Swazi economy: Time for intensive care

The Swazi economy is currently in the depths of a deep-seated structural crisis, negatively impacting workers, communities, and the poor more broadly. The current crisis explains the Tinkhundla regime’s desperate attempts to effect massive structural changes that seek to reconfigure the Swazi economy, paradoxically still in line with the narrow interests of the royal minority that is at the heart of the collapse in the first place.

At the time of Swaziland’s independence in 1968, the royal minority inherited a highly skewed colonial economy. The edges of the skewed nature of the economy were further sharpened through a royal ‘bourgeoisification’ process, with the establishment of a ‘royal fund’ through the vehicles of Tibiyo and Tisuka TakaNgwane. To date, royalties from mining as well as land held by the monarchy for the Swazi nation (utilised by the major sugar and forestry estates), accrue to the royal family through these institutions, and not to the state, lesser still to the people. This system is designed to ensure that the parasitic royal family maintains their huge, highly unproductive and unfettered share from government in the form of the Swazi National Treasury (SNT), an entity separate from central treasury. According to the Swazi Royal Emoluments and Civil List Act (enshrined in the Constitution of 2005), Parliament should legislate a limit to the money going to royal institutions. Inexplicably, this stipulation has been ignored over the decades, handing the royal family 5 per cent of the annual budget to dispense with as they please.

THE PARASITIC ECONOMY: CAUSES

Swaziland is Southern Africa’s second-smallest economy after Lesotho and is suffering from a combination of low investment, dwindling international opportunities, low productivity levels, deteriorating trade receipts and low domestic resource capacity. This is further compounded by the years of poor growth levels, which have resulted in the deepening of poverty and unemployment. Even worse is the alarming impact of the 32.4 per cent prevalence rate of HIV/AIDS.

Swaziland ranks as one of the most unequal societies in the world. Two key factors contribute to this:

Firstly, the deliberate designs of the Tinkhundla royal regime to monopolise national resources and allocate these for their own narrow interests, to the exclusion of the suffering majority of the people and;

Secondly, the inability to translate the economic growth experienced in the 1980s and 1990s into effective development for the benefit of the majority of the people and instead the pursuit of a neoliberal policy framework.

The royal family consumes about 5 per cent of the annual budget while 70 per cent of Swazis live below the poverty line of US$1 per day. This reality exists despite the fact that Swaziland qualifies as a middle-income state due to a flattering per capita GDP. Swaziland is therefore not poor in strict economic terms. However, the country’s glaringly skewed politics of distribution certainly are.

Neoliberal economic policies remain a large part of the problem. Any structural adjustments would have and will still hurt the ordinary citizen while temporarily cushioning the interests of big businesses. Are these not the same policies responsible for the total collapse of the global economy?

The Swazi economy is therefore characterised by massive concentration in the hands of a tiny minority with land in the hands of a few (largely members of the royal family who are unable to use it for productive purposes). The economy is largely agro-based, with semi-feudal relations frustrating its development potential, as the majority produce for their landlords rather than for national or for their own benefit.

There are very high and unsustainable levels of poverty, which are compounded by the systematic destruction of jobs and the lack of creation of new ones. As the economy is no longer expanding, excess dependence on the Southern Africa Customs Union (SACU) revenues have exposed the fragility and lack of foresightedness on the part of the regime, who have looted without regard for the future sustainability of the economy. The crisis of the economy is deep and systemic.

Not so long ago, Swaziland was regarded as a middle-income country with a GNP per capita of US$1360 (1999). This global economic ranking illustrates the weakness of the neo-liberal model of economic measurement, as it disregards the huge inequalities and resorts to an artificial or narrow, technical means of categorisation. The standard of living for the majority of Swazi nationals has been steadily and gradually declining since the royal regime’s ascendance to power in 1968.

According to the United Nations Development Programme (UNDP), the Swazi economy is characterised by huge unequal distribution of income and living conditions, regional disparities in income and living conditions, skewed property income and land ownership, inequality in upward mobility and favouritism in social opportunities, unequal access to safe and clean water and sanitation facilities, massive rural and urban poverty and landlessness.

