Country FilesSouthCountry Profile 2014: SWAZILAND

Wed,19Sep2018

Posted on Wednesday, 05 February 2014 14:36

Country Profile 2014: SWAZILAND

More squeeze on Mswati

The lack of opportunity for meaningful political change could become a matter of secondary concern if the economic outlook does not improve soon.There even remains a possibility that, as Swaziland’s chronic joblessness increases and local prices soar, South Africa could yet choose to pull the plugon King Mswati’s outdated system of government and start to exert meaningful leverage rather than the soft threats it has issued so far.

 

 

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> Top Swazi Companies

Top Swazi Banks

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More squeeze on Mswati

Public sector spending is on the rise as King Mswati seeks to buy loyalty

Economists predict near-zero growth for the foreseeable future

The lack of opportunity for meaningful political change could become a matter of secondary concern if the economic outlook does not improve soon.There even remains a possibility that, as Swaziland’s chronic joblessness increases and local prices soar, South Africa could yet choose to pull the plugon King Mswati’s outdated system of government and start to exert meaningful leverage rather than the soft threats it has issued so far. There are two reasons for this: South Africa has limited patience with the ever-swelling flood of Swazi job-seekers, and its institutions see no reason to extend unlimited credit to the financially squeezed Swazi treasury.

The economic for ecasters continue to see near-zeroeconomic growth into the foreseeable future, as well as poor prospects for local business esamida climate of rising inflation. And yet the government’s allocations to King Mswati (and his multiple families) keep on rising,with the royal household having now made space for his 15th so-called ‘virgin bride’. The public-sector wage bill is on its way up too as he seeks to buy loyalty to keep his indulgences going. As ever, the police doggedly sniff out anything that looks like a threat from political activists and trade unionists, whom they routinely describe as ‘anarchists’.


CHANGE FROM WITHIN


Another election of hand-picked legislators took place in September, with the government claiming a 97% turnout but democracy campaigners strongly disputing this. Nevertheless, it was significant that one major opposition figure, Jan Sithole, did manage to gain a seat by standing as an independent rather than as a representative of his Swaziland Democratic Party, which would have resulted
in disqualification. He hopes others will join his efforts to change things from within the system. The rather larger People’s United Democratic Front stuck to its boycott policy, vainly hoping to put pressure on European governments to abrogate the EU’s trade agreements and guaranteed quotas for Swazi sugar.


Foreign observers, especially those from the Southern African Development Community (SADC), have tended to pull their punches in their muted praise for the “orderly and peaceful” elections.This
means there is unlikely to be a head of steamfor serious collective international pressure on the government to change its ways. In this case the only realistic source of effective pressure can be South
Africa, whether through its trade unions or its financiers.

The government’s fiscal crisis reached a peak in 2012, when arrears to the domestic banks soared to 5.4% of GDP and the fiscal deficit stood at 6%. The government responded by cutting its spending on vital poverty-relief measures. However, as light easing of the financial pressures on the government came from a temporary doubling of transfers from the Southern African Customs Union in early 2013 and this seems to have dulled the urge to instigate serious reforms.


WAGE BONANZA


Instead, the government increased public-sector wages by 5% despite the International Monetary Fund (IMF) stepping up its calls for big expenditure cuts. Fiscal adjustment was seen as essential if the parity of the lilangeni currency with the South African randwas to be realistically maintained. In early 2013 the IMF was also insisting on a crisis resolution mechanism for banks, and proper supervision of savings and credit organisations.

In the real economy, sugar remains king, with industry sales of $406m in 2013 and the continued provision of 35,000 regular jobs to locals. And yet Swazi sugar, like its textiles, vitally depends on the
current preferential access to the US and European markets being maintained. Time is severely limited to achieve greater competitiveness and diversification across the board. Europe and South Africa currently take about 70% of Swazi exports and their own lack of economic buoyancy
has had its own impact on the country. With such uncertain prospects, private sector firms have battled to keep operations going, and a major furniture manufacturing company recently closed.
Mainland Chinese investment is not an option because of the government’s loyalty to Taiwan, which responds with direct financial support of around $200m a year as well as support to its own industrial
investors.

 

 Top Swazi Companies

 

Rank 2012Rank 2011CompanySectorCountryTurnover (Thds $)Turnover changeNet profits
419405ROYAL SWAZILAND SUGAR CORP.*AGRIBUSINESSSWAZILAND267,630NA11,708
 

 Top Swazi Banks

No companies from Swaziland featured in The Africa's Report's Top 200 Banks in Africa 2012.





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