Mbabane – Eswatini’s energy sector is set to become a major driver of economic growth in 2026 as the government ramps up investment in domestic power generation and energy security, according to the International Monetary Fund (IMF).
The IMF’s January 2026 World Economic Outlook update and Country Report No. 2025/279 projects that Eswatini’s real GDP growth will accelerate to 4.6% next year, largely supported by investment-led capital projects, with energy infrastructure taking centre stage.
“Several key energy projects are expected to move from planning to execution in 2026, marking a shift from policy design to tangible implementation,” the report states. These initiatives aim to improve energy security, strengthen domestic production capacity, and reduce vulnerabilities linked to external supply shocks.
Investments in the energy sector are also expected to have spill-over effects across the economy, particularly in construction, logistics, and related services, reinforcing overall growth momentum.
A major concern highlighted by the IMF is Eswatini’s continued reliance on imported electricity. The country currently imports an estimated 70% to 80% of its power, mainly from South Africa’s ESKOM and Mozambique’s EDM, exposing the economy to price volatility and supply disruptions.
To address this, the 2026 outlook calls for expanded domestic electricity generation, particularly through biomass and solar power projects. “These could help diversify the energy mix while improving resilience against regional power shortages,” the report notes. Strengthening local generation capacity could also improve Eswatini’s balance of payments and reduce pressure on foreign exchange reserves over the medium term.
The IMF identifies the Strategic Oil Reserve Project as a key initiative to reduce reliance on fuel imports and improve the country’s ability to manage supply disruptions. Beyond energy security, the project is expected to stimulate construction, storage infrastructure, and logistics activity, providing an additional boost to economic growth during implementation.
While the overall economic outlook is positive, the IMF warns of slightly higher inflation, partly due to negotiated increases in electricity tariffs. These adjustments are intended to reflect cost recovery needs within the energy sector as new investments are rolled out.
The Fund stresses the need to balance financial sustainability in the energy sector with affordability for households and businesses amid still-elevated living costs. Over the longer term, it encourages Eswatini to focus on sustainable energy solutions, including green financing and aligning energy investments with climate adaptation strategies.
“Climate-related risks, such as droughts that affect hydropower generation, remain a concern. Diversification toward solar, biomass and other renewable sources is critical to ensuring long-term energy and economic stability,” the report adds.
The IMF also notes that while global growth is increasingly driven by technology and artificial intelligence, sub-Saharan Africa’s outlook is supported by commodity markets and structural reforms. The region’s growth is projected at 4.6% in 2026, mirroring Eswatini’s forecast.
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