Mbabane: South Africa recently granted a US$350 million bailout to Swaziland’s King Mswati III - following desperate overtures to his neighbour to stave-off his kingdom’s financial meltdown - but the king has now cooled to the idea and left the Memorandum of Understanding (MOU) unsigned and the loan in limbo. The first tranche of the three-tranche loan was scheduled to be released in August 2011, but among the loan conditions were 'confidence-building measures' on democracy, human rights and fiscal reform, as well as the 'overhaul of its budgetary systems'.
These vague conditions were dismissed by the Congress of South African Trade Unions (COSATU), the country’s largest union federation and alliance partner to South African President Jacob Zuma’s ruling ANC government, as giving 'breathing space for the regime,' and not 'serious' in inducing a democratic transition, while pro-democracy activists in Swaziland dismissed it out of hand as a 'betrayal' of the Swazi people.
Mswati’s government is reportedly trying to source additional finance from non-traditional sources of revenue such as Qatar and Kuwait, but as these efforts proceed so the country sinks further into the financial quagmire.
The impact of the current financial crisis is severe and according to the World Food Programme, annual production of the staple maize since 2000 has gradually dropped - from an average of 100,000 tons to about 70,000 tons - a consequence of erratic weather, high input and fuel costs, HIV/AIDS and the declining use of 'improved agricultural practices'.
Stocks of antiretrovirals have become alarmingly low and were reportedly standing at one month’s supply. Swaziland has the world's highest prevalence, with one in four Swazis aged 15-49 HIV-positive and about 70 percent of the population living below the poverty line.
Dimpho Motsamai, a researcher in the Africa Conflict Prevention Programme at the Pretoria-based think-tank the Institute for Security Studies, told IRIN South Africa’s loan 'was small and will be quickly absorbed' and the government needed to look for other financing opportunities.
However, the MOU created the impression in Swaziland the country was being 'dictated to' and issues of sovereignty and patriotism had reared their heads.
'The government does not fully appreciate the magnitude of the fiscal crisis, the potential for a social crisis and the need for dialogue. They think it is just about money and think it will be fine if they get a loan as it will address the liquidity crisis. It’s a band aid approach..[but] it is not about money. It’s about governance,' Motsamai said.
Government has opaque accounting systems of its spending and has approved multi-million dollar vanity projects such as the Sikhuphe International Airport. It also has a free-spending and unaudited Royal Household, and there have been recent disclosures in the media that more than US$10 million each month disappeared from government coffers.
Meanwhile, Circular No 1, 2010, provides politicians (from the prime minister to regional administrators) with numerous perks - from entertainment allowances to their water, rates and electricity bills being paid. The public sector wage bill is difficult to assess, as the budget for the security personnel is withheld for 'security reasons' as are payments for an indeterminate number of traditional authorities.
Mswati III, in a speech on 14 September, railed against the international community for leaving his country bereft, and specifically the International Monetary Fund (IMF), for refusing to bail out his country until it had implemented economic reforms. One of the IMF conditions was the reduction of the public service wage bill, seen as too large for the country’s size, and widely regarded as a store for patronage.
Mswati, who has a personal fortune estimated at about US$200 million, said the IMF had 'double standards' and was assisting countries such as Greece - which has a similar debt-to-GDP-ratio as Swaziland - with bailouts.
'However, when they [IMF] come here you see that they treat us in a different spirit. What is worrying then is why do these organizations apply different standards when dealing with Swaziland? They start making unreasonable conditions like we should retrench people and effect salary cuts. They flatly refused to discuss the bail-outs with us as they do with European countries,' Mswati said.
Joannes Mongardini, IMF head of delegation responsible for Swaziland, told local media on 22 September 2011, in response to allegations of double standards, that 'Swaziland is not alone. The cuts in Europe were much more significant than those being proposed in Swaziland. Swaziland salary cuts are not extreme. The longer it takes [to restructure its finances], the more painful it will become.'
Prime Minister Sibusiso Dlamini has candidly admitted any significant public sector salary cuts or retrenchments would create social instability, although growing socio-economic and pro-democracy protests this year have been met with a heavy-handed police response.
Swaziland’s financial crisis began in earnest after revenue from the Southern African Customs Union (SACU) - the world's oldest customs union, comprising Botswana, Lesotho, Namibia, Swaziland and South Africa that applies a common set of tariffs and disproportionately distributes the revenue to member states - declined significantly in the wake of the 2008 global slowdown.
South Africa has said if Swaziland was unable to repay the loan - if it were accepted - it would deduct it from SACU contributions to the country, although the drop in revenue receipts was one of the drivers of its financial crisis.
