MBABANE – The Central Bank of Eswatini (CBE) cannot carry out its core mandate of offering advice on the risks associated with capital flight because it is conflicted.
This impasse stems from the bank’s own actions, specifically its awarding of a E2.9 billion tender to Ingcebo, a foreign joint venture.
As the Ministry of Public Works and Transport and EWADE are thought to be leading partners in awarding tenders to foreign entities, it is understood that the CBE cannot offer advice to them in terms of the Central Bank of Swaziland (Eswatini) Order of 1974 and the Constitution of the Kingdom of Eswatini because it is also involved in the shipping of money out of the country.
In our scrutiny of the laws, assisted by noted attorneys and well-established economists, it has emerged that the CBE holds the key advisory role when it relates to money coming in and out of the country.
However, the Central Bank, headed by Dr Philemon Mnisi, is reportedly conflicted because it awarded the E2.9 billion construction tender for its headquarters in Ezulwini to Ingcebo Joint Venture (JV). Ingcebo JV is a construction consortium formed by Stefanutti Stocks (Pty) Ltd and Stefanutti Stocks Construction Eswatini (Pty) Ltd.
While the Central Bank maintains its argument that Stefanutti Stocks Construction Eswatini (Pty) Ltd is a local company, the Times SUNDAY can reveal that both Stefanutti Stocks (Pty) Ltd and Stefanutti Stocks Construction Eswatini (Pty) Ltd are wholly owned subsidiaries of the South African multidisciplinary construction group, Stefanutti Stocks Holdings Limited.
Section 40(1) of the Construction Industry Council Act reads: “A person shall not award contract works to a foreign company or foreign firm without the approval of the council.”
Subsection 2 also reads: “Where an award for a contract is referred to the council for approval and the council determines that the construction work to be awarded can be undertaken by a Swati company or Swati firm, the council shall not endorse its approval and the person shall not award the contract to the foreign company or foreign firm.”
There is a penalty to be imposed on entities contravening this law: “A person who contravenes subsection (1) or (2) commits an offence and shall be liable on conviction to a penalty not exceeding 10 per cent of the gross estimated value of the project or to imprisonment for a period not exceeding 10 years.”
Then, there is Section 41 (1), which specifies partnerships with Swati companies or Swati firms. “A person shall not award a contract for any construction works to a foreign company or foreign firm unless the foreign company or foreign firm undertakes the construction works in partnership or jointly with a Swati company or Swati firm,” reads Section 41 (1) of the CIC Act of 2013.
Section 41 (2) also carries a penalty: “A person who contravenes subsection (1) commits an offence and shall be liable, on conviction, to a fine not exceeding 20 per cent of the gross estimated value of the project or to imprisonment for a period not exceeding 10 years, or to both.”
Role of the Central Bank
Why was this Central Bank established? Section 4 of the Central Bank of Swaziland (Eswatini) Order of 1974 provides that the principal objects of this financial institution shall be to:
Formulate and implement monetary policy to the end of promoting monetary stability.
Issue and redeem currency which is legal tender within Swaziland (Eswatini) under Section 23.
Issue securities on its own account.
Formulate and implement appropriate intervention policies in the foreign exchange market.
Hold and manage the official foreign reserves of Swaziland (Eswatini).
Promote, regulate and supervise the efficient and secure operation of payment systems.
Supervise banks, credit institutions and other financial institutions to the end of promoting a sound financial structure.
The Central Bank is also governed in terms of the Constitution of the Kingdom of Eswatini. Section 260 (2) provides that the Central Bank shall, among other things:
(a) Be the only authority to issue the currency of the kingdom.
(b) Be the sole custodian of public funds both in and outside Swaziland (Eswatini), with power, by appropriate instrument, to delegate such custody of funds as may be specified in that instrument.
(c) Maintain an adequate external reserve for Swaziland (Eswatini).
(d) Supervise the operations of financial institutions in the kingdom.
(e) Issue securities on its own account.
(f) Promote monetary stability and a sound financial structure in Swaziland (Eswatini).
(g) Foster financial conditions supportive of an orderly and balanced economic development of Swaziland (Eswatini).
It is said that the powers of the bank shall vest in a Board appointed by the minister responsible for finance, of which the governor and the deputy governor shall be members.
It must be said that the governor is appointed by the King on the advice of the prime minister, based on the recommendation of the Board, which is set up by the minister for finance.
Constitutionally, the Central Bank is independent and not subject to the control or direction of any person or authority, save as may be necessary for the due performance of its functions.
Economists cited Section 260 (6) as what the Central Bank of Eswatini should have done to preserve local empowerment and ensure that the CIC Act is adhered to, as it seeks to cement the country’s financial stability.
Section 260 (6) reads: “The bank shall have power to disallow any transaction, investment or transfer of any foreign exchange, both in and outside Swaziland (Eswatini), which is contrary to the law or which may be prejudicial to the monetary policy or price stability of Swaziland (Eswatini), when performing its functions under this Constitution or any other law.”
*Full article available on Pressreader*
Dr. Phil Mnisi, the CBE Governor. (Courtesy pics)