimed at addressing these government approach that can bring together differences. This should be part of a collaborative the various constituencies of the government. process involving all relevant stakeholders. Many key objectives identified in existing policies are far from realization, including wider broadband access and greater use of ICT to increase efficiencies across all sectors of the economy. 24 TABLE 1: Assessment of the strengths, weaknesses, roadblocks and opportunities of each DE4A pillar Digital Infrastructure Main strengths Main weaknesses and roadblocks Opportunities • Steps towards liberalization • Lack of competition in fixed • Existence of fiber backbone initiated broadband market due to delayed presents an opportunity for • Strengthened regulatory unbundling of EPTC and the good quality broadband internet environment through exclusivities it benefits from services if conducive policy and regulatory decisions in areas • Lack of national broadband plan market environment is in place such as infrastructure sharing, • Low adoption of mobile broadband • RSTP provides an opportunity to interconnection, and licensing and high usage gap develop world-class data center • Reduction in wholesale • Unaffordable broadband prices facilities broadband prices through the for all user groups (government, Price Transformation Program educational institutions, businesses implemented by the Eswatini and individuals) Communications Commission • Digital divide in urban-rural areas (ESCCOM) • Competent telecoms regulator Recommendations Quick wins • R1.1: Proceed with the unbundling of EPTC while pursuing liberalization of all segments of the value chain in due course. Based on the unbundling report prepared by the International Telecommunications Union (ITU), conduct an EPTC options study to evaluate selected options for the long-term sustainability of EPTC’s telecom businesses. Based on the conclusions of the options study, proceed with relevant unbundling of EPTC to facilitate the accounting and functional separation of EPTC’s wholesale and retail service businesses, identify potential restructuring areas and leverage private sector investment. Pursuing liberalization would include clarifying the current situation with regards to the international gateway, liberalizing the middle-mile segment after a period of exclusivity after the unbundling, and ensuring that additional players could possibly enter the market. • R1.2: Review and improve the administration of the Universal Access and Service Fund (UASF). • R1.3: Facilitate infrastructure sharing with state-owned enterprises (SOEs), such as the Eswatini Electricity Company (EEC), to expand fiberoptic broadband infrastructure. High priority • R1.4: Place conditions and regulatory safeguards, such as cost-based wholesale price controls, adequate interconnection regulations and measures to ensure nondiscriminatory and open access to the wholesale network followed by the unbundling of EPTC. • R1.5: Expedite the expansion and certification of the local Tier III data center to encourage the growth of a local cloud services and content ecosystem. • R1.6: Increase demand for and usage of broadband services by reducing or eliminating excise duties and other taxes on feature and early-level smartphones, tablets or laptops, and/or subsidizing or offering low or zero-interest loans for their purchase, as well as by implementing large scale digital awareness and literacy campaigns. 25 Digital Platforms Main strengths Main weaknesses and roadblocks Opportunities • Some core platforms and • Low government online presence • Development of an platforms for service delivery • Lack of interoperability resulting interoperability framework in place, i.e., digitized in redundant data collection and • Strengthened public platform national identification; lower-quality services functionality to drive greater HR management, tax and • Cyber assets and critical efficiency and service delivery customs payments, health infrastructure not sufficiently secure • Increased use of platforms services. • Limited e-commerce platforms due to gather citizen feedback on • A few private sector digital to low uptake of DFS government services platforms promoting business • Constrained business environment • Commitment to increase the competitiveness including • Limited demand for service delivery coverage, reliability, and security mobile money platforms of ID and CR systems to improve • Substantial progress made in trust in the NPR platform increasing birth registration • Boosting the use of e-commerce and providing identification to platforms people in Eswatini Recommendations Quick wins • R2.1: Pilot mobile government apps for core and service delivery platforms that have a high level of readiness, e.g., tax filing, procurement, and health services. • R2.2: Conduct detailed systems assessments, audits and business process reviews to develop technical specifications for core government platforms. • R2.3: Invest in upgrading the National ID/NPR platform and establish linkages to key service delivery platforms to increase equity and accessibility, particularly for social protection and education. High priority • R2.4: Improve government ICT infrastructure to enable utilization of more advanced public sector platforms. • R2.5: Clarify mandates and strengthen coordination functions to support implementation of e-Government strategy. • R2.6: Promote the use of e-commerce platforms by leveraging regional initiatives and through the design and implementation of an e-commerce strategy. www.worldbank.org/lesotho 26 Digital Financial Services Main strengths Main weaknesses and roadblocks Opportunities • Solid financial market • DFS at an infancy stage • Achievement of large-scale shift infrastructure on which to • Absence of specific retail payments to DFS through government anchor DFS strategy payments, informal sector and • Proportionate regulation that • Lack of full interoperability between insurance products, thus boosting allows non-bank participation bank accounts and mobile wallets financial inclusion in the issuance of mobile • Lack of access to payment channels • Size of the country and money in rural areas small population creates an • High percentage of • Bank fees viewed as very high opportunity to shift to digitization population with access to • Lack of sustainable funding for relatively easily mobile phones and growth in innovative developments • Targeting of rural areas with agent network • Absence of digital framework for specific products and financial • Authorities’ commitment to electronic signatures and customer education DFS and financial inclusion identity validation • Spillover benefits from South • Establishment of the Centre African banks to DFS for Financial Inclusion with a mandate to drive financial inclusion growth through DFS Recommendations Quick wins • R3.1: Complete the implementation of the online government portal and promote the use of DFS in government payments through a comprehensive national strategy for digital services. • R3.2: Establish an enabling framework that supports digital signatures and the verification of identity information declared by customers. • R3.3: Finalize the review of the Payment Systems Act in order to strengthen and broaden the legal framework for developing DFS. High priority • R3.4 Conduct a comprehensive retail payment cost study with a view to establish the fees to be charged by service providers. • R3.5: Strengthen the oversight and supervision capacity of the CBE to ensure it adequately responds to the development and expansion of DFS in Eswatini. • R3.6: Establish domestic retail payments and credit infrastructure to achieve full interoperability, expand DFS and improve lending. • R3.7: Establish a regulatory framework for international remittances based on relevant standards. • R3.8: Strengthen cooperation between regulators beyond existing bilateral memoranda of understanding (MOUs). 27 Digital Skills Main strengths Main weaknesses and roadblocks Opportunities • Government commitment • No comprehensive policy for ICT • Development of a digital skills to strengthening ICT in in Education nor implementation framework to assess progress education plan and no framework for in the development of digital • Higher level digital skills defining skills, competencies, and literacy and a digitally competent training improving at the proficiency levels workforce university level including • Not enough secondary students • Plans to undertake a National through the Advanced School qualifying for science, technology, Skills Survey focusing on selected of IT in the RSTP engineering and mathematics growth sectors including ICT • Existing Ministry of Education (STEM) courses and consequent • Possibility of connecting higher and Training (MoET)’s lack of graduates in ICT and STEM education and TVET institutions Educational Management related subjects to a regional Research and Information System is well- • Lack of connectivity in schools, Education Network (REN) functioning and potentially (Technical Vocational Education able to house data on digital and Training) TVET institutions and skills higher education, and high costs of connectivity • Very few teachers qualified in ICT • Few schools integrating ICT in the learning process • Insufficient ‘rapid skilling initiatives’ for out-of-school youth and adults • Challenges with under-staffing and under-funding of IT functions in government departments Recommendations Quick wins • R4.1: Develop an ICT and Education Policy and Implementation Plan. • R4.2: Connect higher education and TVET institutions to a Research and Education Network (REN) as part of the digital master plan. • R4.3: Pilot interventions at secondary school level to build digital literacy skills, particularly in schools that serve poor communities. High priority • R4.4: Review intermediate and advanced digital skills programs in higher education institutions, particularly courses related to computer science, and incentivize entry into these programs. • R4.5: Strengthen the capacity of the Ministry of Education and Training (MoET) to develop policies, deliver ICT support services and conduct diagnostics. 28 Digital Entrepreneurship Main strengths Main weaknesses and roadblocks Opportunities • Government commitment via • Lack of public-private collaboration • Partnership with established establishment of RSTP , which in areas of digital entrepreneurship corporations for Open Innovation houses the country’s only support and access to finance programs, benefiting startups digital incubator, a digital • Business environment constraints • Opportunity to further promote skills academy and a data including protection of IPR agritech programs relying on center • Insufficient monitoring and impact MTN and SEDCO’s commitments • Plans by the University of evaluation of business support to supporting agriculture Eswatini to launch iLab, a programs entrepreneurs second digital incubator • Limited capabilities of existing • Accelerated ease of doing • Existing private-sector-driven business support organizations to business reforms including IPR entrepreneurship initiatives, increase the quality and impact of protection such as the Mbabane Hub, support to high-growth firms • Expanding opportunities for Global Entrepreneurship • Very limited access to early-stage (M)SMEs to access public Network Eswatini chapter, finance for startups procurement and Limkokwing University’s • Lack of differentiated support • Increasing access to innovative Limkokwing Entrepreneurship for growth versus subsistence financing instruments including Acceleration Platform (LEAP) entrepreneurs angel and seed stage VC initiative investments • Fostering increased knowledge and experience sharing and learning across the Eswatini and regional ecosystem through the Innovation Bridge Portal initiative Recommendations Quick wins • R5.1: RSTP to take the lead in coordinating ecosystem development, entrepreneurship support programs and championing participation in the Innovation Bridge Portal. • R5.2: RSTP to establish an incubation program targeted at supporting early-stage digital startups and a seed financing facility that can co-invest with angel investors and others. High priority • R5.3: Accelerate business environment reforms including strengthening IP protection to support the growth of micro and small enterprises and tech startups, possibly by leveraging the Electronic Procurement System (e-GP) platform to connect them to public procurement opportunities. • R5.4: Partner with established corporations, including SOEs, to design Open Innovation programs, in order to allow startups to co-create innovative solutions with established companies. • R5.5: Increase access to funding for digital startups by incentivizing angel investments and seed stage venture capital. • R5.6: Strengthen collaboration with regional institutions such as the AU and Southern African Development Community (SADC) to promote digital market integration in the Southern Africa region. 29 Policy and Legal Landscape Main strengths Main weaknesses and roadblocks Opportunities • E-Government strategy • No whole-of-government • Recognition of ICT sector adopted and under approach; lack of strategic and the digital economy as implementation direction and vision growth enablers in National • National Digital Strategy • Lack of effective institutional Development Plan and ICT Master Plan under coordination • ICT sector identified as one development • Legislative gaps of the critical enablers for the • ICT sector identified as one “Post Covid-19 Recovery Plan,” of the critical enablers for including unbundling of EPTC the “Post Covid-19 Recovery Plan,” including unbundling of EPTC Recommendations Quick wins • R0.1: Finalize the preparation of the Eswatini Digital Strategy to provide high-level objectives and guidance on fostering the growth of the ICT sector and strengthening the digital economy. High priority • R0.2: Strengthen the regulatory framework to unblock bottlenecks to digital service delivery, by emphasizing the development of implementing regulations for existing laws on data protection and cybercrime, and the creation of the relevant regulatory bodies. • R0.3: Develop close collaboration between upstream and downstream policy actors. Taking the practical actions identified in the following roadmap will help the GoE achieve the recommendations and thus advance its digital economy and digital transformation agendas: 30 Phased Roadmap for Key Recommendations Pillar Short-term Actions Medium/Long-term Actions Expected Outcomes Liberalize the wholesale telecommunications market • Complete EPTC options study to • Put in place regulatory Increase the assess financial and economic measures, such as wholesale affordability of impact of key options to address price controls and adequate internet prices and EPTC’s financial and operational interconnection regulations, the competitiveness of needs. and guarantee non- local internet service • Implement final option discriminatory and open providers (ISPs). selected by GoE, including any access to the wholesale unbundling of EPTC network to be operated under • Conduct market analysis to the Eswatini Infrastructure establish clear definitions for Corporation. retail and wholesale markets, designate any operators with dominance or significant market power and impose appropriate remedies on operators. • Reduce transit costs for international connectivity through a virtual landing point and associated regulations. Digital Promote policies and regulations that would facilitate infrastructure roll-out Infrastructure • Facilitate infrastructure sharing • Expedite the expansion and Narrow the digital with SOEs, such as the Eswatini certification of the local Tier divide especially in Electricity Company (EEC), to III data center to encourage rural and remote areas leverage excess fiber capacity. the growth of a local and increase in access • Develop clear target goals for cloud services and content to high-speed, quality the Universal Access and Service ecosystem. broadband services. Fund (UASF) Strategy, including • Finance or subsidize monitoring of the effectiveness broadband infrastructure and impact of the UASF programs development in areas where and projects, and diversify commercial viability is low. operational funding sources for the UASF. Boost demand for broadband services • Reduce or eliminate excise duties • Introduce demand-side Increase the demand and other taxes on feature and subsidies for handsets and and usage of entry-level smartphones, tablets tablets and offer low- or zero- broadband services. and laptops. interest loans for devices. • Implement large scale digital awareness and literacy campaigns. 31 Pillar Short-term Actions Medium/Long-term Actions Expected Outcomes Strengthen public sector platforms’ functionality, interoperability, and leveraging of shared services • Pilot mobile-Government apps • Improve government ICT Increase the efficiency for core and service delivery infrastructure to enable and transparency platforms that exhibit high levels utilization of more advanced of the public sector, of readiness, e.g., tax filing, public sector platforms. improve service procurement and health services. • Provide capacity building delivery, and reduce • Conduct detailed systems opportunities for IT staff to transaction costs for assessments, audits and business improve the sustainability, government. process reviews to develop operations, and maintenance technical specifications for core of these systems, in order to government platforms. upgrade or re-implement core government platforms. Upgrade the National ID/NPR platform and establish linkages to key service delivery platforms to increase equity and accessibility • Conduct an in-depth technical • Invest in ID systems and Ensure citizens evaluation of the ID system. reforms to increase NPR have unique digital registration and inclusivity, and identification which provide interoperable identity improves access to verification services to enhance government services service delivery. and increases equity. Clarify mandates and strengthen coordination functions to support the implementation of the e-Government strategy Digital • Set clear e-Government • Evaluate the structure and Facilitate the Platforms objectives for i) budget controls mapping of the center of streamlined for ICT systems investments, excellence or centralized IT implementation of operations, and maintenance; function. e-Government. ii) a single portal or domain for the whole-of-government; iii) agile and centralized procurements for digital platforms; iv) policies, standards, and compliance monitoring; and v) the establishment and implementation of a center of excellence or centralized IT function. Promote the use of e-commerce platforms through the design and implementation of an e-commerce strategy • Leverage Sokokuu, the • Develop e-commerce strategy. Promote the continental e-commerce platform e-commerce market, launched as part of the Africa improving citizens’ e-Trade Group, to increase use of access to goods e-commerce platforms. and services and • Consult with the AU and translating this into development partners to clarify economic gains. their vision for an e-commerce strategy and build the capacity of policymakers. 32 Pillar Short-term Actions Medium/Long-term Actions Expected Outcomes Scale up use of digital delivery channels for government payments • Complete implementation of the • Move social grants and other Reduce government e-Government portal to facilitate G2P payments to digital as far costs of collecting digitalization of government as possible. revenue and increase payments. • Establish an interface between convenience to the • Government to step up efforts the CBE and Accountant public. to stop using cheques; explicitly General’s office for safety and state strategic direction on DFS efficiency. and increase efforts to raise • Reduce high levels of cash use awareness and uptake of DFS. (estimated at 80-90 percent for P2G) by introducing digital revenue collection in revenue collection offices. Allow non-face-to-face verification of customers for DFS onboarding processes • Review and refine Know-Your- • Establish an enabling Reduce cost of Customer (KYC) and Anti-Money framework that supports digital compliance with Laundering (AML) requirements signatures. customer due diligence using a risk-based approach, in • Invest in relevant infrastructure when onboarding order to remove the requirements to support centralized KYC and customers and Digital that are too stringent for most link to government registries. compliance with KYC Financial unbanked individuals. • Strengthen legal provisions and AML requirements. Services for the collection and digital storage of documents. Increase interoperability across various payment service providers and DFS services • Strengthen collaboration and • Establish domestic retail Increase DFS in establish a forum for discussion payments and credit retail payments between the CBE and private infrastructure to facilitate full and consumer sector to ensure buy-in for the interoperability, expand DFS convenience through central infrastructure. and improve lending. interoperability; introduce credit infrastructure to reduce risks in lending. Strengthen the legal framework for DFS • Review of current National • Enact new NPS Law. Foster an enabling Payment System (NPS) Act and • Build oversight and supervision environment that finalize draft NPS Bill. capacity of the CBE to ensure supports DFS and open • Ensure consistency in regulating it adequately responds to the access to payment payment service providers. development and expansion of services. DFS in Eswatini. 33 Pillar Short-term Actions Medium/Long-term Actions Expected Outcomes Promote the use ICT in education and develop a costed, implementable action plan • The Ministry of Education and • Monitor targets to be achieved Help the government Training, in collaboration with on a regular basis and amend make informed Ministry of ICT, should develop a plan as required. decisions through a coordinated, costed action plan • Provide information and data coordinated plan that that defines: (i) the framework to the public on digital literacy sets targets for and for digital skills and proficiency levels and the availability of a measures progress in levels to be used in Eswatini; (ii) digitally competent workforce. digital skills. the actions needed to connect education institutions, train staff such as teachers, education managers, IT systems operators and support staff, procure devices, and reform courses; (iii) the funding requirements and sources needed to undertake these actions in a phased manner; and (iv) the targets to be achieved and monitoring and evaluation processes for reporting on progress towards targets. Ensure that all major tertiary education and research institutions are connected to digital infrastructure and start connecting secondary schools to digital infrastructure Digital Skills • Consider establishing a National • Reform skills training Expand digital Research and Education Network programs in higher education connectivity in tertiary (NREN) or connect to a regional and TVET to build a critical education institutions REN such as UbuntuNet Alliance, mass of individuals with and build intermediate on the basis of a cost comparison advanced digital skills and and advanced digital and the availability of support ICT professionals that can skills to drive economic services. drive economic growth and growth. development in several sectors through the application of digital technologies. Reform teacher training programs in tertiary education to include training in intermediate level digital skills. Strengthen digital literacy skills • In secondary schools where there • Scale up successful models Increased digital is almost universal access to that employ digital learning literacy for a greater electricity and where about 60 solutions in the classroom. proportion of the percent have access to digital • Expand digital infrastructure to population. infrastructure, start piloting online primary schools and integrate teacher training programs to get digital teaching and learning. teachers used to working with • Assess digital literacy through digital technology. framework and targets set in the ICT in Education Policy and Action Plan. 34 Pillar Short-term Actions Medium/Long-term Actions Expected Outcomes Foster increased knowledge and experience sharing and learning across the Eswatini ecosystem as well as from regional and global experience. Enhance the technical capacity of the • Provide ongoing support Drive entrepreneurship RSTP to: to RSTP and other ecosystem growth • Take the lead in ecosystem entrepreneurship support through enhanced development and the programs to implement local and regional coordination of entrepreneurship investment-readiness linkages and expand support programs and to programs for emerging digital market opportunities champion participation in the businesses. through the regional Innovation Bridge Portal. • Strengthen collaboration with integration of digital • Establish an incubation program regional institutions such as markets. targeted at supporting early- the AU and SADC to promote stage digital startups and a seed digital market integration in financing facility that can co- the Southern Africa region, invest with angel investors and with the aim of expanding others. business opportunities for • Leverage the Africa e-Trade entrepreneurs and MSMEs in Group and Sokokuu to Eswatini. boost MSME participation in e-commerce and cross-border market activity. Linking digital startups to public and private procurement opportunities • Leverage the Innovation Bridge • Launch an open data platform Promote access to Portal to organize corporate to incentivize data-driven markets. Digital innovation programs to businesses. Entrepre- connect startups in Eswatini to neurship corporations, including from the broader region. • Leverage the e-GP platform to connect digital startups to public procurement opportunities, and provide a platform to develop SMEs’ skills and technical capacities in accordance with corporations’ procurement standards and requirements. Increase access to funding for digital startups • In the short-term, establish • Establish a seed financing Increase access linkages with existing sources of facility that provides a to finance for early-stage funding available in combination of grants and digital startups and the region and globally (includes loans to very early stage digital businesses. grants, seed funding from angel or technology startups that investors and VCs). are at the ideation, pre-seed or seed stage, and support capacity building of ecosystem service providers to provide more impactful support. • Crowd-in and de-risk private financing from angel investors and venture capital firms, including regional and global enterprises. 35 Pillar Short-term Actions Medium/Long-term Actions Expected Outcomes Build commitment to legal and policy reforms and adopt pending reforms to unblock bottlenecks in digital service delivery • Finalize the national strategy that • Ensure proper implementation Foster legal and policy provides high-level objectives of the recently passed enabling environment and guidance on fostering the Computer Crime and that strengthens the growth of the ICT sector and Cybercrime, Data digital economy. strengthening the digital economy Protection and Electronic in Eswatini. Communications and Transactions Acts. • Initiate and implement regulatory reforms needed to facilitate digital transactions and e-commerce platforms, such as an enhanced IP framework and consumer protection. • Develop close collaboration between upstream and downstream policy actors to Policy and clarify mandates and improve Institutional implementation. Development Accelerate critical business environment reforms to support the growth of micro and small enterprises and tech startups • Improve Eswatini’s Ease of • Develop and adopt a clearly Foster legal and policy Doing Business indicators, by articulated, multi-year enabling environment implementing critical reforms that business environment reform that strengthens create an enabling environment agenda with clear objectives, private sector for digital startups and performance targets and competitiveness vis-à- established digital businesses. oversight and coordination. vis the digital economy. • Strengthen Intellectual Property • Ensure implementation and Rights (IPR) to facilitate innovation monitoring and reporting and entrepreneurship. mechanisms are developed in close partnership with the private sector, to enhance investor confidence and remove obstacles to the establishment and growth of new digital businesses. 36 1 Country at a glance: Eswatini Population (2019) 1.15 M GDP (2019) US$4.405 Bn Rural population (2019) 78% Poverty headcount ratio at national poverty line Hhohho 59% (% of population) (2017) Literacy rate (2018) 88% Electrification rate 78% Manzini Lubombo Labor force participation rate (2019) 51.1% Labor force participation rate, female (2019) 47.1% Shiselweni Agriculture jobs (% of population) (2019) 70% Doing Business Index, rank (2020) 121/190 Digital Adoption Index, score 1-100 (2016) 0.315 TABLE 2: Eswatini at a glance: key top-level figures1 and map The Kingdom of Eswatini is a mountainous, landlocked country in Southern Africa, bordering South Africa and Mozambique. Eswatini’s population of 1.15 million people is predominantly rural (76 percent) and relatively young (58 percent aged between 15-64 years)2. As a “monarchical democracy,” absolute power rests with the monarch. Traditional and parliamentary systems run concurrently. Eswatini has close economic links to South Africa, on which it depends for about 85 percent of its imports and about 60 percent of its exports3. Eswatini is a member of the Common Monetary Area (CMA) with Lesotho, Namibia and South Africa, and the domestic currency, the Eswatini lilangeni (SZL) is pegged at par to the South African rand, which also constitutes legal tender in the country. It is part of the Southern African Customs Union (SACU) alongside Lesotho, Botswana, Namibia and South Africa, which aims to support the free exchange of goods in these countries. While SACU membership brings benefits in terms of revenue from common external tariffs, it also exposes Eswatini to volatile South African financial markets, as experienced during the Covid-19 crisis. www.worldbank.org/lesotho 1 Source: World Bank World Development Indicators (WDI), World Development Report, 2016 2 World Bank, Systematic Country Diagnostic for Eswatini, 2020 3 Ibid. 38 Eswatini’s macroeconomic performance has Manufacturing dominates the industrial sector, which been hampered by severe climate-change- has a 36 percent share of GDP . The private sector in induced drought and growing fiscal challenges Eswatini is relatively small and suffers from low levels of due to rapid growth in the public wage bill, with investment and an unfavorable business environment. the pandemic and unrest further dampening In terms of large investments and the formal export growth. Eswatini’s growth trajectory has been sector, the private sector is predominantly dominated influenced by developments in South Africa. Annual by large firms from neighboring South Africa, with a growth of real GDP averaged 7.6 percent between few players from Asia, United States and Europe also 1980-95, linked to higher foreign direct investment present. inflows from South African firms relocating to Eswatini during apartheid. This fell to 3 percent between 1996- 2020 after the end of apartheid. Divestment revealed Although classified as a lower-middle-income structural constraints such as’ a narrow economy country with a Gross National Income (GNI) per and export base4. Public debt increased rapidly as a capita of US$2,960, high poverty rates hinder consequence, rising from 10 percent of GDP in 2009 Eswatini’s economic and human development. to around 30 percent of GDP in 2019. In 2019, the While the national poverty rate has fallen in recent International Monetary Fund (IMF) urged Eswatini years (from 63 percent in 2010 to 59 percent in to rationalize expenditures to address its high fiscal 2017), it remains very high, and the country ranks deficit and cashflow challenges. GDP contracted by low in human development (144th of 189 countries in 1.9 percent in 2020 due to pandemic-related impacts the 2017 Human Development Index). Challenges to but grew by an estimated 3.1 percent in 2021, buoyed poverty reduction include the slowdown of economic by an easing of lockdown measures (though weighed growth, adverse weather patterns, the high prevalence down by ongoing unrest). The pandemic led to the of HIV/AIDS (27.7 percent among those aged 15 to first deep recession since 1976. A recovery in external 49, the highest in the world), high unemployment and demand supported export-oriented manufacturing high income inequality (Gini coefficient of 49.3). An activities in 2021. Public debt increased from 27 almost stagnant growth rate in the formal sector has percent of GDP in 2018 to an estimated 43 percent of pushed most of the population to the informal sector, GDP in 2021, reflecting an increase in domestic and with irregular incomes leading to dependence on foreign borrowing. The government has begun to family members for support. implement a Fiscal Adjustment Plan for 2021-2023, which is expected to reduce deficits and stabilize Sustainable and inclusive development in debt at around 40 percent of GDP in the medium Eswatini calls for strengthened efforts towards term. Key aspects of this plan are reducing public reducing gender inequalities and the rural- wage spending, rationalizing state-owned enterprises urban divide. There are numerous links between (SOEs), increasing domestic revenue, and improving income, gender and rural-urban inequalities. The the targeting of social assistance programs. most striking gender disparities are found in the labor market, as female labor force participation The economy of Eswatini remains concentrated rates remain considerably lower than those of their in a few sectors. The economy is largely driven male counterparts. Similarly, poverty in Eswatini by an agro-based export sector, and agriculture has been predominantly a rural phenomenon, with employs over 70 percent of the population5. Sugar approximately 70 per cent of the rural population is the largest single earner of foreign exchange, living below the national poverty line. Improving contributing up to 14.3 percent of GDP in 2016. infrastructure and service delivery in rural areas could Despite the large agrarian population, many Swazis significantly help to reduce rural-urban inequalities. practice subsistence farming only resulting in low productivity. While the service sector’s share of GDP is the largest at 51 percent in 2018, it is dominated by wholesale and retail trade which mostly offer low paying jobs. 4 World Bank, Macro Poverty Outlook for Sub Saharan Africa, 2020 5 World Bank, Systematic Country Diagnostic for Eswatini, 2020 39 Rationale for Digital While the digital economy offers multiple opportunities, Eswatini only captures a fraction Economy Development in of this potential. With strong foundations in place, Eswatini can harness digital data and technologies as Eswatini sources of productivity growth, economic and social inclusion. This can help generate new content, link individuals with markets and public services, and roll FIGURE 1: The digital economy can bring shared out new and more sustainable business models. Most of prosperity and reduced poverty Eswatini’s labor market is informal and characterized by low productivity, and digital technologies provide Inclusive Digital Education Smart Energy the opportunity to simplify and facilitate the transition Growth of labor from the informal to the formal economy, Digital Transport Digital Smart Agriculture as well as to foster the creation of jobs and income Citizen Poverty growth alongside economic growth. Yet, most Swazis Reduction are still locked out of critical digital services, financial Digital Digital Digital Economy Digital eCommerce inclusion, and markets. Digital startups struggle to Health Government Private Sector Jobs attract funding and ‘traditional’ businesses are only slowly adopting digital technologies and platforms. Digital Culture Digital Digital Digital Industry There is a shortage of workers with solid digital skills, 4.0 Efficiency Finance Entrepreneur Platforms while limited digital literacy holds back the adoption and widespread use of digital products and services. Digital Digital Infrastructure Skills Universal adoption and effective application of digital technologies is expected to characterize While the Covid-19 pandemic has compound- economies of the future, shaping their ability to ed Eswatini’s existing economic and social chal- succeed in the global marketplace and offer a lenges, it has also presented an opportunity better quality of life for their citizens. Disruptive for Eswatini to accelerate the pace of its digital technologies are already altering traditional busi- transformation. The pandemic has led to a sharp ness models and pathways to development, yield- decline in economic growth coupled with significant ing significant efficiency and productivity gains and financing needs, at a time when the country already increased convenience, as well as supporting better faced deep economic and social challenges. None- access to services for consumers. They change the theless, the pandemic has demonstrated the value way economies of scale are achieved, particularly that robust digital infrastructure and digital technolo- with online service delivery. Well-functioning digital gies can provide to ensure the continuity of essential economies may thus offer potential to achieve faster services and provide critical support to societies, for economic growth, facilitate innovative products and instance in the following areas: services and stimulate job creation. At the same time, • Information management: Digital solutions disruptive technologies also carry risks, such as job enable the sharing, safeguarding and promotion losses in industries affected by structural change and of factual information in the fight against the automation, that need to be effectively managed and Covid-19 pandemic; mitigated. Assessing strategic investments and inter- ventions based on effective prioritization, sequencing • Detection and containment: Digital solutions and risk mitigation is a critical first step to enable the can support advanced virus detection and help growth of the digital economy. contain its spread; • Healthcare provider enablement: Digital solutions can supply front-line healthcare workers with the tools, technologies and capabilities they need to fight the virus; 40 • Economic resilience: Digital solutions can support local and global commerce through Structure of this Report levers such as critical infrastructure support, Each chapter that follows starts with key mes- business enablement for small and medium- sages and concludes with a summary of main sized enterprises, and prediction models for recommendations. Chapter 2 reviews cross-cutting policymakers; factors that affect the strategic, institutional and regu- latory environment for the digital agenda in Eswatini. • Social cohesion: Digital solutions can foster The report then proceeds to explore the five founda- communication and cohesion between and tional pillars of the digital economy in more depth. among individuals, corporations and institutions6 Chapter 3 looks at the access, affordability, quality 7 . and usage of digital infrastructure, as well as the Consequently, the crisis has sparked an in- dynamics of the connectivity market, including what creased demand for digital technologies and needs to happen to get more Swazis online. Chapter services coupled with new opportunities for the 4 analyzes the current use of and scope for expand- development of innovative digital solutions8. ing digital platforms, in both the public and private Meeting these demands would allow Eswatini to de- sectors. Chapter 5 examines the state and uptake of liver critical services to a broad range of consumers, DFS among individuals, businesses and by the gov- allow firms to adopt productivity-enhancing technolo- ernment. Chapter 6 discusses the current state of dig- gies, and facilitate data-driven policy making. ital skills attainment and coverage. Finally, Chapter 7 assesses the state of digital entrepreneurship and the culture of innovation in Eswatini. In acknowledging the critical role that digital technologies are playing in addressing Covid-19 The report concludes with a discussion of next related challenges, the GoE has identified the steps, including a summary of recommendations. ICT sector as one of the critical enablers for the These recommendations are intended for a wider au- fulfillment of its Post Covid-19 Recovery Plan. dience, including government, the private sector and The plan has been launched to generate enough development partners. However, report findings are momentum for the Eswatini economy to move out of also likely to shape World Bank Group (WBG) inter- the Covid-19 lockdown with a high level of economic ventions on related topics moving forward. production and productivity. This plan is expected to trigger high impact projects that will, in the medium and long term, overcome the social and economic losses stemming from the pandemic. Key ICT priori- ties identified by the government include: unbundling the Eswatini Post and Telecommunications Corpora- tion (EPTC), leveraging the Royal Science and Tech- nology Park (RSTP)—which hosts the country’s only incubator for digital firms—to create a single Center of Excellence for the government, linking government and public procurement to an online auction plat- form, consolidating and growing the country’s Inter- net Exchange Point (IXP), and establishing a national payment gateway.9 6 Saving lives, Scaling-up Impact, and Getting Back on Track: World Bank Group Covid-19 Crisis Response Approach Paper. World Bank Group. June 2020. Available at: http://documents1.worldbank.org/curated/en/136631594937150795/pdf/World-Bank-Group-Covid-19-Crisis-Response-Ap- proach-Paper-Saving-Lives-Scaling-up-Impact-and-Getting-Back-on-Track.pdf 7 ICT Covid-19 Response: Partnering with Technology Companies to Combat Covid-19: Available at: http://www3.weforum.org/docs/WEF_Tech_4_ COVID_Early_Compendium_2020.pdf 8 On April 30, G20 Ministers responsible for the Digital Economy agreed to work together to leverage digital technologies and relevant digital policies to strengthen and accelerate the collective response to Covid-19. 9 Government of the Kingdom of Eswatini (2020), Post Covid-19 Kingdom of Eswatini Economic Recovery Plan 41 2 Policy and Institutional Context of the Digital Economy in Eswatini Key messages: Policy landscape: While reference to the importance of digital technology is made in Eswatini’s existing strategic frameworks, e.g., for e-Government, a clear digital roadmap is still missing. It is therefore urgent to finalize the National Digital Strategy and ICT Masterplan, adding a clear roadmap for implementation of flagship initiatives across different sectors, with clear roles and responsibilities defined. Institutional framework: In Eswatini, different aspects of the digital economy are under the responsibility of different parts of government (e.g., Government Computer Services and the e-Government unit). Further, their mandates are not well-defined, particularly in relation to that of other relevant agencies, and thus sectoral actors do not necessarily view these agencies as their primary interlocuters for issues related to digitization. This results in weak interagency coordination. Regulatory framework and reforms: While the laws addressing cybercrime, data protection and electronic trade were recently enacted, the corresponding regulations and regulatory bodies now need to be created. Regulatory reforms are also needed to facilitate digital transactions and e-commerce platforms such as an enhanced IP framework, e-commerce regulations, consumer protection, and so forth. A number of important planned reforms remain incomplete, such as the unbundling of EPTC, which should increase competition in the telecommunications sector in order to facilitate fair pricing for consumers and help develop the necessary infrastructure for Eswatini to have a thriving digital economy. Importance of High-Level Leadership and Coordination for Digital Transformation Supporting digital transformation requires high-level political commitment and effective institutional leadership and coordination across government and the wider ecosystem. A clearly articulated and shared vision and roadmap for supporting digital transformation needs to be internalized by all stakeholders, and ideally championed by Eswatini’s leadership at the highest level. Effective leadership and stewardship for the agenda is key, including a strong institutional framework with clearly defined roles and responsibilities, where responsible institutions and entities are equipped with the adequate (financial and human) resources and capacity to effectively execute their mandates. 42 Notably, fragmentation in the leadership of the ICT function in the public sector is often one of the key Diagnostic Findings: Digital obstacles to successful implementation of a whole- Policy and Legal Landscape of-government approach to digital transformation. Eswatini’s institutional and strategic framework for in Eswatini digitalization is therefore equally important for the While Eswatini is making progress towards rolling success of digital economy initiatives as the various out its digital vision, currently there is no whole- technical aspects, making it a critical ‘analogue’ of-government approach to bring together the complement10. various parts of government. Coordinating digital transformation across Ministries, Departments and Effective government strategies and policies Agencies (MDAs) is essential to maximizing the recognize that telecom and ICT services, especially affordable high-speed broadband access, are benefits of digital solutions that stem from the real- critical foundational “utilities” that underpin time transfer of information, interoperable and shared effective government services and growth in services, and data-driven services. This can also employment, investment and entrepreneurship. improve citizen-centric service delivery and promote The government’s role in the market must evolve in efficient government operations. This section explores line with both global industry trends and the maturity the current institutional framework by looking at the of the Swazi market. Originally, the government’s strategies currently in place, the institutions tasked role was as a direct investor and market participant with implementing them, and relevant laws and to expand telecommunications services and jumpstart regulations. market creation. Today, the private sector is expected to be the primary driver of investment, which challenges State-Owned Enterprises (SOEs) to operate profitably in a competitive context. The Government’s primary Policy and Institutional Framework role should thus be to enable the growth of the sector. This can be done by facilitating the development of an Policy Landscape The Government of Eswatini has identified ICT optimized enabling environment and by using policy as a driver of economic growth and sustainable and regulatory tools to encourage private investment development, and as a national priority that in digital infrastructure, services and competition, facilitates the attainment of its Vision 2020. reduce infrastructure deployment costs, and improve The National Information and Communications broadband accessibility. Infrastructure (NICI) Policy Mission Statement echoes the important role that ICT plays in enhancing socio-economic development. In this statement, the government intends to “enhance national socio- economic development by encouraging the beneficial activities of ICT in all sectors, through the provision of a conducive environment that will progressively maximize the quality and security of the life of the people of Eswatini and make the best use of the country’s human and natural resources, and promote multi-layered co-operation and knowledge sharing nationally, regionally and globally”11. 