Home-grown recovery plan
An economist based in the capital Mbabane and working for a South African finance institution, who declined to be named, told IRIN: 'There is now, and for some years has been, a way for Swaziland’s government to get out of its hole, and that is to follow IMF recommendations for such things as reducing salaries for government workers earning more than R150,000 (US$20,000) a year. This recommendation spares the lower earners.'
He said the IMF was scheduled to return in November to review the government’s home-grown financial recovery plan, but the politics of the government was to portray the international finance institution as the villain of the piece and it can 'only make international lenders and donors suspicious and nervous. If they don’t do what Swaziland wants, will they be called racists and hypocrites for their good intentions?'
Recent public protests have highlighted two royal conglomerates, Tibiyo TakaNgwane and Tisuka TakaNgwane, which have extensive business dealings within the kingdom based on property developments, manufacturing, coal mining, and tourism, but are exempt from taxation. The conglomerates were established by Royal Charter in 1968 - the year the country achieved independence - with the objective of complementing the government’s national development priorities.
However, in a recent letter to the labour union about their role, Finance Minister Majozi Sithole said the money from these entities belonged to the Royal Household and not the people, as 'these entities were formed in terms of a Royal Charter which does not provide for their income to be part of government income.'
Landlocked between South Africa and Mozambique, Swaziland is not endowed with an array of natural resources like many other African countries. Coal and sugar are important exports for the country as are soft drink concentrates, and the country has a vibrant tourist industry.
* Related article: The Swazi Bailout Conundrum
For good reasons it is not immediately apparent to the general Swazi population as to whether the agreement by the South African government to give its Swazi counterpart a loan amounting to R2.4 billion is going to save the country politically or impede its natural development.
Swaziland's natural development is its creation of a democratic society based on principles of liberty, freedom, peace and respect for human rights. This will only come about with the collapse of the feudal Tinkhundla system of governance, which has proven beyond doubt that it is undemocratic and oppressive completely ineffectual to deal with modern challenges of modern society.
To speak of Swaziland as having only fiscal difficulties is to focus on the symptoms of the only economic problems while completely ignoring the cause which is the political economy of Tinkhundla reproductive system.
Swaziland's current fiscal difficulties are a result of the country's political regression anchored on royal capitalism, i.e profit for the royalty, exploit for the royalty.
Governing a country with a feudal system of governance in this day and age poses difficulties in terms of dealing with the ever present realities of endemic corruption and gross incompetency. This is because the basis of feudal systems of governance is tribal fraternity amongst the people and the unconditional reverence for tribal authorities, kingship and royal supremacy.
In Swaziland these basic founding values of feudalism have led to unreasonable and criminal practices. These include what the Southern African Institute of Security Studies once labelled as a "Royal blanket covering corruption", which in the Swati language is known as "Kwembula ingubo."
The practice shields corrupt public servants and politicians from prosecution. In a constitutional framework where the royal family is above the law, it is impossible to even make them account for their decisions for shielding well known culprits.
This political system cannot deal with the endemic corruption in the country. When the Prime Minister of the country, Dr Sibusiso Barnabas concedes to the media that the Anti-Corruption Unit is toothless in the fight against corruption, it is an admission of the failure of the system.
The minister of finance, Majozi Sithole, reiterates this by saying that the country loses more than R80 million per month to corruption alone, almost R980 million per annum, making the bail-out unwarranted unless its to feed this trough.
This corruption, which the royal family not only shields but partakes in, unfortunately leads to the widespread poverty in the country and has led to the large influx of Swazi economic refugees who have silently integrated into South Africa, despite the government's denial or its inability to document them.
Such a situation leads to the conclusion that the best help that the South African government can give to Swaziland is political aid. Without helping Swaziland politically, a financial bailout is an exercise in futility, and it is only a matter of time before the country comes back begging for more aid. Its in this context that the primary condition for this bail-out if it is given, should be political the unbanning of political parties and frameworks towards democracy.
Since the system of the absolute monarchy has proven to be unsustainable, would it not have been a wiser decision to without any form of financial aid until a more sustainable political system was out in place? An archaic system that cannot deal with modern challenges cannot be saved by merely throwing money at it. The first confidence building measure should therefore be the unbanning of political parties and democratic commitments.
Swazi's are united in the belief that the decaying system of Tinkhundla is unable to function in its present form. The only difference in opinion is between reforming it and doing away with it completely. Tinkhundla apologists and reformists have had more than three decades to experiment with people's lives while the rest of the region was discarding the one-party system for multi-party democracy.
