A bleak festive season awaits bankrupt kingdom

Nowadays there is seldom good news coming out of the kingdom of Swaziland.

The trend seems to continue and with the latest setback many Swazis will probably experience a bleak and unhappy festive season, with emotions running high since some newspapers reported on an official memo stating the government might be unable to pay its 35 000  civil servants their November salaries or will pay them late.

This news caused anxiety among the civil servants and threats of retaliatory strikes followed immediately.

Writing in the Mail & Guardian Kevin Davie exposed the chilling truth that ”You know as a country that you are bankrupt when you default on meeting your civil service payroll” and driving home the point adds that ”the civil servants are still being paid in Greece...”

Only after some frantic scrambling could the Swazi government announce that it had arranged loans to pay the civil service wage bill of US$43 million for November on time but warned that December pay cheques could still be in jeopardy.

Mystifying

Where the funds are coming from remains something of a mystery.  A spokesman for the Swazi government explained that it secured the necessary loans from the domestic market, which included financial institutions and private companies. But, being vague, the explanation created anxiety about the origin of the funding and what strings are attached.

Swaziland Solidarity Network, an opposition civic pressure group based in South Africa, citing a "highly placed sources", claimed that the bulk of the 1.4-billion-emalangeni (rand) loan came from an investment company, African Alliance, with allegedly close ties to king Mswati.

African Alliance denied lending the money with the CEO responding that it is impossible for his company to raise such an amount.

A second investment firm allegedly involved in the bailout, South Africa-based Interneuron, confirmed it had made a proposal to the Swazi government but said no deal had been clinched.

Swaziland Solidarity Network nevertheless accuses the Swazi government of offering its shares in several banks and companies as collateral. "At the stroke of a pen the people of Swaziland are facing a real risk of losing whatever little family silver the country still has. It would not be surprising if African Alliance emerges out of this illicit deal as the future super bank of Swaziland."

Another claim is that king Mswati himself was funding the bailout and channelling the money through African Alliance in a bid to increase his control over the country's assets.

The Swazi government might have averted, for now, a potentially highly explosive situation aggravated by the existing tension in the country caused by the hostility shown by king Mswati and his followers to the calls for greater political transformation and freedom.

Under pressure

There are valid questions asked as to the ability of the Swazi government to sustain its fiscal position through borrowing just to pay salaries.

The economy of Swaziland is against the ropes and actions such as these are like placing a Band Aid on an open, bleeding wound.

To survive the Swazi government will have to make far-reaching and critical choices followed by a willingness to carry them out even if it involves unpopular International Monetary Fund (IMF) ultimatums. An anonymous government official admitted,” If we don’t do this, then we will not survive”.

King Mswati might still .succeed, for the time being, through security forces clampdowns and intimidation tactics to delay the inevitable capitulation to the demands of the people of Swaziland for greater political participation. However, Mswati’s ability to resist the financial challenges facing his country is extremely limited and when the situation causes a need  to file for bankruptcy the floodgates will open.

Mswati stands to lose control of dictating the pace of political transformation in the Swazi kingdom.

The Swazi king can still make a meaningful contribution to help save his country by cutting back on his lavish lifestyle. His own fortune, although claimed that it belongs to the people of Swaziland, is estimated at US$200 million and will do little to alleviate the kingdom’s economic burden but will go a long way to help fight bankruptcy and might buy him some goodwill.

The cost to stay in power

It also seems that there are solutions if the king and his advisers are willing to listen.

The Times of Swaziland reports that the IMF has said the Swazi government does not need to dramaticly retrench civil servants or cut salaries to save the failing economy.

The head of the IMF mission to Swaziland, Johannes Mongardini, pinpointed the country’s bulging security services which he said were responsible for increasing Swaziland’s wage bill. According to Mongardini the IMF is recommending the Swazi government to reduce the wage bill by five per cent. This is a relatively moderate cutt compared to countries like Greece, Portugal and Ireland. Greece was required to cut salaries by 15%, Portugal by 10% and Ireland by 17%.

Mongardini attributed the increases in the country’s wage bill to the large expenditure on Swaziland’s armed forces.

"Some of the largest increases in the wage bill in recent years are due to increased security forces and police personnel and also due to the very generous allowances that government has given to politicians and top civil servants."

The Times of Swaziland quotes the US Central Intelligence Agency (CIA) World Factbook which states that Swaziland spends a lot of money on the army – proportionately more than any other country in the Southern Africa Development Community (SADC) in terms of percentage of the gross domestic product (GDP) and ranks 13th in the world.

An analysis of the statistics suggests that proportionally Swaziland’s military expenditure at 4.7% of GDP surpasses that of the United States and war-ravaged Libya. The US spends 4.06% of its GDP on the military.

Everyone knows that the large security establishment is to keep king Mswati   in power and his subjects under control. It is therefore highly unlikely that he will follow this sound advice despite projections that economic growth will slow down to 0.3 per cent this year while the government spending is double the level of revenue collected.

Indifference

The seemingly insensitive and indifferent attitude displayed by Africa’s last absolute monarch to the challenges facing the kingdom suggests that more tough times might lie ahead.

It is generally accepted that Mswati’s rejection of South Africa’s conditions to the loan of R2.4 billion is the main reason for lack of progress and central to Swaziland’s current financial deficiency.

Signing the South African conditions might  force king Mswati and his 12 wives – wife number 13 was recently shown the door when one of the king’s ministers was caught in a compromising situation  under the princess’s bed – to surrender  their lavish and extravagant lifestyle.

The Swazi royal household seems unwilling to commit to the sacrifice.

It is wrong and in bad taste to make light of anyone’s religion and custom, but for any outsider it appears short-sighted and morally unjustifiable for king Mswati to shun a delegation from the IMF at a time when his country needs all the support it can get because he is on a month-long religious retreat and leave it to his officials to meet with the delegation.

When king Mswati and the Swazi royal household gather around their Christmas lunch they will hopefully spare a thought for the kingdom’s less fortunate subjects.