Thursday 2018-08-16

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CASH COW RUNS OUT OF MILK, GOVT NOW ONLY HAS CARCASS

By Ackel Zwane | 2018-08-10

THINGS had to come to this before a stubborn government could come to terms with the realities of a crumbling economy that is somewhat heavily dependent on taxes coming from trade with neighbours, the Southern African Customs Union.

 There is no other source of money for government to sustain itself other than milking the already taxed to the born citizens who hardly have any remaining impetus to add value in the Gross Domestic Product in the form of attracting money from the outside.

It is, however, disheartening to mention that at this day and age the Eswatini state is still able to afford as a matter of priority, the financing of retiring politician’ huge perks, including the construction of a multi-million mansion for an ageing and sickly prime minister, whose structure can be nothing less than E15 million by all calculations.

This is a more than one storey structure than an old man of over 70 cannot generate enough energy and power to climb to the second step. This is the same for politicians who leave behind a legacy of ballooning the wage bill, much against influential international observations such as the World Bank and just recently, the United States ambassador.

At the start of last month, Ambassador Lisa Peterson: Commemorating the 242nd US Independence Day at the Ezulwini US Embassy could have been speaking against a hard rock that happens to be government but she was not referring to any premonition about the state of the economy, she was speaking economics when she said Eswatini was currently in the midst of a fiscal crisis that would surely push any hope of reaching this goal [to the top 10 per cent of the medium human development group of countries by 2022] several more years down the road. 

She observed that there were factors over which the country had little control, not least of which was the incredible toll of HIV on Eswatini’s most precious resource – its people.  But there are also many choices that have pulled the country back from its own stated development goals.

“Government has known for years that it needs to reduce the size of the civil service, decrease overall expenditures, and pursue policies that will foster economic growth.

  Instead, the public service wage bill has grown by 85 per cent in the last five years.  Government officials and oversized delegations are travelling in first or business class and spending days, sometimes weeks, in luxury hotels, using funds from public coffers. 

King Sobhuza II sounded a warning against such behaviour saying, ‘The Roman Empire collapsed because of too much attachment to luxury, and also because of the complacency of its people.’  We should all strive to heed his advice.”

She further noted that some in government had recognised the severity of the fiscal crisis and were moving to institute much-needed changes. She said it would be imperative that those in leadership positions do everything possible to claw Eswatini out of this fiscal hole.

 “The HIV and AIDS response, along with a host of other socio-economic and health challenges, is gravely undermined by this fiscal crisis. And while we want to help, our resources are finite, and many countries beyond Eswatini have foreign assistance needs as well.

 How do we continue to justify helping out in the health sector while bad spending decisions are being made elsewhere in government?  The necessary changes will require extraordinary political willpower, fiscal transparency at all levels, and greater regulatory oversight.”

While there is a mad rush for winning elections into parliament for the lucrative gains and benefits that go along with joining politics in Eswatini, the ambassador made another startling observation during her remarks that the incoming parliament and cabinet would have a daunting task in setting the economy back on track, “but they will also be uniquely positioned to shape Eswatini’s trajectory over the next five years.

moment

This is a moment of both incredible challenge and incredible opportunity for Eswatini.” Part of the challenge, she added, was that more than half the population was under the age of 24 and the decisions government makes now would determine what kind of future these young people would have.

 She said but these young people were also an opportunity, because they had the potential to bring astonishing energy and new ways of thinking to the hardships the country is facing.  The next five years are going to require a tremendous balancing act to address the challenge and harness the opportunity.

In its December 2010 World Bank report, Eswatini was forewarned that the wage bill (as a percentage of GDP) had become “uncommonly large in Swaziland. It is larger when measured against historic levels and against other countries in Africa and the world.”

 The gaping fiscal deficit of about 15 per cent of GDP in 2010/11, and the difficulty in securing the requisite financing, continued the report, precipitated the need for a rapid intervention in curtailing the wage bill.

The irreversible reduction of the SACU revenue base is being addressed by earnest efforts to boost non-SACU revenue that will have an impact in the medium term, thus shifting the emphasis for expenditure restraint on an orderly roll-back of the wage bill. Moreover, a thoughtful resizing of the civil service is likely to facilitate private sector-led growth, since its expansion has most likely come at the expense of the private sector. It is the expansion of the private sector that must be counted on in the long term to sustain the government’s expenditure plans.  The World Bank further noted that the wage bill needed to be addressed urgently for two main reasons:

The first is that it cannot be afforded any more, as the public revenue base has experienced a significant collapse that will not be reversed in the near future.

The second is that wages are crowding out other types of expenditure that are necessary for quality service delivery. “Eswatini needs to consider two sets of options: one set to put the wage bill on a track that will see it decrease permanently over time as a percentage of GDP, and one that will contract it rapidly to achieve fiscal sustainability.

The two sets of options, while conceptually different, need to be considered jointly to keep government effective and efficient.”

It is unfortunate that while the Smart Alecs come home to roost, brushing their round bellies which they misinterpret to signify wealth,  it is the very same downtrodden people of this country who must clean up the mess caused by bad government decisions and bad governance.

They must make more sacrifices in the sole belief in a better future for the next generations while the rogues sit back and enjoy what they illicitly squandered from a defenceless people who had entrusted them with the responsibility of steering their country into one among many of the civilised community of humans.

Come to think of it, how many old hags are still being recycled to make decisions within the civil service and other governance agencies, people who should otherwise, like the rest of everybody, be homebound to enjoy the savings accumulated throughout hard work leading to age 60? How many are over 60 still in the government system? watch this space!

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