SENATORS SPOT-ON IN QUESTIONING FINANCE MINISTER’S LOAN REQUEST

Minister of Finance Neal Rijkenberg made a big statement in Parliament in the past days after admitting that the country would still acquire more loans to fund development projects.

He was seeking authority from senators to raise a loan not exceeding E2 084 290 000 from the AfDB to assist in the financing of the Mkhondvo/Ngwavuma Water Augmentation Programme Phase II (MNWAP IB). Quite rightly, the senators questioned the loan request, making it no secret that they were tired of passing loan bills as they fear that these might leave the country in the red eventually. This, it must be said, is indeed a serious concern. The Minister did assure the legislators that government was going to afford the loans (which I find hard to believe), further stating that more loan bills would be making their way into Parliament.

“There is no way that we will not be taking debt. The two percent of the fiscal deficit that was projected means more debt is being taken. For the years we are in, we are going to acquire about E1 billion,” he was quoted as saying by our sister publication, Times of Eswatini. Fiscal deficit, in economic terms, is when a government does more spending than generating revenue. So, when government borrows money to finance its spending in the country, economists call it deficit spending. The question is, where are we as a country on that?  

Valid concerns

During this debate, Senate President Lindiwe Dlamini raised valid concerns that the country could end up being submerged in high interest debts, which might see the kingdom taken over by the Asian State, as it has a larger share-holding in the African Development Bank (AfDB). Interestingly, the Minister said it was unfortunate that government had a history of agreeing to projects, yet as time went on, the finances would dry up hence escalating the costs.   

When a government borrows, funds are transferred from the lender to the government, the lender exchanging money for government securities. The effect is to reduce the liquidity of the lender, his command over cash, to an extent, is dependent upon the nature of the securities. Again, it is also a known fact that when government borrows money, a large debt may discourage expansion of economic activities because of the fear of high taxes in the future and the realisation that the large debt may prevent borrowing for urgently needed local improvements.

The bad part about borrowing is also that the borrower must meet interest obligations, and these are usually paid out of taxes. The consequences are dire, it must be said. Granted, increased borrowing can boost public spending on infrastructure and social services, which would stimulate economic activities. At the same time, borrowing often funds’ investments, leading to job creation and an increase in productive capacity.

Well and good but we can agree that when a country relies a lot on loans to fund projects and sustain the economy, then it can only mean something is not going right somewhere in the government machinery. We cannot be content with relying on other countries for economic survival because such tendencies depict a bleak future economically.

Acknowledgment

By coincidence, the Prime Minister (PM) Russell Mmiso Dlamini engaged local business leaders at the first business to government forum. Given the rising loans bills making their way to Parliament, perhaps this initiative deserves acknowledgment and encouragement at the same time. It is bringing some positivity in what is otherwise a bleak future.

   As correctly pointed out by the PM, business community remains an important partner towards growing the country’s economy, creating sustainable jobs and alleviating poverty. In his address, the premier emphasised on the fact that to grow the economy, government needed to put the right policies in place, which do not only include growing local business, but also be effective in the attraction of large foreign direct investment. I could not agree more with the PM on this and one hopes one of such policies would be the reduction of loan bills making their way to Parliament because this does not inspire hope for the future.

It is also good to note that during this function, the PM made mention of the fact that part of government’s priorities was to alleviate poverty and achieving this feat demands clever minds, politicians who think outside the box. I am still praying for that period where Eswatini would afford to lend money to other countries, as opposed to the current borrowing habit. That would be refreshing for a change.

Deficit

More worrying is the fact that our government seems to be operating on a budget deficit already and the consequences of this are borrowing, increased national debt and potential inflation. Clearly, a lot has to change, which makes the task even harder for government. Maybe, it is time government identifies the areas of the country’s economy that are not being fully and effectively utilised. A journalist friend of mine from South Africa once asked me why our country was struggling economically given the rich minerals we are blessed with.

He is struggling to understand why we are always asking for loans from other countries when we have sizeable number of mines, reported to have minerals like gold, green chert, coal and many more. We also have a diamond mine that for years, has been lying idle at Dvokolwako, depriving Emaswati of much-needed employment and financial rewards for the economy.

We see such minerals growing economies in other countries, maybe government needs to empower us why it is different in our situation. People need to appreciate the numbers in terms of the financial benefits of the mines currently operating in the country. Right now, it is difficult to even tell which sector is financially rewarding for our economy, there are just too many unanswered questions.

That said, I am still a firm believer in not judging people, but instead giving them a chance to prove their worth. Although the Finance minister’s statement on requesting more loans for the country is not giving hope, this is still a new government with new energy and faces. The PM is putting commendable effort in bringing stability to the economy and we will continue to give his Cabinet the benefit of the doubt.

It is good news to hear that government is planning to revive the Poverty Alleviation Fund, which seeks to benefit Emaswati at grass-root level, by accessing loans with low interest rates to start small-scale businesses. It is common knowledge that accessing personal loans at banks or other financial institutions is a tedious process for the employed and impossible for the unemployed. Unfortunately, our country has a high rate of unemployment.

The Regional Development Fund (RDF), currently pioneered by Micro-Projects under the ministry of economic planning and development, is another initiative that is benefiting Emaswati in the different communities. If this initiative can be married with the proposed Poverty Alleviation Fund, a lot of lives would definitely be changed.      

DPM deserves a big pat on the back for her great work ethnic. Only those with feeble minds would dispute that Deputy Prime Minister (DPM) Thulisile Dladla is a blessing to the needy people in our communities. She is a political woman with a good heart in all honesty.

Appreciate

Eversince assuming the DPM position, she has been reaching out to the needy people of our community in a very good way. She has hardly completed a year in the position, but already, the fruits of good work are there for the nation to see. We have already seen a number of needy elderly citizens in the country benefitting through the kindness of the DPM. Her schedule appears very busy because she is covering all parts of the country to assess and appreciate the needs of the elderly people, especially in the rural areas. The Minister has also been visible in community initiatives, especially those seeking to make the lives of Emaswati better in all possible aspects like health and many more.

Her office has assisted a lot in building new houses for the underprivileged and one of her remarkable feats thus far has been facilitating the construction of a new primary school at Maphiveni. This has brought a new lease in life for the residents in that area and given the amount of energy Dladla is displaying, there is definitely a lot she is going to achieve as DPM. She deserves all the praise, encouragement and support from all stakeholders because she is doing an incredibly-fine job. Keep up the good work madam minister!

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