10 World Bank (2016). Digital Dividends. World Development Report 2016 11 National Information and Communication Infrastructure Implementation Plan 2012-2016: Available at: www.gov.sz/images/stories/swd%20 nici%20plan%20-%20final%203.pdf 43 Furthermore, Eswatini’s government views ICT as Institutional Framework being of critical importance in eliminating the social Eswatini’s institutional framework for ICT is divide between the haves and the have-nots. In fragmented across numerous strategic and addition to being perceived as a tool for economic regulatory documents, which vary in level of growth and increased productivity, ICT can be an finalization or formal legal status. The development effective tool for poverty reduction when used to meet of the ICT sector and digital policies in Eswatini is the needs of the poor12. largely driven by MICT, which was established by legal notice No. 25 of 2009 with the mandate to formulate, However, Eswatini still does not have an coordinate and administer ICT policy15. The sector is overarching strategy that provides a clear vision regulated by the independent regulatory authority, and policy direction for developing the ICT Eswatini Communications Commission (ESCCOM), sector and advancing the digital economy13. created under the Swaziland Communications The latest ICT Policy development is seen in the NICI Commission Bill (Act no. 10 of 2013), which took Implementation Plan 2012-2016, the update of over this regulatory role from the EPTC and Eswatini which is long overdue. Likewise, the e-Government Television Authority (Eswatini TV)16. Strategy is long expired, having covered the period 2013-2017. Given the role that the ICT sector is However, the institutional framework for the expected to play in driving economic growth and governance of the digital economy is currently sustainable development, the timely update of this placed within the realm of different institutions, sectoral policy seems indispensable for achieving the which creates confusion and overlap. In goals identified in the NDP14. Many key objectives particular, there is a lack of clarity in the institutional identified in existing policies remain far from being mandate for operationalizing e-Government, which achieved, including enhanced access to broadband is one of the factors slowing down the upgrade and and greater use of ICT to increase efficiencies across interoperability of digital public sector platforms. The all sectors of the economy. This is the result of several GoE created Government Computer Services within underlying issues related to poor strategy design and the MICT to digitize government services, as well as the weak political buy-in, as well as the lack of effective e-Government unit of the Office of the Prime Minister institutional coordination and access to adequate (OPM) to develop relevant policies and strategies and resources to support implementation. The absence of drive coordination between ministries. Stakeholder a clear strategy in turn has an adverse impact on the consultations suggest that the Government Computer effectiveness of existing institutions, as key MDAs lack Services Department was initially intended to provide strategic direction and shared vision. technical support and the actual implementation of the strategy, whereas the e-Government Unit would Currently, the Ministry of Information, lead only on the strategy and coordination side. Communications and Technology (MICT) is However, the lines of demarcation between these developing the Eswatini Digital Strategy, which responsibilities are not clear and, therefore, subject will cover all aspects of the development of to interpretation of the institutions, which causes the digital economy. This will include a national operational challenges for downstream actors. Due to broadband strategy and universal access policy. capacity and resource limitations, the government has An ICT master plan is also being developed since transferred Government Computer Services to with support from Taiwan, which will focus more RSTP to promote greater efficiency and flexibility. The closely on infrastructure development. While these e-Government Unit is now relocating to MICT in order developments are welcome, the preparation of these to harmonize and streamline policy development. strategic documents has been delayed. 12 National Development Plan: 2019/20 – 2021/22: Towards Economic Recovery: Available at: www.gov.sz/images/CabinetMinisters/NDP-2019-to- 2021-22-final.pdf 13 https://www.broadbandcommission.org/Documents/Policy%20Section%20Documents/BRoadbandPolicies2018.pdf 14 In NDP, priorities relating to the digital infrastructure include: (i) Increase access and affordable communication services focusing mainly on creating an enabling legal environment and liberalizing the industry; (ii) Increase bandwidth by modernizing the backbone infrastructure and optimally operationalizing the Royal Science Technology Park; (iii) Promote the use of ICT to increase efficiencies across all sectors of the economy, cf. focus on e-Government. 15 National Information and Communication Infrastructure: Policies, Strategies and Plans – Implementation Plan 2012-2016. Kingdom of Swaziland, Economic Commission of Africa, and Government of Finland 16 Swaziland Communications Commission Act. Available at: https://www.esccom.org.sz/legislation/SwazilandCommunicationsCommissionAct.pdf 44 The extent to which these adjustments will allow History of Regulatory Actions and for improved institutional coordination with other Reforms Impacting Digital Economy ministries engaged in digitalization efforts remains to be seen. The establishment of the parastatal Swaziland Posts and Telecommunications Corporation (SPTC) Similarly, regarding digital financial services, (now Eswatini Posts and Telecommunications there are two competent regulatory authorities. (EPTC)) by an Act of Parliament in 1983 was one These are the Central Bank of Eswatini (CBE) of the key events that sparked the emergence of and the Financial Services Regulatory Authority digital economy in Eswatini. At the time, it was a (FSRA). While responsibilities of each regulator in monopoly offering postal services and access to fixed- respect to DFS are generally well delineated and line telephones. Three years after MTN International activity-based, some legal provisions need to be had been established as C-Mobile in South Africa in clarified in order to avoid overlap and confusion 1994, provision for the establishment of a cellular on the part of regulated entities. For example, the mobile phone system in Eswatini was made through Consumer Credit Act empowers the FSRA to supervise a ten-year Joint Venture Agreement (JVA) between all financial institutions that provide credit (i.e., banks EPTC and MTN International in 1997-8. King Mswati and non-banks), while the FSRA should in principle III made the first cellular phone call in Swaziland only regulate non-banks. during Independence celebrations in September 1998. This was after SPTC had sought to set up its As it stands, the implementation of digital own mobile service but was prevented from doing platforms by other line ministries is either absent so by the government. Vodacom, the South African or pursued using siloed approaches. On one subsidiary of Vodafone, had also unsuccessfully hand, some sectors, such as health, have an advanced placed a bid in a competition to establish a mobile and in-depth strategy with a clear roadmap. One the network (Sutherland, 2014). other, there is a lack of leadership in key areas such as e-commerce, digital entrepreneurship, innovation Over time, SPTC sought to sell off increasing and digital skills. Overall, there appears to be weak numbers of its shares to allow it to establish a inter-agency coordination, and in particular weak competing mobile phone system, a move that exchange between the general leadership of the would also raise the necessary funds to do so. MICT and sectoral line ministries where there could Increased competition would have compelled MTN be greater synergy, e.g., in relation to the deployment Eswatini to reduce its very high prices—among the of cross-cutting programs. Consequently, digital highest in the region—and thereby its substantial transformation efforts are characterized by scattered profits. The JVA between MTN International and SPTC initiatives across MDAs. Furthermore, efforts to precluded SPTC from establishing a competing mobile support government digitalization have mirrored the phone system, so long as it retained a controlling vertical silos of the government, resulting in pockets share in MTN Swaziland. To overcome this constraint, of progress but also a marked absence of a whole-of- SPTC offered and successfully sold some shares, but government approach, resulting in low cost efficiency in doing so created conflicts of interest for several and fragmentation, as will be further discussed in the parties involved. After SPTC’s failure to sell the desired section on Digital Platforms. volume of shares, it proceeded to launch a competing fixed wireless system, known as ONE, in May 2010. This was contested in court as a potential violation of the SPTC-MTN JVA. The case was escalated all the way to the International Court of Arbitration, whose decision in March 2012 required SPTC to close down its mobile operations. Around the same time in 2011, SPTC had also signed, without government approval, a 20-year contract with SEACOM for access to international cables through its gateways in Maputo and Mthunzini in KwaZulu Natal. 45 The government sought but was unable to cancel President’s Emergency Plan for AIDS Relief (PEPFAR) this contract17. The result was major turmoil within and the Global Fund, enabling it to communicate with SPTC. In 2019, the Eswatini Communications many of its clinics while bypassing the commercial Commission (ESCCOM), the ICT regulator, decided cellular phone network(s). that EPTC (formerly SPTC) should divest from MTN and the regulator announced its plan to allow EPTC The Electronic Communications Act of 2013 has to subsequently invest in the retail mobile market paved the way for the liberalization of Eswatini’s subject to EPTC’s divestiture from MTN Eswatini18. telecommunications sector and the privatization However, this decision was subsequently revoked, of EPTC. However, two key bills related to digital considering that it was in the interest of EPTC to infrastructure have been drafted but not approved, remain in the JVA, as it had decided to embark on a even though they appeared in an official list of pending turnaround strategy19. The processes of (1) increasing legislation at the end of 2017. These are the Eswatini competition in the Telecom sector to facilitate fair Telecommunications Corporation Bill and the Eswatini pricing for consumers, and (2) installing the necessary Communications Infrastructure Corporation Bill. Per infrastructure for Eswatini to have a thriving digital these bills, EPTC will be separated into three entities: economy remain unfinished to this day. In summary, Eswatini Telecom and Eswatini Post (both scheduled the high cost of cellular communication and access to to be operated independently), alongside the Eswatini the internet, and the large profits extracted from the Infrastructure Corporation, which will remain state- business, have had a strongly inhibitive impact on the owned. This unbundling is one of the key priorities of development of a digital economy. EPTC’s 5-year Strategic Plan 2020/21-2024/25, and is intended to facilitate the transformation of EPTC, modernize the backbone infrastructure and upgrade Laws and Regulations the service portfolio through the expansion of fiber infrastructure21. These bills aim to remove control of A review of enabling legislation for the digital economy over the last twenty-five years the backbone infrastructure from EPTC, establish a demonstrates that the necessary regulatory separate infrastructure corporation, and enable EPTC, developments were hindered by a lack of as a telecommunications corporation, to establish commitment and political interference. This a third competing mobile network (Government of process has been further undermined by a lack Kingdom of Eswatini, 2017b). However, according of capacity and resources, which prevent legal to press reports, the interests of key stakeholders staff at line ministries from drafting legislation that were not sufficiently aligned to allow these bills to be incorporates relevant aspects of international best passed into law22. practices. Additionally, the Registrar General lacks the capacity and expertise to push draft bills through the legislative process. The consequence has been that recurrent high costs of internet have stunted growth of the digital economy and minimized access for even the most critical stakeholders, such as primary and secondary schools, of which approximately 8 percent and 58 percent have internet access, respectively20. Tellingly, as indicated in an interview, the Ministry of Health has made significant progress in digitization thanks to its own system of microwave towers, funded by the U.S. 17 AmaBhungane, 2012; Sutherland, 2014. 18 Investigation into the joint venture agreement between MTN Eswatini and the Eswatini Posts and Telecommunications Corporation. ESCCOM. Available at: https://www.esccom.org.sz/publications/notices/docs/FINAL%20ESCCOM%20JVA%20INVESTIGATION%20%20-%20Revised%20 Decision[1].pdf 19 https://www.esccom.org.sz/publications/notices/docs/GENERAL%20NOTICE%20NO%208%20-%20REVOCATION%20JVA%20DECISION%20 2022.pdf 20 Annual Education Census 2017. 21 EPTC. Summary of Strategic Plan 2020/21-2024/25. 22 Rooney, 2019. Natalie Ngosa, Mast Online, June 2018. 46 After some delay, legislation is moving to allow • The Electronic Communications and Transactions Eswatini to mature its digital economy. The Act of 2022 provides for the regulation of electronic Computer Crime and Cybercrime Act, the Data transactions and electronic communications, the Protection Act and the Electronic Communications facilitation of the use of e-Government services, and Transactions Act were passed on March 4, the protection of consumers, the limitation of the 2022. The enactment of these key bills will enable liability of service providers, and other incidental critical government services such as digital ID and matters. e-Government, as well as allow local and international companies to provide data-driven business services and models that will be a major catalyst of innovation Additionally, the 2020-2025 National and digital transformation. The key provisions of the Cybersecurity Strategy has been published, and legislation are summarized below. plans to establish a CERT or a computer security incident response team (CSIRT) as a department • The Data Protection Act of 2022 was introduced within the National Cybersecurity Agency, with clear functions and responsibilities including with the objectives of: (i) establishing a Data incident response. Considering the far-reaching Protection Authority, (ii) governing the collection, use, disclosure and care of personal data, and implications of cybersecurity, it will be essential to (iii) protecting personal data and the needs of include a coherent cross-ministerial and horizontal organizations to collect, use, or disclose personal governance structure with a clear mandate for data for legitimate and reasonable objectives. decision-making. The GoE has indicated the need for The Act provides for the collection, processing, financing support to roll out cybersecurity structures disclosure, and protection of personal data, and infrastructure. and balances the competing values of personal information privacy and sector-specific laws and other related matters. The Data Protection Authority proposed in the legislation would be created under the auspices of the regulator ESCCOM. • The Computer Crime and Cybercrime Act of 2022 defines and criminalizes offenses against computers and network-related crimes, and provides for the investigation and collection of evidence for such offenses, including the admission of electronic evidence. While the Act defines “critical infrastructure (CI)” and illegal system interference associated with CI, it does not provide concrete measures for CI protection. Furthermore, the Act does not contain any provisions for the establishment of a computer emergency response team (CERT). 47 Recommendations & Next Steps Regulatory reforms are also needed to facilitate digital transactions and e-commerce platforms such as an Quick wins enhanced IP framework, consumer protection etc. As such, it is recommended that the legal and policy R0.1: Finalize the preparation of the Eswatini reforms progress as quickly as possible, so that they Digital Strategy to provide high-level objectives move in lockstep with developments on the ground. and guidance on fostering the growth of In addition, effective regulation is needed in order the ICT sector and strengthening the digital to foster a robust wholesale market that can support economy. Likewise, the ICT master plan should affordable, cost-based wholesale access prices. To do be completed without further delay. Priority should this, ESCCOM needs to conduct a market analysis be given to finalizing these strategic documents as to identify and designate operators with dominance soon as possible, while ensuring that consultations or significant market power in wholesale markets, and dissemination are undertaken to ensure broad as well as the establishment and enforcement of commitment to the implementation of the plans within appropriate remedies and operator obligations. This the public sector and the broader digital ecosystem. is further detailed in the Digital Infrastructure section. High priority - Medium- to long-term R0.3: Develop close collaboration between recommendations upstream and downstream policy actors. Cross-ministry, agency and SOE coordination on the R0.2 Strengthen the regulatory framework to interpretation and implementation of policies should unblock bottlenecks to digital service delivery, by be improved. emphasizing the development of implementing regulations for existing laws on data protection and cybercrime, and the creation of the relevant regulatory bodies. While the laws addressing cybercrime, data protection and electronic trade were recently enacted, the corresponding regulations and regulatory bodies now need to be created. 48 3 Digital Infrastructure Key messages: The importance of digital infrastructure in Eswatini: In order to reap the economic and societal benefits associated with a robust digital economy, universal access to broadband connectivity infrastructure is essential. Low broadband adoption: Eswatini’s low levels of broadband internet adoption are driven by high prices and remaining coverage gaps in rural areas. Furthermore, those that do have access to broadband internet experience low service quality. Delays in the liberalization agenda: Internet infrastructure investments have been hampered by delays in fully liberalizing the first (international gateway) and middle (backbone) miles of the nation’s digital infrastructure. The lack of competition has caused higher prices for retail services than would otherwise exist. Investment in wholesale infrastructure has also been less than optimal due to EPTC’s monopoly and lack of financial capacity. The pace of Eswatini’s digital infrastructure development will be increased by a full liberalization of the broadband market. Investments needed: The country needs significant investments to modernize the backbone infrastructure, cross border bandwidth and capacity. For mobile broadband, there is room to further increase access to high-speed, good quality internet services by expanding 4G/LTE networks. While this will be mainly driven by private investment, it is important that the GoE encourage private sector investments to ensure the expansion of mobile networks in rural and remote areas and narrow the digital divide. Demand stimulation needed: Emphasis needs to be placed on increasing the demand for broadband services through targeted interventions to increase digital inclusion, such as demand- side subsidies for handsets and tablets or low- or zero-interest loans for devices, as well as large scale digital awareness and literacy campaigns. Importance of Digital Infrastructure Broadband has the potential to accelerate Eswatini’s socioeconomic development. An extensive body of research confirms that broadband penetration and good-quality broadband availability can be important economic growth drivers. Recent research notably estimates that for every 10 percent increase in mobile broadband penetration in African countries, a GDP increase of 2.5 percent can be realized23. In particular, it is estimated that a 10 percent increase in broadband penetration in Eswatini would result in an additional US$108.4 million of GDP and 2.46 percent productivity gains24. Connectivity can shape countries’ development paths through several interrelated channels: i) it can bridge the information gap, alleviating asymmetry problems and improving communication, ii) it is a cost-effective and fast means of connecting all citizens to markets and services, and iii) it increases productivity, lowers transaction costs and optimizes supply chains.25 23 Https://www.itu.int/dms_pub/itu-d/opb/pref/D-PREF-EF.BDT_AFR-2019-PDF-E.pdf 24 Country Portal by Research ICT Solutions. Available at: https://researchictsolutions.com/ict-evidence-portal-africa/ict_evi- dence_portal_africa.php 25 Aker and Blumenstock, 2015 50 More broadly, accessible, reliable, and affordable digital infrastructure is the key foundation upon Diagnostic Findings: which an inclusive digital transformation and Current State of Digital economy are built. 26 Digital economies are creating unprecedented potential for countries to unleash new Infrastructure opportunities, create jobs, and transform people’s lives27. Fast internet provides a platform for innovation The fixed broadband infrastructure in Eswatini and is a key input across sectors, reverberating across is underdeveloped, mainly due to the lack of the entire economy. It enables entrepreneurship, competition in the sector, which is due to EPTC’s dominant position in international connectivity with businesses and individuals using fast internet and the national backbone of the broadband to create new applications and services in areas value chain. The analysis shows that, despite a such as e-commerce and financial services. It also significant reduction in recent years, fixed broadband enables digital service delivery in sectors that are prices remain high and unaffordable to much of critical for inclusive growth, such as education, health the population and small businesses. As a result, and agriculture. Likewise, it allows the public sector the fixed-broadband penetration rate is significantly to deliver services to citizens and businesses more limited, at only around 1 percent of the population, effectively and more inclusively. As such, broadband equivalent to 12,269 subscriptions as of March has the potential to transform Eswatini’s economy 202028. EPTC also lacks the substantial funding and and help the country leapfrog development stages, economies of scale necessary to fully modernize and provided that effective policies are put in place that deploy upgraded networks. Operational and staffing encourage its use as an essential input by all sectors issues also impact EPTC’s capacity to provide these of the economy. services on a profitable “best in class” basis. Additionally, reliable and affordable fixed-line Mobile broadband is the predominant way that and mobile broadband connections are required the Swazi use the internet. Mobile broadband to ensure seamless social and economic infrastructure is widely available, with around interaction in a post-COVID world. With more 90 percent of the population covered by mobile economic and social activities carried out online, digital broadband networks (3G or 4G). However, mobile technologies have helped and will continue to enable broadband adoption remains considerably low, with economies to handle shocks. Digital connectivity has a unique mobile broadband subscriber penetration indeed become a lifeline for individuals, governments rate estimated to be 35 percent29 in 2021.This usage and businesses to ensure continuity of economic and gap is driven by several factors that include a lack of social activities. digital literacy and digital skills, lack of affordability, and other issues related to relevance, safety, and security. According to the regulator, the mobile A key priority for the GoE, as outlined in its NDP , is to ensure the deployment of accessible, robust, network operators in Eswatini—MTN Eswatini and reliable, and affordable ICT services to citizens. Eswatini Mobile—plan to expand 4G/LTE networks In the medium to long term, the government intends to to cover 85 percent population by 2024, a positive focus on improving the efficient and reliable delivery step toward enabling universal access to good of services across all sectors of the economy through quality broadband internet for the Swazi. At the same the use of digital technologies. Furthermore, as per time, the GoE should take measures to ensure the the NDP , the government intends to create an enabling availability of 4G/LTE networks in rural and remote environment for broad stakeholder participation and areas, to narrow the digital divide. the liberalization of the industry. 26 Draft Digital Transformation Strategy for Africa (2020 – 2030): Available at: https://www.tralac.org/documents/resources/afri- can-union/3013-the-draft-digital-transformation-strategy-for-africa-2020-2030/file.html 27 Draft Digital Transformation Strategy for Africa (2020 – 2030) 28 ESCCOM. Annual Report 2020 29 World Bank DE4A team analysis and estimate, 2022. It is calculated with the number of unique mobile broadband capable subscribers (GSMA) divided by the total population (UN). The number of unique mobile broadband capable subscribers are estimated by dividing (i) number of mobile broadband capable SIM connections by (ii) SIMs per subscriber. Mobile broadband capable is based on unique SIM cards (or phone numbers, where SIM cards are not used) that have been registered on the mobile network in a device capable download speeds of 256 kb/s or greater (agnostic of the device type) at the end of the period. Connections differ from subscribers such that a unique subscriber can have multiple connections. 51 It could also introduce measures to increase the Adoption of Broadband Internet demand for broadband services, recognizing the A relatively high cellular (2G and above) crucial role that mobile broadband plays in wider penetration rate has been a key driver for the socio-economic development and access to services. adoption of mobile internet as the primary technology that Swazis use to access the internet. According to ESCCOM, the total number of mobile subscriptions was 1,211,894, with a penetration rate Broadband Penetration of 111 percent in 2021. It must be noted, however, that this high number likely double counts individuals Availability of Broadband Networks with multiple SIMs. The GSMA estimates that the For most of Eswatini’s population, mobile number of unique mobile subscribers for the same broadband is the most widely available period was 889,200. technology to access the internet. Mobile technology has demonstrated its ability to reach the underserved, especially low-income populations, Despite the high cellular penetration rate and women and rural residents. According to the Global the fact that around 90 percent of Eswatini’s System for Mobile Communications Association population is covered by 3G or better broadband (GSMA), 90 percent and 30 percent of the population networks, the unique mobile broadband are covered by broadband-capable 3G and 4G subscriber penetration rate was estimated at mobile networks, respectively, as of Q1 202130. 35 percent in 202133. This usage gap highlights On the other hand, fixed broadband networks are the existence of factors other than coverage that not as widespread and tend to be concentrated in hinder people from using the internet, such as a lack urban areas, where only 24 percent of the population of literacy and digital skills, affordability, relevance, resides31. Eswatini did not have its first Asymmetric safety and security34. Digital Subscriber Line (ADSL) broadband connection until September 2018. In 2011, EPTC (formerly SPTC) Fixed broadband, which uses dedicated physical embarked on an expansion program focused on its links to high-speed internet, has very limited ADSL network and added a total of 6,496 ports. As of reach in Eswatini. Although fixed broadband January 2020, a total of 38 exchange sites were listed penetration has increased, particularly in urban as having ADSL functionality32. areas, it remains significantly lower than mobile broadband penetration rates, at a mere 1 percent of the population (15,150 subscriptions as of March 2021)35. While this low rate is equivalent to the African average, it is well below the global average of 13.6 percent36. A notable market trend is the increasing use of fixed wireless internet services. According to ESCCOM, fixed wireless subscriptions have grown by 26 percent from 9,731 in FY2018/19 to 12,289 in FY2019/2020, surpassing fixed-line broadband services in FY2019/2037. 30 Q1 2021. GSMA Intelligence 31 World Bank Open Data: Available at: https://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS?end=2019&locations=SZ&start=2019&view=bar 32 TeleGeography – GlobalComms Database: Available at: https://www.telegeography.com/products/globalcomms/data/country-profiles/af/Eswatini/ broadband.html 33 World Bank DE4A team analysis and estimate. Please refer to footnote 29 for the calculation methodology. According to ESCCOM, the mobile broadband penetration rate reached 101 percent with 1, 105,897 subscriptions in 2021. However, this figure does not take into account double counting for individuals with multiple SIMs, expired accounts as well as foreign tourists buying data plans while in country, which explains a discrep- ancy from the World Bank estimate used. 34 ESCCOM. Annual Report 2018 35 ESCCOM. Annual Report 2021. 36 Connecting Africa through Broadband: A strategy for doubling connectivity by 2021 and reaching universal access by 2030. Broadband Commission for Sustainable Development 37 ESCCOM. Annual Report 2020. 52 Affordability of Broadband Services The high cost of broadband services is a major barrier to internet access in Eswatini and thus contributes to the country’s low broadband uptake and usage gap. In 2020, the average price of 1GB mobile data was USD13.3138, while the cheapest 1GB prepaid mobile data cost USD10.22 in 201939. In other words, Eswatini residents paid on average 3.4 percent of GNI per capita per month to buy the cheapest 1GB of mobile broadband data40 (and 4.4 percent of monthly GNI per capita to buy the average 1GB mobile data), which is above the global benchmark set at 2 percent or less of an individual’s average monthly income41. The price for fixed broadband services is even higher: fixed broadband packages cost USD85.70 on average in Eswatini in 2020 (ranked 166 out of 211 selected countries), which is very expensive compared to the cheapest average price of USD6.41 in Ukraine42. Similarly, in 2017, Eswatini’s ICT price basket for access to fixed broadband internet averaged 19.06 percent of GNI per capita per month43, indicating that internet unaffordability is a prevailing issue. The high prices are largely attributed to EPTC’s monopoly in the wholesale broadband segment, combined with the current duopoly in the mobile market (see below for more detail). The prohibitively high prices thus remain unaffordable for the average consumer. Mountainous terrain in parts of the country and the lack of direct access to submarine cables (as Eswatini is land-locked) also contribute to the high costs of broadband services. FIGURE 2. Average Price of 1GB Mobile Data in Selected SADC Countries (in US$, 2020) 27.41 30 25 20 13.87 15 13.31 10 5 1.36 2.13 4.30 0 S E S I I IA BI A O O U U CA IA LA AR ES IN A W AN G TH IT I Q I IB RO O SC EL L AT AN LA M N R IN FR AM O G Z ZA CO SO A A H W S W A TA N LE AU B TH N M AN AG YC S T M M ZA CO E E BO O U AD S M SO M Although the price of broadband services remains high, various efforts to reduce this have yielded positive outcomes. The introduction of a second mobile operator introduced some competition to the mobile market for mobile voice, SMS and data services, thus increasing options for consumers at more competitive prices. The price of 1GB of data dropped from E230 (USD16) to E150 (USD10) in 2019. The Cost-to-Communicate Price Reduction Programme, implemented by ESCCOM, further contributed to reducing prices (see below). 38 https://www.cable.co.uk/mobiles/worldwide-data-pricing/ 39 https://researchictafrica.net/ramp_indices_portal/ 40 Calculated based on ITU methodology using the average price of 1GB mobile broadband data from cable.co.uk and the World Bank’s GNI per capita (Atlas method) data. 41 Alliance for Affordable Internet 2018 Affordability Report: Available at: https://a4ai.org/affordability-report/report/2018/ 42 https://www.cable.co.uk/broadband/pricing/worldwide-comparison/#resources 43 ITU. 2017. ICT Prices 53 The affordability of internet-ready devices is The average download speed in Eswatini is suitable another major barrier to broadband access for low-intensity services such as general browsing in Eswatini. Given that mobile broadband is the and email, social media, and standard and high- principal way in which Swazis access the internet, definition personal video calls (e.g., Skype), but does the price of mobile devices has a major impact on not allow for higher-intensity and productivity-related internet use. In GSMA’s connectivity index, Eswatini’s applications such as video streaming, telecommuting performance regarding the affordability of mobile and video teleconferencing (see Annex 3). internet access devices was in the lower tier, with a score of 17.1 (out of 100)44. The cheapest smartphone Deployment of the Broadband Infrastructure cost 16.9 percent of per capita GNI in 2021, and was thus unaffordable for most of the population45. Value Chain The broadband value chain required to provide universal, affordable, and good quality Quality of Broadband Services broadband internet is comprised of four broad segments: first mile, middle mile, last mile, and With a mean download speed of 4.51 Mbps46, invisible mile (see by segments of the value chain need and a broadband minimum target download to be built incrementally. The value chain incorporates speed of 2 Mbps47, Eswatini has achieved the DE4A interim target of 3 Mbps by 2021. However, important supporting infrastructure components such this is well below the DE4A 2030 minimum target as data centers, internet exchange points (IXPs), a of 10 Mbps, which is considered adequate for reliable electricity supply and affordable internet a country to fully reap the benefits of a digital access devices49. The state of digital infrastructure in economy48.There is a direct relationship between the Eswatini will be assessed using this framework. quality of broadband service and the extent to which users can fully exploit the range of online possibilities. BOX 1: Binding constraints to Internet access and usage in Eswatini When analyzing the provision of digital infrastructure and broadband penetration in Eswatini, it must be kept in mind that Eswatini is a lower middle-income country, where relatively low purchasing power and low electrification rates are binding constraints for the majority of the population. • Poverty has persisted despite the country’s lower-middle-income status. As discussed in the country context section, 59 percent of Swazis lived below the national poverty line in 2017. By international poverty standards, 39 percent lived below the 2011 purchasing power parity (PPP) line of USD1.90 per person per day, and this rises to 60 percent when the 2011 PPP USD3.20 per person per day poverty line for lower middle-income countries is used. Consequently, purchasing power is low and telecom and ICT expenditures are not a priority for most of the population. • Access to reliable electricity is also a barrier to the expansion of digital infrastructure and broadband penetration in Eswatini. Electricity is required for a range of activities, from recharging access devices to powering mobile network base stations. The country has made significant progress in increasing access to electricity and nationwide household access currently stands at 80 percent. Yet, a significant part of the population remains without electricity, especially in the most remote parts. The country has assessed the cost of addressing the needs of the power sector and estimated that for adequate expansion of the system, the total cost of providing electricity is expected to increase from the current level of around USD 40 million per year to USD 200 million by 2034 (see the Kingdom of Eswatini’s Energy Master Plan). 44 GSMA Mobile Connectivity Index: Available at: http://www.mobileconnectivityindex.com/ 45 Alliance for Affordable Internet, https://a4ai.org/research/device-pricing-2021/ 46 Worldwide Broadband Speed League 2019: Available at: https://www.cable.co.uk/broadband/speed/worldwide-speed-league/ 47 ESCCOM, ICT Baseline Report – 2017 48 Connecting Africa Through Broadband: Broadband Commission for Sustainable Development: Available at: https://broadbandcommission.org/ Documents/working-groups/DigitalMoonshotforAfrica_Report.p 49 Connecting Africa Through Broadband: Broadband Commission for Sustainable Development: Available at: https://broadbandcommission.org/ Documents/working-groups/DigitalMoonshotforAfrica_Report.pdf 54 FIGURE 3: Key components of Broadband Value Chain (Source: Innovative Business Models for Expanding Fiber-optic Networks and Closing the Access Gaps, World Bank) WWW Cross border network Middle mile network Last mile ) (core network) (access) Bringing Internet to a Purpose centers to the world point in a community for the middle mile in the wide internet to the service centers community to individual homes & business Fiber Fiber DSL er COAX Fib Terrestrial fiber IXP Fiber Wireless Technologies WWW Fiber or Microwave Wi-Fi, LTE, Fibe TV White Space WWW r Satellite link Satellite link (DTH) Subsea cable Wireless Balloons & drones distances Typical 1000s km 100s – 1000s km 10s-100s km <1 – 5 km Source: TMG/Salience Consulting, taken from Innovative Business Models for Expanding Fiber-optic Networks and Closing the Access Gaps, World Bank First Mile: International Another contributing factor to the upward pressure on IP transit costs may be EPTC’s Connectivity contractual arrangements with international internet bandwidth suppliers. These Indefeasible As a Landlocked Developing Country (LLDC), Eswatini faces international internet connectivity Right to Use (IRU) contracts fix pricing for a long challenges due to its geographical position. It contract term (usually 15 years or more), giving pricing thus depends on neighboring coastal countries for stability but also fixing in any high wholesale pricing access to undersea cables, international internet for the long term. In addition, EPTC may be charging bandwidth and general communication connectivity. high prices for the provision of international gateway Long routes, complicated administrative transit services to cross-subsidize other unprofitable business procedures, multiple border crossings and inadequate lines, thereby increasing the cost of services offered infrastructure all increase the trade and transaction by its competitors, reducing competitors’ willingness costs incurred by Eswatini. Multiple providers supply to provide retail services such as broadband access international connectivity to operators in Eswatini, and increasing barriers to entry for new ISPs. connecting the country to undersea cable systems while charging for broadband transit services to those points of access, Interconnection services are offered by three service providers, namely Telkom South Africa and Broadband Infraco for South African interconnections and Tmcel for interconnections with Mozambique. 55 Middle Mile: Backbone Networks In a bid to expand the reach and reliability of its broadband network and reduce the cost Eswatini has a fiber backbone network that is of network deployment, EPTC entered into approximately 1,200km long. This is comprised of a Memorandum of Understanding with the 985km of fiber backbone, 97km of fiber network Eswatini Electronic Corporation (EEC) in 2018. for connecting corporate clients and 117km of This agreement allows EPTC to make use of EEC’s fiber to the cabinet (FTTC). Of the FTTC deployed, optical fiber network. The EEC, a state-owned 72km of it is in active use with a cabinet install base of enterprise, has a monopoly on the transmission and 137. Each FTTC installation can provide an average distribution of electricity and has a dominant position download speed of 10 Mb/s, and an upload speed in local electricity production. EPTC has intention to of 1.5 Mb/s depending on the distance from the negotiate the deployment of last mile fibre over power FTTC access system and the age of onward copper lines where it would help speed up the deployment of connections50. fiber, and has already started using EEC’s fiber assets. EPTC completed the digitization of its network Key government offices in Eswatini are currently in 2011 and has since been upgrading its connected through fiberoptic networks, and telecommunications backbone network, to a there is a plan to connect smaller government Next Generation Network (NGN) based on offices using microwave links. According to fiberoptic infrastructure. This upgrade has resulted information provided by the Ministry of ICT, 18 out of in an improved ability of the network to deliver high- 21 government ministries are connected through fiber, speed broadband services coupled with a marked one connected through a leased line, and the other increase in data consumption. Yet, some operators, two connected through microwave technology. The service providers and corporations who access majority of remote government offices are connected the infrastructure operated by EPTC complain of using microwave links and a few are connected via long delays in sourcing fiber backhaul connectivity leased lines. from EPTC51. Concerns about EPTC’s management of the middle mile have also been raised when several Members of Parliament (MPs) pressured Last Mile: Internet Services the government to allow greater access to the fiber network as well as the international gateway in Mobile broadband is the predominant way of 2017. This request to the government was driven by accessing internet in Eswatini. As noted above, concerns that EPTC was not managing these assets mobile network coverage stands at 90 percent for 3G effectively52. Consequently, MTN was allowed to and 80 percent for 4G, leaving around 10 percent of establish its own backbone, due to the inability of the population unconnected. Among fixed broadband EPTC to provide sufficient resources for the launch subscribers, 77 percent use Digital Subscriber Line of 3G and 4G services. MTN fully self-provisions its (DSL) access technologies, 15 percent use fixed- backhaul network using microwave links and only wireless technologies and 8 percent use other access uses EPTC for the connection between its two data technologies, as of 2018. centers and the international gateway. 50 EPTC 51 For instance, all new 4G sites on the MTN network do not have fiber backhaul connected to them. Instead, some of the sites have multiple E1 links provisioned by EPTC. Such connections can compromise the performance of the 4G network as fiber backhaul connectivity is required to deliver true high-speed mobile broadband connectivity to customers off a 4G site. 52 Eswatini – Telecoms, Mobile and Broadband – Statistics and Analyses 56 The last mile is mostly built and operated by The country currently has no third-party tower operators in the mobile and fixed segments: MTN providers in the market and relies on Mobile Eswatini and Eswatini.net for mobile broadband Network Operators (MNOs) to build their own services, and ISPs, such as Real Image, Jenny infrastructure or share facilities and infrastructure and Touch IT, for fixed broadband services. to the extent possible53, encouraging passive In addition, Real Image, the ISP with the second infrastructure sharing among service providers. A largest market share, currently provides public Wi- specialized tower operator (towerco)54 could alleviate Fi hotspots over an unlicensed spectrum at 5.8GHz, cost pressures and provide efficiency gains to the which is attributed to the high cost of using fiber as existing MNOs. Many mobile operators in Africa have the backhaul solution. followed this route to reduce costs and focus on their core businesses. In the last mile for fixed broadband services, EPTC’s ownership of the ADSL network and its alleged anti-competitive behavior have affected Supporting Infrastructure the quality of ADSL internet services. EPTC sells wholesale ADSL services (line rental and data) to Internet Exchange Points (IXPs): The Mbabane ISPs, yet also competes with the same ISPs it serves, Internet Exchange Point (Mb-IXP), launched in 2014 with the support of the African Union creating an incentive for it to charge higher wholesale (AU) and implemented by the Internet Society prices to ISPs than it charges internally to its own (ISOC)55, has not been influential in lowering retail business. Some of the anti-competitive behavior broadband prices in Eswatini. Mb-IXP has 1Gbps alleged by some ISPs, and the resulting consequences fiber backhaul capacity and began operating with on the quality of service, include the following: multiple peering partners, including Real Image, POSIX and MTN. However, the impact of the IXP in • The high wholesale pricing for backhaul driving connectivity costs down will remain minimal connectivity provided to ISPs, forcing them to apply as long as EPTC continues to be the dominant high contention ratios on ADSL services sold. This provider of international bandwidth in Eswatini and results in a poor quality of services provided to does not peer through the IXP . Indeed, a significant end-users. part of the nation’s internet traffic is still exchanged internationally56, further contributing to high costs of • EPTC’s slow response times when addressing content provision and internet usage. lines resold by ISPs, which can take up to several weeks. It is claimed that these response times Data Center and Cloud Services: Eswatini has a are not experienced when Eswatini.net makes a limited market for data center and cloud services, similar request, thus providing Eswatini.net with in part due to high connectivity prices. At present, an unfair market advantage. approximately 70 percent of the content consumed in Eswatini comes from data centers located outside • ISPs who resell ISDN lines are not able to guarantee the country. Not only is this more expensive, but continuity of service for customers after service international content is also not always relevant interruptions. This is because EPTC reconnects to the local population. This lack of relevance can suspended or faulty lines at a default speed of be a disincentive for broadband internet adoption. 