PROTECT THE POSITIVE GAINS

Last week, Finance Minister Neal Rijkenberg, issued a mid-term budget review that highlighted some positive growth in the economy of about five per cent and projected continued growth in the following year, though at a slightly lower rate of 3.6 per cent. Unfortunately, these otherwise encouraging statistics were drowned by the announcement of the contentious electricity and water services proposed hikes of 12 per cent and 34 per cent, respectively, over the next two years. Unlike the proposed water tariff increase, the public is currently being consulted on the electricity tariff increase and this is where one gets a different assessment of government performance or the state of the economy as it were.

Survey

Granted, nobody wants to ever pay more for services at a time when the country is experiencing one of the highest unemployment rates ever at 33 per cent according to the labour force survey of 2021, with over half the country’s population living below the poverty line. Eswatini is also listed among those in the top 10 countries with the highest rate of inequality.
These are some of the constraints that are driving the resistance to any move that has the intention to take more money out of people’s pockets. They are also the reason we need positive economic growth figures to increase employment, get more of our people out of poverty and reduce inequality.

Eswatini, like many countries across the world, has had to pull itself out of the harsh impacts of the COVID-19 pandemic back in 2020, which ravaged economies with shutdowns to curtail the movement of people and contain the spread of the virus. It took with it about 1 427 lives of emaSwati and over 80 per cent of local businesses were recorded by a Business Eswatini COVID-19 impact assessment report to have experienced medium to high level financial impact. Since then, the country has launched an economic recovery strategy and the recent mid-term budget review gives us an indication of its success, not to discard the financial boost to our national budget from the substantial growth in receipts from the Southern African Customs Union (SACU) pool over the past two years.

Investment

Contributing to this growth, we are told, has been the manufacturing and retail sectors. Although emaSwati would have loved to see more on the investment front, the arrival of Kellogg’s Toleram, Lush Hair manufacturing and seeing expansions in CONCO, Umbuluzi, the sugar industry, Montigny, Pick n Pay, KFCs and the opening of the Lifestyle Shopping Complex in Matsapha, just to name a few, provide a glimmer of hope on the job front. Recent statistics also show a trade surplus with Eswatini becoming the second to South Africa among those with authorised international operators certificates (see Business Section). The coal mining sector also realised high returns followed renewed demand globally, providing a positive spin-off in the related sectors like logistics.

We also look forward to the opening of the Jonsson Workwear factories in the Shiselweni region to ease the unemployment woes. The Mpakeni Dam project is also expected to change the economic landscape of this region upon completion in a few years time. The Ministry of Commerce, Industry and Trade has had to be one of the busiest post-COVID-19 to resuscitate the economy and the recent figures are, to a reasonable extent, an indication of its efforts.As if to encourage these positive trends, His Majesty the King has given himself time to visit various businesses over the past few months and expressed satisfaction at what he has seen, while stating that a lot more still needs to be done, particularly for the country’s youth.

Take nothing away from the tighter fiscal controls and increased revenue collections by the finance ministry and its organs.  Economists have lauded this positive trajectory, albeit with caution, saying the growth prospects of the nation depend largely on improved government expenditures. In summarising the mid-term budget review, economist Sanele Sibiya said the statement paints a picture, in which the economy will have to consistently grapple with this upswing and downswing in the volatile SACU receipts. He also noted that public debt is projected to exceed 40 per cent of GDP at the end of the current financial year, with debt servicing exceeding 50 per cent of budgeted funds.

Growth

“The budget and expenditures may actually stagnate in the financial year 2025/26. This may hamper attainment of the 5.5 per cent growth in GDP, which in the short to medium term is expected on the back of mega projects and these require stable government expenditures,” he noted. He observed that delays in capital projects and subsequent expenditures may result in a downward revision of job projections and private consumption expectations. “There is need to diversify domestic revenue collections and find alternative sources of funding for fiscal expenditures,” he urged.

This should come from creating more jobs in the country and to do this means creating a more conducive environment for businesses to thrive and for investors to find preference in settling here rather than elsewhere. All these positives, however, can easily be retarded by a lack of decisive action on corruption where the untouchables are eagerly waiting to devour the next set of gains in our economy for their selfish benefit. 

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