---

---

Swaziland: Governance Not Money At Heart of Nation’s Malaise

22 September 2011

---

analysis

Mbabane — South Africa recently granted a US$350 million bailout to Swaziland’s King Mswati III – following desperate overtures to his neighbour to stave-off his kingdom’s financial meltdown – but the king has now cooled to the idea and left the Memorandum of Understanding (MOU) unsigned and the loan in limbo.

The first tranche of the three-tranche loan was scheduled to be released in August 2011, but among the loan conditions were “confidence-building measures” on democracy, human rights and fiscal reform, as well as the “overhaul of its budgetary systems”.

These vague conditions were dismissed by the Congress of South African Trade Unions (COSATU), the country’s largest union federation and alliance partner to South African President Jacob Zuma’s ruling ANC government, as giving “breathing space for the regime,” and not “serious” in inducing a democratic transition, while pro-democracy activists in Swaziland dismissed it out of hand as a “betrayal” of the Swazi people.

Mswati’s government is reportedly trying to source additional finance from non-democratic states such as Qatar and Kuwait, but as these efforts proceed so the country sinks further into the financial quagmire.

The impact of the current financial crisis is severe and aid agencies are predicting that in the absence of major new loan, a humanitarian crisis could develop within the next few months.

Stocks of antiretrovirals have become alarmingly low and were reportedly standing at one month’s supply. Swaziland has the world’s highest prevalence of HIV – 26.1 percent. One in four Swazis aged 15-49 is HIV-positive and 70 percent of the population live below the poverty line.

Dimpho Motsamai, a researcher in the Africa Conflict Prevention Programme at the Pretoria-based think-tank the Institute for Security Studies, told IRIN there was “nothing wrong with [Swaziland] diversifying their resource base as a sovereign country grappling with a liquidity crisis even though the [possible] partners [Qatar and Kuwait] had a slippery relationship with democracy”.

Swaziland had been complacent in the past in terms of broadening its international relations, she said, and the South African loan “was small and will be quickly absorbed” and the government needed to look for other financing opportunities.

However, differing styles of public diplomacy in South Africa, which was more open, and Swaziland, were delaying the MOU’s signing, she suggested.

The MOU created the impression in Swaziland the country was being “dictated to” and issues of sovereignty and patriotism came to the fore, Motsamai said.

“The government does not fully appreciate the magnitude of the fiscal crisis, the potential for a social crisis and the need for dialogue… They think it is just about money and think it will be fine if they get a loan as it will address the liquidity crisis. It’s a band aid approach… [But] it is not about money. It’s about governance,” Motsamai said.

Government has opaque accounting systems of its spending and has approved vanity projects such as the Sikhuphe International Airport, which according to some estimates could escalate from a planned cost of US$150 million to $1 billion. It also has a free-spending and unaudited Royal Household, and there have been recent disclosures that more than US$10 million each month disappeared from government coffers.

Meanwhile, Circular No 1, 2010, provides politicians (from the prime minister to regional administrators) with numerous perks – from entertainment allowances to their water, rates and electricity bills being paid.

The public sector wage bill is difficult to assess, as the budget for the security services is withheld for “security reasons” as well as the payment for an indeterminate number of traditional authorities.

“Double standards”

Mswati III, in a speech on 14 September, railed against the international community for leaving his country bereft, and specifically the International Monetary Fund (IMF), for refusing to bail out his country until it had implemented economic reforms. One of the IMF conditions was the reduction of the public service wage bill, seen as too large for the country’s size, and widely regarded as a store for patronage.

Mswati, who has a personal fortune estimated at about US$200 million, said the IMF had “double standards” and was assisting countries such as Greece – which has a similar debt-to-GDP-ratio as Swaziland – with bailouts.

“However, when they [IMF] come here you see that they treat us in a different spirit. What is worrying then is why do these organizations apply different standards when dealing with Swaziland? They start making unreasonable conditions like we should retrench people and effect salary cuts. They flatly refused to discuss the bail-outs with us as they do with European countries,” Mswati said.

Joannes Mongardini, IMF head of delegation responsible for Swaziland, told local media on 22 September 2011, in response to allegations of double standards, that “Swaziland is not alone. By a large standard, the cuts in Europe were much more significant than those being proposed in Swaziland. Swaziland salary cuts are not extreme. The longer it takes [to restructure its finances], the more painful it will become.”

