Swazi Observer

FULL STORY

SMALLER ECONOMIES NEED SUPPORT

By Alec Lushaba | 2020-06-01

HIS Majesty King Mswati III on Thursday made an appeal at the UN High Level event on ‘Financing for Development in the era of COVID -19 and beyond’ for the support of smaller economies like that of the Kingdom of Eswatini.

The King’s appeal is informed by the devastating effect caused by the coronavirus pandemic which has resulted in businesses shutting down, some permanently, resulting in negative effects on the country’s tax collection activities.

His Majesty the King appreciated the opportunity for Heads of States and Governments to join hands and find ways and means of addressing the financial and economic challenges post-COVID-19.

I find the King’s submission and appeal to be very instructive and proactive given the situation we find ourselves in as a country.

Clearly the full impact of the pandemic has not yet hit home, as we see government, individuals and the private and public sectors coming in to lend a helping hand to affected people. As corporates and individuals are not fully functional, time will come where even this help is likely to dwindle as this pandemic hits their pockets as well as that of government, compromising the country’s response not only to COVID-19 but many other essential services, particularly in health, education and labour.

His Majesty expressed his fears that if these smaller economies are not supported, especially Sub-Saharan Africa, the coronavirus threatens to negatively reverse the gains the continent has made towards its economic development, in particular its Agenda 2063 which aims to create an enabling environment for all.

decimated

Making an example of the kingdom, the King said at the beginning of the year the country passed a E24 billion budget, which the pandemic has decimated, forced that it be re-directed towards responding to the virus, which has brought a total shift in the way we conducted our business and further halted the economy.

He said as a result this will see the country’s economy shrinking by 6.7 per cent, thereby increasing its deficit from 4.3 per cent to 9.1 per cent.

“Mr. President, our kingdom has a national objective of developing our country towards the attainment of a developed status. We therefore hope, with the support of the UN, we can access financial assistance to support our budget for the next financial year 2021/22 to enable us to address our social and economic landscape.

Implementation of Sustainable Development Goals (SDGs) has always been a priority for the medium term and has been done with the assistance of development partners.

“I wish to appeal to the UN and other development partners to continue to assist Eswatini to finance SDG implementation,” the King said.

The King commended the positive response of international organisations who are offering concessional funding to all countries and waiving their stringent conditions so that these countries can have immediate access to funding, irrespective of their economic status.

“I wish to implore these organisations to suspend debt service obligations and waive interest payments during this period to allow countries to re-constitute their affairs and develop appropriate plans for adjustment,” the King said.

He said the middle income countries are also challenged by their economic classification and treatment. The King said the Kingdom of Eswatini, which is classified as a low middle-income country, has social challenges that have to be met.

He appealed to the private sector for assistance to create employment opportunities and ultimately fight poverty.

His Majesty the King’s appeal to the UN High Level event on ‘Financing for Development in the era of COVID -19 and beyond’ speaks to events that will unfold in the coming months when governments will start to feel the full effects of the pandemic.

Until a medical solution is found, countries will have it tough to keep the balance between ensuring that the virus is controlled and getting the businesses fully unlocked.

allowed

On Friday, the Prime Minister Ambrose Mandvulo Dlamini threaded carefully when announcing what types of businesses are allowed to operate under strict World Health Organisation (WHO) guidelines.

In the midst of that, the PM announced that the expected 1.03 per cent Eswatini Electricity Company (EEC) tariff hike, which was meant to come into effect today, has been pushed forward to the next financial year.

This again assumes that by then the situation would have improved.

Scientists are projecting late 2021 for a medical solution, which means between now and then we have to strike a proper balance of how to unlock the economy.

Whilst we may be happy with the decision, the reality is that deferring the price hike does not suggests that electricity production costs, general, import and personnel costs have also been deferred.

Eskom has just been granted by NERSA to recover about E13 billion from its clients, that include EEC. Recovering costs means increasing their tariff. Instead of EEC customers paying for these costs, we expect government to foot the bill.

overcrowding

On the other hand, our working from home plans as means to avoid overcrowding our workplaces and prevent the spread of the virus are currently undermined by an underdeveloped infrastructure in the information communication and technology sector.

This subject as a priority can no longer be postponed in the government agenda, serious steps must be taken to see how we properly align this significant sector.

Our current challenge is that ICT Minister Princess Sikhanyiso, who eloquently detailed the need for an ICT based economy at Sibaya in 2018 is indisposed or on leave, which means until she is back, very little will get moving in this space.

Lastly, as the economic future looks bleak, it would be better for the Public Sector Associations (PSAs) and the Government Negotiating Team (GNT) to conclude the cost of living adjustment (CoLA) negotiations now.

A time is coming where the three per cent current offer will be removed from the table.

share story