More bad news on the economy: Swaziland could become a ‘failed state’ if a proposal to reform the Southern African Customs Union (SACU) goes ahead.
The proposal is to cut the amount of money Swaziland gets each year from SACU still further. This year Swaziland’s income from SACU was down from E6 billion (about $US875 million) in 2009 to E1.9 billion in 2010.
According to the Reuters news agency, which published a leaked report on the matter, if the new proposal goes ahead Swaziland’s slice of the SACU receipts will fall from 9 percent in 2012 to 3 percent by 2019.
The Swazi News, an independent newspaper in Swaziland, reported this means the kingdom would lose E580 million per year (2 percent of the kingdom’s gross domestic product).
Swaziland is at present reeling under the effects of SACU cuts and years of bad economic management by a succession of governments handpicked by King Mswati III, sub-Saharan Africa’s last absolute monarch.
The kingdom is effectively broke already and cannot pay its bills. Only last week the Central Bank of Swaziland could sell only one-fifth of the E750 million (US$106 million) bonds it needed to so the government could pay its short term expenses, including public sector wages.
In a speech at the opening of the Swazi Parliament on Friday (4 February 2011), the King was unable to come up with any plan for economic recovery. The best he could tell his subjects was to ‘work harder’. The previous week, he told his subjects they should ‘pray’ to save Swaziland from the economic mess.
Professor Roman Grynberg, a senior research fellow at the Botswana Institute of Development Policy Analysis, has a clearer idea of what is going on than King Mswati. Grynberg wrote, ‘Swaziland, which gets more than 60 percent of its revenue from SACU transfers, would suffer without these funds.’
He said the loss of revenue ‘may well turn Swaziland, the most vulnerable of all SACU members, into a failed state’.
Reuters reported, ‘A drop in funds could mean bankruptcy for Swaziland.’
The proposal put forward by Australian consultants, the Centre for International Economics, has still to be discussed by SACU.