ESWATINI’S DEEPENING ECONOMIC CRISIS!
The Kingdom of eSwatini stands at a historic crossroads; drastic political and economic decisions have to be taken if we are to survive and make progress. The price of bread has increased by 20.76 percent, and the same goes for general food prices; fuel prices keep shooting up and this situation affects the prices of other items.
Indisputably, the growing spate of retrenchments, unemployment, insecure jobs, informalisation, out-sourcing, casualization, and poorly paying jobs reflect the structural arrangement of the Tinkhundla economy which serves the interests of the ruling class. The net result of all this is the growing levels of poverty, unemployment and inequalities in the country, with women and the youth as the worst victims.
Of course, this takes place in the context of a continent that is still suffering from the effects of the neo-colonial legacy and underdevelopment, with the accompanying effects of wars and conflicts, poverty, injustices and inequalities, as well as rampant human rights abuses resulting from undemocratic regimes and control over power by elites of various kinds.
However, this does not insulate the Swazi regime from the mess it has plunged our country into. The ruling family is still in place and a majority of Swazis are at the receiving end of oppression and exploitation. There is also a national nucleus that is fast developing into an economic power base in the country, using the feudal nature of the system (i.e. land belonging to the king) to amass wealth in strategic sites of the economy (telecommunications, mining, construction, health, transport & logistics, retail, and finance sectors), partnering with or “bribing the king” in order to fast-track their self-enrichment project. This ‘nucleus’ is doing the entire ‘dirty job’ of accumulation which benefits both itself and the monarch; they are amassing a huge amount of resources and throwing the rest (including SMMEs) out of business. Alongside the comprador bourgeoisie which focuses on sectors like banking and manufacturing, they have since mastered the art of ‘looting’ in Swaziland: give something to the king and do whatever you want! This means more poverty and suffering for the majority of the people.
Therefore, the arrival of Covid-19 and the national shutdown in early 2020 found an already wounded economy. Covid led to deaths, our health facilities were overwhelmed and people lost jobs, businesses were liquidated and the quality of life for people was severely affected. At a global level, the International Monetary Fund (IMF) estimates that the median global GDP dropped by 3.9% from 2019 to 2020, making it the worst economic downturn since the Great Depression. The effects are still felt even today, although the vaccination program and other interventions made it manageable.
While eSwatini was still struggling with recovering from the Covid-19 pandemic, the 2021 civil unrest exacerbated our situation. We lost no less than 80 people, many were injured and some amputated. Companies closed down and some retrenched. The infrastructure was damaged; we had fellow citizens going to exile, some imprisoned and the social fabric of our society was paralyzed. When the Head of State (King) announced a Reconstruction Fund it was like paying attention to symptoms without a correct diagnosis and treatment – the real problem remains the political system and the lack of democracy and good governance in the country. People still cry out for their right to self-determination; they want to choose a government and this has made it impossible for the situation to be addressed. Obviously, economic activity is dependent on politics and vice versa.
The political system remains and the looting of public resources by those in power continues. Thousands of young people do not have jobs. Families are starving. The proposed national dialogue that is expected to usher the country into a democracy has been postponed forever. There is no hope that the economic situation will improve.
In the midst of all that, came the Russia-Ukraine war which has had huge effects on the global economy, and being part of the global community eSwatini has been affected too. The organization of Economic Cooperation and Development (OECD) has already observed that inflation is hitting living standards and reducing consumer spending across the globe, and businesses are becoming less optimistic about future production. It has also mentioned that low-income economies are also at risk due to surging prices of basic food and energy.
According to the International Monetary Fund (IMF), investors expect that central banks will introduce more aggressive interest rate hikes in order to control price rises. Already, the Central Bank of Eswatini (CBE) has announced that the headline inflation increased to 4.0 percent in April 2022, from 3.4 percent in March 2022 and that the inflation remains on an upward trend. According to the CBE’s latest Monetary Statement (20 May 2022), this means banks are expected to increase the prime lending rate on loans extended to individuals and businesses to 8.0 percent until the next Monetary Policy meeting.
“The world economy continues to face challenges that still demonstrate the lingering uncertainty about the Covid-19 pandemic, the ongoing Russia-Ukraine war and faster normalisation of monetary policies in advanced economies,” reads the CBE Monetary Policy Statement.
It has been widely reported that Russia is a major supplier of oil, gas, and metals, and, together with Ukraine, of wheat and corn. The IMF has mentioned that reduced supplies of these commodities have driven their prices up sharply, and that is why we see the escalating prices of fuel and other commodities in eSwatini as well.
The question is, with the inherent problems in the country as reflected in the Tinkhundla Political-Economy, together with the effects of the Covid-19 pandemic and now the Russia-Ukraine war, will eSwatini survive this deepening economic crisis? Time will tell.