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Friday, 14 October 2011

KING BEGS PRETORIA OVER BAILOUT

Southern Africa Report

13 October 2011

Swaziland’s absolute ruler Mswati III was back in South Africa this week to try to persuade Pretoria to proceed with the R2,4-billion (USUS$307-million) loan promised to his cash-strapped regime, but minus the terms and conditions on democratic change.

His clampdown on the Swazi pro-democracy movement has been intensifying since the week of exuberant anti-government protests in early September, closely mirroring Mswati’s growing reluctance to entertain even the vaguely worded democratic reforms required by South Africa as its condition for granting the loan.

Mswati has balked at signing the memorandum of understanding attached to the loan. The MoU closely follows the 3 August 2011 statement by South African Finance Minister Pravin Gordhan, reinforcing its prescriptions on fiscal reform (Vol 29 No 21). Its stipulations on democratic change are fluffy by comparison, with no mention of the sorts of proactive steps Mbabane should take to move towards democracy, such as unbanning political parties.

Instead the MoU reiterates Gordhan’s call for “broadening the dialogue process to include all stakeholders” and his description of the role of the Joint Bilateral Commission on Cooperation, which would meet a few times a year to oversee adherence to the loan conditions. Mswati has rejected both requirements.

The MoU remains unsigned. South Africa has consequently not paid the first of the three tranches of the loan, originally envisaged for the end of August.

Pretoria has said that it will not water down the democracy dividend of the loan conditions. It has also signalled that it does not want other states to bail out Swaziland sans conditions on democratic change. Mswati appears to have sought a loan from Qatar (Vol 29 No 22), and in late August his loyal government point man Prime Minister [Barnabas] Sibusiso Dlamini visited the sheikhdom, reportedly to see if it would be an amenable creditor. In this week’s Qatar-South African bilateral in Pretoria, Qatar Assistant Foreign Affairs Minister Saif Maggadam Al-Buainain denied any knowledge of the Swazi request.

The fiscal crisis in Swaziland stems in large part from the sudden cut in revenue from the Southern Africa Customs Union (Sacu), which until the end of last year provided 60% of Swazi government revenue, about 11% of GDP. But the crisis is systemically rooted in the proclivities of the ruling autocracy. Rampant state spending sustains the monarchy through direct annual grants to the king worth R230-million (US$29,4-million), added to this year by R300-million (US$38,4-million) in upgrades to the network of royal palaces for the king and his 13 wives.

It also provides bloated salaries and perks for MPs, cabinet ministers and royals deployed in government, and is otherwise directed on lavish construction projects, notably the second international airport with its R2-billion (US$256-million) price-tag. In addition the state supports a 36 000-strong civil service that imposes a public wage bill of 18% of GDP. The International Monetary Fund (IMF) has refused to provide Swaziland with the recommendations necessary for it to borrow from the African Development Bank (AfDB) until it starts to comply with spending restraints proportionate to the shortfalls of Sacu revenue.

But Swaziland’s financial meltdown is more about how the country is run than about fiscal technocratic checks and balances. Political parties have been banned in the country since 1973, when the then monarch King Sobhuza II declared himself supreme ruler, and the lack of democratic oversight in government has resulted in a system accountable to little but the whims of royal diktat.

There has been scant pubic information or news reportage in Swaziland on the details of the loan from South Africa, and nothing concerning the conditions on democratic reform urged by Pretoria.

On 9 October the Times of Swaziland, which reports on Swazi affairs with an unwholesome appetite for self-censorship and pro-Mswati spin, announced that South Africa had just declared that it has attached democracy conditions to the loan, and that the “revelation” was made by Pretoria’s representative to the United Nations’ Universal Periodic Review on human rights, which dealt with Swaziland on 4 October.

Swazi government ministers have routinely told the press that the MoU concerning the loan is still being finalised. What they do not say is that the king has personally refused to allow the MoU to be signed by his foreign and finance ministers.

Mswati has tasked his prime minister with finding alternative sources of funding, including making what have by now become routine appeals to the European Union to provide budget support. Brussels has made clear that it will not help bail out the government, citing not just the absence of democratic accountability on but also the lack of even rudimentary transparent auditing oversight by Mbabane.

In the meantime the economic meltdown, which is further buffeted by the international financial crisis, is affecting an ever-widening range of sectors, including health, education, transport, the judiciary and, most recently, the country’s vital food processing industry. At the beginning of October Swaziland Fruit Canners announced that it would close at the end of the month, with a loss of 498 jobs The company, which was bought by the Western Cape-based Rhodes Food Group in 2008, announced that it has recently started to run at a loss.

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