‘Tracing the roots of the economic collapse’

The Swazi economy is facing a deep-seated structural crisis. This crisis negatively impacts workers, communities, and the poor in general. This explains the government’s attempts to make structural changes meant to reconfigure the economy. However, they want to do this while maintaining the narrow interests of the royal family who are sadly at the heart of the collapse in the first place.

Historically, the royal family inherited a highly skewed colonial economy at independence. In fact, the edges of the skewed nature of the economy were further sharpened by royal bourgeoisification process oiled by Tibiyo and Tisuka TakaNgwane.

To date, royalties accruing from mining and land held in trust by the monarchy for the Swazi nation in these entities goes to the king and his family. This has helped to maintain the huge but highly unproductive and parasitic royal family.

This is on top of their unfettered share from government in the form of the Swazi National Treasury (SNT), which, needless to say, is separate from central treasury. According to the Royal Emoluments and Civil List Act, Parliament should legislate a portion of government revenue to royal institutions.

Over the years, five percent of our annual budget has been going to the king to dispense as he pleases.

Inkhosikati laNgangaza seen here with Princess Sakhizwe. The Princess is wearing a Jacob & Co Brilliant timepiece. The watch is worth $42 000.

Combined, these reckless expenditures, parasitic nature of the economy and lack of Foreign Direct Investment (FD) has made Swaziland rank as one of the poorest countries in the continent.

In fact, a recent Oxfam report released this year claims that Swaziland is the most unequal country in the region. 

This can also be attributed to two key factors: the deliberate designs of the Tinkhundla royal regime to monopolise national resources and allocate these for their own narrow interests and the slow growth of the economy in the 1980s and 1990s that never really translated into effective development for the benefit of the majority of the people.

The parasitic character of the Swazi economy is such that the majority who work and produce do not benefit. Instead, the beneficiaries are royal family members who are famous for globetrotting in luxurious hotels.

They are also known for attending best educational institutions the world can offer, enjoying the most expensive health facilities and queuing to lay claim for everything Swazis produce.

Tibiyo Taka Ngwane is thus the cash cow that facilitates this gluttony. The consequence is that the economy gets drained with no proportionate input to create the wealth looted. In this regard, the following factors are important to the full understanding of the causes for the economic collapse;

  • Economic governance – the capacity to manage the economy was never given priority. Policy documents and budgets lacked credibility. There were always huge variations between planned spending and actual outcomes hence the backward system of supplementary budgets still persists to this day. Line ministries showed less commitment to stay within expenditure limits and steps were not taken to correct the discrepancy over the decades.
  • Corporate capture of government – policy decisions taken by the government reflect the interests of big business. A glaring example is the increasing role of royal family businesses in the economy, aptly exemplified by the conflict of interest involving Litfole Lenyatsi (king’s business) in Sikhuphe airport construction projects.Another factor has been that business partners of the king stifle and ultimately buy out most successful independent businesses in the country e.g, Tiger City Building, MPD Building, Tum’s George Hotel, etc..
70 percent of Swazis live on less than $1 a day.

This is meant to benefit a small yet politically connected clique to the detriment of not just local business but increasingly foreign ones too. The dramatic fall out between Singapore businessman Shan Rethenam and king Mswati illustrate this point more clearly but also shows just how extensive the monarch’s business hand reaches is in the economy.

  • The double role of the king as an executive head of state and businessman has meant an unfair competition to other local businesses, especially those that deal with government in one capacity or the other.The other worry is the measures taken to prop up the sugar industry against a background where it may no longer be viable to do so in the long term given the dynamics in the global markets.
  • Failure to put in place fiscal austerity measures – including commitment to implement policy reforms when called upon to do so by credible multilateral agencies like the IMF and others.

Domestic revenue collection was always on the periphery of government priority hence the late establishment of the Swaziland Revenue Authority (SRA). The introduction of more efficient taxes like the Value Added Tax (VAT) was taken with no sense of urgency at all.