1 Mbps irrespective of what the line speed was Notable data center and cloud services offered in the before the disconnection. country include the following: 53 Pronouncement of essential facilities and finding of control of essential facilities by dominant operators. 2017. 54 Specialized tower companies that are active in Africa include Helios, Eaton Towers, and American Tower Corporation. 55 Telegeography 56 Up to 70% of the total internet traffic in Eswatini is international. 57 • EPTC provides data-center-based IT services Analysis of Market Structure & Competition focused on hosting websites, colocation and Eswatini’s broadband market is characterized disaster recovery services; by the near monopoly of EPTC in the wholesale market and limited competition in the retail • POSIX runs its own public cloud at its data center services market. EPTC’s dominant position in the which is connected to the EPTC IP backbone; middle-mile of the broadband value chain affects both fixed and mobile retail prices as operators • Real Image provides disaster recovery services. have limited alternative ways of connecting their access networks in the last mile. Also, while the fixed In a bid to encourage the growth of local data broadband retail market has become increasingly center presence and capabilities, the government competitive, following the licensing of four new ISPs plans to centralize the hosting of its ICT software in 2018, the mobile broadband market remains a services in a tier-3 National Data Center housed highly concentrated duopoly, with multinational MTN at the RSTP . In addition to providing data center having approximately 88 percent market share along infrastructure services for the government, the data with substantial financial, operating, technical and center will also provide the necessary technology marketing resources relative to the other operator. infrastructure that will enable companies to outsource their ICT functions and services. At present, the main government mainframe Consequently, high upstream broadband input costs computers running key government applications and limited competition in both the wholesale and (e.g., payroll systems, population registers, etc.) mobile broadband segments have been key drivers are housed at this data center. Furthermore, it is of the high prices and low service quality experienced anticipated that the data center will host and manage by broadband end customers. The lack of active the transfer of government software applications towercos in Eswatini, in contrast to many other from the mainframe-based systems to a cloud-based African markets, has further limited the potential for architecture. While this presents a clear growth economies of scale in the country. opportunity for this data center, a key challenge is the lack of a clear strategy to guide its evolution. While the national e-Government strategy could provide such guidance, it lacks clear ownership, which makes its enforcement difficult57. FIGURE 4. Broadband market segmentation in Eswatini Key Current Post- Unbundling Operators Service-level Operators Unaffordable internet prices Other Other and devices cost keep the Retail Services operators include: internet usage low Wholesale-retail accounting Fixed (ISPs) • Real Image • Jenny Wholesale Market • Touch IT • Monopoly (EPTC) keeps the EIC EPTC wholesale prices high (Wholesale (Incumbent) • Unbundling of EPTC requires only) Mobile: regulatory conditions in place Passive Network • MTN Eswatini • Eswatini Mobile Source: Authors 57 Africa Union Press Release: Regional Headquarters of the A-e Trade group for Southern Africa: Available at: https://au.int/pt/pressreleas- es/20190707/regional-headquarters-etrade-group-southern-africa-and-west-africa-have-been 58 Broadband Wholesale Market Recognizing the existing market distortion, plans are underway to unbundle EPTC. As discussed in The incumbent and state-owned fixed line the previous section, there were plans to separate EPTC operator, EPTC, provides wholesale access into three entities: Eswatini Telecom (retail service) and operates active networks. As set out in the and Eswatini Post (both scheduled to be operated Eswatini’s Electronic Communications Act (No. 9 of independently), along with Eswatini Infrastructure 2013)58, EPTC maintains exclusivity in key segments Corporation (EIC; which was scheduled to remain of the telecommunications market, including state-owned). According to the aforementioned international connectivity, national long-haul network draft bills, EIC would oversee the establishment, infrastructure, metropolitan network infrastructure, construction, maintenance and operation of the and the ADSL access network, hence its quasi- national telecommunications backbone infrastructure, monopoly in operating the wholesale broadband with three year exclusivity from the time the legislation infrastructure. EPTC is a vertically integrated operator is enacted. Under these bills, all other licensed that provides both upstream wholesale access and operators and service providers would have the right downstream retail services. However, as noted above, to establish last-mile interconnection to the national MTN and other ISPs has started establishing its own backbone infrastructure at interconnection rates that backbone and self-provisioning its backhaul. are subject to regulatory control.61 An options analysis is currently being conducted to identify the best way to unbundle and restructure EPTC. This exclusivity enables EPTC to charge high wholesale prices, which trickle down to end customers through retail service providers, even However, substantial investment, technical though wholesale prices have been significantly resources and expertise are required to deploy reduced thanks to the Cost-to-Communicate and upgrade the wholesale networks needed Price Reduction Programme implemented by to provide the Eswatini market with affordable, ESCCOM, as is further described below59. For high quality telecom services. Given EPTC’s recent instance, Internet Service Providers (ISPs) estimate that operating and financial performance, unbundling up to 90 percent of their input costs in the provision of alone may be insufficient to achieve this. The internet and data services are related to purchasing introduction of a private sector strategic investment bandwidth from EPTC. As a result, retail prices remain partner could potentially provide the necessary unaffordable and discourage demand for broadband resources to help EPTC’s businesses become services, which in turn lowers incentives for private sustainable and to upgrade the infrastructure. This sector investment in the sector. Yet EPTC itself lacks could be considered as part of a review of the various the financial and technical resources to effectively options available to restructure and strengthen EPTC. upgrade and operate its network to meet the needs of ISPs. As EPTC is a vertically integrated operator, there is a further risk of price and quality discrimination60, hindering fair and transparent competition at the retail level. This is further elaborated in the next sub- section. 58 Electronic Communications Bill. Available at: https://investEswatini.org.sz/swaziland-electronic-communications-act/ 59 ICT Baseline Report – 2017: Available at: https://www.esccom.org.sz/publications/notices/docs/ICT-BASELINE-REPORT-21-JUNE-2017-final.pdf 60 Broadband Strategies Toolkit. World Bank Group. Available at: https://ddtoolkits.worldbankgroup.org/broadband-strategies/law-and-regulation/ opening-vertically-integrated-markets 61 Telegeography GlobalComms Database – Eswatini: Available at: https://www.telegeography.com/products/globalcomms/data/country-profiles/af/ Eswatini/Eswatini.pdf 59 BOX 2. Liberalization of the wholesale market—Experience from other small states and lessons learned Small-sized countries share a number of characteristics, most notably challenges to promote infrastructure-based competition due to small economies of scale and limited demand. Experience from other countries can provide useful lessons on how to tackle these bottlenecks. Estonia and Montenegro are good comparators for Eswatini, as they inherited a state-owned monopoly in their telecommunications sector, began the processes of liberalization and boosted market competition, and are comparable to Eswatini in terms of population size. Montenegro, with a population of around 623,000, successfully liberalized its telecom market through sector reform. The 2000 Telecommunications Law ordered the liberalization of fixed line markets from 1 January 2004. Incumbent Crnogorski Telekom (CT, formerly Telekom Montenegro) was designated as having significant market power in both retail and wholesale fixed line markets and was thus subjected to extensive ex ante regulation. Wholesale line rental was launched in 2011 via CT’s wholesale reference offers, under the regulator’s orders and based on the watchdog’s market analyses. Broadband usage has increased steadily since, and Montenegro’s household penetration rate was roughly 88 percent in March 2020, well above both the 58 percent regional average and the 82 percent recorded for countries in the same GDP per capita group. Similarly, Estonia boosted telecom market competition by taking a proactive regulatory approach. It first created an incumbent operator in the early 1990s, which played an important role in building basic telecommunications infrastructure. It was also the only EU applicant country to have fully unbundled the local loop of the incumbent by January 2003. Estonia’s active policy actions ensured the modernization of the fixed network and enabled competition between operators in the mobile network. As a result of the early liberalization of the telecommunications market and intense competition, Estonia has a well-developed communications network: all central and local government agencies, public libraries as well as educational and health institutions have an internet connection, as do all Estonian enterprises. The experiences from Montenegro and Estonia show that ensuring open access to infrastructure operated by dominant operators is key to accelerating the rollout of broadband in a cost-effective manner, if appropriate regulatory conditions are in place that ensure efficient, open and transparent access to wholesale infrastructure. These conditions include: Fair wholesale price control: The costs of connecting to the backbone infrastructure should be fair. Best practices suggest that maximum costs for wholesale access should be set by the regulator based on a cost recovery assumption and a reasonable rate of return. The regulator must perform an analysis of the costs involved and decide on the cost control approach to regulate wholesale inputs. Setting wholesale costs too low discourages investment by the dominant operator subject to the obligation, while setting them too high renders the obligation ineffective and discourages alternative operators from connecting to wholesale inputs.  Open and non-discriminatory access: Operators should be offered access to the backbone infrastructure on non-discriminatory terms, to level the playing field for efficient competition. This is an important step to ensure fairness and thus build trust with operators providing retail services.   • Transparency: Clear and detailed reference access offers should be published with respect to access to the incumbent’s infrastructure. • Quality of provided services: A network management center within the newly established wholesale operator needs to ensure service level agreements (SLAs) are signed with wholesale clients. The quality of provided access services will affect the “buy” and “build” decisions of other operators. • Proactive role of the regulator: The regulator should regulate and work with the wholesale operator to ensure established conditions are clearly outlined and met. The regulator should be equipped to act when these conditions are violated, and should have both the established procedures and capacity to handle disputes between operators. Regulatory stability and consistency create legal certainty for operators, which encourages them to operate on the market and invest. If competition is ensured by applying wholesale regulation, retail regulation may in turn be reduced to a minimum or eliminated, as prices for both fixed and mobile services will be disciplined by wholesale regulation. 60 Broadband Retail Market ISPs with smaller market shares are disadvantaged by the presence of the vertically integrated EPTC Retail fixed broadband and high wholesale prices. In particular, due to The retail fixed broadband market has been the exclusivity granted to EPTC in the international open to competition, with eight internet service gateway and national backbone infrastructure, all providers (ISPs) currently providing fixed ISPs are currently obliged to use the internet gateway broadband services, including EPTC’s retail arm, operated by EPTC and route all outbound traffic Eswatini.net (Figure 5). Eswatini.net has around 80 through EPTC’s network. Furthermore, the current percent market share, followed by Real Image with pricing structure of EPTC, which charges fees for 16.6 percent, indicating market dominance66. line rental and bandwidth, suggests that liberalizing the wholesale market is necessary to effectively ISP Subscriptions (2019) drive down broadband internet prices. Despite the reduction in wholesale prices achieved through the Eswatini.net 12,737 Price Transformation Programme (see below), there Real Image 2,652 has been little change in the pricing of leased lines, which account for much of the costs that ISPs have Touch IT 350 to bear. Given that EPTC also competes in the retail Jenny 85 market, it has an incentive to charge higher prices to ISPs than to its own internal retail network and Posix 40 customers. Swazi Sat 18 Retail mobile broadband Computronics 17 The mobile broadband market is currently Datanet 7 liberalized, with a duopoly. However, the market is highly concentrated with MTN Eswatini, the FIGURE 5. Fixed broadband market share by service incumbent operator, holding a dominant market provider (2019)62 position. MTN Eswatini was licensed to operate in July 1998 as a result of the Joint Venture Agreement (JVA) between the MTN Group and EPTC (see the Policy and Institutional Context section). MTN subsequently remained a monopoly until the entry of a second 17% 1% Eswatini.net mobile network operator, Eswatini Mobile, in 2017. However, MTN Eswatini maintains its dominance in Real Image 2% the retail mobile broadband market with 87.6 percent Jenny market share in 2019 (Figure 6)63. 1% Touch IT FIGURE 6. Mobile-cellular market share by operator Others (share of total subscribers) (September 2019) MTN 80% 80% Eswatini Mobile 62 ESCCOM Annual Report - 2019 63 Ibid. 61 Invisible Mile: Legal, Policy and Regulatory Advances have also been made with regards to Environment mobile active infrastructure sharing and national roaming guidelines. In 2021, ESCCOM reviewed Overall, Eswatini has a relatively modernized the regulatory framework on infrastructure sharing. A and strong telecommunications institutional majority of stakeholders surveyed agreed that there is framework, notably with regards to the need for including active network sharing elements. regulatory authority and its mandate. This could Consequently, the Commission issued and published come as a surprise as the country was one of the the Mobile Active Network Infrastructure Sharing and last to eliminate monopolies in mobile and fixed- National Roaming Guidelines. broadband retail markets, through the Swaziland Communications Commission Act of 2013 and Likewise, ESCCOM worked on the deployment the Electronic Communications Act of 201364. of network capacity and progressive policies In particular, as detailed above, Eswatini has an necessary to ensure the availability of resilient independent regulatory authority, ESCCOM, created infrastructure and services at all times. In this by the Communications Commission Act. regard, Business Continuity and Disaster Recovery Guidelines for the ICT sector were issued in 2021. The regulator is competent and has undertaken The main objectives of the guidelines are to guide and many initiatives to improve the enabling assist service providers to put in place the necessary environment and increase service affordability. processes and systems for improving network This has led to a notable improvement in Eswatini’s resilience and assuring continued service availability, performance on ITU’s regulatory tracker scorecard, and to engage with industry and stakeholders on with its score increasing from 59.33 in 2018 to 66.67 a framework for improving network resilience and in 202065. In recent years, ESCCOM has made efforts recovery by identifying several approaches (e.g., to improve and encourage competition in the ICT redundancy and business continuity) to ensure sector. To increase the affordability of internet prices, uninterrupted service delivery. The guidelines are still ESCCOM implemented the Cost-to-Communicate under consultation and the process will be completed Price Reduction Programme through a three-year in 2022. glide path in the first phase, which resulted in a 33 percent reduction in wholesale rates in the first However, regulatory uncertainty exists in the year alone, with an overall average reduction of definition of a national backbone and what 35 percent further achieved in 2019. In 2021, the constitutes self-provision in last mile, including Commission undertook a pricing benchmark study, its limits, calling for a clear market definition. which revealed that at wholesale level, Eswatini had As per the current legislation, EPTC does not have made significant progress in lowering leased line and exclusive rights over the international gateway but still internet bandwidth costs. Despite this improvement, has exclusivities for fiber. However, the situation is not the country’s data prices are still considered high when clear for some market players. In recent years, this compared to regional peers. As a result, ESCCOM uncertainty has resulted in situations where licensed introduced another three-year glide path (2022/23 operators have attempted to stretch the boundaries – 2024/25) where wholesale rates are to be reduced of what they can do using their interpretation of the by an average of 60 percent over the period. At the regulations. For instance, ESCCOM disclosed that the retail level, the reductions saw operators adopting a Commission investigated two licensees for an alleged pricing philosophy where instead of reducing prices, contravention wherein they were providing internet they tended to increase the volumes, and where the services without connecting to the national backbone volumes remained constant, the prices dropped. infrastructure exclusively established, constructed, maintained, and operated by EPTC. 64 ITU. Measuring the information Society Report 2018 – Volume 2. 2018. https://www.itu.int/en/ITU-D/Statistics/Documents/publications/ misr2018/MISR-2018-Vol-2-E.pdf. 65 https://www.itu.int/net4/itu-d/irt/#/tracker-by-country/regulatory-tracker/2018 62 Radio frequency spectrum management and planning in Eswatini is governed by the provisions of the Electronic Communications Act, No.9 of 2013. This is further elaborated in the Electronic Communications Regulations of 2016, which empowers ESCCOM to manage efficient and effective use of radio frequency spectrum66 along with other essential functions including spectrum allocation, frequency planning coordination and assignment, issuing licenses, regulating and administering the use of radio frequencies, and monitoring and enforcement of procedures67. The frequency spectrum in Eswatini is assigned by ESCCOM through the administrative authorization process and in accordance with license requirements. Unlike the trend of issuing licenses for terms of 10 to 20 years68, the stipulated duration of a radio frequency spectrum license in Eswatini is only one year until renewal. This short-term license term is less likely to ensure regulatory certainty and encourage investment from the market, and is not in line with the best practices recommended by ITU. ESCCOM has recently issued spectrum licensing guidelines that are meant to address the information shortcomings of the regulations and better present spectrum licensing information to ensure that applicants know what to expect from ESCCOM when applying for licenses. These guidelines were issued for public consultation and have not yet been operationalized. Lastly, ESCCOM published (i) a reviewed band plan for Terrestrial Fixed Services bands, which gives a channeling structure for all bands currently allocated to fixed services, outlines the currently assigned spectrum and also recommends steps to be taken to ensure that all assignments are in accordance with the proposed band plan, and (ii) a review of the International Mobile Telecommunications (IMT) band plan and roadmap, which outlines the process and timelines to be followed to make new spectrum bands available to existing and future service providers. BOX 3. Universal Access and Service Fund In addition to its mandate to improve the enabling environment for the telecom sector, ESCCOM is entrusted with ensuring the development of ICT services in the country. To achieve its mandate, the Commission established the Universal Access and Service Fund (UASF) following the terms of section 29 of the Electronic Communications Act, 2013. The core mandate of the Fund is the advancement of communications services, with a focus on achieving universal access to quality, reliable and affordable communications services in Eswatini. These targets support the view that widespread and affordable access to ICT is key to promoting social inclusion, and to bringing the benefits of development to the marginalized and disadvantaged, including the poor and the unemployed, women and the disabled. A number of universal service and access programs have been carried out in the last few years, including: • Assisting the Ministry of Agriculture to connect 17 veterinary offices. • Supporting children living with disabilities through support to the School for The Deaf Primary and High School with technology capabilities to assist in administration, learning and teaching. • Distribution of laptops in schools. • Provision of public WIFI hotspots. • Network expansion in underserved areas, as well as upgrading 2G sites to be compatible with current technological developments, resulting in the expansion of broadband services in underserved areas through the provision of LTE. However, the administration of the Fund could be strengthened to improve delivery at scale. At present, it is not clear what impact assessment strategy is in place for UASF-funded initiatives. Furthermore, MTN currently makes most of the contributions, which can create significant leverage for MTN and a potential conflict of interest. The government could broaden the contribution criteria beyond profitability to ensure the financial sustainability of the UASF. 66 ESCCOM. The Electronic Communications (Radio Communications and Frequency Spectrum) Regulations, 2016. Available at: https://www.esccom. org.sz/regulations/The-Electronic-CommunicationsRadio-Communications-and-Frequency-Spectrum-Regulations-2016.pd 67 https://www.esccom.org.sz/mandate/spectrum/ 68 ITU. Digital Regulation Platform: Spectrum management: Key applications and regulatory considerations driving the future use of spectrum. Avail- able at: https://digitalregulation.org/spectrum-management-key-applications-and-regulatory-considerations-driving-the-future-use-of-spectrum/ 63 Constraints to High-Speed Internet • EPTC’s lack of financial and technical resources Development as monopoly access provider. Deployment and management of high-quality broadband The development of Eswatini’s broadband networks require substantial and nimble financial, infrastructure is constrained by a number of contracting, technical, operating, marketing and factors primarily associated with the presence other resources. EPTC has found it challenging to of the vertically integrated, SOE dominance obtain and manage these resources. in the wholesale broadband market. While the introduction of the Electronics and Communications Act of 2013 set the stage for the establishment Other pressing issues are holding back the of a more competitive market, the slow pace of expansion of the country’s digital infrastructure implementation continues to be at the heart of several and broadband penetration: structural challenges and associated issues that include: • Investment in network expansion, particularly in • The high cost of broadband services, driven by underserved areas and hard to reach areas. The the lack of competition. Despite a significant current ailing economy could lead to a decrease in reduction in wholesale prices imposed by the revenue for operators that contribute to the UASF. regulator, EPTC can still charge relatively high A decrease in operator revenues has a direct internet wholesale prices due to its dominant impact on the size of contributions that the Fund position in key segments of the broadband value receives annually, and consequently affects the chain. This is especially evident in the fixed line ability of the government to finance the expansion market, whereby high input costs for ISPs are of infrastructure to all citizens, particularly those invariably passed on to customers. Likewise, in the in underserved areas. mobile market, increased competition amongst mobile network operators is needed to drive down • Affordability of mobile internet access devices. service prices. High domestic and international Mobile internet access devices are not affordable connectivity prices continue to impede a greater for most individuals in the country, even though uptake of internet services, which has seriously this is the primary way in which Swazis access the inhibited the development of a digital economy. internet. • Low quality broadband services, driven by • The limited local market for data center and EPTC’s inefficient provision of backhaul services. cloud services. At present, approximately 70 Wholesale customers have complained about percent of the content consumed in Eswatini constraints in sourcing fiber backhaul connectivity comes from data centers that are located outside from EPTC. This may be due to the speed at which the country. Besides the added cost of consuming EPTC is able to deploy fiber connections, or the content that comes from outside the country, preferential treatment that EPTC is reported to give international content is not always relevant to the to its retail division and customers. Furthermore, broader population. This lack of relevance can EPTC’s ownership of the ADSL network has be a disincentive to the adoption of broadband been driving anti-competitive behavior and has internet. affected not only the competitive nature of the access segment, but also the quality of broadband services, notably ADSL internet services. 64 Recommendations & Next Steps Medium- to long-term recommendations Quick wins R1.4: Place conditions and regulatory safeguards, such as cost-based wholesale price R1.1: Proceed with the unbundling of EPTC while controls, adequate interconnection regulations, pursing liberalization of all segments of the and measures to ensure nondiscriminatory and open access to the wholesale network followed value chain.The nation’s Post Covid-19 Economic by the unbundling of EPTC. To ensure a successful Recovery Plan highlights this activity as an ICT enabler market outcome, the right legal and regulatory that the country must address as a matter of urgency. mechanisms must be put in place to guarantee that This exercise will help increase competition, reduce retail service providers have equitable access to communication costs, and reduce entry barriers for wholesale network services that are affordable and smaller communications services providers. The delivered in an efficient manner. This is particularly following steps could be taken: important given the significant market power that the • Based on the unbundling report prepared by the wholesale service provider is likely to wield. Without ITU, conduct an EPTC options study to evaluate these conditions in place, the intended goals of the selected options for the long-term sustainability of unbundling might not be achieved, and corresponding EPTC’s telecom businesses. bottlenecks in the retail market might remain. See Box 2 for suggested conditions that ensure access to • Based on conclusions of options study, proceed wholesale infrastructure is provided in an equitable, with relevant unbundling of EPTC to facilitate the open, and efficient manner. Furthermore, in light of accounting and functional separation of EPTC’s MTN’s investments in its own international gateway businesses, identify potential restructuring areas access and backbone infrastructure, clarifying that and leverage private sector investment. all exclusivities on digital infrastructure are to be removed while supporting the implementation of • Pursuing liberalization would include clarifying the regulatory measures to encourage infrastructure current situation with regards to the international sharing would encourage operators to invest in and gateway, liberalizing the middle-mile segment share infrastructure, and thus avoid the need for after a period of exclusivity after the unbundling, duplicative investments. and ensuring that additional players could possibly enter the market. R1.5: Expedite the expansion and certification of the local Tier III data center to encourage R1.2: Review and improve the administration of the growth of a local cloud services and content the Universal Access and Service Fund. This could ecosystem. Plans are underway to increase the include developing and reporting on well-defined capacity of the existing data center, including the targets, including monitoring the effectiveness and construction of a disaster recovery site 50km away impact of UASF programs and diversifying operational from the primary site. Additionally, the facility’s funding sources. Tier III status has not been certified by a globally recognized standard for data center reliability and R1.3: Facilitate infrastructure sharing with SOEs, overall performance such as the Uptime Institute. The such as the Eswatini Electricity Company (EEC), to provision of reliable, affordable local hosting services expand fiberoptic broadband infrastructure. This can encourage the development of local content and would enable broadband operators to expand their cloud service ecosystems. Furthermore, an increase in networks by harnessing existing utility infrastructure locally hosted content and cloud services can lead to such as electricity, rail, water and sewer networks. The a reduction in internet service access costs that include government should consider mandating the provision international transit charges, and higher latencies of adequate communication ducts on all new roads, associated with accessing externally hosted content. especially in major cities and highways. Focus should A point worth noting is that this data center is intended also be placed on the implementation of the MoU to house the planned Integrated Government Services already signed between EPTC and EEC. This would platform and national IXP , which have both been present further opportunities for operators to lower highlighted as critical ICT enablers for the success of the cost of network deployment and speed up the the Covid-19 Economic Recovery Plan. development of broadband networks. 65 R1.6: Increase demand for and usage of broadband services. This would include reducing or eliminating excise duties and other taxes on feature and entry-level smartphones, tablets or laptops, and/or subsidizing or offering low- or zero-interest loans for their purchase. Subsidies could be targeted at priority segments in society, such as women and marginalized populations. Large scale digital awareness and literacy campaigns could also be implemented to boost demand for digital services. 66 4 Digital Platforms Key messages: • Public sector platforms: Key public sector platforms such as financial management, revenue collection, human resources management, digital identification, and delivery of services in key sectors such as health and education are in place. However, several of the digital systems supporting these functions do not yet leverage the range of software functionalities available to align with government business processes or international standards. Further, they are not optimally user- or citizen-centric. • Private sector platforms: Major large-scale private sector digital platforms have a very limited presence in Eswatini, with the exception of social media platforms. There are also a few burgeoning e-commerce platforms and platforms leveraged by local entrepreneurs (see Chapter 7). Other common digital private sector platforms such as ride sharing platforms have yet to gain traction in Eswatini, due to a constrained business environment and lack of reliable ICT infrastructure. • Interoperability: Eswatini lacks an interoperability framework and most public and private sector platforms are not interconnected, even in cases where doing so would generate efficiency gains for providers and users. As a result, there is clear demand from government agencies and the private sector (banks, MNOs) to not only scale up connectivity, but also interoperability. Although the development of an interoperability framework is underway, it has been hindered by the poor condition of government IT infrastructure and lack of clarity of mandates. • Coordination, capacity building and utilization of skills: At present, Eswatini doesn’t have an embedded or systematic approach to coordinating the development and utilization of public and private sector platforms within its digital economy. Lack of clearly defined roles and mandates across institutions has already delayed progress in advancing e-governance and creating incentives for a digitally enabled private sector. As the digital economy develops, there will be an increased need for strengthened interinstitutional coordination, and change management will play a significant role in ensuring that the transition from analogue processes to digital platforms can overcome the challenges that result from lack of capacity and passive resistance. Importance of Digital Platforms Digital platforms offered by governments, businesses and non-governmental orga- nizations have the potential to transform the way these entities interact with each other. The potential benefits of digital platforms stem from their ability to virtually connect people and things as well as to facilitate digital interactions and transactions, including the exchange of information, goods and services. Platforms can also improve access to, efficiencies in, and the quality of service delivery. Digitizing service delivery can increase user convenience and generate savings for government and businesses. For governments, digital platforms can increase the efficiency and effectiveness of core functions and services, reduce unnecessary duplication of systems, combat fraud and corruption by increasing the 67 security and traceability of transactions, and improve requires access to and retention of skilled talent civic engagement and accountability. Consequently, both within the civil service and private sector. Thus, one of the main priorities identified in the GoE’s Na- digital platforms need to be supported by a strong tional Development Strategy, Vision 2022, is the es- enabling environment. Such an environment includes tablishment of e-Government as part of the process a framework of analog complements consisting of of attaining economic growth. measures to address the digital divide, particularly in regard to gender, socio-economic class, education, Commercial digital platforms have created and rural vs. urban areas, as it impacts addressable new markets by enabling more consumers to market opportunities; government procurement of IT access better and more cost-efficient goods and and other digital services; and digital and business services; they also unlock new jobs and income skills of the population for inclusion in the digital opportunities for suppliers and individual market as consumers, entrepreneurs, and suppliers. contractors. Commercial digital platforms are multisided online marketplaces that enable producers and users to create value together by removing market frictions, facilitating interactions and matching, and by Diagnostic Findings: exploiting and managing direct and indirect network effects. They offer distinctive benefits for users, for Current State of Digital example, lower transaction costs, lower search costs, lower prices of intermediate and final goods, and Platforms better quality of products and services. However, In robust digital economies, governments play commercial digital platforms also present important an active role in designing, overseeing and/or risks, usually in the form of anticompetitive behavior developing digital public sector platforms and a and lack of consumer and contractor protection. critical role in supporting firms to operate digitally Network effects and winner-takes-all dynamics may enabled businesses. Furthermore, governments can foster market concentration, and incumbents may strengthen oversight and monitoring mechanisms engage in collusive and discriminatory practices to promote a competitive business environment, that affect new entrants and suppliers, usually by while also ensuring that there are clear and effective exploiting data as a source of market power, among safeguards in place to protect user data and the other potential anticompetitive practices. integrity and resilience of the platforms put in place. In Eswatini, the government has yet to take up these In this chapter, the assessment of Eswatini’s core functions, so that digital public and private sector digital public platforms is divided into two key platforms remain nascent and disjointed as a result. areas: (1) core public sector platforms, namely those used to improve the function and efficiency Eswatini ranks 128 out of 193 countries on the of critical government administrative functions, 2020 United Nations’ global e-Government and (2) public sector platforms for service Development Index (EDGI), which is below the delivery, which are citizen-facing platforms that average for sub-Saharan Africa and well below improve access to government services. the average for the Southern Africa region. Still, Eswatini’s ranking has increased 13 points Management of digital platforms requires strong governance frameworks and may since 2018, in part due to the increase in the online require legal and regulatory reforms such as services index. It is below the continental average and strengthening procurement rules and ensuring other Southern African Customs Union (SACU) and that solutions developed by the private sector Southern African Development Community (SADC) meet requirements for data protection and countries. As a small landlocked country, reasonable ownership, cyber security, and intellectual comparators would include other landlocked African property. Well-developed requirements facilitate the countries and small island developing states (SIDS). integration and use of specific digitized procedures, Eswatini is outperformed by SIDS such as Mauritius like secure e-signatures and electronic Know Your and Seychelles, by landlocked countries such as Customer (eKYC), as efficient substitutes for the Ethiopia, Rwanda, Uganda, Zambia and Zimbabwe, corresponding analog processes. Efficacy in this and by upper-middle-income countries such as South role requires the capability to manage partnerships Africa and Namibia. for and procurement of digital platforms. It also 68 Digital Public Sector Platforms in However, interoperability with the government mainframe is a challenge. SRA’s 2021/2022 to Eswatini 2023/2024 Strategic Plan added a fourth strategic program, which is informed by regional and Core Public Sector Platforms international conventions and initiatives to which The core public sector platforms in Eswatini, such Eswatini is party and must implement. This program as for revenue collection, financial management, would build upon Eswatini’s existing trade MOUs with and human resources management, lack critical South Africa and Mozambique. functionalities and most have been designed in- house by the government. For nearly all of these Financial and Public Expenditure Management systems, the government is pursuing upgrades or system Platform. The Eswatini Ministry of Finance uses a re-implementation to better align their functionalities to computerized financial system, which controls and relevant ministries’ business processes. These systems reports expenditures on a cash basis. However, the are critical for the government’s implementation of absence of a more robust, digitized and integrated the Post Covid-19 Economic Recovery Plan, as they financial management system that is interoperable will support more efficient government expenditures with other key government platforms is considered as and equitable access to government services and a contributing factor to the lack of financial controls resources. In particular, the need to increase access for government spending. Recently the Treasury to procurement for youth and MSMEs is prominently introduced an Invoice Tracking System (ITS), a stopgap featured in the plan. The following paragraphs give measure for tracking expenditures and arrears, while a brief overview of each of these core public sector the Integrated Financial Management System is being platforms. Additional details are available in Annex implemented. This system is a basic IT application 3. which records invoices and payment instructions, creates batches of invoices that correspond to those Tax and Revenue Platforms. The digital systems in the existing accounting system, submits these managed by the Eswatini Revenue Authority batches online to the Treasury, reviews and verifies the (formerly the Swaziland Revenue Authority, SRA)—the invoices, and records invoices marked as paid from Resource Management System (RMS) tax system and specific bank accounts. Automated System for Customs Data (ASYCUDA) World customs system—are well developed. These Public Procurement Platforms. Public procurement are third-party platforms that are maintained by is a source of major government expenditure. The SRA’s IT staffing complement, which is highly capable Eswatini Public Procurement Regulatory Agency and well-trained69. As part of the implementation (ESPPRA) has several digital platforms to aid business of new systems, SRA introduced a single Taxpayer participation in public procurement processes, and Identification Number (TIN), which is a unique 9-digit has developed its own digital systems for improving identifier generated by the RMS and used for both the tracking of and access to government-issued tax and customs. All business owners and persons tenders. These include: (1) a database for tender required to file taxes by law must register for a TIN. alerts, where businesses opt-in to be notified during SRA also has an electronic tax system available for stakeholder engagement activities; (2) a website with citizens and businesses to file their taxes. Currently, tender information, including freely downloadable most commercial entities use the platform, but many tender documents, bidder qualification requirements, individuals do not. To address this, SRA will launch opening and closing dates of the tenders, views of the a campaign to motivate taxpayers to pay digitally. bid evaluation scores, notice of intention to award, VAT is collected at ports of entry and registered in and information about the entity eventually awarded the ASYCUDA World system. SRA is developing an the tender; and (3) a tender review and advertising interoperability program that would automate back- portal, which sends emails to prospective bidders in office communications between relevant government the database. Tenders are also advertised via social systems so they can track customs data in real-time. media. 69 The IT department is small with two directors: one for innovation and systems who supervises 15 staff and the second for infrastructure and servers with 11 staff. Everything for the RMS is done by the vendor and there is a standing contract for support visits. 