PART II: WHO WILL SAVE OUR COUNTRY FROM THE GREEDY KING?
Following on the heels of the King Mswati III opening of parliament speech recently Minister of Finance, Neal Rikjernberg, subsequently, delivered the national budget on the 18th of February.
In this speech, again, the glaring failures and self-serving nature of the regime were laid bare in the open. They can no longer hide the fact that the system is about preserving the privileges of the King’s family at the expense of the whole country and its collective future.
1. Taxing the Poor to Fund the Rich
The budget is a painful testimony of how the country has become a vampire state where the rich and mighty, led by the King, Cabinet, the Judiciary and Parliament no longer relate to the plight and misery of their own people. It was once thought that only apartheid South Africa and the British colonialists were capable of treating black people like animals yet today we can see King’s government is mimicking their colonial masters and apartheid sidekicks.
The Minister announced that a person who earns a mere E4000 per month will, while also paying 15% vat, have pay tax to the state. Taxpayers in this category are desperately poor people, who have children to feed, pay school fees, food, transport and rent in squalor conditions. In this category we have cleaners, housekeepers, textile workers, labourers and casual workers in various sectors. These are Swazis who are living on the edge and desperate for help from the state. Sadly this tax is to fund the ever-growing Royal family budget and the military establishment. This mass exploitation of the poor is unconscionable and devoid of any semblance of humanity. It begs the question as to who sets the expenditure priorities in the budget.
2. The Royal Expenditure Allocation Continues To Soar
The World Bank Country Report of 14 December 2020, unpacks the complex presentation of the budget of the monarchy and the royal family and concludes that it amounted to about 5 per cent of total government expenditure in 2019/20. Even though this report is illuminating on some of the hidden details, it does not appear that in their calculations they include the maintenance of the two private jets and related costs. The report estimates the expenditure at $82m or E1.23bn including the provision of security.
The current budget by the Minister only discloses E579m as being the allocation to the King and Royal family. According to the Royal Emolument Act, the King’s allocation cannot be reduced or adjusted downwards. This means that the balance of the funds of about E800m is hidden under the statutory expenditure budget lines and security budgets. It is time that society is empowered to dialogue and contribute views on the maintenance costs of the Royal family. It cannot be correct that the Royal allocation should be bigger than the country’s investment in tertiary education or grants for the elderly or the allocation for rural development and the Department of Agriculture. In comparison, the Zulu nation has a population of 11 million and the South African Government provides a budget of R71m for the running of the Royal household. How does the Eswatini, the Government and Parliament justify such a huge allocation to the King when there so many national priorities without funding.
3. The Continued Uncontrolled Royal Access to the Central Government Account
On 14 February, the Times of Eswatini published “over 30 cancer patients turned back, at-risk”. The story was that of a serious shortage of equipment at government hospitals. Patients had to pay E5000 from their pockets or else… “No money Dr Magagula”. “There has to be political will - Nurses union”. Previous to this report were headlines about the lack of food and drugs in hospitals. Such stories are a daily occurrence in the country.
On the 4 of February 2022, the government processed travelling allowances for the Queen mother to travel to South Africa E750 000 and the Prince E300 000 each. The accompanying delegation number was close to 100 and were paid E3600 allowances per day. This is over and above the huge budget the Royal family is already receiving. Where is the fiscal responsibility in this?
4. Corporate Tax Reduction
The budget proposes a reduction in corporate tax from 27% to 25%. The immediate question is who called for this change and who will benefit from it? Tibiyo and the private sector are clearly the main beneficiaries. The red flag of the vested interest of the King as a business and head of state, as well as the position of the Minister of Finance with the large financial interest of his own in the private sector and yet instrumental in this self-serving policy decision. The King is conflicted and there is no accountability.
It is notable that in order to make up for the shortfall in the fiscals due to the corporate tax reduction and the slight adjustment in the taxation of the poor, the Minister is proposing a 3% tax increase on the middle class, plus an additional 30 cents per litter tax levy. This is depressing, particularly on civil servants who have not received any salary increase in the past few years and hopefully a wake-up call to the middle class, who have seemingly been on the fence in the agitations for political reforms.
5. Austerity Hurting Public Sector Workers and Poor
The government has clearly utilised the COVID-19 pandemic to suppress public sector workers in terms of their prospects for employment and their prospects for improved workplace conditions of employment and benefits. This has also suppressed the employment opportunities for young graduates who normally would find employment within the public sector in jobs such as administration, teaching and nursing etc.
The clamour for more austerity has been going over the few years by the government supported by various International Funding Institutions, blaming the poor and civil servants for the poor fiscal position that the country finds itself in. Surprisingly, they have never publicly called out the bloated King’s expenditure allocations as well as the funds directed at the security forces, particularly the army which are not scrutinised even by parliament.
