FEW INDIVIDUALS KEEPING THE CASH

“LIFE is tough; we don’t have money and the economy is down, cash is unavailable,” this is the story of everyone who is active in circular business and gainful employment.
Employees survive from hand to mouth. Parents are struggling to pay school fees. Rent and transport are very expensive.

Food prices increase on a weekly basis. Moneylenders are running the show. EmaSwati are heavily in debts. A week ago, at around 6am, I was awakened up by a call from a businessman: “when is SACU transferring the money to the Eswatini Government?” If millionaires and public tender manipulators and dodgers are also broke, it means the unemployed are going through a lot. I wonder how these people survive. The main cash holder is the Eswatini Government. It has a budget of E29.42 billion. Government’s participation in the economy is above 80 per cent. It has the money to dish out to suppliers.

During perilous times, the suppliers run out of cash, mostly when government is dogged by cash flow challenges. They cannot survive without government. Tenders have created monopolies and powerful cliques that can kill if someone denies them passage to the buckets of money. With corruption understandably costing the country E80 million per month, only suppliers with a financial muscle can pull through. They have to bribe their path to accumulate wealth.  This, therefore, reduces the number of suppliers or contracted companies that benefit from public procurement.

Indiividuals

Obviously, this will result in a few suppliers or individuals keeping the cash.   Unfortunately, the few individuals lack capacity to spend the money on every shop in town. Alternatively, they have to keep the whole cash for themselves.They cannot share the money with many of our people across the country. When cash is distributed countrywide, the buying power becomes strong and the economy grows.As it were, it appears there is no significant economic growth now because a few of us control the national cash. The cash is not in the pockets of a sizeable number of consumers.

Bankers say when people have more money and eagerly spend it, several things can happen in the economy. They talk about increased consumer spending, wherein people have more money and they tend to spend more on goods and services. Of course, increased consumer spending can drive up demand for products, leading to higher sales and potentially higher profits for businesses. There is a significant boost in business revenue when people have more money in their pockets. Economists say increased consumer spending can lead to higher revenues for businesses, which can then invest in expanding their operations, hiring more employees, or introducing new products and services. This can further stimulate economic growth.

Money in the pockets of people serves as a vehicle for job creation. As businesses grow and expand because of increased consumer demand, they may need to hire more workers to meet the demand.Economists say this can lead to job creation and lower unemployment rates. Do we now see what happens when emaSwati do not have money? Do we now see what happens when a few of us keep the cash for themselves and their girlfriends?

Government and all businesses in the country must not support one or two people. All contractors and suppliers must be given some job to do. Public procurement must benefit all registered and tax-compliant companies. The economy grows fast in an environment in which 500 companies, for instance, are to share E3 billion. It shrinks or economic contraction is experienced where three companies are to share the E3 billion. It is worse when the directors of these three companies have no vision about job creation and expansion. To them, profits are not for business expansion, but for entertainment. Some economists and bankers are of the opinion that increased consumer spending can contribute to higher economic growth as measured by gross gomestic product (GDP). When people spend more money, it indicates a healthier economy with increased economic activity.

Benefiting

Supposedly, each of the 500 companies benefiting from public procurement employs 10 workers, it effectively means 5 000 jobs are secure. The three companies that keep the E3 billion for themselves may be employing 600 workers. It is important that consumer spending does not outpace the economy’s capacity to produce goods and services. The Central Bank of Eswatini exists to ensure that such imbalances do not cripple the economy. We do not need unnecessary inflations. This is because if increased consumer spending leads to inflation, the central bank may respond by raising interest rates to curb inflationary pressures.

Therefore, higher interest rates can affect borrowing costs for businesses and consumers, potentially slowing down spending and economic growth. On a positive note, analysts point to the fact that increased consumer spending can also lead to increased investment in businesses. When businesses see higher demand for their products, they may invest in expanding production capacity or developing new products to meet the demand. They also talk about stock market performance whereby increased consumer spending can have a positive impact on the stock market. I have been made to understand that higher consumer spending can lead to higher corporate earnings, which can drive stock prices higher.