69 These platforms were created and are maintained currently limited. As a result, Eswatini’s ID system internally by ESPPRA IT staff and have improved access is not able to support other government platforms, to government procurement. Still, ESPPRA would like especially those for service delivery, such as health a more integrated and robust electronic procurement and education with maximum efficiency. There are system (e-GP) that interfaces with the other relevant also gaps in terms of functionalities to provide people government agencies and comprehensively tracks with more oversight and direct control over their data procurements and grievances. Public procurement and credentials. is one of cabinet’s five priority areas; however, this prioritization has not resulted in a higher budget allocation and execution for procurement programs. Spotlight on Digital Identification Human Resources Platform for the Civil Service. The NPR system is an important asset for Eswatini, The Ministry of Public Service uses a Human Resource and on the whole is better developed than many Management Information System (HRMIS) developed Civil Registry and ID systems in Sub-Saharan in 2006 by the Ministry of ICT’s Government Computer Africa. Birth registration has increased dramatically Services Division and stored in the government’s in the last decade and now stands at 70-80 percent mainframe. The HRMIS supports management of for children under five. In addition, the NID and the size and structure of the civil service, maintains PIN are widely used by people as proof of identity employment records, and manages its payroll. This in their daily lives and in other government systems. system contains civil servants’ ID information and Furthermore, the NPR—while generally underfunded is linked to the National Population Register (NPR). and understaffed—appears to have quality, dedicated However, several key functionalities that are available staff with good technical knowledge and a high level in more recently designed HRMIS systems—such of commitment to improving the system and serving as employee record tracking and interfaces with the people of Eswatini. payroll—are not yet available in Eswatini’s system. This is because the original system was not intended At the same time, a number of challenges to be a robust and comprehensive HR management remain: system, but rather a simple employee tracking • Persistent coverage gap for children and system, and because budgetary allocations for adults. Because civil registration laws require further investments in the system have not moved parents to prove their citizenship during the forward in recent years. Envisioned upgrades include birth registration process, parents who are establishing interoperability with the National ID not registered themselves cannot register their system and treasury for payroll disbursement as well children, and adults who were not registered at as integration of performance management tracking birth are then unable to obtain the NID until they and data. do so. This creates a risk of statelessness and can lead to denial of services for which ID is required National Identification and Population Register (e.g., school enrollment). Platforms. Eswatini has an integrated civil registration and national ID system based on an NPR that is • Outdated and bureaucratic systems. NPR managed by the Ministry of Home Affairs (MOHA) systems have not been adequately upgraded and hosted in the Ministry of ICT’s shared data center. since the early 2000s and do not meet relevant The system is structured around Personal Identification performance and security standards. In addition, Numbers (PINs), which are issued at birth and last many steps of the registration process rely on throughout a person’s lifetime. Basic ID cards are paper-based data capture, which can lead issued using the PIN at age 16, after deduplication to inaccuracies in the data with respect to the using fingerprints. Cards are issued to both citizens NID, passport, and other documents. Beyond and foreigners, but the latter receive a different color inefficiencies and security risks, the existing card. Currently, approximately 53 percent of persons systems add to the time and opportunity cost for ages 16 and over have a National ID card. The people registering vital events and applying for NPR has basic functionalities and is well managed. NIDs. At the same time, the digital identity verification and authentication capabilities offered by the system are 70 • Limited identity services and digital ID. Although a number of government databases Public Sector Platforms for Service store the PIN, there are only a few systems that are able to perform identity verification checks against Delivery the NPR using this number. Furthermore, digital authentication technologies that use the existing The platforms designed for service delivery NID card have not yet been deployed, and other across the public sector include Ministry of Health alternative solutions do not currently exist to allow platforms and the Ministry of Tinkhundla’s (local for secure in-person or remote authentication. government) One-Stop Service Centers. The Ministry of Education has a Management Information System, • Reforms needed to enhance the legal and but this system was not able to be evaluated for regulatory framework. While some enabling this assessment. These platforms have some limited laws do exist, such as for civil registration and interoperability with the NPR but are not yet interfaced identification the NPR, certain aspects of this with e-payments systems. Additionally, the use of legislation are out of date and create significant digital citizen engagement and feedback platforms barriers to full inclusion and digitalization. In in Eswatini has not yet begun. There are no ongoing addition, as detailed in the Policy and Institutional Open Data initiatives and government data that is Context section, while Eswatini has a data publicly available is sparse. For example, while most protection law and cybercrime law in force, full ministries include a subset of governing laws and implementation of these laws needs to be pursued. policies on their website, statistical information about Strong legal and regulatory foundations need to implementation of ministry initiatives and delivery of be in place to enable the system to securely and services is less readily available. Summary information inclusively provide critical services—to public and about government budget and expenditure is private entities. available; however, detailed budget and expenditure is not. The Office of the Chief Economist publicizes • The Government of Eswatini views the NPR as quarterly circulars, but these are only available in a foundational resource for the country and hard copy. seeks to improve the inclusivity and security of the system and leverage it to provide Health Systems: The Health Resource Management better services. Meetings with MOHA, Ministry of System (HRMS) was launched in 2015 and connects Economy, Ministry of ICT, and Registrar General 178 of the country’s 334 health facilities. Given the confirmed a high level of political commitment infrastructure and connectivity constraints Eswatini to improving the NPR system. The primary goals faces (see Chapter 3 on infrastructure), the Ministry of of the government are to respond to the main Health has installed their own microwave technology challenges listed above, including: to provide connectivity. System information is • Ensuring that the system is inclusive of all available in real-time to those connected. In the people in Eswatini, regardless of age or system, patients have a PIN, which is a unique nationality; identifier at facility level. The PIN is the same as a • Increasing security and reducing fraud citizen’s national ID number and is the basis for the related to identity documents, passports, and interoperability linkage with the population database border crossing; register. The Ministry of Health is also rolling out a • Responding to demand from other ministries Client Management Information System (CMIS). A and the private sector (e.g., banks and quality management system was piloted in December MNOs) for ID verification services and to 2019 and is interoperable with CMIS and is the enable the unique identification of service digital arm of a program designed to gather citizen users. feedback on health services. Feedback regarding the availability of medication, the cleanliness of facilities, and the bedside manner of medical staff is collected and measured against existing performance indicators. It uses a text-based system where clients opt-in. To run and maintain these systems, the Ministry of Health employs network engineers, database administrators, software developers, statisticians, and 71 health information officers. Tinkhundla One-Stop Service Centers: Ministry of Tinkhundla (Local Government) is establishing digitally enabled one-stop service centers in every Tinkhundla (region) to facilitate improved service delivery in rural areas. At the one-stop service centers, people would be able to access passport and national ID services, update birth and death registration details, and complete vehicle registration. There are also programs within Tinkhundla to enhance wireless access in selected Tinkhundla service points, such as ESCCOM’s UASF program for targeting rural areas to improve ICT and communications. The Ministry of Tinkhundla has future plans to connect all the one-stop service centers with the government-wide area network and offer a full range of digital services to citizens. Summary of the Status of Public Sector Platforms Digital public sector platforms in Eswatini range widely in terms of functionality (see Figure 7 for a heatmap comparison of platforms and Annex 3 for detailed descriptions of each system). On the one hand, Eswatini has well-developed healthcare service delivery platforms with dedicated infrastructure and an automated connection to the population register. On the other hand, it does not have a digitized integrated financial management system that tracks government expenditures, which contributes to large inefficiencies in government spending. The landscape of public and private sector platforms in Eswatini is steadily evolving with the introduction of various back-end and front-end systems, applications and services. Although Eswatini was one of the pioneers of digital government in Africa, beginning its efforts as early as 2003, it now lags behind regional comparators in terms of digital platform development. FIGURE 7. Heat Map of Public Sector Platforms in Eswatini Name of Platform Level of system level of interoperability level of tailoring to Gapsin access and level of staffing dedicated [Ministry, department, agency] development gorvenment business coverage for target to upgrades operations and processed user groups maintance National Population Registry [Ministry of Home Affairs] Invoice Tracking System [Ministry of Finance] Human Resource Management Information System [Ministry of Public Service] Digital Procurement Systems [Eswatini Public Procurement Regulatory Agency] Revenue Management System [Eswatini Revenue Authority] AYSACUDA World [Eswatini Revenue Authority] Health Management Information Systems [Ministry of Health] One-stop Service Centers [Ministry of Tinkhundlal} HIGH MODERATE LOW Note on Methodology: The list of platforms here is non-exhaustive and includes those for which the authors were able to have in-depth consultations. Each rating—low, moderate, high—is determined based on the information available in Annex 3, which details the status of various public sector platforms. Low indicates an area where the stakeholders describe major challenges or a negligible level of advancement or achievement. Moderate indicates some self-reported development but also a clear need and desire for improvement. High indicates a reasonable level of development (especially in comparison to other platforms) and where updates and challenges are aspirational or future-oriented, rather than based on current functions. 72 Digital Private Sector Platforms in Eswatini This is partly attributed to the constrained business environment which also extends to the virtual Eswatini has few fundamental private sector business environment. E-commerce and gig- platforms in place and lags behind comparators economy platforms also rely on a robust on-the- in this regard. Each platform is discussed below. ground logistics and support system. Given that many Eswatini entrepreneurs are considered “livelihood Digital Payment Platforms. Digital payment entrepreneurs”, a possible logistics model has yet to platforms are underdeveloped with few public be fully designed and implemented. and private sector platforms enabled for online payments. Eswatini’s DFS environment is Webhosting and Domains. Stakeholders cited still evolving and weak DFS usage and adoption unavailability of local webhosting and domains hampers full access to services developed by digital as a barrier to public sector efficacy and private entrepreneurs. An enabling DFS environment is also sector growth. For example, government ministries critical to promoting e-commerce usage among do not have a protected e-mail system and even individuals and (M)SMEs. While Eswatini also needs cabinet-level officials use private email accounts to to boost internet penetration to grow e-commerce, conduct government business. it also needs to promote trust and accountability in online transactions. Social Media Platforms. While internet use in Eswatini is still relatively low (see chapter Digital Commerce and Marketplaces. Both on digital infrastructure), social media use is international indices and stakeholder growing, providing an opportunity to increase consultations indicate that Eswatini has a low access to information on goods and services. state of readiness for digital commerce and While there are no robust statistics available on how marketplaces. The three key indices for private the Swazi population uses social media platforms, sector platforms (see Annex 1) place Eswatini in the stakeholders have indicated that this is dominated by bottom quartile, which indicates that growth potential leisure-based internet consumption. The dominant is limited and improving the enabling environment is social media platforms in Eswatini are Facebook, key. Further, stakeholder consultations indicated that Twitter, LinkedIn, and Instagram. For domestic firms, private sector platforms are unable to grow their user these digital platforms can be leveraged to sell goods base and reach scale partly due to the limited uptake and services. of digital payments, aside from mobile money. While mobile money is widely and broadly used (three out of Regional Digital Platforms. Eswatini expects four adults), e-commerce and other digital platforms to benefit from digital capacity building and (including ride sharing platforms) have yet to gain increased access to intercontinental trade; traction in Eswatini. In other African countries, digital however, this depends on the passage of platforms such as e-commerce and gig economy critical legislation governing digital transactions platforms (e.g., online freelancing), and the transport discussed in the Policy and Institutional Context and logistics sector have been catalytic for kickstarting section. The box below illustrates the rise of digital digital and tech-enabled entrepreneurship. This has commerce and marketplace platforms in Qatar, which occurred through the sensitization of the customer has widespread applicability to Eswatini MSMEs (see base to the use of online platforms and by creating Box 4). Creating a successful business environment for job opportunities for lower-skilled individuals (such as MSMEs is critical to the implementation of Eswatini’s drivers). The benefits of e-commerce are not solely Post Covid-19 Economic Recovery and Response for digital startups, they also enable firms and SMEs Plan, where the proposed strategy is to link MSME to in remote areas to access local and international “Big Projects” in the private sector to catalyze growth. markets through their supply chains. 73 BOX 4. Rise of Digital Commerce & Marketplace Platforms in Qatar During Covid-19 In late 2019, Qatar’s Ministry of Transport and Communications (MoTC) launched “Theqa” (https://www.theqa. qa/), an online portal to promote Qatar’s e-commerce gateway, as part of efforts to enhance consumer confidence in the local e-commerce sector and improve the quality of services provided by local online suppliers, in addition to providing traders and shoppers with the latest updates in the sector. The launch of Theqa is part of Qatar’s National e-Commerce Roadmap and the national guidelines, which aim at supporting local e-commerce enterprises and helping traders understand and adopt international best practices and standards. To obtain Theqa’s trust mark, local companies or e-commerce businesses must fulfill a set of standards. The portal helps evaluate each participating company’s website to check if it meets Theqa’s security and safety requirements, and also ensure that proposed services conform to specifications. The company is then granted a certificate and a trust mark, which is subject to annual renewal on Theqa’s website. According to Qatar’s MoTC, there are currently over 500 e-commerce websites registered in the Ministry’s e-commerce directory (https://ecommerce.gov.qa/). These e-commerce websites comprise a mix of larger retailers and startups. Qatar’s e-commerce rates are steadily rising; in 2019, the e-commerce penetration rates rose from 15 percent to 37 percent. Sources: Theqa website; MoTC’s Impact Survey Report-2019 Interoperability and Shared Services Leveraging shared services and following a whole-of-government approach to digital transformation, with an emphasis on ensuring interoperability of systems, holds transformational potential for many governments. ID systems, trust services and data exchanges with shared repositories can help reduce leakage and fraud by ensuring that services reach their intended beneficiaries or suppliers. Beyond service delivery, digital public platforms can provide new channels for public engagement, feedback and information sharing, including CivicTech tools. When digital platforms are built according to international standards and/or standards as agreed by local experts, they spur the development of new applications, and facilitate interoperability. Standards also catalyze private sector innovation by supporting the ease of doing business, improving regulatory and tax compliance, broadening customer bases, generating new markets, and fostering entrepreneurship. Furthermore, leveraging open-source software can result in cost savings, greater efficiency and prevention of vendor lock-in. In Eswatini, Government ICT infrastructure is provided through a central architecture managed by the Government Computer Services Department of the Ministry of ICT in Mbabane. Some core government IT systems, such as the Civil Registry, currently run on an IBM mainframe and other necessary hardware located in a “computer room,” which provides only modest physical security. Key government mainframe computers are also located at the RSTP , as discussed further in Chapter 7. The RSTP system stores critical data including correctional services, public service payroll, immigration and NPR data, government vehicle registration and the national exam system. The RSTP has plans to build a National Data Center, and the government is considering providing hosting services for government data through this facility. However, the physical location of the RSTP is considered less than ideal for coordination with some key government stakeholders as it is outside Mbabane and not accessible by public transport. Thus, contractual arrangements would need to clearly indicate how much autonomy the government would retain over facilities management if this arrangement were to move forward. Access to ICT infrastructure in Tinkhundla is currently limited, with only a few centers having electricity and connection to the government-wide area network; however, expansions are planned. Businesses and other government ministries’ offices are encouraged to take advantage of the shared government infrastructure that the Ministry of Tinkhundla will provide, rather than investing in their own infrastructure and thus potentially creating costly redundancies. Some of these important improvements may come to fruition as part of the implementation of the Post Covid-19 Economic Recovery Plan, which explicitly highlights the need to 74 leverage the Tinkhundla One-Stop Service Centers to to collect the same medication). create economic opportunities for youth. Two upcoming projects will further expand In order to prevent denial of service, the Ministry of government IT infrastructure. The WonderPort Health engages MOHA to work with unregistered project by the Natie Kirsh Foundation aims to connect people and create a temporary ID number for those all schools via TV white space. The Ministry of ICT who do not yet have a PIN. is running a Taiwanese-funded project to connect government facilities by microwave, running parallel The process of moving towards an interoperability to the existing fiber networks. The completion of framework has been hindered by the current both projects, along with the envisioned expansion condition of government IT infrastructure and the of connectivity for health facilities and Tinkhundla, lack of clarity of mandates. The e-Government unit, would also facilitate connectivity for schools and other which is being relocated to MICT70, has been given government facilities. The government aspires to a mandate to produce an interoperability strategy eventually take over the operation and maintenance and related standards; is also a common forum of this infrastructure. for discussions on standards and interoperability. At the same time, stakeholder interviews suggest Stakeholder consultations indicated that there that the Ministry of ICT is responsible for technical is clear demand from government agencies and implementation of the e-Government strategy, also the private sector (banks, MNOs) to not only including setting technical standards. As such, the scale up connectivity, but also interoperability. distinctions between the mandates of the Ministry This is especially so for the NPR, to allow biometric of ICT and the e-Government unit are not yet authentication, as well as the SRA, Ministry of fully clarified. On 4 March 2022, the Electronic Tinkhundla, Ministry of Heath, and Ministry of Home Communications and Transactions Act No. 3 of Affairs. It is the primary responsibility of the Ministry of 2022 entered into force, which specifies the role of ICT to put in place a policy to support interoperability the Ministry of ICT with respect to interoperability in and to ensure the readiness of government systems certain areas. Nevertheless, clarity at a broader level and infrastructure for this purpose. would be ideal for coordination and to ensure the government can deliver on its commitment to this As elaborated previously, one of the platforms reform. that requires the greatest level of integration and interoperability with government systems is Coordination, Capacity Building, the National Identification system. While the PIN Utilization of Skills is recorded by many government agencies, the use of these systems by relying parties is essentially manual. The government’s aspirations for greater The NID is often visually inspected or photocopied as interoperability of digital platforms will also a proof of identity or to record a person’s PIN (e.g., increase the need for a robust strategy and for banks, MNOs, HRMIS, etc.), but there is currently inter-institutional coordination. In collaboration no option for digital authentication and limited with the United Nations Development Programme interoperability for identity queries with other systems. (UNDP), the government developed the 2017-2019 e-Government operational framework, which laid out The Ministry of Health’s Client Management quick wins as well as short-, medium-, and long-term Information System (CMIS) is a use case for priorities. There is also a four-year e-Government interoperability with the NPR. It is one of the strategy covering 2016-2020, which guides the overall most advanced core government systems in the government approach to developing and interfacing country. Both adults and children are registered in public sector platforms. The implementation of these the CMIS using their PIN, enabling some information strategies falls within the mandate of the e-Government sharing of demographic fields. The Ministry of Health unit, which is being relocating from the Office of the reports that this has increased the accuracy of the Prime Minister to MICT to ease coordination for the system, reduced processing time, and ensured the e-Government agenda. However, the lack of clarity of uniqueness of patients, which has been an issue in mandates affects the interoperability framework, the the past (i.e., people going to multiple health facilities RSTP’s datacenter, and coordination with ESCCOM 70 The e-Government unit also has some responsibility for steering and oversight of government digital systems and hardware. 75 regarding backbone infrastructure. The level of quality, dedicated staff with good technical knowledge autonomy and authority of these entities also impacts and a high level of commitment to improving the their ability to deliver on their mandates. Box 5 system and serving the people of Eswatini. Similarly, describes South Africa’s State Information Technology the Ministry of Public Service used MICT to design Agency and how it is structured to deliver on these their HRMIS system. Staff at ESPPRA and SRA have the important coordination needs. capability to design, operate and maintain some or all functionalities of their various digital systems. In a The e-Government strategy is slated to be few cases, the support of international consultants or updated to focus on standards, monitoring and vendors has been leveraged, such as for the SRA’s RMS coordination. It would also include an operational system and the digital Health Management Systems. framework that would facilitate implementation, Although several digital public sector platforms have monitoring and evaluation. There is a need for all limited functionality and do not incorporate state-of- relevant stakeholders to come to the table and the-art technology and standards, in part due to lack contribute to updating the strategy, which did not of budgetary allocation for such improvements, there occur during the development of the original strategy. is significant technical capacity within government There is also a set of proposed recommendations that should be leveraged and enhanced as part of provided by UNDP during its 2019 e-Government future developments. evaluation. It is the view of some stakeholders that guidance from the Prime Minister would be required Bearing in mind the existing technical capacity to tease out relevant issues and provide a clear path within government, Eswatini has challenges with forward. Change management is also critical to understaffing and underfunding its IT functions. integrating and sustaining the changes proposed in Nearly all ministries, departments and agencies had the e-Government strategy. unfilled IT positions in the civil service establishment or were vying for such positions to be placed in the In general, change management plays a establishment. The incoming government has also significant role in ensuring that the transition had to contend with what the Minister of Finance from analogue processes to digital platforms described in February 2019 as ‘an unprecedented can overcome challenges resulting from lack of economic crisis’, resulting from fluctuating Southern capacity and passive resistance. Effective change African Customs Union revenues, a terminal decline management combined with capacity building in the mining sector, and a collapse in revenues from resulted in the effective implementation of the Ministry the critically important sugar industry. of Health’s management information systems. The government has recognized this in its e-Government More recently, as of July 2020, the Covid-19crisis strategy. There is a change management specialist upended the county’s financial outlook and within the Office of the Prime Minister (OPM) who spurred the prioritization of ICT and education as has been working to gain traction in this area, but one of the Post Covid-19 Economic Recovery Plan progress has been slow. Further, given that change priority sectors. These factors, taken together with management capacity is centralized within the OPM, the cost of prestige projects, have resulted in a total coordination is critical to its utilization by other freeze on government recruitment and non-essential parts of government. Given the aforementioned expenditure. It is not clear whether the incentives are coordination challenges, it remains unclear how properly aligned for critical actions to be taken to change management will play out with the transition translate to expenditure on government platforms or of core systems from the MICT mainframe to the new the ICT sector more broadly. This may particularly be shared RSTP data center. true in cases where the implementation or upgrades of digital systems may reduce or eliminate opportunities Several digital public sector platforms in Eswatini for discretionary activities, such as in payments, have been designed, implemented, operated and hiring, and tender awards. maintained by internal IT staff within the relevant ministry department or agency. In some cases, they have been developed by MICT and then handed over to the relevant ministry. For example, the NPR was built by MICT and handed over to the Ministry of Home Affairs. The NPR platform now appears to have 76 BOX 5. South Africa’s State information Technology Agency as an Example of Coordination Agencies for e-Government The Republic of South Africa’s State Information Technology Agency (SITA) was created in 1998 within the Department of Public Service and Administration, and later attached to the Department of Telecommunications and Postal Service for the procurement of IT services, standard setting and product authentication, security of government data, and provision of e-Government services. In 2002, SITA’s legal nature was changed to that of a private company fully owned by the state under the South Africa Companies Act. Now, as a parastatal entity, SITA is expected to work together in collaboration with these departments in providing project management and other support to all e-Government projects. SITA’s statutory mandate is to: • Improve service delivery to the public through the provision of information technology, information systems and related services in a maintained information systems security environment to departments and public bodies; and • Promote the efficiency of departments and public bodies through the use of information technology. Functionally, SITA has four core activities: (1) centralization of all government IT procurement, including adherence to minimum interoperability standards; (2) maintenance of key back-office government systems such as financial management, payroll and procurement systems; (3) provide or maintain a private telecommunication network or a value-added government network; and (4) provide training and/ or technical, functional or business advice to government. In practice, there are some exceptions to how these mandates are carried out. Sometimes there are technical reasons such as ongoing use of legacy systems or lack of interoperability that prevent the minimum operability standards from being met. Still, SITA is expected to develop the necessary integration platform to connect each department’s back-end systems with the central portal (front office), with the objective of improving the level of online services (connected services). One key benefit of SITA’s status as a parastatal is that the Board of Director has the authority to hire based on training, skills, competence and knowledge and to determine the remuneration allowances and service benefits of its staff. Making these two functions independent of government civil service recruitment and renumeration has proven important for hiring and retaining highly qualified staff. 77 Recommendations & Therefore, system improvements should be preceded by detailed systems assessments, Next Steps audits and business process reviews, to ensure the development of proper technical Based on the above analysis, the following specifications. This approach is being utilized for the recommendations are proposed to strengthen financial management system, e-GP , and National Eswatini’s public and private sector platforms. ID/NPR (see Annex 3) and could be replicated for others. Further, these upgrades should leverage ISO Quick wins standards and tailor international best practices to fit the country context and government business R2.1: Pilot mobile government apps for core processes. Given that the government of Eswatini has and service delivery platforms that have a high a sizable cadre of IT professionals that are sufficiently level of readiness, e.g., tax filing, procurement, skilled to assist in the development, implementation, and health services. Mobile government, or operations and maintenance of these systems, these M-government, is a paradigm shift in digital service professionals should be involved in system roll-out delivery in recognition of the high usage of mobile and offered the opportunity to build their capacities internet and mobile devices. The adoption of as much as possible. If third-party software and M-government will enable the marginalized and poor vendors are used, it is recommended that their to access government services more easily through contracts include provisions on building the capacity their mobile devices. of local IT professionals in the process of designing and implementing their software. R2.2: Conduct detailed systems assessments, audits and business process reviews to develop R2.3: Invest in upgrading the National ID/NPR technical specifications for core government platform and establish linkages to key service platforms. These assessments will help strengthen delivery platforms to increase equity and public sector platform functionality, interoperability, accessibility, particularly for social protection and leveraging of shared services—possibly through and education. As a first step, it is recommended an upgrade or re-implementation of core public that Eswatini carefully assess its existing system to sector platforms—while building capacity. benchmarking against other comparable systems, identify priority areas for reform, and serve as Nearly all ministries, departments and agencies critical input for future potential system upgrades. that currently manage core digital platforms— This assessment should provide both an in-depth such as ID, HRMIS, public expenditure tracking technical evaluation of the strengths and weakness of and procurement management—should the current NPR systems; identify priority needs and consider upgrading or re-implementing these platforms in order to strengthen compliance, use cases across sectors in order to make concrete increase efficiency, and reduce costs. Doing so recommendations for improving the system’s would translate to significant progress in the ability of inclusivity, security, and utility; and evaluate the current the Government of Eswatini to manage its revenues legal and regulatory framework for the ID system and and expenditures, as well as strengthen core functions other relevant areas (e.g., civil registration, customer such as civil service management and government due diligence, etc.), and its assets and gaps. procurement. It would also greatly improve service delivery for citizens in the areas of identity authentication and access to education, health and digital financial services, among others, especially if M-government tools are leveraged. Progress should be made in alignment with the existing e-Government strategy and interoperability policy. 78 BOX 6. Digital System’s Role in Capacity and Equitable Access in Procurement In Eswatini, public procurement makes a significant contribution to capital flows. However, the awardees of large government procurement contracts have been historically limited to a small pool of vendors. The ESPPRA views digitization of public procurement processes as a critical mechanism for diversifying the type and size of the companies receiving government contracts. When combined with capacity building and more robust grievance redress mechanisms, e-Procurement can be leveraged to level the playing field. ESPPRA is particularly interested in increasing SME participation in public procurement. At present, large companies dominate construction-related procurements, and SME participation is mostly constrained to common use items such as cleaning and office supplies or small-to-mid-sized consultancy contracts. ESPRRA has launched training programs with the University of Eswatini to level the playing field for SMEs. The main objective is to build the capacity of suppliers and increase their participation in government procurement. The programs focus on helping suppliers become more familiar with the Public Procurement Act, its provisions, and reforms proposed under the new Procurement Act. They also show suppliers how to access existing ESPPRA digital systems for bidding process notification and grievance redress. In the future, ESPPRA would like the training program to cover the e-Procurement system which is planned to be launched in 2023. Procurement reforms have not yet reached the level of targeting specific disadvantaged groups to increase their access to and participation in public procurement. Currently, there is print media and advertising of tenders in rural areas, and the requirement to pay to view full tenders has been removed to increase accessibility to all types of supplier. The adoption of e-Procurement will be a critical milestone providing the foundation for considerable transparency and efficiency gains and promoting participation in public procurement. ESPPRA still feels there is a need to better understand the challenges SMEs face in bidding for and being awarded public procurement contracts. It is thus planning to conduct a study to understand what exactly the barriers are and who is most effected. 79 mapping it to another influential ministry, such as finance. Achieving the Government’s goals for the NPR Furthermore, providing this entity with some semi- will require investments in infrastructure and autonomous functions, such as those related to the technology, business process re-engineering, and recruitment and retention of employees, would be reforms to the legal and regulatory framework. beneficial. Lack of clarity in this respect has thus far Given the importance of the NPR as a critical resulted in stalled implementation of critical activities system and the potential role it can play across the that would improve digitization of back-office functions government and economy, it is essential to approach and service delivery. In particular, the government these reforms holistically and with clear outcomes in would benefit from aligning around a set of objectives: mind in order to avoid common risks. Service delivery i) budget controls for ICT systems investments, outcomes should be prioritized so that they ID system operations and maintenance; ii) a single portal and can be leveraged to better target and deliver social domain for the whole-of-government; iii) agile and protection services and ensure accesses to education centralized procurements for digital platforms; iv) for school-aged children. This would require a strong policies, standards, and compliance monitoring; and well-interfaced system that is interoperable with and v) the implementation and establishment of a key service providers. It would also be aided by the center of excellence or centralized IT function. If the leveraging of mobile technologies to increase and existing e-Government strategy suffered from limited make more efficient birth and death registry. consultations, an important starting point would be to re-initiate consultations and agree with stakeholders Medium- to long-term recommendations on how to reach shared objectives going forward. Concerted efforts in change management are also R2.4: Improve government ICT infrastructure critical. To be successful, the range of stakeholders to enable utilization of more advanced public sector platforms. that may be affected by these changes or asked to contribute to their implementation should be consulted Investments in government ICT infrastructure and and sensitized early. connectivity would enhance the performance of public sector platforms. Leveraging RSTP could help in this respect; for this to be successful, the respective R2.6: Promote the use of e-commerce platforms mandates of RSTP and MICT would need to be by leveraging regional initiatives such as the Africa e-Trade Group and through the design clarified, and the accessibility of RSTP to government and implementation of an e-commerce strategy. staff (bearing in mind its remote location) and any infrastructure redundancy and disaster recovery Development of an e-commerce strategy needs requirements would need to be fully considered. to be supported by parallel initiatives to improve A strategic approach to enhancing infrastructure ICT coverage and affordability, digital skills reliability and connectivity will therefore be critical to training programs, and implementation of DFS, ensuring digital public sector platforms are maximally including fintech. In the short run, Eswatini should beneficial to government and citizens. leverage its hosting role for the Africa e-Trade Group and Sokokuu, the continental e-commerce platform launched under the same regional initiative, to boost R2.5: Clarify mandates and strengthen the use of e-commerce platforms. In the long run, coordination functions to support implementation the World Bank can partner with the AU to help the of e-Government strategy. government design and implement an e-commerce strategy that also provides capacity building for The government of Eswatini should clarify the mandates of ministries, departments and policymakers, including relevant line ministries agencies that have responsibilities linked to and parastatal agencies, and MSMEs and business the e-Government strategy and clearly position development service providers. one particular entity to lead the agenda. Doing so may require keeping the primary entity in charge of e-Government mapped to the executive branch— as the e-Government unit had been thus far—or 80 5 Digital Financial Services Key messages: • Current state of Digital Financial Services: DFS are still at an infancy stage, with mobile money as a key driver. • Infrastructure: The foundational infrastructure is in place to anchor DFS; however full interoperability between bank accounts and mobile wallets is yet to exist. • Regulatory framework: The existing regulatory framework supports the development of DFS and encourages participation of banks and non-bank service providers in mobile money issuance. • Covid-19 has revealed the need to fast track the development of a framework that facilitates digital verification of customers. • Role of banks in provision of DFS: Banking services are viewed as expensive; however, banks are fast embracing DFS in partnership with mobile network operators, and opportunities exist to boost DFS and financial inclusion. Importance of Digital Financial Services Digital financial services (DFS) comprise a broad range of financial products and services, such as payments, transfers, savings, credit, insurance, securities, financial planning, and account statements, that are delivered via digital or electronic technologies, online channels or via a mobile phone71. The DFS ecosystem consists of banks and non-bank financial institutions (NBFIs) and is usually supervised by central banks as the leading regulatory authorities. DFS are critical in providing individuals and firms with convenient and affordable channels by which to pay, as well as to save and borrow. Firms can leverage DFS to transact more easily with their customers and suppliers, as well as build digital credit histories and seek financing. By using DFS, governments can increase efficiency and accountability in various payment streams, including for the disbursement of social transfers, collection of taxes and other revenues. To ensure safety and soundness, the DFS ecosystem must be anchored on a forward-looking and proportionate legal and regulatory framework (e.g., to allow market entry and innovation), robust financial infrastructures (e.g., national payment systems and credit reporting systems), and the development and deployment of low-cost delivery channels (e.g., agents, point of sale devices, automated teller machines, mobile phones). 71 G-20 High-Level Principles for Digital Financial Inclusion, 2016. 82 Eswatini’s collaborative efforts modernization of payment systems for over two in the Diagnostic Findings: decades have laid the foundations for financial Current State of Digital activity and settlement of interbank obligations. Notable achievements include the implementation Financial Services of the real-time gross settlement (RTGS) system that connects all four commercial banks (FNB, Standard Digital financial services in Eswatini are still at Bank, Nedbank and Eswatini Bank) to the Central the infancy stage, with some initiatives in the Bank of Eswatini (CBE), and the Swaziland Automated payments and lending segments. Mobile money Electronic Clearing House (SAECH) which operates a has been the key driver of digital financial services in cheque clearing system and an electronic funds transfer Eswatini. The Eswatini Central Statistics Office and (EFT). Despite these developments, cash remains the Centre for Financial Inclusion note72 that about 94 dominant means of payment, as evidenced by the fact percent of adults in Eswatini have access to a mobile that customers receiving mobile money usually cash phone, while around 3 in 4 adults use mobile money. it out with agents. Additional efforts are therefore needed to broaden access to financial services for the Financial Inclusion and Account entire population, particularly in rural areas, where Ownership significant disparities with urban areas are apparent in access to basic services and infrastructure, education According to Finscope, in 2018, 87 percent of the and level of financial inclusion, among others. population in Eswatini was financially included, 85 percent formally and 2 percent informally. The development of the financial sector Formal inclusion refers to services provided by in Eswatini is echoed in various strategies regulated banks and non-bank service providers, including the National Development Strategy while informal inclusion refers to services provided (NDS), the Poverty Reduction Strategy and by unregulated, entities such as stokvels (i.e., Action Plan, the Financial Sector Development central collective savings and loan schemes) and and Implementation Plan (FSDIP), the National community burial societies. Formal inclusion is Payment System Vision and Strategy and the through access to formal accounts, such as bank National Financial Inclusion Strategy (NFIS). accounts or mobile money and mobile wallets (52 Through alignment of these strategies and support percent use banks and 33 percent use non-banks of policies that promote innovation, and deepen only). While the level of bank account access lags access and usage of products and services, Eswatini’s comparator countries like Namibia and South Africa, authorities have committed to transforming the the share of informal access to financial services and financial system to meet the needs of wider society. products is also far smaller in Eswatini (2 percent) The Centre for Financial Inclusion (CFI), an agency when compared to Namibia (24 percent) or South set up under the Ministry of Finance, has set key Africa (53 percent). priorities in driving the financial inclusion agenda with DFS being recognized as critical in supporting the The increase in non-bank formal account attainment of national targets. Collaboration between ownership was primarily driven by an increase the public and private sectors has been identified as in mobile money accounts, contributing to the key in adopting measures to broaden and deepen the growth of digital payments from around 40 financial system, promoting competition, innovation, percent of the adult population in 2014 to 67 interoperability, flexibility and adaptability, and percent in 2018. Finscope 2018 shows that 3 in 7 financial inclusion. adults use both mobile money and bank accounts to manage their financial needs. Approximately 66 percent of adults reported making a digital payment in the last 12 months, of whom 77 percent used a mobile money account and 28 percent used a bank account. 