Swaziland's Plan to Revive Economy After Coronavirus Ambitious, but Unrealistic

(file photo).

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.

Swaziland continuously scores poorly in surveys for the ease of doing business in the kingdom.

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

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