The enormity of the current crisis is spoken for when one looks at the facts surrounding Swaziland: life expectancy is now at 31.88 years, 30 per cent of all children are orphaned or vulnerable due to living with a critically ill parent, only 6 per cent of the national budget is allocated to health and 2.4 per cent to social services, 69 per cent of the population live in extreme poverty, 25 per cent of the population live on food aid donations and unemployment is estimated at over 40 per cent. Meanwhile, the king has an estimated personal fortune of US$200 million.

THE DIAGNOSOS: INTENSIVE CARE

According to a media commentary, ‘It is estimated that the Swaziland government is overspending by E30 million a month (4.2 million US dollars) and is using its foreign currency reserves to pay bills.’ It went on to say, ‘there is also suspicion that “development aid” destined for Swaziland doesn’t go where it is needed, but instead is siphoned off by King Mswati to pay for his palaces, Mercedes cars and his general lavish lifestyle.’

It summed up by saying, ‘there is overspending by E30 million a month, little chance of selling bonds or assets or securing loans, and a potentially unsympathetic international community.’

The question is where does all this spending go, and who benefits from it?

Finance Minister Majozi Sithole said that government revenues are so low that ‘non-SACU’ revenues are not enough to pay the government wage bill. The extent of the crisis is further explained by the revelations that, ‘the government needs income and it needs it quickly. It is trying all the usual tricks of economists to stay afloat, such as seeking loans, selling assets, issuing bonds’.

However, there is very little, if any success in the aforementioned. The World Bank and the IMF have refused to offer Swaziland a 500 million US dollar loan from the African Development Bank (ADB), citing that the government was spending too much for a kingdom of its size. And more recently the government made a commitment to the IMF to cut 7,000 jobs in the public sector to help ease its possibilities for securing a loan.

Given this situation, the sale of assets is a last resort. Deplorably, the Swazi monarchy (estimated to be wealthier than the country as a whole), is unwilling to release its resources (ill-gotten and belonging to the people anyway) to better the situation.

Notwithstanding, the real source of the problem is the Tinkhundla system in its entirety. It is a fraudulently designed framework founded on the basis of safeguarding and perpetuating the interests of the greedy royal minority to the exclusion of the poor majority.

As early as 1989 the Swazi regime was beginning to realise what the implications of the end of apartheid in South Africa meant for Swaziland. For a long time, the royal regime openly flirted with the apartheid regime, benefitting from the sanctions against apartheid South Africa and acting as a sanctions buster, collaborating with the Pretoria regime and other such global forces. Swaziland was seen as an alternative destination, with apartheid South Africa products being branded as originating from Swaziland. Further, the civil war in Mozambique added to the notion of Swaziland being a rather ‘peaceful and stable’ investment destination.

With democracy, peace and stability descending on South Africa and Mozambique, Swaziland’s competitiveness against a relatively stable Mozambique and a post-apartheid South Africa disappeared. Investors preferred the developed infrastructure in South Africa, access to the sea in both countries, population sizes, and the geo-economic spaces offered by these two countries.

The early 1990s marked a consistent decline in the Swazi economy’s growth rates, though not much in the consumption rates by the ruling elite. Despite this, and in the midst of deepening poverty levels, expenditure on military and security increased.

The health and education budget for members of the royal family using expensive institutions outside the country continues to skyrocket, whilst education and health facilities in the country continue to deteriorate and collapse. Social expenditure, national development and the interests of ordinary people suffered as royal projects such as state-of-the-art royal villas and clinics received priority funding. This explains the deepening inequalities in income and opportunities for the poor majority, particularly for women and those living in rural areas.

The decline in the growth rate of the economy led to the ruling regime introducing neo-liberal economic reforms in the form of their so-called medium-term intervention, the Economic and Social Reform Agenda (ESRA), and what they called their long-term scenario mitigation or planning programme, the National Development Strategy (NDS). Both these programmes have failed. There are now new emerging initiatives that seek to replace these, without an open acknowledgement of the failures of these past initiatives.