72 Eswatini State of Financial Inclusion 2019: Eswatini Central Statistics Office, Centre for Financial Inclusion and Finmark Trust 83 FIGURE 8. Current Level of Financial Inclusion73 Despite advances in financial inclusion, there is a persistent gender and urban-rural gap in terms of bank account ownership. While 52 percent of men have a bank account respectively, this falls to 49 percent for women. There is a similar urban and rural divide in terms of bank account ownership: 66 percent of urban adults surveyed under the 2018 Finscope Survey had a bank account, versus only 44 percent in rural areas. Ownership of non-bank formal accounts is more predominant in rural areas, where 37 percent report having non-bank accounts compared to 23 percent in urban areas. The higher informal account ownership in rural areas can be attributed to the perception that informal mechanisms are cheaper and more accessible compared to formal means. FIGURE 9. Account Ownership across Gender and Location74 73 Source: Finscope 2018 74 Source: Finscope 2018 84 7 Financial Access Points BOX 7. The number of traditional access points has mostly remained constant in Eswatini, whereas the number of mobile money agents has steadily increased. While there has been limited change in the number of commercial bank branches and ATMs per 100,000 adults, the continuous increase in the number of mobile money agents provides an opportunity to achieve financial inclusion for the remaining 15 percent of adults in Eswatini who do not have a formal transaction account. Non-bank mobile money providers use agent networks to sign up customers and provide cash-in, cash-out (CICO) facilities. One of the providers has around 7,000 agents, including agents that have kiosk-type premises and others that do not (for example, those operating by the side of the road or in markets). According to Finscope 2018, a mobile money agent is within 30 minutes proximity to 84 percent of respondents. In addition, approximately 44 percent and 39 percent report that an ATM and bank branch is within 30 minutes distance, respectively. FIGURE 10. Number of access points per 100,000 adults 250 205.76 210.35 200 150 118.2 100 72.5 38.22 38.33 37.2 40.82 50 8.03 7.32 6.49 6.97 0 2015 2016 2017 2018 # of ATMs per 100,000 adults # of bank branches per 100,000 adults # of registered mobile money agent outlets per 1,000 km2 Source: IMF Financial Access Survey 85 Among those that do not have either a bank account or a mobile money account, the majority have access to these services. Finscope 2018 found that 70 percent have access to but deliberately choose not to open a formal transaction account, or cannot use the services due to lack of affordability. However, 37 percent do not have access to a financial institution or mobile money, or do not have identity documents. This segment is thus excluded due to institutional design and needs market development interventions. Savings and Credit Digital credit provision is slowly emerging in the Eswatini financial sector. One non-bank credit institution, Letshego Holdings, has been authorized by the Financial Services Regulatory Authority (FSRA) to provide digital credit. In this context the company partnered with MTN to pilot its quick loan product which registered over 100,000 customers within six months. Commercial banks remain the dominant providers of credit; hence provision of digital credit will likely remain constrained in the same way that traditional bank loans are. However, the active pursuance of digitization plans by some banks should lead to a marked increase in the provision of digital credit and savings. The Eswatini Stock Exchange is also implementing a phased automated trading platform which includes virtual trading. This is set to create an opportunity to broaden the scope of DFS in the country. Saving through formal channels has increased in Eswatini, which has largely been driven by mobile money. Approximately 50 percent of adults in Eswatini report using a mobile money account to save. The 2018 Finscope Survey shows that 55 percent of adults save with formal institutions compared to 40 percent in 2014. As a result, the percentage of those saving through informal channels decreased from 13 percent in 2014 to just 3 percent in 2018. Furthermore, adults that reported saving at home has reduced from 12 percent in 2014 to 5 percent in 2018. FIGURE 11. Saving Channels75 2018 27% 28% 3% 5% 37% 2014 30% 10% 13% 12% 35% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Banked Other formal Informal Home/secret place No savings Informal borrowing still dominates access to credit in Eswatini. While 12 percent of adults in Eswatini report borrowing from formal institutions, the majority of those that borrow use informal sources. Finscope 2018 shows that 11 percent rely only on borrowing from family or friends and do not use any formal or informal financial credit or loan products, and 11 percent rely only on informal sources such as moneylenders and family and friends. However, borrowing is not very common; 66 percent of adults reported not borrowing at all, neither from family or friends nor from formal or informal financial service providers. 75 Source: Finscope 2018 86 FIGURE 12. Sources of Borrowing76 2018 8% 4% 11% 11% 66% 2014 7% 3% 16% 15% 59% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Banked Other formal Informal Family/friends only Not borrowing Role of Banks in Provision of Digital Financial Services The banking sector offers a wide range of banking products and services. These include ordinary savings accounts; purpose-oriented savings accounts (for example, for students); fixed- or flexible-term investment savings accounts (which may roll over automatically); notice-based savings accounts; group savings accounts; time-based deposit accounts; current accounts; and e-wallets and prepaid cards and vouchers. Related services include automated teller machines (ATMs), debit cards, remittance-type services, and internet and mobile phone based banking. Although the four commercial banks primarily offer traditional financial services, they are fast embracing DFS in partnership with the two mobile network operators. These partnerships are bilateral in nature, between an MNO and a bank, and are used by banks to expand their product offerings. The banks also hold the trust accounts opened by MNOs for the provision of mobile money services. Two banks also provide services through agents, one of which uses EPTC while the other uses a variety of corporate agents, including a retail supermarket chain. Savings and Credit Cooperative Organizations (SACCOs) offer ordinary and specific-purpose savings products (such as for school fees and retirement), as well as loans. The ordinary savings products are usually used as collateral for loans and are subject to strict withdrawal limits and frequencies. 76 Source: Finscope 2018 87 Role of Fintechs and Other Non- As a member of the Global Financial Innovation Network (GFIN)80, the CBE is set to benefit banks in the Provision of Digital through international interaction with other Financial Services regulatory authorities, sharing new ideas and experiences across various jurisdictions. Eswatini As broadly defined77, the Eswatini fintech firms is also an active participant in the SADC Fintech providing DFS are currently limited to the two Working Group, which has been tasked to develop MNOs: MTN and Eswatini Mobile. Hence SADC central banks’ policy positions on financial the fintech sector is still at an early stage of technology developments, including crypto assets. The development. The CBE has established a CBE leads a sub-committee tasked with establishing Financial Technology Unit manned by two formalized, structured and transparent mechanisms research-oriented graduate trainees. The main for engagement with the fintech industry, service objective of the Unit is to actively monitor Fintech providers and other stakeholders for the development developments locally and globally, seek to understand of innovative facilitators or tools such as sandboxes, emerging technologies78 and their associated risks hubs, labs, hackathons and accelerators. and regulation, and ultimately inform policy. Eswatini sees an opportunity to leapfrog and embrace new technologies to provide financial services and boost financial inclusion, especially for the unbanked rural Policy and Regulatory Environment population. The Fintech Challenge held in 2019, a The CBE and the FSRA are the financial sector collaborative effort between Eswatini’s regulatory regulatory authorities for bank and non-bank authorities79, the University of Eswatini (UNISWA), the market players respectively. Both regulators are CFI and the RSTP , with support from FinMark Trust empowered by specific provisions in their respective (FMT), is an example of the state’s commitment to statutes. Each regulator’s responsibilities with respect promoting digital solutions and improving access to to DFS are clearly delineated and activity-based to financial services. avoid overlap. The themes chosen for the Fintech Challenge The Central Bank of Swaziland Order 1974, were wide-ranging and provided an opportunity Financial Institutions Act, Financial Services for technological advancements in DFS. However, Regulatory Authority Act and the National an aspect that may prevent these opportunities from Clearing and Settlement Systems (NCSS) being realized is a lack of adequate and sustainable Act constitute the main pieces of legislation funding to support individuals and firms in developing governing financial services in Eswatini. The innovative solutions that can help address financial Practice Note for Mobile Money Service Providers challenges. In addition, since the majority of the (MMSPs) issued in 2019 in accordance with these population lives in rural areas, the effects of innovation statutes provides the framework for the licensing and may fail to have a wider reach given that innovation supervision of mobile money service providers and tends to build on existing traditional products. digital financial services in general. The Practice Note recognizes four competent regulatory authorities with Guidelines for Fintech regulatory sandboxes respect to MMSPs: the FSRA, the Financial Intelligence were issued in March 2020 to promote the testing Unit (FIU), ESCCOM and the CBE. of innovative financial services in a controlled environment. In this context, one startup has been approved by the CBE, while an application for a second one is under active consideration. 77 New entrants in the financial sector that specialize in offering DFS. Examples of Fintechs include digital payment providers, digital insurers, digi- tal-only banks, and peer-to-peer lending platforms. World Bank DFS April 2020. 78 The unit conducts research on emerging technologies such as Artificial Intelligence (AI), Crypto-assets, Distributed Ledger Technology (DLT), Cen- tral Bank-issued Digital Currency (CBDC), Internet of Things (IoT), and Application Programming Interfaces (APIs) and their application in finance. 79 CBE, FSRA, ESCCOM 80 An international group of financial regulators seeking to support financial innovation in the interests of consumers and provide more efficient ways for innovators to interact with regulatory authorities. https://www.thegfin.com/ 88 While there is clear understanding among regulators on their responsibilities regarding Delivery Channel & Product MMSPs and DFS, some legal provisions need to Innovation be clarified to avoid overlap and confusion on the part of the regulated entities. For example, Full interoperability across financial service the Consumer Credit Act gives powers to the FSRA delivery channels provided by banks and non- to supervise all financial institutions that provide banks is yet to be achieved. While the ATM credit, which includes both banks and non-banks. and point of sale (POS) channels owned by all The inclusion of banks in this provision creates an commercial banks are interoperable, through the use overlap, as the CBE also has an explicit mandate to of VISA and Mastercard cards and the retail payments supervise banks. infrastructure in South Africa, Swaziland Building Society (SBS) ATMs operate on a closed network and As supervisor and overseer of the payment can only be accessed by SBS customers using an SBS system, the CBE is aware of its responsibilities debit card. in this area. However, the oversight capacity needs to be strengthened in order to ensure continued Until recently, mobile money services were safety and efficiency in the payment system, and to limited to bilateral arrangements between allow the CBE to adequately respond to challenges banks and the two MNOs; hence there was no brought about by innovative developments in DFS. mobile money wallet-to-wallet interoperability. Supervisory and regulatory technologies are not Currently, MTN Eswatini and Eswatini Mobile are present in Eswatini, hence reporting and regulatory the only mobile money service providers (MMSPs) in processes remain manual. operation. Customers can only move money from their bank accounts to their mobile wallets within However, authorities are keeping abreast with their own banks, but not across banks. However, developments in this area. The NCSS Act is being the integration exercise to facilitate P2P payments reviewed to strengthen the oversight mandate of the between the two MMSPs was completed in June 2020 CBE and ensure the adequacy of the legal framework and officially launched in December 2020. in supporting the development and regulation of innovative financial services. Similarly, the FSRA is According to Finscope 2018, mobile money undertaking a comprehensive review of all laws that accounts increased from 107,000 in 2014 to are relevant to its operations with a view to ensure 454,000 in 2018. With the launch of mobile wallet- consistency. to-wallet interoperability, Eswatini may see a further increase of mobile money accounts in the future, The advent of Covid-19 has revealed the as customers embrace the convenience of seamless challenges of relying on traditional manual and transactions. Mobile money wallets are mostly used to paper-based processes in financial services. The purchase airtime and pay utility bills and school fees. importance of having mechanisms in place to digitally validate and verify customer identity using public The NPS legislation allows Financial Service registries has been brought to the fore. However, in Providers (FSPs) to contract with agents as third- the absence of a supporting legal framework, this will party delivery channels. The legal and regulatory likely remain a challenge and stifle the development framework aims to create a level playing field for FSPs of digital financial services. with respect to the use of agents. FSPs are monitored by the CBE to ensure compliance with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) obligations. While all FSPs are governed by the same legislation, regulations and guidelines on AML/CFT issues81, there is a general perception that requirements for the engagement of agents by banks are more stringent than they are for MNOs. 81 These include the MLFTP Act, (as amended), Financial Action Task Force (FATF) Recommendations, United Nations Security Council Resolutions (UNSCR) Regulations, 2016 and the AML/CFT Guidelines for Financial Institutions, 2016 89 Managing Risks of Digital The Swaziland Building Society has traditionally issued closed loop cards which can only be used Finance within individual institutions’ networks. The CBE, in collaboration with the banking industry, is stepping up Cybersecurity risk: Eswatini authorities consider efforts to establish a local payment switch and set the cybersecurity as a top priority, and have benefited direction for achieving full interoperability across bank from cyber capacity building initiatives driven by and non-bank service providers for all services. Given the ITU aimed at raising stakeholder awareness the recurrent costs associated with payment switches, on cybersecurity issues. Draft cybersecurity it would be useful for the discussions to explore the guidelines have been compiled to provide guidance possibility of implementing instant payments, using to the financial sector on this matter. The completion the existing infrastructure operated by CBE, as a way of the Eswatini National Cybersecurity Strategy of boosting the usage of transaction accounts, and to and the promulgation of the Computer Crime and address the issue of non-card-based interoperability. Cybercrime Law in March 2022 underscores the state’s commitment to protection against cyberthreats. Open and inclusive retail payments infrastructure can lay the foundations to drive digital financial Protection of e-money customer funds: To services. Existing access restrictions to retail mitigate risks in the provision of mobile money payments infrastructure, as well as the lack of services, MMSPs are required to open trust full interoperability across financial products and accounts with licensed and supervised banks. platforms, inconvenience customers and present Trust account balances are regulated and protected constraints to expanding digital financial services in from claims in the event of insolvency. The CBE has a seamless manner. allowed the payment of interest on trust accounts, subject to a negotiated rate with the bank holding the Credit Infrastructure account. However, the interest is not meant to benefit the MMSP; proposals for its use should be submitted The Trans Union Credit Bureau (Pvt) Ltd, a to the CBE for approval. South African registered company with offices in Manzini, is the sole distributor of credit Infrastructure information to creditors and financial sector players. Trans Union is regulated by the FSRA under Retail Payments Infrastructure the Consumer Credit Act 2016, which provides the legal basis for the licensing and regulation of credit The SAECH is the key retail payments infrastructure bureaus, regulation of consumer credit, protection in Eswatini, comprising of a cheque clearing of consumer rights and consumer credit education. system and an EFT system. The SAECH is owned by Currently, reporting to the credit bureau is mainly commercial banks and the CBE in equal proportions. based on negative information and limited in the types It is designated as systemically important; hence is of data provided. Weak governance arrangements bound by the applicable international standards in on the submission and processing of data to the this area, namely the CPSS–IOSCO Principles for credit bureau and the absence of a framework for Financial Market Infrastructures. Notwithstanding the handling disputes and protecting data compromise role played by the building society, credit institutions the effectiveness of credit reporting. The absence of a and mobile money service providers in the provision movable collateral registry in Eswatini has constrained of financial services, these actors have no direct lending to MSMEs, since only physical property is access to the cheque clearing and EFT system. accepted as collateral for lending purposes. Interoperability in the card payments area is currently limited to the four commercial banks issuing foreign cards (VISA and Mastercard), which are accepted at their ATM and POS terminals. There is no local card switch in Eswatini; hence transactions made with these cards are switched in South Africa. 90 Leveraging Recurrent Payments to that yields efficiency, convenience, inclusion and cost saving benefits. However, this needs to be Increase Usage of DFS supported by deliberate measures to boost uptake, since efficiency and convenience benefits can be Government payments subjective depending on the user’s perception. The The government is one of the biggest users of ongoing development of the retail payments leg of the payment system, making payments to both the SADC cross-border payment system is expected to businesses (G2B) and individuals (G2P), as well bring significant changes in the cost of cross-border as collecting payments from both businesses remittances. The banning of exclusivity clauses in the and individuals in the form of taxes, duties and money transfer sector is a positive policy stance by service fees. Currently the Government Treasury the CBE and a critical step to encouraging the entry Office uses the EFT system and the RTGS system to of new players, who may bring innovative products pay suppliers. The use of cash and cheques is still that shift money transfer services away from cash and significant, with lots of paperwork employed in the towards digital channels. payment process. Payment of taxes is possible through mobile money; however, revenue collection offices predominantly accept cash. Despite the fact that Constraints to Digital Financial 64 percent82 of social grant recipients have a bank Services Development account, grant payments are predominantly paid by cheques, which are then cashed over the counter. Although mobile money has emerged as the Opportunities therefore exist for the government to key driver for DFS, cash is still preferred as expand the digital footprint by abandoning the use of a convenient, “fee free” primary payment cash and cheques and replacing them with electronic instrument for consumers. The high levels of means of payment. cash withdrawals at ATMs, cash in/cash out activities at mobile money agent locations and currency in Remittances circulation are all evidence of this. The existing non- According to the Finscope survey, 70 percent cash-based payment instruments, such as cards and of adults in Eswatini used formal channels mobile money, are not widely acceptable at merchant (banking channels or mobile money) to send outlets. This creates the unintended effect of pitting money in 2018, which is a significant increase from electronic payment instruments against cash, which the 26 percent recorded in 2014. Only 6 percent is seen as offering security in case of an emergency. sent or received money through family and friends, With a banked population of just over 50 percent, compared to 17 percent in 2014. banks and branches located in and around cities only, a high rural population (78 percent), a largely SwaziPost has provided remittance services informal sector and low income levels, Eswatini is for years without any cross-border regulatory home to a variety of disparities, which require specific or compliance requirements. Through Sivinini targeted interventions in the development of digital Money Transfer, SwaziPost provides a safe, fast and financial services. The concentration of banks and convenient platform for transferring money from branches around cities contributes to the urban-rural person to person (P2P) through its branch network gap in access to banking channels. across the country, and to South Africa, Lesotho and Botswana. Banks remain the main providers of loans to the formal sector. However, the absence of a collateral The authorities in Eswatini have included the registry acts as a constraint to the development of development of solutions to ensure secure and digital credit: loans are either denied or offered at a faster transfer of remittances at domestic and high cost to borrowers, as banks aim to offer secured cross-border level as one of the key areas of loans. focus in supporting fintech. Expanding DFS by linking existing retail payments infrastructure with money-transfer-operator models for both sending and receiving countries provides a seamless process 82 Finscope 2018 91 Lack of adequate funding presents another constraint R3.2: Establishing an enabling framework that to the development of DFS, particularly on the part of supports digital signatures and the verification authorities to fund individuals and firms in developing of identity information declared by customers. innovative solutions. The development of affordable This is considered critical not only during pandemics products that are specifically targeted to the needs but for safe and efficient delivery of digital financial of the rural population, the informal sector and low- services and for AML/CFT purposes more generally. income population, inter alia, requires financial Current verification arrangements involve physical resources and collective effort by both government presentation of documents to financial service and the private sector. providers, with no verification of the information given by the customer via a link to the public database. This poses risks given that customer due diligence is a fundamental element of the onboarding process for Recommendations & digital financial services. Next Steps R3.3: Finalize the review of the Payment Systems Based on the above analysis, the following Act in order to strengthen and broaden the legal recommendations are proposed to strengthen the framework for developing DFS. The National development and usage of DFS in Eswatini. Clearing and Settlement Systems Act (NCSSA) has provided the legal basis for the development of the payments system in Eswatini since 2011. The entry of Quick wins non-bank service providers and advent of innovation and increasing focus on digital payments has triggered R3.1: Complete the implementation of the online an ongoing review of the NCSSA, with a view to government portal and promote the use of DFS in address any gaps and ensure consistency across government payments through a comprehensive all relevant pieces of legislation. The protection of national strategy for digital services. The partnership interests of payers and payees in payment instruments forged by the government and MTN in response to has become even more important in DFS, in order to the challenges posed by Covid-19 shows that scaling prevent erosion of confidence in the payment system. G2P payments to digital can be achieved in the short It is recommended that the process of reviewing the term. The full establishment of a government portal NCSSA be completed to ensure a comprehensive, clear and payment gateway­ , as envisaged in the National and predictable legal environment that guarantees Development Strategy—Vision 2022, automating the the settlement of obligations, a transparent dispute manual interface between the Accountant General’s resolution mechanism and adequate provisions for office and the CBE (as the government’s bank), and the oversight and supervision of DFS. introducing measures to ensure daily transfer of funds revenue into the government’s account could help enhance efficiency and faster movement of Medium- to long-term payments and realization of revenue. Apart from recommendations reducing the cost and risks associated with the use of cash and cheques, digitizing G2P payments gives R3.4 Conduct a comprehensive retail payment beneficiaries access to financial services and account cost study with a view to establish the fees to ownership, which ultimately boosts financial inclusion. be charged by service providers. Bank charges are Such payments need to be supported by safe and considered high in Eswatini, and this can discourage efficient payment programs, which can also serve savings and the use of formal account services. With as effective tools in the pursuit of other public policy the introduction of mobile payment services and objectives, such as the modernization of the national new technologies, banks and MNOs have formed payments system, promotion of financial inclusion alliances which can help to expand outreach and and ultimately contribute to the country’s economic digital financial services. However, high fees can be a development agenda. The digitization of financial barrier to the uptake of DFS. Mandatory cost disclosure services should be pursued in earnest and anchored by banks and other financial service providers should in a national strategy that is developed collaboratively be considered as a way of promoting transparency. by all relevant stakeholders. 92 R3.5: Strengthen the oversight and supervision R3.7: Establish a regulatory framework for capacity of the CBE to ensure it adequately international remittances based on relevant responds to the development and expansion of standards. The absence of a regulatory framework to DFS in Eswatini. The CBE subscribes to international govern the operations and oversight of money transfer standards and is aware of the importance of the operators poses risks to the financial system and to payment system oversight function in contributing to consumers. A framework to regulate the remittances financial stability and improving the quality of services market needs to be developed in accordance with the to end-users. The dynamic nature of DFS has added applicable standards in this area, namely the General more regulatory pressure to the CBE. In this regard, Principles for International Remittance Services83, it is recommended that the CBE strengthens its which are designed to raise awareness on consumer supervision and oversight capacities, in both numbers protection issues, create a proportionate legal and f staff and skills, in order to adequately respond to regulatory framework, establish competitive market developments in new payment channels such as conditions and governance and risk management remittances and innovative payment mechanisms, practices, and encourage innovative developments in including mobile payment services. the provision of remittance services. R3.6: Establish domestic retail payments R3.8: Strengthen cooperation between regulators and credit infrastructure to achieve full beyond existing bilateral MOUs. The mobile interoperability, expand DFS and improve money ecosystem in Eswatini has four key regulators: lending. Financial market infrastructures which the CBE, ESCCOM, the FIU and the FSRA. In line facilitate the clearing and settlement of financial with recommended best practices, regulators should transactions, and support prudent lending practices, cooperate with each other in fulfilling their respective are key for risk management, decision making and mandates. The cooperative arrangement should be expanded financial inclusion through DFS. Plans by based on effective and efficient communication and authorities to explore the possibility of establishing consultation. Further consideration should be given a national payment switch in collaboration with to establishing an MOU to bring the Eswatini Post DFS the banking industry have been noted. Stepping and payment services units under the regulation and up these efforts, with the CBE taking the lead in oversight of a financial sector regulatory authority. setting the direction, is considered necessary to achieve full interoperability across various payment service providers. Furthermore, there is scope to widen the collaborative platform for retail payments development in general, given the entry of non-bank players in the innovative payments space. Authorities should introduce measures to address existing gaps and enhance the credit reporting system so that it can better serve the needs of reporting institutions. Consideration should also be given to introducing a modern movable collateral registry in the country to facilitate lending to SMEs. 83 https://www.bis.org/cpmi/publ/d76.pdf 93 6 Digital Skills Key messages: • Policy framework and policies: There is no comprehensive ICT in Education Policy that focuses specifically on building ‘digital skills’ as the ultimate desired outcomes, and no existing framework for defining skills, competencies and proficiency levels. Without such a policy, strengthening digital skills remains a largely underfunded priority and actual progress in the acquisition of these skills is difficult to measure. • Underlying infrastructure issues: There is a lack of digital infrastructure and connectivity, particularly in primary and secondary schools, and even for some TVET colleges and higher education institutions. Lack of connectivity is mainly attributable to high internet access costs. The lack of affordable, high-speed broadband for universities remains a significant hurdle for the use of technology in education and research, and even more so for connecting faculty and students in Eswatini to international teaching and research resources. • Insufficient supply of advanced digital skills: While systematic labor market information to inform program and curriculum development is not available, several studies point to a supply-demand mismatch between the TVET and higher education systems and the labor market. Far too few students qualify for STEM-related courses after senior secondary school, and when they do, the programs are not well aligned to labor market needs. The systematic linkages between higher education and training and the labor market are also underdeveloped. • Capacity: The Ministry of Education and Training (MoET) does not have sufficient ICT capacity to deal with the growing demand for digital skills that need to be provided through education and training institutions. Importance of Digital Skills The demand for digital skills in Eswatini is growing, as a result of three factors: (i) technology is disrupting production processes in key manufacturing and service sectors which, in turn, change the skills requirements of occupations, affecting both new entrants to the labor market and older workers. Across the formal and informal economy, there is and will continue to be a need for stronger cognitive skills, socio-behavioral skills and digital skills; (ii) technology is changing how people work, and the rise of digital platforms and the gig economy in both Eswatini and the broader region will put a premium on the digital skills of its citizens; and (iii) being part of a region dominated by the relatively mature digital economy of South Africa, where many Swazis go to find jobs, also creates a need for better digital skills. 94 Digital skills represent a continuum of diverse UNESCO’s Digital Literacy Global Framework is skills which can be fostered through formal based on the European Union’s DigComp 2.1, that education and training as well as through identifies different levels of proficiency in seven areas informal learning. Digital skills can be defined as an of competence (Figure 13) across four broad levels of individual’s capacity to access, manage, understand, digital skills that are applicable to many occupations. integrate, communicate, evaluate and create The four levels of digital skills adopted in DigComp information safely and appropriately. Digital skills are 2.1 are: often understood in simplistic terms, for instance, the • Foundational: With guidance, deals with ability to use a mobile phone for a simple transaction simple tasks that involve remembering content or to access and surf the internet; or, at the other and instructions. end, to carry out coding and software programming. • Intermediate: Independently deals with well- However, the concept of digital skills is deeper and defined, routine and nonroutine problems that broader, encompassing diverse human capacities. involve understanding content. Individuals may differ in their level of proficiency • Advanced: Independently deals with and in these different competencies. At the higher end provides guidance to others on different of the digital skills continuum, individuals will have tasks and problems that involve applying and the ability to deploy digital technologies, develop evaluating content in complex situations. new applications and come up with solutions to new • Highly specialized: Independently resolves problems. It is important to highlight that access to complex problems with moving pieces, guides digital devices does not necessarily translate into others, contributes to professional practices digital skills, even at the basic level, although they are and proposes new ideas to the field. an essential pre-condition for them. FIGURE 13. Framework for all professions: 7 Com- Every country needs a ‘digitally competent petencies/Skills and 4 Proficiency Levels workforce’ and ‘digitally literate citizens’ to reap the wider benefits that digital transformation brings to the economy and society. ‘Digitally competent workers’ drive the development of vibrant digital economies. They can also raise labor productivity by enabling the application of digital tools and processes across diverse areas, including the informal service sector, agriculture, energy, transportation, health, education and government services, to name a few. Digitally literate citizens can better reap the wider benefits of a digital society by gaining access to more, better and safer information and engaging with the broader community. Citizens who lack the capacity to identify credible information Source: Prepared based on Carretero, et.al.(2016) and UNESCO (2018) from competing sources and make appropriate judgements may fall into the traps of the digital world, including financial fraud and (especially for Foundational digital skills are typically used in young people and children) physical and other forms vocational or informal sector occupations and of abuse and exploitation. occupations involving routine tasks. These are skills that every person in the labor force should Digital Skills Frameworks can help to classify have. Intermediate-level proficiency would typically digital skills and enable employers, education be required in mid-level occupations such as skilled and training providers and individuals to assess technicians and the general workforce in formal the competencies and proficiency levels that are small- and medium-sized enterprises. required for different occupations and functions. The World Bank’s Digital Economy for Africa (DE4A) Country Diagnostic Tool identifies two frameworks that can be used to classify digital skills: 95 Advanced-level proficiency, which requires greater TABLE 3. Four Levels of Skills and Education Level analytical skills as well as theoretical knowledge, Equivalent is typically required of occupations with a high Proficiency level Education level equivalent level of ICT intensity, involving applications of digital technologies, including IT engineers, and Foundational Primary/Secondary Education increasingly, finance professionals. Lastly, the highly specialized level of digital skills proficiency is required Intermediate Post-secondary TVET in scientific and advanced professional occupations and represents the ability to develop new digital Advanced Undergraduate degree/diploma technologies, products, and services84. Highly specialized Postgraduate degree The EU e-Competence framework was developed for ICT professionals and technical workers, who underpin the development and spread of digital technologies. This framework is envisaged as a tool to articulate the competencies required and deployed Diagnostic Findings: by ICT professionals including both practitioners and Current State of Digital managers. There are 5 e-Competence areas derived from the ICT business processes PLAN–BUILD–RUN– Skills ENABLE–MANAGE, and 5 proficiency levels for each e-Competence (Figure 14). The e-Competence levels Policy Frameworks and Strategies e1-e5 broadly correspond to the education levels of upper secondary to postgraduate education in ICT for Digital Skills disciplines. The GoE has committed to supporting ICT in FIGURE 14. Frameworks for ICT Professionals education through various national and sectoral policies, though there are gaps in developing a framework for digital skills and ICT in education. The main Ministries involved in the area of digital skills and ICT in education are the Ministry of ICT and the Ministry of Education and Training (MoET). Within the MICT, the Government Computer Services Department is responsible for ICT infrastructure, internet connectivity, and ICT-related procurement of devices for the MoET as well as primary and secondary schools. On the other hand, TVET and higher education institutions have autonomy on ICT- Source: Prepared based on the E-Competence framework by the related matters. The MICT in Eswatini assigns one European Commission (2017). sectoral officer to support each line ministry, though given the shortage of ICT professionals, many sectoral This chapter summarizes the current state of staff support more than one ministry. The MoET is digital skills in Eswatini, using the framework responsible for matters concerning implementation of digital proficiency levels and the equivalent of the ICT strategy for the education system, but does education level (see Table 3) to determine the extent not have a designated unit responsible for ICT. There to which digital skills are demanded by the labor are five staff members at the MoET assigned to ICT market and the level of digital skills that is supplied in education within the Inspectorate Unit, i.e., four by the education and training sector. However, the regional ICT inspectors and one ICT inspector at the digital proficiency levels at each stage of education central level. The focus for these officers is ensuring vary from country to country based on the quality of that primary and secondary schools are delivering education and training services provided. ICT classes in line with the curriculum. 84 World Bank, 2019, Lesotho Digital Economy Assessment, Background Paper. 96 The MoET has an existing Education Management While the overall environment for digital skills Information Systems Unit (EMIS) that hosts data development is conducive to economic growth, from all educational institutions (though at the important factors such as the existence of a Education Development Center and TVET levels, data national digital skills framework (that outlines for private institutions in lacking) which is updated digital competences at different levels) and annually. The data is collected from education detailed cyber security rules for ICT in Education institutions through manually completed forms are not part of existing policies. Moreover, it and is entered and analyzed at the central ministry is significant that the term ‘digital skills’ (or digital level. Over the next five years, UNICEF will support competencies), which has a broader meaning than ICT, the MoET to digitize the EMIS system so that data is does not exist in Eswatini. Rather, the focus in education collected electronically at a decentralized level and policy seems to be on ICT as a curriculum subject and then aggregated at the central level. The back-end a management tool, rather than as a mechanism to operations of this system are supported by the MICT facilitate the building of digital skills in the country. sectoral officer for the MoET. In addition, the policy frameworks and building The National Digital Strategy under development, blocks needed to strengthen digital skills are which will lay out the government’s plan for a currently missing in Eswatini. There is also an time-bound expansion of internet infrastructure, absence of a clear, sequential plan to connect will inform the MoET’s development of its own ICT education institutions (potentially with the support of Policy and Strategy in Education. This is dependent a National Research and Education Network, NREN), on the availability of ICT infrastructure in schools that builds on the digital infrastructure expansion plan. needed to further strengthen education and training Furthermore, there is no framework for measuring related to digital skills and the integration of education digital skills and competencies in Eswatini or training technology in teaching and learning processes. The teachers and education management on digital skills, MoET is also in the process of completing an Open procuring devices and software, building support Distance Learning Policy which also advocates for services within the MoET and MICT, and the eventual better internet connectivity, in terms of both access integration of ICT into teaching and learning policy. and affordability, across educational institutions and Most importantly, there is no overall ICT in Education for all students. Policy to articulate an implementation plan to build digital skills at various levels and specify targets for improvement of digital competencies in the education system. Without such a policy, the strengthening digital skills remains largely underfunded and actual progress is difficult to measure. 97 BOX 8. Connecting Educational Institutions through a Research and Education Network (REN) Most African universities still do not have access to high-speed broadband. This is the case in Eswatini, where most universities receive limited bandwidth, with speeds of less than 100 Mbps (Megabits per second). By way of comparison, in the United States, the State Educational Technology Directors’ As- sociation (SEDTA) recommends a target for schools in 2017-18 of 1 Gbps (Gigabits per second) per 1000 students; for 2020-21, the suggested target is 3 Gbps per 1000 students. If a university wants to use commonly available digital tools such as online videos, open education resources, remote instruc- tion and video streaming, a 1Gbps bandwidth should be considered as the lower bound for acceptable broadband connectivity. This lack of affordable, high-speed broadband for African universities remains a significant hurdle to the use of technology in education and research and even more so for connecting African faculty and students to international teaching and research resources. Remedying this situation should be a strate- gic objective, especially as there can be significant spillovers for the school education system, especially secondary schools and technical or vocational centers. The general approach to university connectivity worldwide is to develop a National Research and Ed- ucation Network (NREN) mandated to connect all universities in a country and to link to international RENs. There has been considerable growth in the establishment of NRENs in the Africa region, although around 30 countries still do not have a functioning NREN. There are also three sub-regional bodies that have helped to connect NRENs and share resources amongst them, including UbuntuNet Alliance that connects countries in East and Southern Africa. Most NRENs have a mandate to connect not only univer- sities, research and tertiary education institutions, but also Technical Vocational Education and Training (TVET) institutes, Teacher Training Colleges, medical colleges, libraries, and even hospitals. NRENs typically lease the high-speed backbone from private or national fiber networks. In some cases, they operate and own last mile connections to member institutions. NRENs are effective when universities have well-managed data networks and encourage the use of technologies. More mature NRENs have provided training and support to universities in these areas. Given Eswatini’s position in the region, establishing an NREN and connecting to others in the region such as UbuntuNet and possibly the Tertiary Education and Research Network (TENET) in South Africa, should be seen as priorities in the forthcoming ICT Master Plan for the country. The cost of establishing a national REN as opposed to connecting to an existing regional REN should be explored. Source: Adapted from World Bank, 2019, ‘Connecting Africa’s Universities to Affordable High-Speed Broadband Internet: What Will it Take?’ 98 The Demand for Digital Skills Currently, there are no estimates of the demand for individuals with different kinds and levels of digital competencies. There are no skill surveys in Eswatini, though the National Human Resource Planning and Development Unit of the Ministry of Labor and Social Security is planning to conduct a National  Skills Survey focusing on selected growth sectors: agriculture, energy, education and ICT, manufacturing and agro- processing and tourism. When completed, the results will provide a better understanding of the demand for different occupations and the skills required, including the digital competencies needed. For this chapter, we focus on the available—albeit limited—data on the demand for digital skills. In 2018, the Swaziland Economic Policy Analysis and Research Centre (SEPARC)85, conducted an Industry Labor Force Skills Gap Investigation focused on the automotive, electrical engineering, and ICT industries. The study found that shortage of digital competencies is a major bottleneck for the development of these industries, especially within the electrical engineering and electronics areas, which are closely connected to the development of digital technologies. Based on interviews with a sample of private and public companies and graduates from Gwamile Vocational and Commercial Training Institute (VOCTIM) and Eswatini College of Technology (ECOT), the leading TVET institutions in Eswatini, the SEPARC has identified key occupations where there is an abundance or scarcity in technicians86. It also has also identified the key competency areas where there are specific skills deficiencies, and these are outlined in Table 4 below for the ICT industry. Technicians in short supply in the ICT industry include network engineers and operators, programmers and software and system developers and engineers. The study found that the country’s ICT graduates are competent in installing and running software and can provide home and office support in basic assembly, disassembly and set-up of computer hardware. However, they lack the advanced coding and programming skills to develop original, Eswatini-owned software and systems. TABLE 4. Key Scarce Technicians, Abundant Technicians, and Skill Competencies/Deficiencies in the ICT industry - Network Engineers and Operators Scarce Technicians - Programming, Software, and Systems Developers • Computer operators Abundant • Support Technicians Technicians • Database administrators • IT administrators • Theoretical knowledge, can install programs in PC, can assemble and provide basic computer hardware and software support Key Skill • Understanding programing language (C+, C++) and hardware installation, Competencies troubleshooting, installing new programs, cabling, planning, assembling and disassembling • Lack of knowledge in routing and switching, designing full networks according to company specifications • Lack of experience in programming, coding, and software development, Key Skill Deficiencies graphics and internet systems, printing specialists. Lack of knowledge on security systems and specialized software for retail, accounting, and banking, and business analytics Source: Swaziland Economic Policy Analysis and Research Centre (2018) 85 Swaziland Economic Policy Analysis and Research Centre (2018) Industry Labor Force Skills Gap Investigation: A Focus on the Automotive, Electri- cal Engineering, and ICT Industries in Swaziland. 