GOVT’S MULTIMILLION A-ETRADE HEADACHE

MBABANE – Pledging financial support based on funding that is not available is catching up with government. 

Government made a financial commitment to provide a letter of guarantee that can facilitate the acquisition of a mortgage, at the expense of the A-eTrade Group, from local financial institutions and/or international financial institutions, to enable it to build its premises in the Kingdom of Eswatini. 

Even though it was not specified in the host country agreement, the guarantee that government pledged was worth millions of Emalangeni.

Government currently has a challenge as it owes local suppliers who have not been paid for the last two years. 

Shortage

The financial commitment also came at a time when government’s health facilities were plagued by a shortage of medication due to lack of funding to procure enough. 

Following the current economic challenges facing the country, in November 2018, Cabinet decided to implement major interim fiscal decisions to enhance financial prudence and controls so as to spend as little money as possible. 

These included that government would not buy new vehicles for the prime minister and deputy prime minister in the interim and they would utilise the vehicles which were used by their predecessors, which would only be serviced as and when required. 

It also stated that government would not hire any vehicles for use by Cabinet ministers.

According to information sourced from Quora.com, Gareth Mitchell-Jones, a direct marketing and customer management professional with over 26 years of international work experience with many of the world’s biggest brands in a number of industry verticals, says it could take up to E250 million to build a fully featured data centre and the development cost could take an additional E528 million. 

The sum is exclusive of the funding government also pledged for the construction of housing for 2 000 to 5 000 A-eTrade staff and other financial support towards the project. 

Jones made reference to a data centre that was set up in Nottingham to provide its clients with a safe, secure, highly resilient facility for delivering mission-critical services. 

Server

He said upon opening, around 700 servers were installed and the number was expected to grow up to a maximum of 5 000 servers.

Government pledged to provide the A-eTrade group with adequate premises to house the platform’s infrastructure and premises for at least two years pending the construction of its premises. 

This is contained in the host country agreement between the Kingdom of Eswatini represented by the Ministry of Commerce, Industry and Trade and the African Electronic Trade Group for the hosting of the A-eTrade Group’s Regional Office for Southern Africa. 

The document was signed in October 2019. 

“The Eswatini Government would provide the requisite guarantee to the selected financial institutions providing the finance to build the premises; in this regard, substantial liquid resources will be available from local financial institutions. Provide a letter of guarantee that can facilitate the acquisition of a mortgage, at the expense of the A-eTrade Group, from local financial institution and/or international institutions, to enable it to build its premises,” reads part of the host agreement document.  

“The A-eTrade Group shall have its Regional Office for Southern Africa in Mbabane/Ezulwini and the government shall assist the A-eTrade Group in acquiring suitable premises for official functions, including for the operation of e-commerce platform,” It further reads.

However, government has purportedly failed to make the funding available for the purposes of building the premises as it pledged. 

This is because the International Monetary Fund (IMF) warned government not to seek additional loans to stabilise public debt and restore external buffers. 

The IMF approved E1.8 billion (US$110.4 million) in emergency financial assistance under the Rapid Financing Instrument to support the authorities’ efforts in addressing the severe economic impact of the COVID-19 pandemic. 

“The immediate priority is to support public health, vulnerable groups and businesses. Once the impact of the pandemic subsides, it is critical to implement the authorities’ fiscal consolidation plan and structural and governance reforms to ensure debt sustainability and achieve a fast and inclusive recovery,” read a report from IMF. 

Section 58 (1) of the Public Finance Management Act states that the Cabinet Secretary may guarantee a loan of a county government or any other borrower on behalf of the national government and that loan shall be approved by Parliament. 

Approved

Chairman of the Ministry of Information, Communication and Technology (ICT) Portfolio Committee MP Macford Sibandze was quizzed on whether the guarantee was approved in parliament or not, but he requested to consult with Minister of Commerce, Industry and Trade Manqoba Khumalo. However, his phone rang unanswered thereafter. 

Subsection 2 (a), (b), (c), (d), (e) of the Act states that the Cabinet Secretary shall not guarantee a loan under Subsection (1) unless (a) the loan is for a capital project;(b) the borrower is capable of repaying the loan, and paying any interest or other amount payable in respect of it; (c) in the case of a private borrower, there is sufficient security for the loan;(d) the financial position of the borrower over the medium term is likely to be satisfactory;(e) the terms of the guarantee comply with the fiscal responsibility principles and financial objectives of the national government. 

In respect to Subsection 2 (e), the terms of the guarantee do not comply with fiscal responsibility principles and financial objectives of the national government, which is still locked in the E1.8 billion loan acquired from IMF and E100 million acquired from the World Bank. 

When quizzed on the financial pledge made by the Kingdom of Eswatini to A-eTrade, the Group’s Director, Treasure Maphanga, said the setting up of the A-eTrade Group offices in the Kingdom of Eswatini was still at preliminary stages owing to the prevailing COVID-19 situation. 

Consult

“Therefore, it is difficult at this point to pre-empt when things will go back to normal. We continue to work and consult with the Government of the Kingdom of Eswatini to ensure that this project becomes a reality. We shall update the public as and when there are new developments,” she said. 

A questionnaire was sent to the Central Bank of Eswatini (CBE) Head of Strategy and Communication, Zithulele Gina, last week Thursday, which was seeking clarity on whether the country was in a position to make additional loans and whether it had not surpassed the 35 per cent threshold of the Gross Domestic Product (GDP). 

However, there was no response at the time of going to print yesterday. 

Approved

Meanwhile, Minister of Finance Neal Rijkenberg said it was in the discretion of the country to make additional loans despite that it was still locked in the E1.8 billion loan from IMF and the E100 million, which was approved by the World Bank Group in April this year, in health emergency funding for a project that would help strengthen the country’s health system preparedness to respond to the COVID-19 pandemic and potential future emergencies. 

He said it was up to the country to say when to stop making loans. 

When quizzed if there was any provision on the IMF loan that addressed the financial pledge made by government in setting up of the A-eTrade data centre in the country, the minister said there was no link between the two. 

 “We are still in discussion on the funding of the A-eTrade data centre but there is definitely no IMF funding going towards that project. We are still in the discussion stage,” he said. However, he was not specific on the funding that government pledged in support of the A-eTrade initiative. 

The African e-Trade Group is a social enterprise initiated by a group of African, multi-stakeholder and multi-talented professionals and entrepreneurs. The group works to empower the African digital economy and this work focuses on a trading platform and capabilities that boost -African trade and African exports. 

The government of the Kingdom of Eswatini submitted a successful bid to host the A-eTrade Group’s Regional office for Southern Africa through its initial letter dated January 28, 2019. 

The A-eTrade Group builds alliances between the public and private sectors, to develop new technology projects that offer opportunities and benefits for African entrepreneurs, especially the youth and women.

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