PROTECTING SACU RECEIPTS AT ALL COST

Government is caught between a rock and a hard place. To run the economy needs money but the problem is, there isn’t enough money trickling into the G-wallet to take care of the long list of government expenditures that are getting out of control, causing a lot of grief for the minister of Finance.

One of these important government revenue streams the minister watches like a hawk is the Southern African Customs Union (SACU) receipts. Government will do anything in its power to protect this revenue stream even if it has to shut down all local economic activities that threaten to erode this revenue stream even by the smallest margins. Government will shut down any activity that eats SACU revenue even if these activities make local business sense or even help improve the purchasing power of local consumers.

Case in point is the shutdown on importation of Japanese used vehicles seven years or older and now the ban on fuel imported from Mozambique. And by the way, these are not new battles that government has wagered on the local economy, they keep resurfacing when the G-wallet comes under extreme pressure, when the taxpayers’ funds dwindle to nothing.

Don’t get this wrong. The point is not that government should not protect or even increase the amount of revenue it generates from SACU trade. The issue is about government taking one-sided decisions that end up with long-term net outcomes that make the country poorer, with a very thin private sector that is dependent on South Africa for everything that can possibly happen in the Eswatini economy. Surely, this is not a sustainable strategy, and if anything, COVID-19 has taught us that the country needs to diversify and release all brakes that are preventing the private sector from thriving.

While imports from South Africa and the rest of SACU contribute significantly to government’s revenue, there is still the glaring need to diversify its revenue streams to avoid driving the economy into the gutter when SACU trade goes sour. For instance, during the current COVID-19 pandemic, SACU trade has slowed down substantially, such that the very same SACU revenue will fall drastically by the year 2022. To respond to this expected fall in SACU revenue, government quickly put together the Post-COVID-19 Economic Recovery Plan to stimulate investment in the local economy and increase economic activities that will generate income for its different revenue streams such as fuel tax, income tax (corporate and individual PAYE), value added tax, etc. SACU is important but is not the Holy Grail for Eswatini’s economic development.

Import

Thanks to SACU, Eswatini will continue to import all of its electricity from South Africa, while electricity tariffs continue to claim a big portion of our monthly budgets just so our government can continue to rest in a false sense of security of guaranteed revenue through SACU. However, the outcomes of these one-sided decisions are much more sinister and if our bureaucrats fail to think critically about these issues, there will be a huge price to pay and already the low-income households and small businesses are beginning to pay for these decisions.

Instead of coming out with a sledge hammer to shut down everything that is keeping the economy alive, government should be encouraging more business activity to increase the revenue collected into the G-wallet. The PAYE tax is the major source of tax revenue and this should be protected by making it easy for people who do business to employ people and keep PAYE revenue growing. Instead, government is all about churning out regulation after regulation to make it hard for anyone to make money.

To increase revenue collected through fuel and VAT, government needs a vibrant private sector with sufficient disposable incomes to support the hustle and bustle in the economy that keeps the private sector viable and growing. What is happening is that the economy is being channelled into one lean pipeline of economic activities that are either copied from developed nations or shoved down our throats to benefit a few individuals so that government can act surprised when investors don’t come in and when the economic policies do nothing to move Eswatini closer to attaining Vision 2022.

In a nutshell, it’s not about SACU or about any regulation that government can quickly throw in our faces to support whatever agenda it wants to push at any given point in time. It is simply about developing Eswatini into a developed country where everyone can enjoy a good standard of living. In that spirit, government should simply get out of the way so that people and their businesses can work and make money.

Enough with the draconian regulations and economic landmines that are making it extremely difficult to do anything in this country! The biggest crime being committed here is government taking our hard earned money to fund failing institutions like CTA, UNESWA, Eswatini TV, and the rest of central government that is about managing the wage bill and external travel and zero public service delivery.

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