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Tuesday, 23 June 2015

ECONOMY SLUMP AFTER TRADE SANCTIONS

The trade sanctions imposed by the United States because of King Mswati III’s poor record on human rights will contribute to a slump in the kingdom’s economy, a senior Central Bank of Swaziland (CBS) official said.

On 1 January 2015, the US withdrew Swaziland’s trading benefits under the Africa Growth Opportunities Act (AGOA) after the kingdom ruled by King Mswati as sub-Saharan Africa’s last absolute monarch refused to accept democratic change.

Swaziland had previously been able to export to the United States without having to pay tariffs. In June 2015 it was reported that in the six months since the loss of AGOA benefits, at least 3,000 jobs had been lost in the textile industry, dominated by Taiwanese companies.

CBS General Manager: Economic Policy Research and Statistics Bhadala Mamba told a pensions funds investment forum in Swaziland, ‘Going forward, economic growth will continue to slump and pickup around 2017, this is because of shocks in the local economy because of AGOA.’

The US had wanted Swaziland to implement the full passage of amendments to the Industrial Relations Act; full passage of amendments to the Suppression of Terrorism Act; full passage of amendments to the Public Order Act; full passage of amendments to sections 40 and 97 of the Industrial Relations Act relating to civil and criminal liability to union leaders during protest actions; and establishing a code of conduct for the police during public protests.

In June 2014, announcing the withdrawal of AGOA, a White House spokesperson said, ‘The decision to withdraw Swaziland’s AGOA eligibility comes after years of engaging with the Government of the Kingdom of Swaziland on concerns about its implementation of the AGOA eligibility criteria related to worker rights.’

In Swaziland political parties are banned from taking part in elections and King Mswati choses the government and top judges. Groups advocating for democracy are outlawed as terrorists under the Suppression of Terrorism Act.

Mr Mamba told the forum that another factor to affect the Swazi economy badly was the closure of the Ngwenya iron mine.

He did not reveal that this mine was closed after King Mswati, who owned 25 percent of the mine withdrew US$10 million from the company to purchase a private jet for himself. Sihle Dlamini, the King’s representative on the board of directors then stopped the mine from trading. 

Eventually it had debts of US$4 million when it was legally wound up in December 2014and more than 700 jobs were lost. King Mswati took the US$10 million loan from the company less than six months after it started trading which he refused to pay back when it hit difficulties. 

A compensation claim for at least US$141 million has been prepared by Southern Africa Resources Ltd (SARL), the company that owned half the mine, against the Kingdom of Swaziland at the International Centre for Settlement of Investment Disputes (ICSID). The Swazi Government owned 25 percent of the mine and King Mswati also had 25 percent which he held ‘in trust for the Swazi nation’.

See also

HOW SWAZI KING DESTROYED IRON MINE
KING COSTS 3,000 WORKERS THEIR JOBS

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