86 This finding alone refers to the TVET system, and not to higher education graduates. 99 In the automotive industry, the study found The SEPARC, which focuses on the TVET level, suggests that the country is struggling to keep up with that a significant shortage exists particularly for roles technological changes, including continuous such as network engineers and system developers evolutions in car makes, models, and associated (advanced skills), whereas in the public service, there functionalities. Eswatini lacks individuals who is a need for both individuals with advanced skills and have advanced car servicing skills, skills for wiring entry level staff such as support technicians and IT and computer box repairs and automatic gearbox administrators (intermediate skills). repairs, and a lack of knowledge and innovation on The technological advances in the region also require newer engines and car models, as well as a lack of more people with advanced and highly specialized auto-electrical skills. Acquiring these competencies digital skills. Given the scarcity of data, conducting requires an individual to have digital skills to at least National Skills Surveys in priority economic sectors an intermediate level. remains vital. A review of mostly white-collar jobs advertised in local newspapers over the last 12 months87 The Supply of Digital Skills revealed that more than half (53 percent) of In the Africa region, many public education the 300 vacant positions advertised explicitly and training systems have generally not been required basic digital skills, i.e., knowledge of the forward-looking in aligning education and standard Microsoft package, and a further 5 percent training outcomes to industry needs, in terms of of vacant positions required advanced digital skills in requisite workplace skills and in adopting new software such as CAD or Pastel. These job vacancies technologies for the future of work. There remains were mainly in government (the largest employer in a disconnect in terms of curricula offered by education Eswatini), public utility services, NGOs, health care, and training providers and the requisite skills and office and accounting roles, financial services, and competencies demanded by employers. This section retail or wholesale services. 42 percent of the job reviews the supply of digital skills in Eswatini through vacancies did not explicitly require basic digital skills, the formal education and training system. which included a large number of recruitments for primary school teachers. Other job advertisements that did not require digital skills were in the tourism Figure 15 shows the structure of the education and hospitality, construction, transport, auto-repair, system in Eswatini. Early Childhood Care and manufacturing and mining sectors. Development programs for children aged 3-5 years old are primarily offered by private providers; followed by seven years of free compulsory primary education, Within the public service, Eswatini has major after which students have to pass a Grade 7 primary challenges with understaffing and underfunding school leaving exam to secure a place in junior of its IT functions in government departments. secondary education. Secondary education, which is Most line ministries do not have units dedicated to IT neither compulsory nor free, comprises of three years functions, but rather have one sectoral officer that is of junior secondary education culminating in a junior seconded from the Ministry of ICT to each line ministry. certificate examination, while the next two years of At the time of this study, nearly all of the ministries, senior secondary education leads to a General departments and agencies had unfilled IT positions in Certificate of Education (GCE). Few students who the civil service establishment, or were vying for such complete secondary education transition to tertiary positions to be placed in the establishment. education, which comprises of Technical Education and Vocational Training (TVET) and university education. Non-formal education, offering flexible While data on the demand for digital skills is class schedules, is offered in two schools in Eswatini scare in Eswatini, available information and for students who drop out of the formal education discussions with employers and government system. The assumption in this chapter is that people officials point to a dearth of advanced and highly who complete the defined education levels in Table 4 specialized digital skills in the country. above reach a certain level of digital proficiency. 87 The job adverts were provided by MoET. 100 FIGURE 15. Structure of Education System in Eswatini ECDE Primary Secondary Post-secondary Level ECCD/Day-care ECDE/Pre-primary AS levels /AS A Grade G000 G00 G0 G1 G2 G3 G4 G5 G6 G7 EPC F1 F2 F3 JC F4 F5 EGCSE Levels / Tertiary education IGCSE Levels International Baccalaureate Theoretical age 0 3 5 6 12 13 15 16 17 18 18 + Foundation Middle Upper Junior Senior Curriculum phase phase primary primary secondary secondary NCPs, KaGoGo centers, households Non-formal education (Sebenta, Emlatini Development Centre), Formal TVET Non-Formal Adult Education (18+) Alternate levels Industrial and Agricultural Skills Colleges Source: Education Status Analysis for Eswatini, World Bank (forthcoming) Foundational Digital Skills Primary Education: The new General Education Framework stipulates that ICT is to be taught as a subject in primary school starting in Grade 3 from 2021 onwards, and will be rolled out through to Grade 7 in 2025, provided schools have the necessary facilities and teaching staff. There are, however, several challenges in rolling out ICT as a subject in primary schools. Firstly, there is a general shortage of primary school teachers with expertise in ICT. The 2017 Annual Education Census found that only 15 of 7,832 primary school teachers in Eswatini had either a certificate in IT education or a diploma in computer science. The actual number of teachers with ICT knowledge is probably higher, but this information is not captured in the annual education census. While EMIS data captures other qualifications for teachers, including a Bachelor of Science, Bachelor of Commerce, Honors, Masters, and so on, the data does not further disaggregate this into the specific field of study undertaken. Second, access to a computer by children at primary school level is very low, be it in school or at home (see Figure 16). This is particularly the case for children living in rural areas. Approximately 20 percent of pupils in urban primary schools had access to computers in 2017, but only 4 percent of pupils in rural primary schools. FIGURE 16. Equipment and facilities for ICT in 624 primary and 285 secondary schools, 2017 PRIMARY SECONDARY ELECTRICITY 9% ELECTRICITY COMPUTER 99.6% LABS: 97% COMPUTER LABS: 62% INTERNET 58% INTERNET 8% Source: Annual Education Census 2017 101 Third, less than 10 percent of the total 624 primary schools are connected to the internet (see figure above), whether for administrative or teaching purposes. This, together with the shortage of qualified teachers, shows that massive investments are required to meet the target of introducing ICT as a subject in primary education. Finally, few primary schools use digital technologies for teaching purposes. While most schools have radio or recording systems for teaching English, very few, if any, primary schools have so-called ‘smart classrooms’ equipped with digital learning technology, such as computers, specialized software, audience response technology, assisted listening devices, networking, or audiovisual capabilities. Secondary Education: At the secondary education level, access to ICT equipment and facilities is much higher, with almost all 285 schools having access to electricity and computer labs and almost 60 percent having access to the internet (see figure above). Schools in Manzini have the most access to computers, although 3 out of 10 students in junior secondary schools and 2 out of 10 students in senior secondary schools in the region do not have access to computers at school88. The cost of internet connectivity, poor coverage in rural areas, and unstable connections are the challenges most often mentioned in reports on use of ICT in secondary schools. Secondary schools face similar challenges to those experienced by primary schools in attracting teachers qualified in ICT (see box 9 below). Only 152 of 7,017 teachers in secondary education have either a certificate in IT education, a BSc in Computers and Mathematics or a diploma in Computer Science. Only just over half the secondary schools in Eswatini have a qualified IT teacher. BOX 9. Pre-service and In-service training of teachers The University of Eswatini, Southern African Nazarene University, William Pitcher Teacher Training Col- lege, Ngwane Teacher Training College and the Eswatini College of Technology all offer teachers training programs. Basic ICT and digital skills are part of the teacher training curriculum at all the institutions. Ngwane Teacher Training College is the leading primary teacher training institution in Eswatini. The college does not offer any qualifications purely in ICT, but all students receive lectures and write exam- inations at both the first- and second-year levels in ICT competencies. Students at the third-year level can choose to specialize in ICT and Math or ICT and Science. The main challenges faced by the college on delivery of the ICT part of the curriculum are the high costs of internet connectivity and the slow speed of the internet, which must service a total of 960 students and 70 lecturing staff. In 2019, only 22 of the graduates were specialized in ICT and Math or ICT and Science in their third year of training. William Pitcher College offers a Primary Teaching and Secondary Teaching Diploma. Specializations in- clude languages, education, practical arts, social studies, sciences and applied science. In 2019/2020, there were a total of 18 graduates from the three-year Secondary Teaching Diploma with a specialization in ICT. Teacher training capacity in ICT and ICT-related subjects does not meet the demand for primary or sec- ondary school teachers with this qualification. Furthermore, there is an unmet demand for upgrading the ICT competencies of a considerable number of existing teachers both at primary and secondary level. 88 MoET: Education Sector Analysis May 2020. PPT. 102 Around 55 percent of secondary schools currently offer ICT as an examinable subject at the certificate level (Swaziland General Certificate of Secondary Education (SGCSE)/International General Certificate of Secondary Education (IGCSE89)). Most schools that do not offer ICT as an examinable subject offer some basic ICT literacy courses. MoET estimates that by the time of graduation from high school, approximately 75 percent of the learners have acquired basic ICT literacy skills at a foundational level (e.g., word processing, creating presentations or using the internet90). Too few students qualify for Science, Technology, Engineering and Mathematics (STEM)-related courses after graduating from senior secondary school. In 2019, only 1 of 5 secondary school graduates opted for either Mathematics, Physical Science or ICT as an examination subject in senior secondary school. Of these, only 29 percent scored a mark above a C in Math and Physical Science, which is usually the minimum grade required to enter higher education. Less than 10 percent of the 2019 senior secondary education cohort qualified for higher education in STEM-related fields. STEM education is important, not only for fulfilling the needs of the future workforce that will require critical thinkers receptive to technological advances, but also for producing researchers and innovators who can help to solve challenges in the economy. The reasons for this low uptake and performance in Mathematics, Physical Science and ICT are varied, and could be the result of a lack of trained teachers who can deliver this content to students in a way that is exciting and understandable, or a lack of facilities and materials to conduct certain classes (e.g., only 51 percent of primary and secondary schools have science laboratories, and many do not have sufficient operational budgets to purchase supplies to conduct experiments in class). Rapid Skilling Initiatives: There are a few ‘rapid skilling initiatives’ aimed at improving foundational level ICT skills among individuals (mostly adults and out of school youth) with no or very limited digital skills in Eswatini. These are usually short courses, with a flexible schedule, typically offered to adults and youth who are looking to improve their knowledge of digital skills. As illustrated in the table below, there are three main non-commercial providers of rapid digital skills programs in Eswatini. In addition, several private, for-profit training providers offer short courses in ICT at different levels. Sebenta National Institute and the Rural Education Centers are two public providers under the MoET that offer a variety of adult literacy and non-formal education services with a focus on rural communities. Both providers offer short courses ranging from 3-12 months on basic computer literacy and computer skills with either internal or external certification (see table below). UNESCO, in collaboration with the MoET, also offers a digital literacy program for communities in rural areas with a focus on “empowering adults and high school leavers to be digitally literate.” TABLE 5. Digital literacy programs targeting out of school youth and adults, 2020 Institution Program Enrollment Duration Form of assessment Basic Computer 23 3 months Internal Literacy Sebenta National International Institute Computer Driving 10 N/A External (ICDL) License (ICDL) Rural Education External - City & Guilds for Computer skills 150 12 months Centers Levels 1, 2 and 3 Digital Literacy 6 months (1 UNESCO 40 Internal Program hour per week) 89 IGCSE is developed and managed by Cambridge University International Exams. 90 Response by MoET to request for information by the World Bank. 103 In addition, the Swaziland Institute of Management and Public Administration, under the Ministry of Public Service, offers short courses in basic computing, as does the Eswatini National Library, which falls under the Ministry of ICT. However, no data on these programs in terms of enrolment and completion was available at the time of this study. In summary, while various educational policies in Eswatini mandate the provision of foundational digital skills in primary and secondary education, as well as for adults and out-of-school youth, there are several constraints to implementing these policies. Firstly, only 10 percent of primary schools and just over 50 percent of secondary schools have access to internet, and many of these have slow connections. Secondly, many schools do not have computers for students to use; of the schools that do have computers, it is not clear how many are functional. Third, very few teachers in primary and secondary schools are qualified in ICT, though there is an ongoing training program to raise teacher competencies in ICT. Fourth, few schools integrate ICT within teaching and learning processes, and this limited the number of schools that were able to use online learning systems during the Covid-19 pandemic. Fifth, there is no information available about the level of digital skills among primary and secondary school teachers. Lastly, there are insufficient rapid skilling initiatives available for out-of-school youth and adults to learn foundational digital skills, which is seen as a necessary for all citizens in a lower middle-income country such as Eswatini. Intermediate Digital Skills Eswatini has 70 Technical Vocational and Education Training (TVET) institutions, of which 27 are public, 29 are private and for-profit, and 14 are run by NGOs, churches and communities91. The institutions offer programs in 60 areas ranging from traditional vocational programs to specialized technical and professional programs, such as business management, computer programming, and education. Twenty institutions offer computer programming, but very few offer specializations for mechanical, electrical, electronic and computer technicians, which are areas of a high demand. While around half of institutions have internet access and computers in working condition, very few use ICT to deliver training online. The table below shows enrollments in the five main public TVET institutions under the MoET. TABLE 6. Number of students by formal public TVET institutions under MoET, 2013 and 2016 Institution Enrolled students 2013 Enrolled students 2016 Manzini Industrial Training Centre 183 243 Nhlangano Industrical Training Centre 90 127 ECOT 945 1,043 Siteki Industrial Training Centre 88 105 VOCTIM 139 176 Total 1,445 1,694 Source: EMIS for 2016 data; World Bank (2014) for 2013 data Eswatini College of Technology (ECOT), Manzini Industrial Training Center and VOCTIM are the three institutions that dominate TVET enrollments in the country. While VOCTIM offers programs at basic TVET level, ECOT trains higher level technicians in engineering. The Manzini Industrial Training Center offers a Certificate in International Computer Driving License (ICDL), which is accredited by the ICDL’s head office in the United Kingdom. Around 1 in 4 students enrolled in these five TVET institutions study engineering or IT-related subjects (see Figure 17). 91 World Bank (2014): Assessing Swaziland’s Technical and Vocational Education and Training System to Improve Economic Growth. 104 FIGURE 17. Enrollment by type of formal public TVET program under MoET, 2016 Arts, Crafts and Upholestry 2% Commercial 3% Agriculture 3% Metal Works 4% Information Technology 8% Motor related 5 12% Business Adminstration 14% Engineering 16% Education 16% Construction related 1 22% ECOT offers diploma courses in Computer The overall number of students enrolled in TVET Science, Electrical and Electronics Engineering, and programs is low in Eswatini, and there are also Telecommunication and Electronics Engineering. concerns with the quality of training in many The programs are three-year full-time courses. The institutions. A 2015 study by SEPARC found several minimum entry requirement to the program is IGCSE factors that affect the quality and relevance of TVET credits (grade C or better) in Mathematics or Physical programs in Eswatini, including: (i) lack of or weak Science, and at least a pass (symbol E or better) collaboration between TVET institutions and industry, in English language. The college produces about including the establishment of national occupational 25 diploma holders a year in each of the courses. standards; (ii) inadequate physical resources, which ECOT also offers a wide selection of short-term skill include facilities, equipment, and machinery as well upgrading courses, in fields such as ICT, electronics as the high cost of internet connections; (iii) weak and and electrical engineering. fragmented institutional environment supporting TVET; (iv) lack of adequate funding for TVET institutions; (v) VOCTIM does not offer specialized ICT courses, but outdated curricula and training modules; and (vi) digital skills are part of the curriculum through practical inadequate capacity amongst TVET instructors. integration in selected technical programs, particularly automotive mechanics, electrical and mechanical There is insufficient data on programs offered by engineering. Automotive mechanics trainees use private TVET providers in Eswatini, but data from automotive diagnostics tools such as scanners and the largest public TVET institutions indicates a lack laptops with scanning software for diagnosis of of graduates in ICT and STEM-related subjects and engine-related faults. Electrical engineering has a shortage of institutions offering more specialized introduced programmable logic controls (plcs) as programs related to digital and ICT infrastructure, applied in industrial wiring for the programming, such as for network engineers and PLC technicians, control and running of industrial machinery and as well as in areas such as programming, software equipment. In mechanical engineering, the training and systems development and mechatronics. includes use of software like auto-CAD and CAM, for drawing and design. Students who study business finance and accounting at VOCTIM take courses in digital skills related to computerized accounting and the Microsoft Office package. VOCTIM also offers fee-based short upskilling courses for individuals as well as enterprises. 105 Advanced and Specialized Digital Skills Advanced and highly specialized digital skills are provided by higher education institutions such as universities, colleges, and polytechnics. Enrollments in the four largest higher education institutions are shown in the table below, totaling around 11,400 students in 2017. Over the past decade, university enrolment has increased both absolutely and relatively92, but participation rates are still low compared to other countries in the region. Women are well represented in Swazi universities. The share of female students has been 50 percent and above since 2012, reaching a peak of 54 percent in 2016 and 2017. With a female participation rate of 46 percent in 2017, only the private Limkokwing University of Technology stayed below the 50 percent threshold. Just over 80 percent of students are enrolled in undergraduate programs, 15 percent in distance education programs and 4 percent in postgraduate programs. Enrolment shares by department in the four largest universities reveal a striking neglect of STEM programs, raising concern about the labor market relevance of the tertiary education sector. Of those enrolled in the higher education institutions listed above, about 800 students (7 percent) are enrolled in 3–4- year IT programs, and about 570 (5 percent) are enrolled in 3-year science and engineering programs (see figure below), meaning only a small number of students graduate annually with these advanced qualifications in the country. FIGURE 18. Undergraduate enrolment by department, 2017 Arts, Crafts and Upholestry 2% Commercial 3% Agriculture 3% Metal Works 4% Information Technology 8% Motor related 5 12% Business Adminstration 14% Engineering 16% Education 16% Construction related 1 22% Source: EMIS, 2017 The University of Eswatini had around 50 students graduating from programs run by its Department of Computer Science in 2019 and about 14 graduates from programs under the Department of Electrical and Electronic Engineering. Challenges highlighted by both departments include prohibitively high internet access costs, particularly for students, and limited broadband infrastructure coverage, which is a barrier to e-learning. At times, the bandwidth does not meet quality of service requirements for some of the teaching tools. The students also lack multimedia devices such laptops and tablets which are needed to access the internet, yet there are also insufficient facilities in the computer laboratories (desktops) to service all the students. 92 The drop in enrollment in 2017 compared to the year before is owed to a reduction in the intake of the Eswatini Christian University following accreditation issues. In 2020, enrolment of the ECU has recovered to about 250 students (information provided by the university management). 106 The Limkokwing University of Technology is a These five courses enable students to carry out a Malaysian global network of universities. The range of digital occupations such as web designers, university specializes to a large extent in multimedia, java and C# programmers, web developers, net IT and digital skills. It is fast expanding its capacity apps engineers, graphic designers, audio and video and soon expects to produce more graduates per year editors, 2D and 3D animators, motion graphics than any of the existing tertiary institutions in Eswatini. designers, hardware specialists, network and server A World Bank report (2010) found that several administrators, cloud architecture and ethical factors limit Eswatini’s higher education system hackers, security administrators, and forensics and from helping to facilitate the country’s transition to cybercrime investigators. The establishment of ASIT knowledge-driven growth. Access to education is too is seen as a means to increase not just the number low to supply Eswatini with the necessary high-level of ICT graduates in Eswatini, but also to increase the skills required to lead knowledge-driven growth. quality and relevance of graduates’ digital skills. The Access is also inequitable by rural locations and low first cohort of students graduated from ASIT at the socioeconomic status. Higher education in Eswatini end of 2020. is of reasonable quality, though the observed quality may be substantially aided by the system’s stringent selectivity and exclusivity. For its teaching and On the whole, the number of students graduating research programs, higher education has low output with relevant, advanced digital skills in Eswatini in Eswatini. For research programs there seems to be is limited. Universities in Eswatini have challenges a low level of expertise among professors, combined related to a lack of collaboration with employers to with insufficient research funding. Other constraints understand labor market needs as well as constraints are the lack of clear mechanisms for centering the with internet connectivity, and inequities in access university in the national development dialogue, poor to higher education. While establishing the ASIT information on the labor market, lack of strategic is one response to these issues, supporting existing guidance in terms of sector policies and strategic plans universities in delivering high quality and affordable and lack of a national human resource development programs to students remains a priority. strategy. Recognizing the importance of science, technological innovation and digital skills, the Government of Eswatini has established the Royal Science and Technology Park (RSTP) under the Ministry of ICT. The RSTP is divided into two divisions, which consist of the IT Park and the Biotechnology Park. The Advanced School of Information Technology (ASIT), located at the RSTP IT Park, is operated by Aptech Limited, a global retail and corporate training provider. ASIT offers 2-year diplomas and various short-term courses in various ICT-related subjects. The goal of ASIT is to have an ICT-literate Swazi society and offers courses in software development, multimedia, cyber security and forensics, and hardworking and networking. 107 BOX 10. Remote Learning in response to the COVID-19 Pandemic The Eswatini education system has been seriously affected by the Covid-19 pandemic. All schools and institutions of higher learning were closed on 20 March 2020 when the country instituted lockdown measures. Working with the Ministry of Health, the National Disaster Management Agency and development partners, the MoET put in place measures to ensure the continuity of education during the pandemic, including through online learning programs where possible. Specifically, MoET undertook the following actions in response to the Covid-19 pandemic: Basic education level • Training of teachers to teach lessons over radio and television broadcast • Developing and broadcasting lessons (radio, television, and print) for students, targeting completing classes first (Grades 7, Form 3 and Form 5) • Broadcasting weekly programs on mental health and a psychosocial program for learners • Engaging mobile service providers to upload multimedia lessons and ensure educational websites are zero-rated, i.e., a price of zero is applied for the data traffic associated with these websites • Some schools and education institutions (mostly private schools) provided lessons through e-learning platforms such as Google Classroom, Zoom and others TVET and tertiary education level • Tertiary and TVET institutions used various technologies to teach students remotely, including Google Classroom, WhatsApp, email, Zoom, student portals, blackboards, and so on. While the actions of the government to ensure continuity of learning while schools were closed are commendable, the differential access to remote learning and conditions at home are likely to widen the existing learning inequalities in Eswatini. Children from the most educated and wealthiest families are better able to cope with the challenges posed by the crisis and sustain their learning at home. They are more likely to have computer equipment and connectivity, a space to work, and books and other learning materials at home. As a result, children without this support find themselves at an even greater disadvantage when schools reopen. The Covid-19 pandemic has highlighted the digital divide between the wealthy and the poor, stemming from challenges related to access and reliability of electricity, access to teaching and learning devices such as laptops, tablets and smart phones, low coverage of internet connectivity, the high cost of data bundles, the ability of teachers and students to use digital technologies effectively for teaching, and the engagement of parents in supporting children to learn remotely. It also highlighted the need for close collaboration between the MoET and the MICT in supporting remote learning. 108 Policy Recommendations R4.2: Connect higher education and TVET institutions to a Research and Education Network for Eswatini on Digital Skills (REN) as part of the digital master plan: The lack of affordable, high-speed broadband for African universities remains a significant hurdle to the use The Government of Eswatini has acknowledged the of technology in education and research, and even importance of building digital competences to keep more so for connecting African faculty and students up with technological advances that spur economic to international teaching and research resources. development, but also the importance of digital Remedying this situation should be a strategic skills in transitioning to knowledge- and innovation- objective and connecting the major universities and driven growth. This is reflected in the growth and TVET institutions to high-speed broadband should development strategy for the country as well as within be included in the forthcoming digital Master Plan. several education and training policies. There are, Establishing a National Research and Education however, several areas of improvement in supporting Network (NREN) or connecting to a regional REN the development of digital skills in the country that are such as UbuntuNet Alliance should be considered highlighted below. based on a comparison of costs and the availability of support services. Quick wins R4.3: Pilot interventions at secondary school R4.1: Develop an ICT and Education Policy and level to build digital literacy skills, particularly in Implementation Plan: There are several different schools that serve poor communities. This can be policies that address broad issues related to ICT in done through the integration of ICT-enabled teaching Education, but these policies are not coordinated and learning in priority subjects such as Mathematics in terms of implementation and do not provide and Science.  The pilot could test various models of operational details to guide investments to support digital skills training, starting with teachers and then digital skills development. There is also no existing students in secondary schools, and eventually moving policy that focuses specifically on building digital to primary schools, with the aim of improving digital skills as the ultimate desired outcome, and no existing literacy across the population. framework for defining skills, competencies and proficiency levels. The existing and planned policies do address issues of infrastructure development (e.g., the planned Master Plan), training of teachers in ICT and reforming courses, but these policies are uncoordinated. A coordinated action plan is needed that draws together multiple stakeholders, led by the MoET and MICT, to define: (i) the framework for digital skills, competencies and proficiency levels to be used in Eswatini; (ii) the actions needed to connect education institutions, train staff such as teachers, education managers, IT systems operators and support staff, procure devices, and reform courses; (iii) the funding requirements and sources to undertake these actions in a phased manner; and (iv) targets to be achieved and processes for monitoring and reporting on targets. 109 Medium- to long-term This complementary supply and demand analysis would form the basis of a comprehensive human recommendations resource development plan, including for digital skills, around which employers and training institutions can R4.4: Review intermediate and advanced digital coalesce. In the interim, there is a need to build a skills programs in higher education institutions, critical mass of individuals with advanced digital particularly courses related to computer science, skills and ICT professionals that can drive economic and incentivize entry into these programs. There growth and development in several sectors through is a general perception that many of the current the application of digital technologies. TVET and higher education programs in Eswatini are of low relevance for employment, but too little is known about actual market needs. While systematic R4.5: Strengthen the capacity of MoET to develop labor market information to inform program and policies, deliver ICT support services and conduct curriculum development is not available, several diagnostics: The MoET does not have sufficient studies point to a supply-demand mismatch in the capacity to deal with the growing demand for digital TVET and higher education systems. The problem skills to be provided through education and training includes outdated curricula, instructors who do not institutions. Currently, there is only one person at the have enough industry experience, and the lack of national level, seconded from the MICT, who supports national occupational standards for priority trades. the entire ministry with ICT-related matters. There Considerable effort is required in Eswatini to improve are ICT inspectors in each of the four regions, but labor market information for skills development their expertise and skills are in line with supporting planning, including digital skills. The National and monitoring the implementation of ICT in the Human Resource Planning and Development Unit of curriculum, rather than operational and support the Ministry of Labor and Social Security is beginning services related to hardware or networking issues. If this process by conducting a National Skills Survey the MoET is to move towards ICT-enabled teaching focusing on selected growth sectors: agriculture, and learning, which is particularly relevant currently energy, education and ICT, manufacturing and agro- given the Covid-19 crisis and the need for more processing, and tourism. To complement this survey, remote learning opportunities, it needs to develop its the Government of Eswatini needs to assess the supply own capacity to plan, deliver, monitor and support of skills in these priority sectors and focus on plugging the development of digital skills and ICT-enabled the gaps related to the quantity and quality of skills teaching and learning. provided in priority trades. 7 Digital Entrepreneurship • Public and private sector collaboration on the digital startup agenda: There is a need to increase collaboration and partnership between the RSTP and private sector actors for better integrated and more impactful digital entrepreneurship support and access to early- stage finance. • Business environment reforms to stimulate private sector competitiveness: Eswatini can improve its performance on the Doing Business indicators. Identified reforms include strengthening the business environment to support the growth of micro and small enterprises especially in terms of business entry, operations and exit. • Implementing monitoring and evaluation frameworks: Public sector support programs lack robust results measurement frameworks. Enhancing monitoring and evaluation of support programs will be critical to strengthening outcomes and analyzing the impact of public sector interventions. • Strengthening the capabilities of existing business support organizations to increase the quality and impact of support to high-growth firms: Currently business support organizations mostly cater to traditional MSMEs, that are primarily micro or subsistence firms. RSTP is the only known digital incubator in the country that targets firms with potential for growth and scale, and there is room to enhance its capacity. • Increasing access to early-stage finance for startups: There is a clear need to differentiate between sources of financing for tech startups compared to subsistence entrepreneurs. The Youth Enterprise Revolving Fund (YERF), which caters to traditional SMEs, does not constitute an appropriate financing source for startups. • Improving the IP framework for startups: To be internationally competitive, Swazi SMEs need to constantly improve efficiency, reduce production costs, and enhance the reputation of their products and services through investments in research and development or by acquiring new technology. Without IP protection, there is a strong risk that SMEs will be disincentivized from innovating. • Leveraging opportunities from digital financial services: An established DFS environment promotes trust and accountability in online transactions and contributes to the development and uptake of digital platforms, such as e-commerce marketplaces and use of online or mobile apps for ordering from restaurants, groceries, and other goods and services. Importance of Digital Entrepreneurship Digital entrepreneurship is a key pillar of a digital economy for Eswatini and instrumental for sustained economic growth, wealth creation and higher standards of living93. 93 World Intellectual Property Organization (WIPO), 2018. 112 Digital entrepreneurship94, for the creation of new The RSTP consists of a Biotechnology Park and an ventures in the digital sector95, is also critical for Innovation Park, which also houses the e-Government the development of digital private sector platforms, center, the National Data Center as well as the which can bring the digital economy to life. Digital regional e-trade platform. The RSTP is therefore ventures offer new products and services, leverage well positioned to play a critical role in fostering the new technology and business models, and open development of digital businesses96, and potentially new markets. They can contribute to net employment be a core driver of the digital economy in Eswatini. growth and help enhance the competitiveness and productivity of the economy, especially post Covid-19. Eswatini generally lags behind South Africa, Namibia and Botswana in terms of startup The GoE’s Ministry of Commerce, Industry & Trade skills, networking and technology adoption (MCIT) has two dedicated agencies providing opportunities (as shown in Figure 19) and can support for Small and Medium Enterprises benefit from greater regional cooperation and (SMEs): the SME Unit and the Small Enterprise networking. Given its small economy and a still Development Company (SEDCO). The SME Unit developing ecosystem, there is potential to strengthen is responsible for coordinating a range of financial the role of support organizations (such as incubators, and non-financial support programs across various accelerators, innovation hubs and co-working spaces) ministries, parastatals, and local organizations. and improve access to early-stage financing (such SEDCO is mandated to provide business advisory as seed, angel, impact investment, venture capital, support to (M)SMEs, including digital businesses. Most and grants). Furthermore, there is a need to increase of their current portfolio of 127 enterprises are in specific skills (both technical and business), access to agribusiness. SEDCO does not award grants, but does markets, and establish an overall conducive business offer subsidized office space. SEDCO also sponsors environment that motivates the creation and use of an annual “Entrepreneur of the Year” competition novel digital technologies. that provides award money to the national winners. The Unit is working towards establishing a common data platform of programs and beneficiaries and FIGURE 19. Global Entrepreneurship Index scores a standard results monitoring and evaluation for selected indicators (1.0 is the maximum score97 framework. These instruments, when established, will significantly enhance the role and effectiveness of the Unit in establishing a better coordinated and more impactful national SME program. However, in the absence of a monitoring and results framework, the impact of SEDCO’s efforts is difficult to quantify and assess. SEDCO management is aware of the need to enhance its role, delivery capacity and effectiveness in supporting digital startups. The establishment of the RSTP , as a public enterprise under the MICT, signals the GoE’s commitment to supporting the digital entrepreneurship ecosystem. The objective of the RSTP is to foster innovation and technology commercialization, as well as to coordinate the various elements of the R&D cluster and provide a focal point for research, industry linkages and incubation of tech startups. 94 The term ‘Digital Entrepreneurship’ most commonly refers to the process of creating a new— or novel —Internet enabled/delivered business, product or service. The definition used here includes startups that bring new digital product or service to market. Welsum, v. D., World Bank Group, “Enabling Digital Entrepreneurs” 2016. 95 These are typically defined as young (under 5 years) firms that are pursuing growth. 96 WBG Stakeholder interview. 97 2018 Global Entrepreneurship Index 113 Diagnostic Findings: Current government-supported activities and interventions offer limited support to helping Current State of Digital micro-enterprises grow and achieve greater scale, and many business support providers Entrepreneurship have limited rural reach. These factors demonstrate that the enabling environment for overall business Eswatini’s fledgling efforts to support digital development is significantly lacking. There are very entrepreneurship can be strengthened and few digital businesses in Eswatini. CrunchBase100 scaled through improved coordination and analyzes 19 companies active in Eswatini, with three focus. There are small scale efforts to support firms categorized as operating in the ICT sector: entrepreneurship in Eswatini including digital SupplyAfrica101, Vision Software PTY102 and ScopeHost entrepreneurship. However, these efforts are Operating Company. Notably, only ScopeHost uncoordinated and have limited impact in terms of Operating Company is headquartered in Mbabane. reach and job creation. Entrepreneurs face hurdles in starting and operating a business, access to early- stage finance is challenging, and effective technical The figure below summarizes all small business training, coaching and mentoring support programs owners (including informal firms) in Eswatini, with for entrepreneurs are scarce. There is no systematic digital firms captured under the “other services” tracking or measurement of results and impact and category.103 there are limited opportunities for ecosystem actors to interact, network and collaborate. As discussed in the 20 Small business owners in Eswatini FIGURE 20. Digital Infrastructure chapter, the quality and cost of broadband access is also a major obstacle for digital entrepreneurs and subsequently hampers accessibility of ICT devices to rural populations, contributing to an urban-rural digital divide98. The shortage of critical technical and business skills, concerns over protection of IP and the overall lack of an entrepreneurial culture are other binding constraints. State of the Digital Entrepreneurship & Innovation Ecosystem Digital Startups and Digitally Enabled Entrepreneurs Eswatini’s private sector is relatively small, dominated by micro-enterprises and livelihood entrepreneurs operating in the agriculture sector. The Eswatini Finscope Micro, Small and Medium Enterprises (MSME) Survey estimated that there’s a total of 59,283 formally registered business owners in the country, who employ approximately 93,000 people. However, only 8 percent of total MSMEs are 100 According to CrunchBase data, the majority of firms operation- small and medium enterprises, meaning that the al in South Africa are headquartered outside of Eswatini. This includes MTN, AfriCar Group, AutoZone, Little Green Beverages. majority are micro-enterprises, and most businesses 101 SupplyAfrica is an e-commerce platform headquartered in Preto- are in rural areas99. ria, South Africa. 102 Vision Software PTY is an entertainment and edutainment soft- ware sales in South Africa and has 16 full-time employees. The 98 According to 2018 FinScope data, 71 percent of adult Swazis company has regional offices in Durban and Cape Town and is (defined as 16 years or older) live in rural areas and only 29 rapidly building export sales into Kenya and four neighboring percent live in urban areas. countries (Zimbabwe, Namibia, Botswana and Swaziland). 