Sunday, August 2, 2009


Swaziland is facing economic meltdown, but the Swazi Government refuses to take the crisis seriously.

By the end of this year money could run out to pay salaries and for goods and services. Education and the health service (such as it is) will almost certainly grind to a halt as salaries go unpaid and the government runs out of cash to pay its bills.

This is because the amount of income Swaziland gets from the Southern African Customs Union (SACU) will fall by about a half this year.

About 70 percent of the total income of Swaziland comes from the Southern African Customs Union (SACU). This is income that is entirely outside of the government’s control. It is not raised within the kingdom as such and the amount that comes in through the SACU depends very much on how much trade there is within other countries in southern Africa.

In the week the Swazi government was warned of the impending disaster it announced that the salaries of civil servants (including teachers and nurses) would rise by 12 percent.

The disaster has been predicted for a number of years, as I wrote in 2008. The International Monetary Fund (IMF) has consistently warned the Swazi Government about the way it runs its finances. In 2007 in its official report the IMF stated that ‘Swaziland’s economic performance remains weak. Poverty has escalated in the face of high and rising unemployment, food shortages, and the world’s highest HIV/AIDS infection rate.’

The IMF report went on to say that the amount of money Swaziland was receiving through the (SACU) made the economy of Swaziland look better than it really was. This, however, was a temporary windfall of money that was expected to run out in 2007/2008. After that date the amount of money coming from the SACU would ‘sharply decline’.

The present economic policy of Swaziland would be unworkable once the SACU revenues decline, the IMF report stated. The IMF recommended that to save the economy the Swaziland Government had to change its economic policies. Top of the list was for the government to reduce its wages bill, begin civil service reform and privatize state-owned assets.

Instead, the government has done the exact opposite increasing salaries in 2008 and again this year.

I shudder to think of the consequences of the financial meltdown. Swaziland is a desperately poor kingdom and that’s because the economy is in ruins. About 70 per cent of the population earn less than one US dollar a day. Of those in work large numbers earn almost slave wages. Think of the textile workers whose wages are so low they have to live six to a room and sleep three to a bed.

One consequence of the meltdown might be that as the police and army go unpaid and the Swazi ‘middle class’ salary earners find they are just as poor as the rest of the population their loyalty to King Mswati III and the ruling elite will be severely tested.

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