‘GOVT WON’T GO BANKRUPT, SAFEST TO SUPPLY, BUT ...’

MBABANE – The Minister of Finance Neal Rijkenberg says supplying government remains the safest to supply, but suppliers should have facilities in place to cushion themselves in case of delays.

In an interview with this publication, the minister stated that, first and foremost, it was important for one to understand that government pays in cycles. He said normally just before the Southern African Customs Union (SACU) receipts come in, there would be a piling up of backlog of payment for suppliers. The minister was asked on what government was doing to address the issues of suppliers who were owed, and finding themselves defaulting on their loans from financial institutions, due to the delays in payments from government. It is worth noting that our sister publication, the Times of Eswatini earlier this month reported that government was in a tight financial position, owing suppliers E1.4 billion.During the interview with this publication last week, the minister said unfortunately, suppliers must also be able to work with that, and have facilities in place to make sure that they do not get themselves in issues if government delays payments.

Supplying government

“But the beauty with supplying government is that, unlike private sector businesses that may at some point become bankrupt, government will pay the bills and government does not get bankrupt,” he said.The minister shared that currently, government had received some money from the Johannesburg Stock Exchange (JSE) through the bonds listing. He shared that there was another loan that recently came in over the past week, which also brought some relief. He said through all this, he hoped the E1.4 billion owed to suppliers had been reduced. Around May, government  received about E400 million which came as a result of a decision it took in early 2022, to seek a loan through issuing bonds on the JSE amounting to E4 billion.
Rijkenberg shared that another relief for suppliers would come in the first week of July, when government hopes to pay some of its suppliers.

The payment of suppliers in July is indeed expected to come through as in the same month last year; the minister announced that government had spent E2.8 billion on paying suppliers.
The delays in government paying suppliers had often resulted in the suppliers defaulting in paying their loans and also defaulting in paying taxes.  Defaulting in loan repayment often leads to the increase in the non-performing loans in the financial institutions.

Killing their businesses

Business owners under the Federation of Eswatini Business Community (FESBC) had been lamenting that the delay of payments by government was killing their businesses. The business owners stated that the delays led to them failing to comply with their tax obligations and further failed to pay salaries. They stated that they were struggling to get paid by government. “Job losses are eminent due to the delay of payments by the government,” said the businesspeople. Economist Sanele Sibiya advised that government needed to align its expenditure with the revenue it generated. 

The economist told the Times of Eswatini a couple of days ago that the fact that government was heavily reliant on the SACU receipts meant that the streams of income were limited and needed to be diversified.  Sibiya said other than the reliance on SACU; the hike in arrears to E1.4 billion affected the growth of the economy, as it was not circulating. He said this meant that suppliers and service providers were not re-investing and creating more revenue for themselves and government through tax.  “Government needs to start aligning its expenditure along with the revenue it generates, as the current cycle means service delivery will always be compromised,” he said.

It is worth noting that during Sibaya in October 2023, just before the Prime Minister (PM) Russell Dlamini was appointed, panellists questioned several candidates about how the country could find other sources of revenue and end the reliance on SACU receipts.  This was highlighted as an impediment to Eswatini’s growth. Among those questioned was the Minister of Finance, Rijkenberg, who also emphasised that the only way Eswatini could stop the cycle was to ensure the growth of the economy.  Rijkenberg emphasised that government needed to invest in financial prudence and also weed out elements of corruption in procurement, which resulted in high amounts of money being spent on far lesser items.

During the recent Business to Government (B2G) engagement, the PM said government should stop relying on the SACU receipts for survival.  Dlamini said government should find other ways to finance its budgetary obligations, other than to rely on the SACU receipts.

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