Swaziland: Economy - Impossible to Cut Poverty

Photo: Nadia Neophytou
File photo: Swaziland Protests in London

Swaziland's economy is still in dire straits despite a U$800m cash windfall received by the government this year from the Southern African Customs Union.

And, the financial situation is so bad it will be impossible to reduce poverty in the kingdom, where seven in ten people earn less than US$2 a day.

This is according to a report published by the International Monetary Fund (IMF) which stated that government spending continued to be out of control.

Salaries for public servants remain one of the highest in sub-Saharan Africa and amount to about 15 percent of the kingdom's gross domestic product (GDP).

The report, written by Olivier Basdevant, Emily Forrest, and Borislava Mircheva, also stated that the kingdom's deficit spending was at about 6 percent of GDP when 'estimated sustainable levels' say it should be at 2 percent of GDP maximum.

The report contradicts the Swazi Finance Minister Majozi Sithole who last month (January 2013) said the kingdom's economy was no longer in crisis. "I can safely say the economy is now under control. We have survived the worst economic challenges ever,' he said at the time.

The IMF-published report said current government spending should be channelled towards social priorities or poverty issues. It said social spending in Swaziland was much lower than budgeted by about US$56 million in 2011/12. This meant there was less spending on education and health, including orphans and vulnerable children (OVC), scholarships, and hospitals and schools.

The report added, 'In addition, several investment projects with poverty-alleviating components (e.g., school extensions) were stopped, while other investment projects (e.g., the Sikhuphe airport) were given priority.'

Sikhuphe, an 'international airport' being built in the Swazi wilderness, using taxpayers' money, is widely regarded as a vanity project for King Mswati III. Sikhuphe has been criticised both inside and outside of Swaziland for being expensive and unnecessary.

The report's writers said the kingdom's financial position remained vulnerable and inadequate to reduce poverty.

The report stated that in future the national budget would need to ensure an adequate allocation to grants for OVC and the elderly. Investment projects should be prioritized according to their expected impact on growth and poverty reduction.

This latest report on the impact on ordinary Swazi people of the financial mismanagement of the economy by a succession of governments, all hand-picked by King Mswati, who is sub-Saharan Africa's last absolute monarch, follows a detailed analysis published last year (2012) by the United Nations.

It stated that the kingdom's financial crisis had worsened poverty by putting an additional strain on the poorest households, especially families affected by HIV and AIDS and young people.

The report based on a kingdom-wide survey of 1,334 households in Swaziland suggested that one in four households suffered from rising food prices and loss in labour income and that some families skipped meals for an entire day. It was also found that families had less access to services.

In 2011, social grants including the elderly grant, child welfare grant, orphan and vulnerable child education grant, as well as public assistance grant, were suspended or delayed. By August, only about one third of primary school fees for orphans and vulnerable children, part of the government's commitment to roll out free primary school, had been paid. In the health sector, some maternal health services were interrupted and a national HIV prevention campaign was put on hold due to a lack of funds, the UN reported.

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InFocus

Economic Crisis Continues in Swaziland

File photo: Swaziland Protests in London

Despite economic reforms that have been made to boost the struggling economy, the nation remains poverty-stricken. Read more »