NO MORE TAXES FOR ECONOMIC RECOVERY

When government tables the 2019/20 National Budget, I think we all want a commitment to practical social and economic programmes that will make economic recovery a reality rather than a policy illusion. 

An economic recovery is the phase of the business cycle following a recession, during which an economy improves and exceeds peak employment and output levels achieved prior to the downturn. So resuscitating the economy speaks to reinvigorating the business and institutional environment so that it facilitates optimal employment creation to increase total production.

If it is not clear already, it is worth re-emphasizing that increasing taxation will not be the answer to economic recovery, especially for a small economy like Eswatini. Government always insists on taxing EmaSwati and businesses through the roof so that it can cover shortfalls in the Southern African Customs Union (SACU) receipts. Instead of finding new ways of growing the economic base and pinning down government spending, tax is always the quick answer and saving grace to the detriment of the economy.

In the 2018/19 Budget Speech, government emphasised that its spending should not come at the expense of economic growth, and voila the fiscal crisis in this fiscal year. The minister of Finance then noted that in recent years, government has not been able to raise enough revenues to cover the ever-increasing expenditures, which is a clear indication that the current government model cannot be sustained.

So in the 2019/20 Budget, the country needs fresh programmes that will direct most of the G-wallet to growing the critical sectors of the economy, for example, agriculture, education, health, and manufacturing to turn the economy around.

If we take a look at capital expenditure in 2018/19, government’s budget estimate books show that general public services absorbed most of government spending on capital projects accounting for E2.3 billion or 41.3 per cent of capital expenditure. This is as good as money flushed down the toilet because we all know the value the country derives from general public service.

Support

Other significant capital expenditure allocation included: transport and communication with E1.2 billion (20.8 per cent); and agriculture E1 billion (19 per cent). As a country we are not in the business of building state-of-the-art schools and hospitals, and setting up new industries that can sustain the economy and most of all, benefit the majority of Eswatini’s population.

For example, both the health and education sector were allocated 3.3 per cent and 2.2 per cent of the capital budget respectively, which implies the country does not really value its human capital. Both health and education should remain priorities of a developing country to ensure that people are healthy and that they are well-educated and equipped with the skills necessary to support current and new sectors of the economy/businesses.

Yes, government has diligently built the critical infrastructure needed to facilitate business activities to put the country into a path for growth. The problem is that a lot of people or a majority of the population has been left behind in the process as the country spent billions of Emalangeni building roads, hotels, and an airport. Yet, to get a return on investment on this critical infrastructure, the people have to be developed too.

If more than 70 per cent of Eswatini is rural with a bulk of the population living in rural Eswatini, it should be a no-brainer that the national budget should focus on this human capital waiting to be developed too so that it can start using the roads, the hotels, and the start-of-the-art airport. The Regional Development Fund only gets about E118 million, which is less than a percent of total government expenditure. Can government honestly say it wants to see a substantial transformation in rural Eswatini with only cents/peanuts of the G-wallet being thrown to the majority of the people who need to be developed?

There are a lot of opportunities that could be coming with infrastructure development in Eswatini if and only if government could start investing more of its money in human capital development. Government wants to tax people but does not want to invest money in lifting a majority of these people so that they are healthy and skilled to start new business enterprises in the Kingdom of Eswatini.

As we await the new government to roll out its economic recovery strategy, we hope it will speak to the real social and economic priorities, which is developing Emaswati, especially the majority of EmaSwati living in rural Eswatini.

It’s simple, the more of EmaSwati overcoming the poverty trap, the more money government will be cashing into the G-wallet. If government continues to tax us to fund projects we do not afford, the ship will keep sinking. An economic recovery should put money and more money in all our pockets.

Post your comment

Your name:

Your e-mail address:

Add your comments:

Please enter the code you see in the image:

Image:

Code: