Foreign Capital Inflow, Domestic Credit and Private Investment in Swaziland

Abstract

Historically, private investment in Swaziland relied heavily on foreign resources, which have been rapidly declining in the 1990s. This article examines the role of domestic credit and interest rate policy in promoting desired and sustainable investment rates in the country, in the context of the common monetary agreement. While foreign capital inflow has a significant effect in the long-run, private investment is found to be always responsive to changes in bank credit to the private sector. The paper argues for increased mobilisation of domestic resources and non-credit support to domestic enterprises as means for stimulating domestic investment and employment.


Eastern Africa Social Science Research Review (EASSRR) Vol. XVII No. 2 June 2001, pp. 69-90