According to an Organisation for Economic Co-operation and Development (OECD) report, ‘the country’s manufacturing sector is hard hit, with virtually all significant manufacturing sub-sectors (cement, agricultural machinery, electronic equipment, refrigerator production, footwear, gloves, office equipment, confectionery, furniture, glass and bricks) affected by the global slowdown in trade. Further, forest fires that destroyed timber supplies impacted on the wood-pulp industry. Equally, the apparel industry was hit as it is dependent on preferential trade arrangements with the United States through the African Growth and Opportunity Act (AGOA).’

TAX THE POOR, GIVE TO THE ELITE

Whilst the economy is in a free-fall, there are no credible measures being taken in the medium term to normalise the situation. Instead, the government has engaged in underhanded tactics aimed as fleecing citizens of their last penny. Examples include: a new three per cent tax for low income earners, forcing the adoption of new car registration plates, aggressively dealing with traffic offenders through exorbitant fines or bail, new travel documents, the prime minister and finance minister’s unilateral ‘home grown Fiscal Adjustment Roadmap’ recently presented to the IMF, World Bank, and EU, and others. While these stern measures negatively affect the ordinary taxpayer, they do nothing to tackle the big-time tax evaders.

In fact, for some time now, the Swazi regime has been involved in an exercise to expand the tax base by targeting all those things upon which the poor and working masses rely for their livelihoods; including trees, domestic animals and other such basics.

Budget estimates point to about 68 per cent of the budget being allocated for security services. This bears testament to the priorities of the Swazi regime, which is essentially about protecting the privileged few and keeping the rest in conditions of starvation.

The government seems unfazed by the gravity of the situation, with unwarranted expenditure continuing. They are going ahead with:

- plans for a 25th Anniversary for King Mswati III;

- wasteful and fruitless expenditure associated with the royal family and high expenditure on functions meant to buy patronage and popularity such as the annual Reed Dance’

- salary increments for politicians and (inevitably) civil servants at a time of crisis;

- Hefty handshakes for retiring top politicians and inordinately excessive funding for security forces (including the creation of new ranks to be accompanied by increased pay).

In essence, Swaziland’s economy is suffering from a lack of a clearly articulated national development plan or growth path aimed at supporting strategic sectors, and enforcing a redistributive capacity to ensure the effective and full participation of all the people in the development of the country.

THE URGENT NEED FOR AN ALTERNATIVE

It is clear from the foregoing that Swaziland is suffering from a democracy deficit in its governance system. Democracy in Swaziland will ensure that credible institutions tasked with properly managing the affairs of the state are put in place. In this regard, multiparty democracy holds the only promise for the reform of the Swazi state, both to keep the monarchy in check and to ensure the establishment of these credible institutions with strong checks and balances to run state affairs efficiently.

MERITOCRACY VERSUS PATRONAGE

There has been a deliberate path of rewarding loyalty to the royal family rather than on the basis of excellence or merit. This is a most debilitating strand of corruption, as it kills off honest industry and demotivates those who uphold this value. Their reality is of having to look on in bemused helplessness as the indolent ‘get ahead’ through royal connections.

There is an equally pressing need to change the structure of the economy from export orientation to an import substitution model.

There’s an even bigger need to support an agrarian revolution, coupled with the need to enhance this crucial sector’s linkages to other economic sectors.

EMERGING FORCE FOR CHANGE

Realising that the hopeless state of the economy is foremost a symptom of bad governance, the trade union movement and other progressive social forces inside Swaziland continue to express their disgust and anger. Since its historic launch in Johannesburg on 21 February 2010, the Swaziland Democracy Campaign (SDC), a campaign-oriented operational wing of the Swaziland United Democratic Front (SUDF), has been active in bringing the massive socio-economic time bomb to the attention of the world. This time bomb has remained largely unnoticed by the outside world and is now waiting to explode. The SDC has undertaken the task of uniting the forces for democracy both inside and outside Swaziland through engaging in rolling mass protest actions inside Swaziland aimed at building an appreciation of the extent of the Swazi crisis globally. Through this it hopes to ensure that the world takes the necessary measures to support those inside the country that are facing this painful and harsh reality and who are struggling to change the situation for the better.

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* Bongani Masuku is the international relations secretary for the Congress of South African Trade Unions.
* Please send comments to [email protected] or comment online at Pambazuka News.