Overall, economists and financiers agree that when people have more money and eagerly spend it, it can have a positive impact on the economy by stimulating economic activity, creating jobs and driving growth. However, policymakers need to monitor the situation to ensure that the economy remains balanced and does not experience negative consequences such as inflation or asset bubbles. The World Bank describes public procurement as a fundamental, crucial component of democratic governance, poverty reduction, and sustainable development.
According to the bank, governments around the world spend an estimated E171 trillion (US$9.5 trillion) in public contracts every year, which in many developing countries represents approximately 15-22 per cent of GDP.

From building roads and power stations, to purchasing pharmaceuticals and securing trash-collection services, efficient use of public resources contributes to better delivery of services.
The financial institution states that public procurement also serves as a significant policy instrument, which governments can use to propel changes in public service delivery, create fiscal space and jobs and stimulate private sector growth.

Competitiveness

A well-performing public procurement system increases citizens confidence in government and private sector competitiveness, especially by leveling the playing field for small- and medium-sized businesses. Is the ground level in Eswatini? I doubt that it is level for a healthy competition in public procurement. It is an indisputable fact that only a few companies are getting tenders from government, and this is killing the economy. The World Bank further states that developing countries and donor agencies recognise the importance of strong procurement systems to build viable partnerships and collaboration between private and public sector actors and resources. Crown Commercial Service (CCS) in the United Kingdom mentioned in its publication of May 12, 2023, that SMEs are the backbone of any healthy economy.

I agree with this entity of integrity as SMEs drive growth, provide employment opportunities and open new markets. CCS understands how important it is to have a diverse range of suppliers working with the public sector.  The bottomline is that we have to strive to ensure economic growth. Three people cannot grow the economy. We need 1 000 companies or even more to do so.Economic growth refers to an increase in the size of a country’s economy over a period of time. The size of an economy is typically measured by the total production of goods and services in the economy, which is called gross domestic product (GDP). The Reserve Bank of Australia says economic growth can be measured in ‘nominal’ or ‘real’ terms.
Bankers say nominal economic growth refers to the increase in the dollar value of production over time. This includes changes in both the volume of production and the prices of goods and services produced.

Grey DePersio shares similar opinion that economic growth is measured by an increase in GDP. As earlier pointed out, GDP is defined as the combined value of all goods and services produced within a country in a year. Many forces contribute to economic growth. However, DePersio argues that there is no single factor that consistently spurs the perfect or ideal amount of growth needed for an economy. Unfortunately, recessions are a fact of life and can be caused by external factors such as geopolitical and geofinancial events. Interestingly, he says economic growth is often driven by consumer spending in the United States. The economist of note says if consumers are buying homes, for example, home builders, contractors and construction workers will experience economic growth.

Wages

Businesses also drive the economy when they hire workers, raise wages and invest in growing their businesses. He goes on to say that a company that buys a new manufacturing plant or invests in new technologies creates jobs and spending, which leads to growth in the economy.  That is what must happen in the kingdom. DePersio lists the following takeaways -  
Economic growth often is driven by consumer spending and business investment. Tax cuts and rebates are used to return money to consumers and boost spending. Deregulation relaxes the rules imposed on businesses and has been credited with creating growth but can lead to excessive risk-taking.

Infrastructure spending is designed to create construction jobs and increase productivity by enabling businesses to operate more efficiently. It is understood that tax cuts and tax rebates are designed to put more money back into the pockets of consumers. The Government of Eswatini used to approve tax rebates for the working class. I hope the Eswatini Revenue Service (ERS) was established to ensure economic growth. The ERS should be part of the drive to ensure emaSwati have enough money to spend on the economy. EmaSwati spend some money at various businesses, which then increases the businesses’ revenues, cash flows and profits. Having more cash means companies have the resources to procure capital, improve technology, grow and expand.

All of these actions increase productivity, which grows the economy. It is said that tax cuts and rebates allow consumers to stimulate the economy themselves by imbuing it with more money. Let the cash be kept by many of us.

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