As such, whatever Structural Adjustments Programs (SAP) said to be implemented will only hurt the ordinary Swazi. One is then left to wonder why government would opt for the very programs that caused the 2008 collapse of the global economy in the first place? 

To this day, the world doesn’t seem to find a sustainable way out of the accumulation processes and contradictions inherent in neo-liberal capitalism. 

Failure to put in place proper financial management systems – that minimise wastage and curbs corrupt practices in the utilisation of public funds. This has resulted in the government losing millions of Emalangeni and is in fact the major obstacle to possibilities of obtaining budget support from Official Development Assistance (ODA) countries.

A case in point is the EU’s rejection of Swaziland loan request. Another example was the IMF/World Bank refusal to back Swaziland’s loan application to the AfDB on grounds that the country’s excessive public spending compromises its loan repayment capacity in the long term.

In fact, a 2019 assessment of Swaziland economy by the IMF has found that from as far back as 2016 “rising government spending and low revenue from the Southern African Customs Union (SACU) have increased public debt and contributed to large domestic arrears. On top of that International reserves have declined while real GDP growth has been sluggish.

  • A largely agrarian economy that remains feudalistic – and characterised by subsistence farming which still remains the most dominant economic activity for some 70 percent of the population.Underdevelopment of this core sector of the Swazi economy is no accident of history either. The link between the sugar industry, the majority of whose shares are directly controlled by the royal family, and multilateral giants like Coca-Cola, helps to explain why stifling agricultural development was deliberate to ensure Swazis could not subsist on their meagre farm produce instead remain trapped in the vicious cycle of dependence on slave-wage labour.
Princess Temaswati showing off her Jacob & Co Five Time Zone Diamond encrusted timepiece worth $115 000.

It is also very important to understand that all of this was a deliberate design to ensure exclusive control and ownership of the economy by the royal family and their friends. Consequently, Swaziland today has skewed land ownership patterns dominated by members of the royalty that do not even use it for productive purposes. 

Since the economy is largely agro-based, the semi-feudal nature of land ownership frustrates the developmental potential of land as a springboard for economic prosperity.

Added to this is the high and unsustainable levels of poverty, systematic destruction of jobs and an economy no longer expanding but dependent on SACU revenues. All this has exposed the fragility and lack of foresightedness on the part of the Swazi government. Theirs has always been about looting without regard for the future sustainability of the country.

Whilst the economy is on a free-fall, there are no credible measures taken in the medium term to normalise the situation. Instead, the government has engaged in underhand tactics aimed as fleecing citizens of their last penny. 

Such measures include the new three percent tax for low income earners, adoption of new car registration plates, aggressively dealing with traffic offenders by demanding exorbitant fines or bail, new travel documents fees, the PM and Finance Minister’s unilateral “home grown Fiscal Adjustment Roadmap” recently presented to the IMF etc.

While these stern measures negatively affect the ordinary taxpayer, they still do nothing about the big-time tax evaders in royal owned business.

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 (like taxing trees, domestic animals and other such basics).

This was originally part of the government’s 1997 Economic and Social Reform Agenda (ESRA) policy. Sadly this backward policy has now been taken forward with a new sense of determination by the new government.

The fact that the budget estimates points to about 68 percent of the whole budget being for security services indicates the priorities of the government. In essence, Swaziland’s economy is suffering from a lack of a clearly articulated national development plan to grow it, support strategic sectors, and enforce a redistributive mechanism to ensure the effective and full participation of all the people in the development of the country.

It is clear from the foregoing that the only solution for Swaziland is democracy. Democratisation will ensure that sound economic policies are developed and sold to the masses for popular mandate and then implemented to benefit everyone not just the royal family and their hangers on. 

*Images taken from royal leeches facebook group

NB: Bongani Masuku is COSATU Head of Secretariat and former President of the Swaziland Youth Congress (SWAYOCO). He writes in his personal capacity.

Bongani Masuku

1 thought on “‘Tracing the roots of the economic collapse’

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