Prime Minister Sibusiso Dlamini has candidly admitted any significant public sector salary cuts or retrenchments would create social instability, although socio-economic and pro-democracy protests have this year gathered pace and in turn been met with heavy-handed police responses.

Swaziland’s financial crisis began in earnest after revenue from the Southern African Customs Union (SACU) – the world’s oldest customs union, comprising Botswana, Lesotho, Namibia, Swaziland and South Africa that applies a common set of tariffs and disproportionately distributes the revenue to member states – declined significantly in the wake of the 2008 global slowdown.

South Africa has said if Swaziland was unable to repay the loan – if it were accepted – it would deduct it from SACU contributions to the country, although the drop in revenue receipts was one of the drivers of its financial crisis.

Land reform

An economist based in the capital Mbabane and working for a South African finance institution, who declined to be named, told IRIN: “There is now, and for some years has been, a way for Swaziland’s government to get out of its hole, and that is to follow IMF recommendations for such things as reducing salaries for government workers earning more than R150,000 (US$20,000) a year. This recommendation spares the lower earners.”

He said the IMF were scheduled to return in November to review the government’s home-grown financial recovery plan, but the politics of the government was to portray the international finance institution as the villain of the piece and it can “only make international lenders and donors suspicious and nervous. If they don’t do what Swaziland wants, will they be called racists and hypocrites for their good intentions?”

Landlocked between South Africa and Mozambique, Swaziland is not endowed with an array of natural resources like many other African countries, and its diplomatic support for Taiwan at the UN, has been in part rewarded in the form of financial aid and infrastructure projects, including US$22 million for the new airport, but at the cost of alienation from China.

Coal and sugar are important exports for the country as are soft drink concentrates, and the country has a vibrant tourist industry.

Recent public protests have highlighted two royal conglomerates, Tibiyo TakaNgwane and Tisuka TakaNgwane, which have extensive business dealings within the kingdom based on property developments, manufacturing, coal mining, and tourism, but are exempt from taxation.

Power base

The conglomerates were established by Royal Charter in 1968 – the year the country achieved independence – with the objective of complementing the government’s national development priorities.

However, in a recent letter to the labour union about their role, Finance Minister Majozi Sithole said the money from these entities belonged to the Royal Household and not the people, as “these entities were formed in terms of a Royal Charter which does not provide for their income to be part of government income.”

Another avenue for raising revenue is the leasing of land to foreign corporations for food production, especially for the domestic markets of the Middle East.

Swaziland, although a relatively small country, has some prime agricultural land well-irrigated by myriad rivers, but apart from a few private farms, most land is locked into Swazi Nation Land, where 70 percent of the population reside with non-secure land tenure and live under palace-appointed chiefs – increasingly members of the royal families appointed to replace traditional chiefs from non-royal clans. The system forms the bedrock of monarchical rule.

Analysts believe reform of the “feudal” land tenure system of Swazi Nation Land would accelerate the country’s agricultural output with the introduction of modern farming methods. However, such an eventuality would also undermine Mswati’s power-base.

Other controversial ideas to help boost the country’s revenue – proposals made at a recent national dialogue of government-invited participants – include legalizing marijuana and turning the country into southern Africa’s Amsterdam, and building walls around informal settlements to hide squalor from tourists.

[ This report does not necessarily reflect the views of the United Nations ]

Be the first to Write a Comment!

More News on allAfrica.com

Google Closes the Gap Between Online and Real-World Commerce The gap between the online …	Technical Sessions On Tuberculosis Start Thursday in Luanda The Third Technical/Scientific …
Non-Students Barred From U-17 Competitions A groundbreaking proposal has been pushed by the …	E-Payment System Saves Water Body Millions Annually National Water and Sewerage Corporation …
Tenancy Law – Lagos Lectures Landlords, Estate Agents, Others LAGOS state government …	Delayed Malaria Spraying Sparks Health Fears THE Ministry of Health and Social Services has …

---

In Topical Focus » Swaziland

Swazi King Delays Signing South African Loan Deal There are clear signs that, despite initial jubilation in Swazi governing circles…

‘Brutal’ Crackdown on Swaziland Protesters – Reports The “Global Week of Action for Swaziland” has entered its third day…

Swaziland to Test Entire Population for HIV Authorities in Swaziland want to subject the entire Swazi population to an…