The eSwatini (Swaziland) Government is relying on the
private sector to revive the kingdom’s economy after the coronavirus pandemic
is over.
Prime Minister Ambrose Dlamini announced a
strategic economic recovery plan that would cost E30
billion (US$1.73 billion). The Swazi Government wants E23 billion of this to be
privately financed.
The plan listed 97 specific projects across eight
sectors of the economy that ‘are ready to be implemented within 18-months
beginning of 1 July 2020.’ It said 40,126 jobs would be created.
The plan emphasised the recovery would result in a
private sector-led economy. To achieve this there needed to be ‘fundamental
economic reforms’. These included ‘a shift away from Government as the central
driver of the economy. Instead, Government needs to re-establish itself as the
key enabler of growth across all sectors of the economy.
‘In enabling the private sector, the Government of
eSwatini will focus on creating a conducive business environment’. It added,
‘Overall, a focus on “big projects” that will be driven by the private sector
will stimulate the necessary economic reforms to allow the private sector to
lead and expand the eSwatini economy for greater income generation and wealth
creation.’
The plan stated, ‘The ultimate outcome of the recovery
plan is to create the pathway for high value investment to settle in eSwatini
so that the country can be Africa’s most preferred host for high net-worth
individuals and the head office capital for multi-corporations.’
The plan was welcomed
by business interests in the kingdom. The local
media in the kingdom where King Mswati III rules as an
absolute monarch were largely supportive.
None pointed out that Swaziland has been trying for
more than a decade to reduce the government’s spending and to encourage private
investment, especially from outside the kingdom. To date these efforts have
largely failed.
In June 2017, the Open
Society Initiative for Southern Africa (OSISA) reported
the kingdom, was riddled with corruption in both private and public places.
In May 2019, the
US State Department in its annual review of human rights
in Swaziland found there was a widespread public perception of
corruption in the executive and legislative branches of government and a
consensus that the government ‘did little to combat it’.
It added, ‘Credible reports continued that a person’s relationship with
government officials influenced the awarding of government contracts; the
appointment, employment, and promotion of officials; recruitment into the
security services; and school admissions. Authorities rarely took action on
reported incidents of nepotism.’
Swaziland remains a desperately poor kingdom where
about seven in ten of the 1.1 million population live on incomes less than the
equivalent of US$2 per day.
Swaziland’s economy has been in freefall for years and
the coronavirus (COVID19) pandemic accelerated its decline. Government revenues
have fallen and the recovery plan stated ‘continuing implementing government
programmes without adjustment/reallocation of the budget may lead to a
situation where government will not able to pay civil servants’.
Swaziland has
already secured an emergency loan of US$101.4 million
from the International Monetary Fund (IMF) and another E2 billion loan from
the African Export-Import Bank. It wants to borrow another US$100 million from
the IMF and US$200 million from the World Bank.
The Swazi Government pledged to
cut public sector jobs, contain wages and award below inflation
salary increases in order to get the loan from the IMF.
The new economic recovery plan is ambitions but
unrealistic. In February 2020, just before coronavirus struck the IMF reported
the economy continued to be in decline. Public debt was still rising, domestic
arrears were growing, and international currency reserves had fallen ‘below
adequate levels’.
The growth in private investment was slowing and
declining external competitiveness hindered the kingdom’s growth prospects. None
of that has changed and the effects of the lockdown on the economy introduced
by King Mswati in March has made the situation worse.
The IMF reported in February 2020, ‘Economic
indicators are expected to remain weak. GDP growth [the total value of goods
and services in the kingdom] is projected to temporarily pick up in 2020, as
the government plans to repay some arrears, but growth would be subdued
afterwards as fiscal imbalances persist and the private sector remains
hamstrung.’
The IMF predicted the government’s deficit was
expected to remain large and public debt would rise to above 60 percent of GDP
over the medium-term and contribute to further reduce international currency
reserves.
Richard Rooney
See also
Swaziland pledges public sector
job cuts, below inflation wage increases to secure IMF loan
IMF reports Swaziland
public debt rising, foreign reserves fallen ‘below adequate levels’
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