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Economy: It never rains but it pours

International donors are not very keen on pouring money into this country because we are considered a middle-income country. However, much of the country’s wealth is concentrated on a few individuals who only constitute ten percent of the population. Minister for Finance Majozi Sithole sees ours rank status as unfortunate. We are a country whose party has come to an end. We need to start looking very closely at how we spend our money.
MANTOE PHAKATHI reports.

Minsiter of Finance with Govenor or the Central Bank meet with IMF Officials

Added to the problem of government’s fiscal crisis is that this country is also receiving minimal foreign aid because the World Bank classifies Swaziland as a middle-income country.

“The country’s status makes it impossible for us to partner with international organisations that could assist us with some of our services,” Pat Muir, the principal secretary at the Ministry of Education and Training told economic experts at a budget meeting on February 23. Muir said when seeking foreign aid, government is always reminded that the Kingdom is not among poor countries deserving of this kind of assistance.

Now that the government is facing financial challenges, the country is feeling the pinch of the foreign aid squeeze much more than ever before. Following the slash in the Southern African Customs Union (SACU) receipts with which Swaziland used to finance its budget by up to 60 percent, the country needs foreign aid more than ever before. This follows the global economic meltdown that has reduced the amount of exports from SACU where Botswana, Lesotho, Namibia, South Africa and Swaziland are members.

According to Minister of Finance Majozi Sithole, SACU receipts have been reduced from over E5 billion in the financial year 2009/10 to about E2.8 billion in the year 2011/12. “We need assistance to increase our nonSACU revenue,” said Sithole.

The minister was speaking during a budget analysis forum where the International Monetary Fund (IMF) and African Development Bank (AfDB) were in attendance. Swaziland is under the IMF’s Staff Monitored Programme which requires that the organisation visits the country every six months to observe its fiscal management.

On February 18 Sithole delivered a budget projecting over E8 billion revenue with grants amounting to just over E400 million which he said was very minimal. He decried the skewed distribution of wealth in the country which he said contributed to the country being classified as a middle income country a status based on only 10 percent of the richest controlling 60 percent of the country’s wealth, according to Idasa.

The 2009 Forbes Magazine lists the head of state, King Mswati III, Africa’s remaining absolute monarch, among the richest royals in the world. The King’s wealth is estimated at $100 million excluding an alleged $10 billion which was put in trust in his name by the late King Sobhuza II.

Government or the King’s office has not come out to dispute these allegations since they were published.

Although the country is undergoing a fiscal challenge, government, however, increased King Mswati III’s budget from E170 million last year to E210 million this year. This happens at a time when government, as advised by the IMF, is in the process of cutting salaries by five percent and freezing wages for the next three years to bring down the wage bill, the highest in the region, by five percent annually.

 “Civil servants would have to make a choice between earning 90 percent of their salaries or nothing at all after a year if they insist on getting 100 percent of their wages,” said Sithole. This left Evart Madlopha, the principal secretary at the Ministry of Public Service, confused because he is not sure how to effect this in line with the law. This led to a verbal showdown between the principal secretary and the minister.

“I’d like to know if what the minister is talking about is a policy and how do we reconcile it with the cost of living adjustment?” asked Madlopha. He wondered how, with the prices of basic commodities skyrocketing, wage cuts are going to be effected in the highly-unionised civil service. This infuriated Sithole who urged Madlopha to go and negotiate with the unions and “win this one for us.”

On the other hand, corruption in the country is a major problem with Sithole claiming that government is losing E80 million every month to this scourge. “We’ve also been seeing a lot of over expenditure on the part of government where departments would buy big expensive cars just to use on tarred roads,” said Sithole. The conspicuous expenditure over the years has been enhanced by the availability of money from the SACU receipts.

“A big party has come to an end,” said Johannes Mongardini, the IMF Africa head of mission. The number of people living below the poverty line of less than E4 a day has been reduced by six percent between 2001 and 2010 according to the 2009/10 Swaziland Household Income and Expenditure Survey (SHIES) report released on February 24.

However, the SHIES report points out that although the rate of poverty in the country has gone down, the welfare of the poorest of the poor, which make up to 30 percent of the population, did not improve. “It had been shown that the economic growth experienced by Swaziland during the 2000s has not been pro-poor,” reads the SHIES report. More than 160 000 people depend on food aid while 26 percent of the productive age group of 15 and 49 years is infected with HIV. While grappling with these challenges government can only access limited foreign aid because of the middle income status.

The same is true for civil society organisations which are also facing the same problem where donors shifted their focus from the tiny kingdom in southern Africa to focus on lower income countries.

According to Emmanuel Ndlangamandla, the director for the Coordinating Assembly for Non-Governmental Organisations (CANGO), foreign aid to Swaziland started to dry up from the 1990s. “And since then, NGOs have been downscaling their operations because donors are not interested in funding Swaziland because of the lower middle income status,” said Ndlangamandla.

What has further compounded the problem, said Khangezile Dlamini, the general secretary for Council of Swaziland Churches (CSC), is the system of govern-ance that breeds corruption and does not allow transparency. “Some of our donors tell us that government hosts the King’s Birthday celebrations every year yet we don’t have money to assist our poor people,” said Dlamini. She said SCS had to discontinue a programme where the organisation was installing boreholes for poor communities in the drought-prone areas. “Our donors told us that government should be responsible for providing these services for its people,” said Dlamini.

It’s a catch 22 situation for the country.

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