This is because, as explained before, Swaziland's fiscal problems stem from endemic corruption, a deep rooted culture of impunity and royal greed which leaves the majority poor and creates all social ills facing the country.
The exodus of young educated Swazis to South Africa, coupled with the lack of government social support for the majority of the population leaves the population in a state of economic paralysis. This is evident in the fact that the country's only university remained closed despite the fact that it was due to open in August. Even when it was officially opened, key services within it remained non-functional due to the lack of operating finances.
Moreover, the students had their allowances reduced by 60%.
All of these factors are bound to have a negative effect on the education of Swazi students. Most students who attend the country's university come from poor backgrounds, the majority being children of workers and the poor. As a result, their study allowances are the only source of money for living and accommodation expenses. Thus one way in which it can be determined that the loan from South Africa is not being directed to priority areas is the education crisis in the country.
Despite this, however, royal emoluments have not been reduced. Princes and princesses, who are employed well - to - do brothers and sisters to the reigning king, continue to receive their stipends which amount to more than one R100 000 for each prince/princess. Political brainwashing exercises, masquerading as Swazi culture, such as the Umhlanga reed dance have been allowed to continue as if the country is not experiencing any fiscal problems.
All this misspent money should be used to cater for essential needs that have an impact on the country's overall well-being. These include social needs like health, education and others. It should also be used to cater for genuine dialogue exercises that will lay the foundation for a democratic Swaziland. It should also be used to fund the creation of a conducive environment for a free media that the people can use to communicate with each other without relying on the Tinkhundla and royal controlled state media alone.
An environment with freedom to share ideas should be a prerequisite to the South African government granting Swaziland the loan. This should be accompanied by the unbanning of all political parties, the return of all political exiles and the freedom of all political prisoners. Members of political groupings should be free to hold peaceful rallies in the country if the country is sincerely taking steps towards democracy.
All the conditions necessary for creating the levelling of the political playing field should be there prior to the release of any funds instead of giving the Swazi government a blank cheque and hoping that a few months down the line a delegation will be sent to determine if King Mswati111 has kept his promises.
The loan must be withheld until these conditions are met. The level playing field is necessary if the country is to embark on creating a new constitutional framework under which democratic elections will be held.
Without these conditions the bailout will be a mere economic olive branch to a despot, and such cannot be helpful in the long term as it will only weaken the Swazi state rather than strengthen it. Whatever spin that this loan is given by South Africa's spin doctors, the fact remains that Swaziland is now dependent on South Africa. It has turned into a basket case.
Despite the lack of a clear programme for embracing democracy from the Swazi government, the country's democratic forces must appreciate that there are still possibilities for a democratic revolution. They should not be side tracked by the loan agreement but continue intensifying the struggle.
The current fiscal crisis allows them to sharpen the contradictions within the Tinkhundla system of governance and the germination of a democratic system. It is their duty to mobilise the masses and popularise the people's demands, espousing the basic conditions that must be realised for the country to be democratic.
This will require appreciating the fact that new terrains of mobilisation and consultation between the leaders of the struggle and the masses must be utilised. It is necessary at this juncture to unify all the leading democratic forces and illuminate the path to victory.
The popular democratic movements need to set up peoples' committees to rally the masses, particularly those in the country side who have become vulnerable to King Mswati's coercive tactics. They need to be empowered to take the revolution into their own hands.
The international community also has a significant role to play in the democratic process. The SADC and South Africa, in particular, needs to give support to democratic movements in Swaziland. This should be both moral and material support.
International friends must help the movement for democracy by giving it resources to popularise the concept of democracy as public opinion has to be propagated. Without it then the Tinkhundla forces will be able to win power in a democratic dispensation and return to the same political set up that the country currently has.
Bailout and IMF
At the present moment the Swazi government is still in the process of soliciting loans from various international banking institutions such as the African Development Bank and the IMF. Should these loans be granted, the conditions should not be such that they will hold the future democratic government at ransom.
The democratic movement must prepare to govern by creating policy discourse.
Sham attempt of a democratic Convention
The SSN has also noted that king Mswati is billed to address the nation in a window dressing exercise which will only add to Swaziland's financial problems as the king will obviously, as usual, be tempted to spend money on feeding the people while the outcome of the exercise will be meaningless.
Such exercises in futility are no longer needed. The democratic forces in the country should ensure that this attempt at a fraudulent referendum should never see the light of day.
We will be monitoring events as they unfold in Swaziland and continue to hold the democratisation of the country close to our hearts. We applaud the success of the global week of action.
* By Swaziland Solidarity Network [SSN] - National Chairperson comrade Solly Mapaila.