99 2018 FinScope Making Access Possible SME Eswatini Diagnostics 103 2018 FinScope Consumer Survey Highlights 114 The Royal Science and Technology Innovation Market access Park, Eswatini’s only digital incubator, hosts Eswatini entrepreneurs are hampered by a world-class facilities, including co-working small domestic market and limited access to spaces, offices, and meeting rooms for companies regional and global markets. The lack of local and in its portfolio. RSTP currently supports 36 digital international market linkages are a major impediment startups, of which 41 percent are women-led, via a to business growth for most MSMEs, which rely three-year incubation program that provides non- heavily on public procurement opportunities. A few financial support such as technical and managerial businesses, especially in the agriculture (vegetable training, access to the internet and to co-working and fruits), agro-processing, and arts and crafts or office spaces. Financial support (predominantly sectors have successfully penetrated international grants) is sourced through partnerships or applications markets. However, the volumes involved are still low to other funding sources. and targeted efforts are required to increase the participation of Swazi MSMEs in regional and global Access to finance value chains and take advantage of regional market The availability of early-stage financing is opportunities. The establishment of the e-Trade extremely constrained. While access to finance is Group for southern Africa at the RSTP Data Center is an overall constraint for all MSMEs in Eswatini (the a significant asset that can be leveraged successfully SME financing gap was estimated at 45 percent of to help address this challenge. GDP in 2017, and almost half of Eswatini SMEs face liquidity problems due to Covid-19), early-stage Public procurement opportunities are still limited financing opportunities are especially limited. The for SMEs. The Eswatini Public Procurement Regulatory Youth Enterprise Revolving Fund (YERF), under the Agency (ESPPRA) is well positioned to implement a Ministry of Sports, Culture and Youth, only provides full e-GP platform that will facilitate transparent loans (ranging from E50,000 to E150,000) to youth- access for SMEs and startups to public procurement led enterprises; SEDCO104 serves as the YERF’s opportunities. Currently these opportunities are incubation service provider. The YERF is exploring dominated by larger firms that have the required a partnership with MTN to develop a new financial technical and financial capacity. product targeting existing youth-led businesses that will provide grants in the amount of E100,000. The market for digital goods and services is However, YERF funding is inadequate for digital hampered by the lack of digital platforms. and digitally enabled startups, as it is targeted While mobile money is widely and broadly used, more towards subsistence entrepreneurs whose e-commerce and other digital platforms have yet needs are very different from the financing needs of to gain traction in Eswatini, given the small size of growth entrepreneurs. Eswatini lacks grant funding the market as well as connectivity and digital literacy organizations (such as foundations), angel investors, constraints. For example, PayPal is not available, while venture capital funds, and critical sources of early- SupplyAfrica, an e-commerce platform, is currently stage financing. The RSTP has plans to organize and not fully operational. Due to the limited use of DFS launch an angel investor network to address this products, the use of private platforms for transactional critical gap. Currently, digital entrepreneurs self-fund purposes (versus for social media) has yet to take off or apply to pan-African funding programs, such as in the country. There are opportunities to adopt a the Tony Elumelu Foundation105 and organizations targeted approach to seek new investments in private and early-stage funding opportunities in South Africa. digital platforms that will in turn provide significant opportunities for SMEs to provide new digital services and products. See Chapter 4 on Digital Platforms for more details. 104 SEDCO’s Entrepreneur of the Year awards includes cash prizes but these typically benefit SMEs with demonstrated market traction 105 The Tony Elumelu Foundation, based in Lagos, Nigeria, manages a USD $100 Million seed fund that awards USD $5,000 to successful appli- cants. To date, it has funded 9,000 entrepreneurs from across all of Africa. 115 Policy Framework and Business Climate for Digital Entrepreneurs Prior to the Covid-19 pandemic, Eswatini’s economic competitiveness was marginally improving. While its overall 2020 Doing Business ranking declined by four spots to 121 of 190106, Eswatini made improvements on the following indicators: Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property and Resolving Insolvency. Additional reform efforts are needed to improve the Getting Credit (rank 94/190) and Protecting Minority Investors (140/190) indicators. Eswatini’s performance in other global indicators such as the Global Entrepreneurship Index (GEI) and the World Economic Forum’s (WEF) Global Competitiveness Index remained mostly stagnant. Eswatini’s poor rankings are a combination of low business dynamism (limited competition) and a small market size. TABLE 7. Snapshot of Eswatini’s Economic Competitiveness Snapshot of Eswatini’s Competitiveness Top Performing Sub-Saharan Index Ranking Change in Ranking Africa (SSA) Economies World Bank’s Doing • Mauritius (13/190) 121/190 ▼4 Business 2020 ranking • Rwanda (38/190) 2018 Global • Botswana (52/137) Entrepreneurship Index 86/137 ▲2 • South Africa (57/137) ranking • Namibia (61/137) 121/141 World Economic Key Indicators: Forum’s 2019 Global • Mauritius (52/141) ICT Adoption: 119 Maintained ranking Competitiveness Index • South Africa (60/141) Skills: 101 ranking Business Dynamism: 119 Innovation Capability: 134 Over the past two years, Eswatini has made strides in some areas of business regulation, particularly in starting a business, obtaining construction permits, securing electricity and registering property. Despite these positive reform efforts, Eswatini’s businesses still face a range of challenges. According to the World Bank’s Enterprise Survey data, the major business environment obstacles for firms include corruption, access to quality electricity, high tax rates, crime, and competitor practices in the informal sector. Reforms are underway to improve the business-enabling environment through lower trade licensing fees and reduced time to issue trade licenses, as well as by strengthening commercial dispute resolution. Nevertheless, an accelerated and sustained reform program could lead to significant improvements. Eswatini has no investment law to create incentives for early-stage investments. Businesses may be issued with a Development Approval Order for up to ten years, allowing them to pay only 10 percent corporate tax, instead of the standard flat rate of 27.5 percent applicable to corporate entities. The Minister of Finance is authorized by law to grant Development Approval Orders for approved new investment, business or development enterprises in the manufacturing, mining, international services and tourism sectors, to entities that do not compete with existing Swazi companies. This incentive is not available for investors in early-stage financing nor for businesses operating in other sectors, including agriculture and ICT. 106 DB 2020 116 The functionality of the online business Each pillar also identifies a critical gap in the current registration portal needs to be improved. The ecosystem and highlights the need for well-coordinated business registration portal does not accept online efforts amongst public sector agencies and units payments and its operational reliability needs to be within MCIT. While the policy articulates promotion of improved. Fees for business licenses and taxes do ICT usage, there are no specific initiatives to support not differentiate between small enterprises and larger the digital transformation of businesses. corporations, creating disincentives for small firms to register. Eswatini’s business environment could be The fintech working group that includes the significantly strengthened by the adoption of digital Financial Services Regulatory Authority (FSRA) platforms and the provision of efficient digital G2B and the Central Bank of Eswatini (CBE) is a and G2P services. promising initiative. There is scope to expand support to the fintech sector108. The CBE’s commitment Eswatini’s Intellectual Property (IP) framework is to the fintech working group is promising. Continuous not optimized for technology-based businesses, collaboration with the private sector is necessary to (1) although the World Intellectual Property Organization ensure that the regulatory environment promotes the (WIPO) is currently reviewing Eswatini’s IP framework. development and use of fintech products, particularly IP protections are critical for supporting emerging by digital startups, and (2) a strategic approach is technology-based businesses. There is scope for a adopted to promote universal financial inclusion broad-based business and regulatory environment and the increased use of mobile payments and other reform agenda to improve the ease of starting, digital financial services products. operating and exiting a digital business in Eswatini. Support Organizations Implementation of the revised MSME Policy of 2018107 needs to be accelerated. The MSME Policy The small number of entrepreneurship support is intended to provide a coherent and comprehensive entities in Eswatini are primarily public sector policy framework for MSMEs that drives the public supported or are country-level chapters of and private sectors in achievement of these goals and global organizations. These include the RSTP , the objectives. The eight strategic pillars identified in this Mbabane Hub109, an initiative of the WEF Global policy are: Shapers, SEDCO, the Global Entrepreneurship (i) Increase access to financial products and Network—Eswatini chapter, Enactus, and Junior services; Achievement Eswatini (JAE). According to a joint Briter (ii) Strengthen MSME business support institutions Bridges and GSMA Accelerator Programme Mapping and structures; of Tech Hubs in Africa 2019110, Eswatini hosts (iii) Strengthen the legislative and regulatory fewer than four tech hubs, with only RSTP explicitly framework for the development of MSMEs; supporting digital entrepreneurs and categorized as (iv) Promote and develop a culture of an incubator. SEDCO’s incubation program does not entrepreneurship and innovation; leverage digital skills or digital strategies (e.g., digital (v) Strengthen the domestic and international marketing) but is attempting to deploy e-learning competitiveness of MSMEs; solutions for its incubation program participants. (vi) Define, recognize, and protect the informal There are currently no accelerators established in sector; Eswatini but various United Nations Development (vii) Develop and improve the position of and Program (UNDP) acceleration challenges could be support to MSMEs owned by women, youth, considered as incubation plus programs, as they and disadvantaged groups; and offer grants to idea-stage entrepreneurs and up to 6 (viii) Enhance policy implementation and months of business advisory support. Many of these integration by improving dialogue between initiatives were established less than five years ago key stakeholders. and the efficacy of these programs has yet to be measured. 107 Full Policy is available at http://www.gov.sz/images/MSME-Policy.pdf. 108 WBG Stakeholder interview 109 The Mbabane Hub is a registered non-profit in Eswatini, a pre-requisite to be affiliated with the WEF’s Global Shapers network. Mbabane does have a physical space but it is primarily used to host events and other gatherings for members as part of its revenue model. 110 GSMA article and infographic available here: https://www.gsma.com/mobilefordevelopment/blog/618-active-tech-hubs-the-backbone-of-af- ricas-tech-ecosystem/ 117 Recently, several private sector entrepreneurship Private sector youth entrepreneurship activities initiatives and activities have emerged, primarily include MTN and previously, Swaziland targeting youths via educational institutions. Beverages. MTN runs several initiatives including “21 JAE, a non-profit affiliated with Junior Achievement days of yell’o,” which includes an activity on business Worldwide, provides financial literacy and training and financing for innovative ideas. As part entrepreneurial education to secondary-school-aged of a regional initiative, Swaziland Beverages ran a youth. JAE’s cohort consistently ranks among the top Kickstart competition that provided seed grants, in two performing countries during Junior Achievement the form of asset purchases, to innovative enterprises. Worldwide entrepreneurship competitions. However, The Swaziland Beverages Kickstart program is no the program found that follow-on entrepreneurship longer active. support for JAE participants wishing to pursue serious entrepreneurial endeavors post-graduation Agritech is an emerging sector of interest and is deficient. As a result, the former CEO of JAE there are opportunities to connect startups to established the Global Entrepreneurship Network’s corporations through Corporate Innovation (GEN)111 Eswatini chapter as a parallel initiative programs. MTN and UNDP , alongside RSTP as to crowd-in additional resources and contribute to the implementation agency, are supporting several the budding entrepreneurial culture. These efforts agritech challenges for ideation-stage entrepreneurs. need to be complemented by continued business It is unclear if these programs will provide extensive development support and access to early-stage and longer-term business advisory support to nurture financing. Awareness of and access to opportunities and develop these entrepreneurs into revenue for emerging entrepreneurs are currently limited, generating firms. Unfortunately, existing business though the establishment of a Youth Chamber of development service (BDS) providers, including RSTP Commerce and Industry is meant to address this and SEDCO, are unable to provide the necessary need. advisory support, and the participation of agritech and food tech startups remains very limited. At the tertiary level, Enactus112 and Limkokwing University run entrepreneurship programs. The table below provides an overview of the Enactus Eswatini organizes a national competition entrepreneurship activities described above. which has benefited 14 teams, 589 students, and supported 3 projects to date. Limkokwing University of Creative Technology runs the Limkokwing Entrepreneurship Acceleration Platform (LEAP) for final year students. Both programs are sector agnostic but encourage the use of creativity and technology. The University of Eswatini plans to launch iLab, an incubation center, to complement RSTP initiatives that encourage graduates to pursue entrepreneurial activities. 111 The Global Entrepreneurship Network operates a platform of projects and programs in 170 countries aimed at making it easier for anyone, anywhere to start and scale a business. GEN Global, based in Washington, DC, organizes an annual Global Entrepreneurship Conferences which includes a ministerial track for policymakers and publishes an annual Startup Genome report. Unfortunately, Eswatini’s ecosystem is not currently featured in this analysis. GEN’s global chapters are well-known for organizing annual Startup Weekend events, typically occurring in the fall. 112 Enactus, affiliated with Enactus Worldwide, leverages its experiential learning platform to facilitate knowledge exchange amongst its 37 member countries. 118 TABLE 8. Mapping of Entrepreneurship Activities in Eswatini Program Sponsor(s) Beneficiaries Funding Provided Status Swaziland Beverages Y – total E5.1m (approx. Swaziland Beverages ~28 youth-owned SMEs Inactive Kickstart USD $340,000) 7 youth-owned SMEs Y – E100,000 per 21 days of yell’o MTN in partnership in agriculture & honey startup (approx. USD Active with YERF production $6,666) Active N SEDCO Incubation 127 MSMEs, primarily Program agribusinesses; also SEDCO under provides training to YERF Ministry of loan applicants Commerce, Industry & Trade - Entrepreneur of the - 8-9 regional winners and 1 Year Award national winner Active Y – N/A Ministry of SME Unit (policy unit Commerce, Industry N/A N Active for SME development) & Trade Parastatal under Youth Enterprise Ministry of Sports Y – loan from financial MSMEs Active Revolving Fund (YERF) Culture & Youth institution Affairs Government of Junior Achievement Secondary school aged Y – E50,000 to top 5 Eswatini, Eswatini Active Eswatini (JAE) youth entrepreneurs (approx. USD $3,333) Mobile UNDP AgriTech UNDP, RSTP AgriTech startups Y Active Challenge Global Entrepreneurship GEN Global Swazi entrepreneurs N Active Network (GEN) Eswatini Fintech working group (includes Fintech Hackathon 5 fintech ideas Y – N/A Active Central Bank of Eswatini & FSRA) Parastatal under RSTP 36 digital startups N Active Ministry of ICT World Economic Mbabane Hub Forum (WEF) Global 16 shapers (individuals) N Active Shapers Limkokwing Enterprise Limkokwing Final year students N Active Acceleration Platform University Enactus – entrepreneurship Enactus Worldwide Social enterprises N/A Active learning platform for social enterprises iLab University of Eswatini N/A N/A Pipeline 119 Constraints to Digital Recommendations & Entrepreneurship Development Next Steps Eswatini is a small market for digital consumers, meaning new and emerging digital firms The following recommendations represent critical first need to internationalize to achieve scale and steps towards unlocking bottlenecks and constraints profitability. Eswatini’s Investment Promotion within Eswatini’s digital entrepreneurship ecosystem, Agency (EIPA) plays a limited role in helping micro- to be implemented concurrently with efforts to increase and small-enterprises access international markets, access to broadband, digital platforms and skills, as since targeted beneficiaries are medium-to-large highlighted in the other sections of this report. enterprises. RSTP’s incubation program currently provides limited support to digital entrepreneurs Quick wins seeking to internationalize. Stakeholders also cited a desire to maximize opportunities within the domestic R5.1: RSTP to take the lead in ecosystem market, such as goods and service providers to development, coordination of entrepreneurship existing large firms, before entering international support programs and championing participation markets. in the Innovation Bridge Portal (IBP). Given the size and maturity of the ecosystem, there are opportunities Lack of e-commerce platforms limit the ability of to increase collaboration and sharing of resources MSMEs and digital businesses to access broader amongst ecosystem actors to reduce fragmentation marketplaces. Efforts to promote e-commerce and duplication of support programs and scale platforms need to be tied to an enabling and successful initiatives. The RSTP is well positioned to competition-friendly business environment and perform the role of an ecosystem hub and champion. reforms to accelerate DFS uptake and usage. It can leverage the IBP for networking opportunities and private-public collaboration to further strengthen Eswatini’s private sector environment is the range and quality of support services offered, characterized by low dynamism and the including impactful coaching and mentoring, and regulatory framework is not optimized for provide a repository of data on entrepreneurship. The MSMEs and digital startups. Despite marginal first step to take would be a comprehensive mapping improvements on Doing Business indicators, digital and evaluation of the existing public and private sector entrepreneurs remain constrained by a poor business programs supporting entrepreneurship, as well as environment and lack of pro-competition policies. establishing a common data platform for monitoring and evaluation and leveraging the IBP . Being part of a Early-stage financing is almost non-existent for regional network will provide increased opportunities digital entrepreneurs. Critical sources of early-stage for entrepreneurs and startups to benefit from the financing (pre-seed and seed funding) are extremely considerable experience and resources available in limited. There are no local angel networks or VC South Africa and elsewhere. funds. UNDP and corporations such as MTN provide limited grant financing for startups. Commercial bank R5.2: RSTP to establish an incubation program loans are not suitable financing sources for digital targeted at supporting early-stage digital businesses. startups and a seed financing facility that can co- invest with angel investors and others. The RSTP will also benefit from capacity enhancements and increased collaboration with private partners both from Eswatini and from the region, which will result in increased knowledge exchange and enhanced local and regional linkages to drive ecosystem growth. 120 Medium- to long-term R5.5: Increase access to funding for digital startups by incentivizing angel investments and recommendations seed stage venture capital. While YERF focuses on funding subsistence youth entrepreneurs, there is R5.3: Accelerate business environment reforms scope for the government to establish a seed financing including strengthening IP protection to support facility that provides a combination of grants and the growth of micro and small enterprises and loans to very early-stage digital and tech startups tech startups, possibly by leveraging the e-GP that are at the ideation, pre-seed or seed stage, as platform to connect them to public procurement well as support capacity building of ecosystem service opportunities. Eswatini’s Post Covid-19 Economic providers to provide more impactful support. This Recovery Plan places improving Eswatini’s ease of facility could also be set up in a manner to crowd- doing business as a top priority. Several reforms have in and de-risk private financing from angel investors been recently adopted and are being implemented, and venture capital firms including those from the as described earlier. There are also ongoing region or globally. Such a facility could be managed initiatives to strengthen intellectual property rights, by private partners under a governance mechanism which will facilitate innovation and entrepreneurship. with clearly established performance targets. Nevertheless, developing and adopting a clearly articulated, multi-year business environment reform R5.6: Strengthen collaboration with regional agenda with clear objectives, performance targets institutions such as the AU and SADC to promote and oversight, coordination, implementation and digital market integration in the Southern Africa monitoring and reporting mechanisms, in close region. The assessment has shown that limited market partnership with the private sector, will enhance access is one of the key barriers for entrepreneurs and investor confidence and remove obstacles to the MSMEs in Eswatini to grow and expand. As the host establishment and growth of new digital businesses. country for the AU e-Trade Group’s digital platforms, hosted at RSTP’s data center facility, champion of the R5.4: Partner with established corporations, pan-African Sokokuu e-commerce platform, Eswatini including SOEs, to design Open Innovation can leverage its position to facilitate the integration programs, in order to allow startups to co-create of markets. The enhanced access to regional and innovative solutions with established companies. global value chains will help develop and expand Through the ecosystem network championed by the business opportunities particularly for MSMEs and RSTP , there are opportunities to organize corporate entrepreneurs in Eswatini. innovation programs to connect startups in Eswatini to local and regional corporations. The e-GP platform could also be a powerful instrument to connect digital startups to public procurement opportunities, while providing a platform for developing the skills and technical capacity of SMEs in accordance with the procurement standards and requirements of corporations. Agritech and food tech startups will benefit tremendously from partnering with corporations and tapping into their use cases in order to develop new products and innovative solutions for climate-related challenges. The Government could also create an open data platform to incentivize new data-driven businesses. 121 8 Conclusion: The way forward Cross-cutting priorities • Priority 1: Improve the enabling environment for the digital economy • Priority 2: Expand and close gaps in access to digital infrastructure and digital services as well as address affordability to boost demand • Priority 3: Enhance government capacity and improve the quality of digital public services • Priority 4: Strengthen digital skills of the Swazi population and create an enabling environment for private sector investment, entrepreneurship, and innovation to facilitate digital technology adoption • Priority 5: Enhance regional integration through the digital economy The digital economy is a key driver of economic growth, innovation and prosperity, and an essential element in Eswatini’s resilience to future shocks. Digitalization can help the government and businesses to extend the reach of their services at an unprecedented scale. The emergence and maturity of the digital economy in a country also has potential to create new economic opportunities, and the increased use of digital data can help improve economic and social outcomes. While the value of the digital economy is expected to grow from 15.5 percent to a quarter of global GDP between 2016 and 2026113, digital inequalities and uneven access and adoption of the internet are widening, not just between countries but also within countries114. Therefore, closing the infrastructure gap in Eswatini, complemented by strengthening other foundational pillars, can yield clear economic benefits, create employment opportunities and lead to better services for its citizens. A holistic approach is necessary to create an enabling environment for the digital economy, and thus maximize the promising potential of digital economy in Eswatini. An overarching, whole-of-government national strategy that provides a high-level vision and objectives for the digital economy and digital transformation will help the GoE shift away from fragmented and siloed interventions. Institutional coordination and collaboration should also be strengthened, with clear articulation of the mandates and responsibilities of relevant MDAs to ensure far-reaching impact of digital transformation in Eswatini. 113 Oxford Economics. Digital Spillover: Measuring the true impact of the digital economy. Available at: https://www. oxfordeconomics.com/recent-releases/digital-spillover 114 Broadband Commission. State of Broadband 2020. https://www.itu.int/dms_pub/itu-s/opb/pol/S-POL-BROAD - BAND.21-2020-PDF-E.pdf 122 This report has shown that the potential of digital Digital skills, or the lack thereof, currently economy is currently unrealized in Eswatini. While present a bottleneck to the development of an the liberalization of the ICT and telecommunication inclusive digital economy in Eswatini. Digital skills sector has begun, the process has not yet been and relevant policy instruments are currently focused completed. This delay has prevented growth in the on the narrow definition of ICT as a curriculum subject sector due to the lack of market competition and and management tool, rather than a mechanism to sufficient private sector investment. As indicated in facilitate digital skills and capabilities in the country. the government’s Post Covid-19 Recovery Plan, the The lack of digital infrastructure and connectivity in liberalization of the ICT industry includes completing primary and secondary schools is prevalent, which is the unbundling of EPTC, in order to expand digital associated with the high cost of internet access. infrastructure and increase the affordability of digital services. Lastly, the business environment in Eswatini does not effectively promote digital technologies Ongoing efforts to leverage digital platforms in and platforms and there is a lack of support the public sector are largely fragmented across for entrepreneurs and startups. There is room various departments and agencies. The use of for greater public and private sector collaboration digital public platforms will become more effective to scale up digital entrepreneurship support and and efficient by ensuring greater interoperability increase access to finance. RSTP , a parastatal agency, and focusing on shared services. Improved is the only known digital incubator in the country institutional coordination is needed to ensure the full with significant potential for growth and scale. More implementation of the currently stalled e-Government integrated financial and non-financial support should strategy and the development of interoperability of also be provided to early-stage ventures. digital public platforms. Furthermore, the government can play a greater role in promoting the use of Based on the preceding analysis, five broad e-commerce platforms, for example through an priority areas emerge as opportunities for e-commerce strategy. Eswatini, where both public and private efforts are needed to accelerate the emergence of the The development and adoption of DFS in digital economy. All recommendations are more Eswatini is mainly driven by the use of mobile fully elaborated in individual chapters of this report. money. While there is a foundational infrastructure in place on which the growth of DFS can be anchored, full interoperability between various systems and DFS products has yet to be accomplished. The urban-rural gap is particularly remarkable in terms of access to DFS. The full-fledged development of the DFS ecosystem would require strengthened institutional cooperation, particularly among regulators, effective oversight and supervision by the CBE, and interoperability across various payment service providers. As mentioned previously, promoting the use of DFS should be supported by the establishment of a government portal and payment gateway, as envisaged in the NDP . 123 Priority 1: Improve the enabling environment for digital economy This priority area focuses on addressing identified policy, legal, and regulatory gaps, and stimulating the enabling environment for digital technology adoption and usage in Eswatini. The measures outlined under this priority area can assist Eswatini in improving digital infrastructure, facilitating institutional coordination, and providing a vision for whole-of-government commitment to the realization of the digital economy. While key foundational pillars linked to this priority primarily concern digital infrastructure and digital public platforms, the enhanced policy and regulatory environment will also help advance other pillars of digital economy in Eswatini. Priority Recommendations • Complete the preparation of the National Digital Strategy and ICT Masterplan that provide high-level objectives and guidance on fostering the growth of the ICT sector and strengthening the digital economy in Eswatini. The strategy should include a consultation with public and private sector stakeholders. • Provide missing pieces of sector-specific strategies and policy frameworks. Ongoing efforts in different pillars of the digital economy can be accelerated by adopting supplementary policies and strategic visions, such as: Quick • E-commerce strategy for promoting the use of e-commerce platforms wins • Review for the Payment Systems Act for strengthening legal frameworks for developing a DFS ecosystem • National strategy for facilitating the implementation of the government portal and promoting the use of DFS in government payments • ICT and Education Policy and Implementation Plan that will help integrate digital connectivity in educational institutions to improve digital skills training and the use of ICT- enabled teaching and learning • Strengthen institutional coordination and collaboration. Effective and efficient cross- ministry, agency and SOE coordination and collaboration between upstream and downstream policy actors is essential to create far-reaching impact. Clarifying mandates of the MDAs that are responsible for operationalizing the e-Government Strategy would facilitate the development of digital public platforms and e-Government services. Medium- • Strengthen the regulatory framework to unblock bottlenecks to digital service delivery, term by emphasizing the development of implementing regulations for existing laws on data protection and cybercrime, and the creation of the relevant regulatory bodies. • Complete the unbundling of EPTC and pursue full liberalization of the market. Measures need to be in place to ensure the accounting and functional separation of EPTC into wholesale and retail services, that will translate into improved market competition and increased broadband affordability. Measures to be taken include setting clear market definitions for retail and wholesale markets, and conducting whole pricing analysis. Priority 2: Close gaps in access to digital infrastructure and digital services and address affordability to boost demand This priority area addresses the identified gaps in access to affordable and good quality broadband connectivity and essential digital services, such as DFS, particularly in rural areas. The limited access to digital infrastructure is exacerbated by the high cost of internet, which is largely influenced by insufficient market competition in the broadband market. While supply-side actions are needed to bridge infrastructure coverage gaps in underserved areas, it is even more crucial to create demand for internet connectivity and digital services through policy measures to close the existing large usage gap. 124 Priority Recommendations • Improve administration of the Universal Access and Service Fund (UASF) to generate a greater Quick impact in expanding digital infrastructure in rural and remote areas. A well-functioning UASF wins can be leveraged as a vehicle to expand access to digital infrastructure, including 4G/LTE mobile networks, in rural areas where the incentives for market investment are low. • Facilitate cross-sectoral infrastructure sharing by leveraging the excess fiber capacity owned by utility companies and the development of local Tier III data centers. This can support the government’s commitment to anchor the ICT sector as an enabler of the post-Covid-19 economic recovery. Medium- term • Increase demand for and usage of broadband services. Given that the high cost of devices is one of the key barriers for the Swazi in accessing the internet, innovative financing mechanisms to subsidize the purchase of end-devices should be considered. Large scale digital literacy and awareness campaigns could also be considered to create more demand for digital services. Priority 3: Enhance government capacity and improve the quality of digital public services This priority area focuses on improving the public sector’s ability to guide digital transformation in Eswatini by bolstering government capacity and institutional coordination for enhancing digital service delivery and increasing interoperability in public-sector-driven platforms and services. Priority Recommendations • Update and expand public sector platforms so they are tailored to government business processes and underpinned by the most advanced, context-appropriate technologies and standards possible. Specially, government has identified the National ID, HRMIS, procurement, and public expenditure management platforms as urgently needing upgrades. Upgrading the National ID and NPR platform and establishing linkages to key service delivery platforms will contribute to Quick increasing social equity and accessibility of public services such as education and social protection. wins • Strengthen interoperability of platforms, leverage shared services, and strengthen underlying infrastructure to facilitate a whole-of-government approach to digital transformation. Ensuring the interoperability of systems and digital platforms could strengthen the GoE’s ability to manage its revenue and expenditure as well as core functions such as management of the civil service and government procurement. It would also improve service delivery for citizens in the areas of identity authentication and access to education, health, and digital financial services. • Establish retail payments and credit infrastructure to achieve full interoperability and expand DFS. Achieving full interoperability across various payment service providers would help achieve authorities’ plans to establishing a national card switch in collaboration with the banking industry. Furthermore, there is a scope for widening the collaborative platform for retail payments given the entry of non-bank players in the retail innovative payments space. Medium- term • Strengthen the oversight and supervision capacity of the CBE to ensure it adequately responds to the development and expansion of DFS in Eswatini. The dynamic nature of DFS has added more regulatory pressure to the CBE, whose supervision and oversight role needs to be enhanced to respond to developments in new payment channels such as remittances and innovative payment mechanisms, including mobile payment services, in a timely manner. 125 Priority 4: Strengthen the digital skills of the Swazi population and create an enabling environment for private sector investment, entrepreneurship, and innovation to facilitate digital technology adoption This priority areas focuses on the strides that Eswatini needs to make to improve the digital skills of its population, ranging from basic literacy to advanced digital skills and talent. Furthermore, key actions are outlined under this priority to foster an environment to attract private sector investment in the digital economy and promote digital entrepreneurship for the creation of an innovation ecosystem. Jointly addressing the challenges in digital skills and digital entrepreneurship development in Eswatini, combined with the government’s efforts in creating an environment for the emergence of the digital economy, will help its citizens and businesses thrive in a digital world. Priority Recommendations • Increase the digital literacy of the population by piloting interventions at secondary school level to build digital skills, particularly in schools that serve poor communities. This can be done through the integration of ICT-enabled teaching and learning in priority subjects such as Mathematics and Science. The pilot could test various models of digital skills training, starting with teachers and then students in secondary schools, and eventually moving to primary schools, with the Quick aim of improving digital literacy across the population. wins • RSTP to establish an incubation program targeted at supporting early-stage digital startups and a seed financing facility that can co-invest with angel investors and others. The RSTP will also benefit from capacity enhancements and increased collaboration with private partners both from Eswatini and from the region, which will result in increased knowledge exchange and enhanced local and regional linkages to drive ecosystem growth • Strengthen MoET’s capacity to develop policies, deliver ICT support services for education and conduct diagnostics. The MoET needs to develop its capacity to plan, deliver, monitor and support digital skills development and ICT-enabled teaching and learning, particularly in light of the increased need for remote learning opportunities. • Strengthen linkages between education and training institutions and employers to enhance labor market relevance of the skills development system. Efforts to involve employers and workplace experts in the identification of programs and content development, and to build capacities in the private sector to actively participate in higher education and training development, can enhance Medium- these linkages. Developing a governance and management system that facilitates better linkages term between the higher education and training system and employers at the national, regional and education/training institution level should be a priority. • Accelerate business environment reforms to support growth of micro and small enterprises. As prioritized in Eswatini’s Post Covid-19 Economic Recovery Plan, improving its business environment should be a medium-to-long-term activity, as it is tied to a range of factors including ICT affordability and a constrained private sector environment. Business environment reforms include simplifying and digitizing business registration and regulation procedures and differentiating between MSMEs and large corporations. 126 Priority 5: Enhance regional integration through digital economy Developing and advancing its digital economy agenda can also improve Eswatini’s regional integration with South Africa and other neighboring countries. This has the potential to further attract private investors and create jobs with larger market bases, as well as to increase social benefits, such as the facilitation of the cross- border labor flow and immigration. The actions outlined under this priority area will assist Eswatini in preparing the policy measures and regulatory frameworks necessary to facilitate cross-border transactions and the flow of knowledge and skills. Priority Recommendations • Connect major education and research institutions through a national REN, connected to a regional REN. The lack of affordable, high-speed broadband for universities in Eswatini remains a significant hurdle for the use of technology in education and research, and even more so for Quick connecting their faculty and students to international teaching and research resources. Therefore, wins connecting major universities and TVET institutions to high-speed broadband should be a priority in the forthcoming digital Master Plan. Establishing a national REN and connecting to a regional REN, such as the UbuntuNet Alliance, should be considered based on a cost comparison and the availability of support services. • Strengthen the collaboration with regional institutions such as the AU and SADC, in particular by leveraging Eswatini’s host role for the AU e-Trade Group’s digital platforms, to promote digital market integration in the Southern Africa region. These collaborations would aim to expand business opportunities for entrepreneurs and MSMEs in Eswatini through regional e-commerce and digital trade platforms. • Establish a regulatory framework for international remittances based on the relevant standards. A framework for the regulation of the remittances market needs to be developed in Medium- accordance with applicable standards in this area, namely the General Principles for International term Remittance Services. • Deepen regional and international linkages to leverage other entrepreneurship ecosystems and promote access to additional incubation and acceleration support, access to finance, and access to markets. The Southern Africa region is a top-ranking entrepreneurship ecosystem in SSA, thanks to the quality of local support structures and its ability to attract and convene a global audience. 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Benchmarking penetration, affordability and coverage Botswana Namibia Eswatini Lesotho World Africa Africa South Indicator World Bank Analysis for DE4A (2019) Unique Mobile-bb Subscription (2021 35% 46% 45% 47% 58% 37% - estimates) Internet penetration (ITU 2017) Percentage of the population using the 47 29 47 51 56 22 49 Internet 13 49 67 59 70 25 62 Active mobile-bb subscriptions (per 100) 0.7 0.2 1.4 2.7 2.0 0.4 12 Fixed broadband subscriptions (per 100) Affordability (cable.co.uk 2020) 13.31 2.13 13.87 4.78 4.30 - - Average price of 1GB (USD) Coverage (GSMA) 3G Population Coverage (%) (Q2 2020) 89.25 99.97 90.00 75.00 99.50 83.03 92.66 4G Population Coverage (%) (Q2 2020) 30.00 75.00 80.17 75 96.48 50.92 85.85 Quality (cable.co.uk 2020) Average Mobile-bb download speed (Mbps) 4.51 7.43 2.78 3.91 14.04 4.51* 24.83 ITU ICT Development Index (2017) - 133 105 118 92 - - ITU Regulatory Tracker (2020) 66.67 70.83 70150 75.67 82.33 - - Note: * Sub-Saharan Africa average 130 Annex 2: Digital platforms Table 10. Benchmarking Targeted Download Link Speeds Country Defined/ Targeted Download Link Speed Kenya 40 Mbps in urban areas and 5 Mbps in rural areas by 2017 (set in 2013) Australia 100 Mbps available to 93% of homes, schools, and businesses by 2018 Finland 100 Mbps connections available to every household by 2016 EU “Digital Agenda for All Europeans to have access to connections with speeds of at least 30 Mbps by 2020, Europe” with 50% or more of households having access to speeds in excess of 100 Mbps 40% of households and businesses having access to 100 Mbps connections by 2015, Sweden and 90% by 2020 Minimum downlink speeds increased in 2015 from 4 Mbps to 25 Mbps, and the United States minimum uplink speed from 1 Mbps to 3 Mbps. Source: ESCCOM ICT Baseline Report FIGURE 21. Broadband Speed Guide Source: Federal Communications Commission1 1 Federal Communications Commission: Broadband Speed Guide: Available at: https://www.fcc.gov/consumers/guides/broadband-speed-guide 131 Annex 3: Digital Platforms Definitions of Digital Platform Elements This annex elaborates the definition, purpose and benefits of the concepts that form digital platforms. It begins by discussing public sector platforms, including interoperability frameworks, then commercial platforms and finally the enabling environment. Public Sector Platforms: Core Components Digital Identification Systems. Digital proof of identity is achieved through systems that often link civil registration details (e.g., birth, marriage or death) to biometric data (e.g., a photo, fingerprint or retinal scan) and even the e-signature of a given person. Beyond “traditional” physical forms of identification, such as ID cards, birth certificates and passports, the emergence of the digital economy has created a need for verifiable digital identity credentials. With digital proof of identity, citizens can access basic services2 and digitized transactions3 and exercise key rights, such as voting and land ownership. Digital ID systems can also accelerate trade and market integration by enabling secure cross-border transactions and access to services. Interoperability Frameworks. Interoperability frameworks allow countries to pursue and implement a “whole-of-government ”4 approach to the digitalization of core government systems, which automates business processes and leads to increased efficiency, accountability, improved service quality and reduced leakages of government funds. However, many countries’ public sector platforms have major challenges with interoperability as a result of two key factors. Firstly, platforms are developed in siloes in line ministries or at different administrative levels and are fit-for-purpose but lack the functional requirements that would allow for future integration. Secondly, different platforms are often funded by different donors who may have preferences for specific systems. In the absence of standardization protocols in the recipient country, these systems also lack the features required for future integration with other platforms. Digital Service Delivery Systems, Citizen Feedback Mechanisms and ‘CivicTech’. Organizations may opt to use digital channels (such as online portals, mobile phones and social media) to offer client- facing services. By offering services digitally, organizations may improve the cost and efficiency of such delivery, and offer ease and convenience to clients. These services may span all aspects of a person’s or a firm’s life. For people, digital services can span from cradle to death, including birth registration, digital identification, education, healthcare, driver’s license, taxation, vehicle registration, property registration, pension, social security, social protection, and death registration. For firms, digital services may span from starting to closing a business, including business registration, taxation, capital raising, initial public offering, financial reporting, and bankruptcy filing. 