This austerity is causing great harm to service delivery as areas of public service are short staffed and the public continues to receive shoddy services. It would appear that the real challenge facing government is the setting of correct priorities and not the lack of financial resources.
6. The Insensitivity of the Reconstruction Fund to Ignore the Brutalised and Those Who Lost Their Lives
The budget also sets out an allocation of E500m which was announced by the King for the repair of fixed properties and businesses destroyed during the national protests. Again, the state demonstrates unbelievable animus towards the people whose lives were destroyed by state violence during the protests. There is no attempt to reach out with similar mitigation measures to the victims of the state and their dependants. The human rights commission confirmed that the armed forces were complicit in the injury and deaths of unarmed protesters. It is a serious indictment that the state values property more than human life. The state has refused even to hold formal enquiries in acknowledgement of the loss of human life.
7. The Security Cluster Budget
The combined Security Budget, Army, Police and Correctional Services is crushing the poor. This is a budget of a government that is under siege and is dependent on the military and police force to stay in power. All this happens at a time when the country needs to focus its resources on priority needs such as basic education, technical education, tertiary funding, teachers, nurses, doctors, health infrastructure, rural development, uplifting the youth and unemployed. The combined budget for the army, the police and correctional services stands at E2.87bn compared to the health budget of E2.42bn or agriculture at E304m. This is not a budget for the development of the country but the formal pronouncement of a full capture of the state for private interests.
8. Investment Promotion
The budget statement announces various superficial measures to improve the business environment and attract external investments. The statement does not address the fundamental challenges faced by external investors. These obstacles include influential networks dominating the decision making environment and unsolicited governmental or royal family interference in private business affairs. In a weak political and legal environment where the King is above the law, any minor policy twigs will not remove the uncertainty that is entrenched in the perception of the domestic and international community. We therefor do not see the proposed changes as fundamentally addressing the structural barriers to the security of private investments. Major investment disputes have been reported over the years on matters of mining, investments on Swazi Nation land, reports of unreasonable demands by the mighty and powerful demanding shareholding in private investments, high-jacking of private investments etc.
Further, the Minister does not appear to appreciate the lack of serious attention to the causes of the ongoing national protests and the failure by the King and government to engage society in a meaningful way. This will continue to be a major source of sovereign risk, thus presenting a much bigger barrier to the efficient operation of the state and the economy.
9. The Budget Fails Dismally to Offer Support to Small, Medium and Microenterprises
It is estimated that on average 25 000 school leavers have been entering the labour market over the past 10 years and around 1000 per year absorbed into formal employment. About 66% of employment opportunities have been created by the informal sector. Further, it is estimated that 75% survive on subsistence farming in rural areas. The budget makes no meaningful provisions commensurate with the demand for state support for the poor. The key highlights in the budget offers E4 Million for informal traders in Manzini, E45 Million revolving fund for Micro, Small and Medium Enterprise and E42.2 million to cater for agricultural subsidy programmes.
It is therefore absurd that this sector is not receiving support when the state has so much fiscal space in the budget but instead chooses to fund the King, Tibiyo and Minister Neal’s business associates at the expense of the poor citizens of the country.
10. The Capture of the State by the King and Royal Family has Reached Unbearable Proportions
There is strong evidence that illustrates the extent of the capture of the state and diversion of critical resources for the exclusive benefit of a small elite to the disadvantage of the poor in eSwatini. This gridlock of the public purse and the broader economy has constrained the development of the country and shrunk economic growth. Public funds have been wasted before in projects such as the Sikhuphe Airport, Sicunusa-Nhlangano road and the eZulwini International Convention Centre and continues to be a black hole without any limit. In all these projects royal connected companies are a common feature and colour of corruption in the country. Such looting is expected to continue even with announced projects such as the construction of the new parliament and the Mkhondvo – Ngwavuma water project.
This wasteful expenditure has starved the country of critical savings that could have been used to invest in skills development, addressing the mountains of socio-economic needs of the youth and unemployment. The address by Minister Neal failed to provide answers as to what measure shall be taken in the New Year to address these glaring acts of blatant stealing of public funds.
11. The New Airlines
It has been announced that the country has acquired two planes as part of a launch of the new Swazi Airline. It is not clear as to who has made this decision. Where is the money coming from? Who made the feasibility study to support this project? Where are the tourists coming from? What has changed in the tourism market that will stimulate the large tourist travel to Sikhuphe airport? This is yet another scheme to impoverish the country.
It was encouraging to hear the Honourable Member of Parliament Marwick Khumalo asking some of the important questions in Parliament. There are many questions that need to be asked.
Letfu-Sonkhe will be hosting the budget speech discussion presented by Swazi Economists on Sunday on 6th March 2022, supported by a panel of Swazi leaders in the trade union and civil society.
NB: Mandla Hlatswayo is the Chairman of Letfu Sonkhe Institute of Strategic Thinking and Development.