2 Some examples of these services include cash transfers and other social safety net payments, agricultural subsidies, medical services, business licensing and tax filing. 3 Business such as banks, for example, can use digital ID systems and trust services to meet know-your-customer (KYC) requirements for account opening. 4 A whole of government approach moves countries away from siloed structures and applications that reflect the needs of specific ministries, depart- ments or agencies and towards the development of interoperable systems, underpinned by a shared vision and effective strategic coordination. 132 Digital platforms can also provide avenues for public engagement, feedback, and information sharing, shortening the accountability loop and increasing the responsiveness and quality of service delivery. Both public and private platforms can facilitate the aggregation of public feedback and monitoring of service quality. Public platforms may be fit-for-purpose and managed by specific MDAs, soliciting feedback directly from their users or constituents via SMS, phone or web portal. Private platforms may similarly be fit-for-purpose, targeting specific customers. Widely available private platforms, like social media, where MDAs and companies have accounts, can also constitute channels via which the public provides feedback, alerts entities to problems, or expresses preferences and drives demand for new products and services. By providing a channel for citizens to voice concerns and hold the government accountable, CivicTech can increase government responsiveness to citizen needs, which can help improve overall confidence and trust in public services. In some countries, digital service delivery systems include functionalities for gathering citizen feedback within a single platform to create a feedback loop. For the purposes of this report, these types of platforms are discussed separately, as Eswatini does not have a platform with these functionalities. Further, digital service delivery systems focus on government-to-citizen service delivery. Citizen feedback mechanisms focus on citizen- to-government information flows that should eventually be used to improve service delivery, regardless of whether that service is delivered through a digital platform or not. Public Sector Platforms: Use Cases Digital Financial Management Systems. Digital financial management systems enable the government to digitally account for its various revenue streams and expenditures in order to prevent overspending and facilitate accounting and auditing functions. Often revenues and expenditures are tracked in separate platforms operated by revenue authorities and finance ministries or national treasuries, respectively. If separate, these systems should be interoperable and automated so that government expenditures can be counted against both incoming revenue and agreed-upon budget allocations in real-time. Human Resource Management Systems. Digital human resource management systems enable governments to track and manage the size and structure of their public service cadre (e.g., an establishment list) and associated costs of maintaining the public service (e.g., salaries, benefits and pensions), and perform analysis to understand the impact of HR spending (i.e., the wage bill) on the macroeconomy. Digital HR platforms should track employees’ rank (grade), duty station, the ministry, department or agency to which they are assigned, their salary and commensurate payroll information, and link their position to the establishment list. To function optimally, these systems should be able to authenticate the identity of public servants and pensioners through a digital ID in order to prevent payments to unauthorized individuals and link to the digital financial management system to automate payroll. Digital Procurement Systems. Digital procurement systems create efficiencies in public procurement processes and have the potential to generate significant benefits to government through enhanced quality of goods and services procured and reduced transaction costs and contractual issues with vendors. Digital procurement systems can (1) shorten transaction waiting periods and processing times; (2) enable more bidders to identify tender opportunities and thus enhance competition; and (3) increase transparency in tender award processes and reduce appeals. Ideally, procurement systems should be transparent, facilitating some level of access to the public to find and track procurement opportunities, and allow government audit and accounting institutions to analyze government expenditure. Further, interoperability with a digital financial management system would help expedite and track payments to vendors. 133 Commercial Platforms Digital Commerce or ‘e-Commerce’. E-commerce platforms offer retail services online and connect buyers with sellers, which facilitates the formalization of commercial transactions and can passively generate basic standards and quality control through customer ratings and feedback. The creation and use of e-commerce platforms is low across the African continent, but globally, uptake of e-commerce has fueled GDP growth. A robust e-commerce ecosystem should center around online businesses, startups and their customers, and would also include telecommunications, logistics, transport, shipping, and manufacturing companies5. E-commerce platforms can also allow disadvantaged groups (e.g., farmers, rural households and women) to more readily access new markets. Digital Payments and Mobile Money. Digital payment platforms increase the efficiency of financial transactions through low-cost delivery channels (e.g., agents, point of sale devices, automated teller machines and mobile phones). Firms can use digital payment platforms to transact more easily, build digital credit histories and seek financing. Governments can leverage digital payment platforms created by the private sector to increase efficiency and accountability for payment streams, such as disbursement of social transfers and receipt of tax payments. These platforms are also often the entry point for digital financial services (e.g., banking, savings and credit) because they allow payments to flow through traditional banking systems or through mobile money providers, such as M-PESA in Kenya or Alipay and Tenpay in China. This topic is covered extensively in the Working Paper on Digital Financial Services. Digital Marketplaces. Digital marketplaces aggregate produces and services offered by multiple providers into a single platform and help create value through digital matching, economies of scale, strengthened competition between companies, reduced information asymmetries, and improved variety, quality, and value for money of goods and services6. Digital marketplaces are particularly important for the growth of SMEs, with Business-to-Citizen (B2C) and Business-to-Business (B2B)7 platforms enabling access to a broader customer base at reduced cost. Digital marketplaces also help combat unemployment by more efficiently connecting employers to job seekers, matching talent with market needs, and lowering the transaction costs of hiring. If barriers to regional data sharing and trade have been sufficiently reduced, digital marketplaces can increase local companies’ access to foreign goods and services. Social Media and Apps. Social media and applications (apps)—such as Facebook, Twitter, WhatsApp and ride sharing apps—are arguably the platforms with the highest levels of usage globally and have thus been transformative in the digital economy. These platforms can connect people to ideas and resources that were previously out of reach, which is why many public and private sector actors leverage them to improve service delivery and market themselves. Although social media holds great potential, many have been cautious of the risks associated with such platforms, as identity authentication is difficult and there is little validation of the information being disseminated. 5 https://unctad.org/en/PublicationsLibrary/tn_unctad_ict4d09_en.pdf 6 Guellec and Pauvnoc 2017. 7 Supports digital transactions between businesses (e.g., wholesalers, retailers, distributors, etc.) for products, information, and services 134 Enabling Environment Policies and Regulations. Policy and legal frameworks allow government to facilitate the development of the digital economy. Frameworks should be forward-looking, adaptive, and technology-neutral to facilitate uptake and innovation while also addressing relevant risks. A country’s policy and legal framework establishes the ‘rules of the game’ that govern public sector financing, implementation, operations, maintenance and oversight over digital platforms and related infrastructure. Such rules typically cover issues such as cybersecurity, data access, ICT standards, government ownership of ICT systems, and e-commerce, to name a few. An enabling environment can increase online trust, which is necessary for systems to scale up. Nevertheless, well-designed frameworks to not necessarily translate to effective implementation. In cases where there is limited functioning of government line ministries or legislative bodies, some countries have also found it beneficial for the framework to create or designate a specific government entity (semi-autonomous or directly reporting to the presidency) to provide strategic and technical guidance for the whole of government and serve as a focal point for the private sector with respect to interoperability between public and private sector platforms. Systems and Infrastructure. In addition to relying on physical ICT infrastructure, digital platforms have their own internal systems and infrastructure on which they operate, including operating systems and software, shared services, and user interfaces. Optimal platform systems and infrastructure require (1) fast, reliable affordable connectivity; (2) proper design and customization based on actual business processes, enforcement of standards and protocols, especially with regard to interoperability; (3) properly-structured relationships and contracts with vendors; (4) the ability to store, archive and back up data; and (5) robust cybersecurity to protect governments’, businesses’ and citizens’ sensitive data. Both government and the private sector have a direct role in funding and managing the systems and infrastructure used in platforms. Standards and Protocols. Standards and protocols for designing, operating and interfacing digital platforms—such as those for developing Application Program Interfaces (APIs), ensuring data quality, and tracking usage and reliability—are critical in creating a sustainable digital economy and maximizing the efficiencies gained through use of digital platforms. Ideally, the policy and legal framework would require the development of standards for data provenance, accuracy, timeliness, and completeness; data archiving, preservation, and redundancy; data analytics; interoperability of systems; security and authentication; system reliability and maintenance; vendor contracts; and service-level agreements within government and with vendors. Robust yet customizable standards and protocols are critical to realizing a whole-of-government approach and systematic monitoring and evaluation (M&E) of platforms’ performance. Skills, Capacity Building and Change Management. Public and private sector actors require specific skills to maximize the benefits of digital platforms, which include technical ICT knowledge to operate, maintain, and improve their systems; procurement and contract management skills to manage ICT vendors; the ability to coordinate on technical issues both within and beyond their sector; and change management skills to facilitate the adoption of new platforms. Unfortunately, many countries lack capacity in these areas, constraining them to hire expertise from international firms. Poorly designed contracts may leave the door open for ICT vendors to maintain ownership over government systems or data, require frequent systems upgrades at a high cost to government, or develop systems on proprietary software such that government cannot easily sever the relationship with the vendor without having to recommission an entirely new system from scratch. The adoption of digital platforms thus requires significant changes in the way governments and firms operate, as well as taking stock of key digital assets and developing incentives and drivers to effect change via the use of platforms. Without solid change management, costly ICT systems may go un- or underutilized, may not be sufficiently customized to meet user needs, and may eventually fall into disrepair. 135 Open Data. Increasingly, the public demands or is offered transparency over public and private sector data to facilitate innovation and increase accountability. There are many approaches to open data, including no data sharing, providing pre-analyzed data upon request to stakeholders on a ‘need-to- know basis,’ and wide sharing of raw data on fully accessible platforms. Governments may mediate data sharing to various degrees through the policy and legal framework. Private sector actors may do so through legal mechanisms such as contracts on information disclosure. Actors are increasingly implementing aspects of open data best practices and putting in place processes for collecting, storing, and sharing public sector data in standardized formats. There are also numerous international initiatives and organizations dedicated to increasing data availability and enhancing frameworks and protocols for data sharing. 136 Digital Platforms in Eswatini Public Sector Platforms Digital Identification Systems. Eswatini’s foundational ID systems are managed by MOHA, and include a national population register based on civil registration and a national ID card issued to adults. Each of these systems are linked by a unique identifier, called the Personal Identification Number or PIN. The NPR has been a centralized, digital system since 2000 that is hosted and maintained by the Ministry of ICT in a shared data center. It represents an important asset for Eswatini, and is generally stronger than many CR and ID systems in Sub-Saharan Africa. Major achievements include a huge increase in the birth registration rate over the past decade, which now stands at 70-80 percent for children under five. In addition, the NID and PIN are widely used by people as proof of identity in their daily lives and in other government systems. Death registration was low in the past but has increased significantly after the introduction of funeral benefits. Furthermore, the NPR—while generally underfunded and understaffed—appears to have quality, dedicated staff with good technical knowledge and a high level of commitment to improving the system and serving the people of Eswatini. Under the current system, birth registration and the issuance of identity cards are closely linked with each other and the determination of nationality. Children are assigned PINs during birth registration, which requires proof of parents’ nationalities in order to establish the nationality of the child. At age 16, individuals can apply for the NID card based on their NPR record and PIN. Cards are issued to both citizens and foreigners, but the latter receive a different color card. Applications to register vital events and obtain a NID are processed in one of 14 centers that include NPR windows (separate for CR and NID) and other government services, including a separate payments window. Birth registration is a largely manual process that involves a paper application that is re-entered by hand and sent to the central system for PIN issuance. Although the process is completed on the same day, limited computerized workstations and unreliable internet often create delays. The application is then typed and sent to the central system for validation and deduplication using an Automatic Fingerprint Identification System. If a person wants to apply for a NID but was never registered at birth, they first need to complete the birth registration process to obtain a PIN before applying for a NID. Card production is carried out centrally by NPR staff within 48 hours and distributed to regional centers for collection. The PIN is a 13-digit structured number based on date of birth, gender, citizenship, and a serial number. The NID is a basic card that includes a 2D barcode encoded with the PIN and two encrypted fingerprints. Applicants authenticate using fingerprints to collect the card. The first card is free, but replacements—which are reportedly frequent—require payment of a fee. The NPR system also has an Unstructured Supplementary Service Data (USSD) application for people to track the processing of their cards. However, challenges remain. There are persistent coverage gaps for children and adults. Despite major and largely successful efforts at sensitizing people to the importance of birth registration—particularly from a public health perspective—some obstacles remain. Chief among these is the fact that civil registration laws require parents to prove their citizenship during the birth registration process, which many are unable to do. This creates a cycle of under-registration: parents who are not registered themselves cannot register their children, and adults who were not registered at birth are then unable to obtain the NID until they register their birth and obtain the PIN, which may be impossible without their parents’ registration. This partly explains the relatively low NID coverage rate for adults, which is around 50 percent. There are particular concerns about the risk of statelessness and denial of services for which ID is required due to lack of documentation (e.g., school enrollment requires birth certificates). Mop up campaigns are planned to address these issues and ensure the inclusion of the elderly and disabled persons. 137 A general lack of resources means that IT systems have not been adequately upgraded since the early 2000s—nearly 20 years ago—and do not meet performance or security standards. For example, there is currently no disaster recovery site for the data center (an IMB mainframe), most systems run older software that is no longer secure, data are not encrypted, and NID cards cannot be revoked or invalidated. There are limited identity services and digital ID. Although a number of government databases store the PIN, there are only a few systems that are able to perform identity verification checks against the NPR using this number. Such services are limited not only by technology—e.g., the lack of other digital systems, and the capacity of the NPR server—but also by the lack of governance and trust frameworks as well as privacy- by-design measures (e.g., tokenization) necessary to protect people’s PINs and other personal data as they become more frequently used. Furthermore, digital authentication technologies using the NID card have not yet been deployed, and other alternative solutions do not currently exist to allow for secure in-person or remote authentication. Reforms needed to the legal and regulatory framework. ID systems require a comprehensive legal and regulatory framework. While some enabling laws do exist, such as for civil registration and the NPR, certain aspects of this legislation are out-of-date and create significant barriers to full inclusion and digitalization (e.g., paper-based processes, application requirements, etc.). In addition, while Eswatini has data protection and cybercrime laws in force, regulations for the existing laws need to be prepared and the relevant regulatory bodies need to be created. The Government of Eswatini views the NPR as a foundational resource for the country and seeks to improve the inclusivity and security of the system and leverage it to provide better services. Meetings with MOHA, the Ministry of Economy, MICT, and the Registrar General confirmed a high level of political commitment to improving the NPR system. The primary goals of the government are to respond to the main challenges listed above, including: • Ensuring that the system is inclusive of all people in Eswatini, regardless of age or nationality • Increasing security and reducing fraud related to identity documents, passports, and border crossing • Responding to demand from other ministries and the private sector (e.g., banks and MNOs) for ID verification services and to enable the unique identification of service users. Given this commitment and the central role that an inclusive and trusted ID system can play in the government’s overall goals of improving efficiency and service delivery and growing the digital economy, there is a clear opportunity to strengthen the NPR. Achieving the government’s goals for the NPR will require investments in infrastructure and technology, business process re-engineering, and reforms to the legal and regulatory framework. Given the importance of the NPR as a critical system and the potential role it can play across the government and economy, it is essential to approach these reforms holistically and with clear outcomes in mind in order to avoid common pitfalls. For example, many countries in Africa have focused on building ID systems with the latest technology, which may not always be necessary for—or capable of—meeting priority use cases and concerns, and typically comes at a high cost and with vendor lock-in. In-depth technical assessments of the current systems, that take into account the local context and requirements for future use cases, are crucial for identifying priority reforms and ensuring that investments and design decisions are fit for purpose. 138 To assist the Government of Eswatini with this deeper technical analysis, the World Bank’s Identification for Development (ID4D) Initiative has undertaken two parallel assessments: • ID4D Diagnostic: A Diagnostic, which provides a more in-depth technical evaluation of the strengths and weakness of the current NRC systems, and identify priority needs and use cases across sectors in order to make concrete recommendations for improving the system’s inclusivity, security, and utility. • ID Enabling Environment Assessment (IDEEA): The IDEEA, which provides a comprehensive assessment of the current legal and regulatory framework for the ID system and other relevant areas (e.g., civil registration, customer due diligence, etc.), and its assets and gaps. Together, these two assessments can serve as a useful benchmark, identify priority areas for reform, and serve as critical input for future potential support from the World Bank. 139 Financial Management Systems The Eswatini Ministry of Finance uses a computerized financial system, which controls and reports expenditure on a cash basis. However, the absence of a more robust, digitized and integrated financial management system that is interoperable with other key government systems is considered a contributing factor to the lack of financial controls for government spending. Recently the Treasury introduced a stopgap measure for tracking expenditures and arrears while the Integrated Financial Management System is being implemented, called the Invoice Tracking System (ITS). The system is a basic IT application which records invoices and payment instructions, creates batches of invoices that correspond to those in the existing accounting system, submits these batches online to the Treasury, reviews and verifies the invoices, and records invoices marked as paid from specific bank accounts. Public financial management outcomes are affected by the weak financial management information system. Consolidated budget data suggests that there were expenditure deviations varying between 15 and 25 percent over the last three years (2017-2019). In addition, domestic expenditure arrears rose to 6.7 percent of GDP as at end-2019, up from 5.9 percent of GDP reported in January 2018. This is in part attributable to weak expenditure controls, especially the lack of effective control of expenditure commitments at the level of line ministries. This undermines fiscal discipline. According to the Accountant General, core rules are not complied with on a routine and widespread basis, through direct breach of rules or unjustified routine use of simplified or emergency procedures. The 2016 Auditor General report highlights a lack of compliance with internal controls, which is repeatedly observed. The 2019 budget speech highlighted outstanding domestic arrears as a key risk to the country’s fiscal status but did not indicate the total value of those arrears. This indicates a need to strengthen both analog and digital public financial management in Eswatini. 140 Human Resource Management The Ministry of Public Service uses a Human Resource Management Information System (HRMIS) that was developed in 2006 by the Ministry of ICT’s Government Computer Services Division and is stored in the government’s mainframe. The HRMIS started off as a management system that was primarily utilized by the accounting cadre. Therefore, certain features that the government considers important for a HRMIS are not currently implemented. The Ministry of Public Service continues to have IT support from the Ministry of ICT for system maintenance. The HRMIS has links to the civil service recruitment process. Each fiscal year, budget is allocated for positions that are to be opened and the corresponding values are posted in the HRMIS. Once an appointment is confirmed by Civil Service Commission (CSC), then position is created in HRMIS. However, documentation about the appointment is not shared across the CSC and Ministry of Public Service and duplicate information must be submitted to both agencies in order for it to be linked to the HRMIS. Certified documents are linked to the person’s application and personnel file in the HRMIS. One key functionality that could be improved is that of employee records tracking and links to payroll. At present, each civil servant has three identifiers within the system: (1) a unique employee identifier (derived from part of the civil servant’s graded tax number and linked to their National ID number), (2) a personnel file number (used for tracking their CSC application), (3) a post code (used to match a person with their mapped position type within the civil service establishment, e.g., HR officer in the Ministry of Finance). In principle, only civil servants with post numbers are to be paid. But the current HRMIS contains a glitch which enables employees without these numbers—namely persons not holding an established post within government—to be paid. This results in potentially significant financial losses for the government. The Ministry envisions several upgrades to the system. One includes simplifying the employee identifiers by utilizing the National ID and including biometric details in the HRMIS. The HRMIS used to be able to store and show employee photos, but this functionality has been lost. Another upgrade includes interoperability with the Treasury for payroll distribution. Currently the Treasury and the central bank use EFT to disburse salaries, but the Ministry of Public Service sends the payroll information to them manually. The Ministry of Public Service also envisions digitizing their performance management system in the near future. The performance management system is primarily analog and was designed in 2018. However, the Minister has yet to announce the commencement of its implementation. The main objective of the performance management system is to make career development and progression more transparent and objective. With respect to digitization, the ministry would like to move to a digital balanced score card for civil servant performance, with immediate supervisors as assessors, and integrate this into the HRMIS. Given that the HRMIS was designed in-house by government staff, it has not yet been decided if this modification would be done internally or by a vendor. 141 Digital Procurement Systems The Eswatini Public Procurement Regulatory Agency (ESPPRA) has several digital platforms to aid businesses in participating in public procurement processes. There is (1) a database for tender alerts where businesses opt in to be notified during stakeholder engagement activities; (2) a website with tender information, including freely downloadable tender documents and bidder qualification requirements, opening and closing dates of the tenders, views of the bid evaluation scores, notice of intention to award, and name of entity eventually awarded the tender; and (3) a tender review and advertising portal which sends emails to prospective bidders from the database. Tenders are also advertised via social media. These platforms were created and are maintained internally by ESPPRA IT staff. There are currently two IT staff members supporting these platforms, although ESPPRA originally envisaged that five staff would be required. Budgetary constraints have prevented the hiring of more personnel and some outsourcing may eventually be required. ESPPRA also runs these platforms via their own servers; however, capacity is already overloaded and will need to be upgraded. ESPPRA found that having private servers was more reliable than using government infrastructure. Public procurement is one of the cabinet’s five priority areas; yet this prioritization has not resulted in higher budget allocation and execution for procurement programs. However, this dynamic may shift given that the need to increase access to procurement for youth and MSMEs is prominently featured in the Post Covid-19 Economic Recovery Plan. ESPPRA previously planned an SMS project with MTN to have tender notifications sent to prospective bidders’ cell phones, but this was eventually put on hold due to lack of funds. Nonetheless, there are other plans to make tendering a more accessible process, including developing partnerships with post offices, local services centers and Tinkhundla where internet connectivity allows increased access to the tender portal. ESPPRA is also developing an e-procurement strategy, and aspires to have a consolidated e-procurement system with enhanced functionality and interoperability with key agencies. It also plans to create a national supplier database that is automatically connected with Eswatini Revenue Authority and linked to Tax Identification Numbers (TIN). During the consultations, legal reforms for procurement were cited as a critical issue, given that government plays a large role in the market. The ESPPRA legal department is drafting proposed amendments to the 2011 Public Procurement Act. Part of the suggested amendment mandates authorities to promote participation of local companies, most of which are SMEs. The amended Act would also allow ESPPRA to generate revenues from advertisements placed by government agencies, charges for specialized audits not in annual audit plan, user paid training services, and value for money audits. Additionally, and amendment of the 2011 Citizens’ Economic Empowerment Bill is in draft stages and waiting to be passed. .ESPPRA is also developing an MOU with SEDCO to develop a curriculum for training SMEs on procurement procedures. 142 Domestic Tax Payments, Customs, and e-Single Window In 2011, the Swaziland Revenue Authority (SRA) was established to unify two previously separate units dealing with customs and tax. One of the major reforms introduced by the SRA was a Value Added Tax (VAT). There was a legacy digital tax management platform used prior to the introduction of VAT and this system was migrated. Now, there is one digital platform for customs (ASYCUDA World) and another for tax (Revenue management system [RMS]). The Ministry of ICT was involved in the migration to the RMS platform and also managed previous versions of ASYCUDA World. SRA runs their digital systems with a slim staffing complement. The IT department is small, with two directors: one for innovation and systems who supervises 15 staff and the second for infrastructure and servers with 11 staff. Everything for the RMS is done by the vendor and there is a standing contract for support visits. As part of the implementation of new systems, SRA introduced a single Taxpayer Identification Number (TIN), which is a unique 9-digit identifier generated by the RMS and used for both tax and customs purposes. All business owners and those required to file taxes by law must register for a TIN. Private persons who are formally employed are not required to file unless their earnings exceed 1.2 million Rand and businesses do not file on their behalf. In the future, SRA eventually wants to move towards using the National ID number within their systems, especially for sole proprietors or others who do not require a TIN. SRA has an electronic tax system available for citizens and businesses for file their taxes. Currently most commercial entities use the platform but many individuals do not yet do so. To address this, SRA will launch a campaign to motivate taxpayers to pay digitally. As part of this transition, SRA will no longer accept cash at government service points, but will accept credit and debit cards. Mobile money payments from citizens to SRA are not yet possible, but the necessary upgrades to the system for Automated Clearing House (ACH) and mobile money transfers are envisaged. Refunds, however, can be processed and issued through ACH transfer functionality in the RMS. An KYC ‘lite’ process is used to verify recipient bank details. Namely, SRA issues a refund letter to the recipient for confirmation and verifies the rightful bank account owner by cross-checking their TIN and national ID information. SRA acknowledges that income tax collection is an area that requires sensitization and change management. It is moving towards a self-declaration model, but is concerned that compliance will decrease because people are not yet sensitized to this approach. Further, much of the data that SRA requires for monitoring of tax compliance is held by other ministries and is submitted manually. This data includes, but is not limited to, the register of companies, business licensing information and deeds register, and a public provident fund. VAT is collected at ports of entry and registered in the ASYCUDA World system. All 8 commercial borders, the airport and the inland rail freight depots are connected to the SRA server via the ASYCUDA World system. The system has few issues with downtime and connectivity and customs payment are typically processed within 3 hours. Implementation of a single window is underway but incomplete. SRA is developing a program designed to create interoperability for automating back-office communications between the relevant government systems so that they can track data in real-time. However, interoperability with the government mainframe is a challenge. Full data transfer from the legacy system and inputting of paper-based archival data has been slow. In some instances, end users have used this incomplete transition to justify resistance to the newer system, citing mistrust in the quality of data. In 2021, SRA will begin operating under a new organizational strategy, which may advocate for the development of a SACU- wide trade system. This would build upon Eswatini’s existing trade MOUs with South Africa and Mozambique. 143 Health Management Information Systems The Health Resource Management System (HRMS) was launched in 2015 and connects 178 of the country’s 334 health facilities. Given the infrastructure and connectivity constraints Eswatini faces (see chapter on Infrastructure), the Ministry of Health has installed its own microwave technology. Towers have been built throughout the country and a dedicated signal is used for real-time dissemination of information. The costs are covered by The Global Fund and the connected health facilities do not incur reoccurring charges. The government is working with PEPFAR to set up high-elevation infrastructure sites to achieve last-mile connectivity for the remaining facilities. Information in the system is available in real-time to those connected. In the system, patients have a PIN, which is a unique identifier at facility level. This is the same PIN used for a citizen’s national ID number and is the basis for interoperability with the NPR. Babies receive a PIN at birth, and can get a National ID at the age of 16. For those without an NID or PIN, the system creates a placeholder for them by generating a barcode for record retrieval and issuing a personal health card, called a “Red Card,” which facilitates easy retrieval of records. Each facility has a dashboard to improve the quality of health data available and data use. The dashboards are updated on weekly basis during facility standing meetings to assure quality. There is also a built-in notification system that alerts the Ministry of Health in the event of an outbreak of disease such as measles or malaria. The Ministry of Health is also rolling out a Client Management Information System (CMIS). Initially, the development intended to use an opensource platform but in the end, the system was custom-built using MySQL in collaboration with a US Centers for Disease Control quality assurance program. The system complies with the relevant ISO standards and is linked with sector key performance indicators. The CMIS is integrated with the HRMS, and if there is a misalignment between data in CMIS and civil registries, the Ministry of Health is notified and works with regional home affairs offices to correct the irregularities. A quality management system was piloted in December 2019 and is interoperable with CMIS; this is the digital arm of a program designed to gather citizen feedback regarding health services. Feedback regarding availability of medication, cleanliness of facilities and the bedside manner of medical staff is collected and measured against existing performance indicators. It uses a text-based system where clients opt in. Health officials can program into the system indicators of interest, such as age bracket, according to their needs, e.g., for family planning. SMS and calls are placed through a toll-free number. The system is widely considered a success story within government. Other ministries, such as the Ministry of Public Service, have approached the MoH for support in developing their own client satisfaction systems and training databases. To run and maintain these systems, the Ministry of Health employs network engineers, database administrators, six software developers, statisticians, and health information officers. Some of these positions are funded from the government budget and others through donor financing. There is a data management team responsible for data extraction and matching, then sharing with the ministry’s M&E unit. Interns from Limkokwing University of Creative Technology and other universities with IT and Computer Sciences departments are also hired to fast-track rollout of specific software upgrades. Still, staffing remains a challenge, as is road connectivity, which is an issue when IT experts need to be deployed to health facilities to resolve system problems. Increasing the level of government-funded staff is critical to allow the MoH to be able to sustainably implement its future goals for the systems. 144 Multiple plans exist to expand digital health management information systems. Improvements to the HRMS include adding biometric verification and linking it with the PIN; developing a national repository of data; improving production of facility-level reports; and setting up an interoperability platform or an Application Program Interface (API) that would link with laboratory results and drug management data. For the CMIS, there are plans to develop a ‘CMIS lite’ for use by health professionals traveling to remote areas and in-patient client management modules. There is also discussion of developing a dedicated SMS gateway for health. The implementation of the health information management systems has produced significant positive results for health care delivery in Eswatini. Prior to implementation of the systems patients experienced excessive wait times and there were reported instances of people going to multiple sites for the same drugs, causing critical drugs to fall out of stock. The system has enabled the government to transition from situation where they were simply counting HIV and AIDS cases to one where they are able to slow the rate of transmission and achieve a decline in disease prevalence. Buy-in and commitment from the Prime Minister to introduce e-Government and pilot it in the health sector was instrumental to the successes in digitizing health care service delivery. An e-health strategy was developed and launched by the Prime Minister and the systems were introduced at the community level, to ensure local buy-in. Furthermore, the integration of universities to build capacity and help capture health data was considered as another success factor. A Tinkhundla program has also been introduced to train chiefs on gathering community-level health information using iPads. Local government The Ministry of Tinkhundla (Local Government) is establishing digitally enabled one-stop service centers in every Inkhundla (region) to facilitate improved service delivery in rural areas. Priority Inkhundla for establishing centers are those that do not already have a clear service point or town center at an ideal geographic location. As of January 2020, there were three fully functioning centers in Siphophaneni, Matata, and Sihlutse. There are four priority centers for development in Luve, Sithobelweni, Lomahasha, and Maiwane. At the one-stop service centers, people would be able to access passport and national ID services, update birth and death registration details, and complete car registration. The Ministry of Tinkhundla is also looking to develop skills and service profiles throughout the centers. It also wants to create a marketplace for local skills and services that shows lists of services, sourcing of local products, and contact persons available at local level, as a way to reduce economic migration. They plan to do so by leveraging and existing platform run by a private entity. There are also programs within Tinkhundla to enhance wireless access in selected Inkhundla service points. This includes an ESCCOM program targeting rural areas to improve ICT and communications. The Ministry of Tinkhundla has future plans to connect all the one-stop service centers with the government-wide area network and offer a full range of digital services to citizens. 145 Private Sector Platforms Digital Commerce and Marketplaces There are currently no digital commerce or online marketplaces in Eswatini, though the MICT hopes to launch an e-commerce and e-trade strategy with technical assistance from the AU. The potential for e-commerce uptake is typically measured by financial inclusion indicators (described above and in the DFS chapter) and by ICT and mobile penetration rates (detailed in the Digital Infrastructure chapter). Social Media Platforms Despite the lack of digital marketplaces and e-commerce platforms, social media users make up 23 percent of the population8. Ninety-seven percent of active social media users access platforms via mobile devices, and this represents a critical opportunity for employing social media marketing strategies by MSMEs. Some key statistics include: • 96.8 percent of Facebook users accessed via any kind of mobile device compared to 85 percent of users accessing only via mobile device; • The number of people that Facebook reports can be reached with adverts is 250,000, with reported advertising reach of 13 percent of the population aged 13+; • The number of people that Instagram reports can be reached with adverts is 38,000, with reported advertising reach of 4.9 percent of the population aged 13+; • The number of people that Twitter reports can be reached with adverts is 20,400, with reported advertising reach of 2.6 percent of the population aged 13+; and • The number of people that LinkedIn reports can be reached with adverts is 61,000, with reported advertising reach of 9.5 percent of the population aged 18+.mmary of Digital Competences 8 According to the #Digital2020 Eswatini report, figures current as of January 2020. 146 Annex 4: Summary of Digital Competences TABLE 11. Summary of Digital Competences, based on EU DigComp 2.1 and Digital Literacy Global Framework (DLGF) Competence Competences Proficiency Levels Areas 1. Devices Identify and use hardware and software tools and and software technologies. Foundation (Levels 1 and 2) - Can operation a deal with simple tasks that involve 2 competences involving physical and software operations remembering content and instructions of digital devices. but also requires some guidance to 2. Information Search for, judge the relevance (including its source) and execute. and data organize digital content. literacy 3 competences involving browsing, evaluating, and managing digital content. 3. Interact and engage in citizenship through digital Communication technologies while adhering to netiquette and managing and one’s digital identity. Intermediate (Levels 3 and 4) - Can collaboration independently deal with well-defined, 6 competences involving communicating, collaborating, routine and nonroutine problems that and engaging in citizenship through digital technologies as involve understanding content. well as netiquette and digital identity management. 4. Digital Create new or modify existing digital content while correctly content creation applying copyright and licenses as well as programming. 4 competences involving developing and integrating digital content as well as understanding copyrights, licenses, and programming. Advanced (Levels 5 and 6) - Can deal 5. Safety Ensure security measures while safeguarding against risks with and provide guidance to others threatening devices, privacy, health, and the environment. on different tasks and problems that involve applying and evaluating content 4 competences involving protecting devices, personal data, in complex situations privacy, and health as well as the environment. 6. Problem- Solve problems in digital environments and use digital solving tools to innovate and keep abreast of the digital evolution. 5 competences involving resolving digital issues, creatively using digital technologies, bridging personal gaps in digital skills as well as computational thinking. Highly specialized (Levels 6 and 7) - Can resolve complex problems with few or 7. Career- Use specific career-related digital technologies and content several moving pieces, guide others, related to have access to opportunities in the digital economy. contribute to professional practice and competences* 2 competences involving operating specialized digital propose new ideas to the field. technologies as well as working with digital content for specific career-related fields. Source: Based on Carretero et al. 2017, and UIS 2018. Note: a. Proposed by UIS as additions to the DigComp 2.0 framework, which was subsequently updated to DigComp 2.1. 147 Copyright © 2020 International Bank for Reconstruction and Development / The World Bank. Some rights reserved. World Bank, 1818 H Street NW, Washington, DC 20433. Telephone: +1 202-473-1000; Internet: www.worldbank.org