- Economic growth has been lingering around 2 percent annually in Swaziland for seven years, not enough to lead to improvement for the kingdom's detracting population. Indeed, the poverty rate keeps increasing. A new economic survey leaves little hope for an improvement in 2007.
The latest analysis of economic trends in Swaziland by the International Monetary Fund (IMF) was released today, and reads as one of Africa's bleakest economic outlooks in many years. Not for one single year during this millennium has the Swazi Kingdom experienced sustainable growth rates.
Since 2000, real GDP growth has been around 2 percent annually. 2003 represented a "record year" with a growth rate of 2.9 percent. Given Swaziland's negative population growth due to the AIDS pandemic - the population is estimated to detract by around 0.3 percent annually - these figures in theory could have meant real per capita growth for the Swazi population.
But Swazis are indeed drifting further into poverty, according to the IMF analysis. "Poverty has escalated in the face of high and rising unemployment, food shortages, and the world's highest HIV/AIDS infection rate," the report says. Further to the distress of the country's poor masses, inflation is higher than GDP growth, and especially the prices on basic food commodities are skyrocketing.
The relatively small economic growth during the last six years has increasingly gone towards government spending. While in other countries this could have meant improved social services and wealth for the ordinary population, Swaziland is increasingly paralysed by poor governance, corruption and the private spending of authoritarian King Mswati III and his large royal family. The growing social crisis in the country and the lessening interest of donors to support King Mswati's regime has also created escalating needs for social services beyond the scale of national budgets.
As is normal for an IMF report, the Fund however does not go deeply into the malfunctioning of the Swazi government. It concludes that the "weak economic performance" is owed to a substantial appreciation of the local currency - the lilangeni - during 2002-04, "erosion of trade preferences, recurrent drought, and stagnant investment."
During the last six year, "rising government expenditures, especially on the wage bill, undermined fiscal sustainability and reduced foreign reserves to critically low levels," the report adds. Few other African countries have made less effort in reforming the economy to made budget ends meet and to spend more on fighting poverty.
For 2007, expectations remain bleak. The IMF expects that GDP growth in 2006 stood only at 2.0 percent. Swazi revenues from the South Africa Customs Union (SACU) are expected to fall during the next few years, raising concerns over this year's and future budgets. Few economic reforms are underway.
In a clear message, the IMF expressed "concern about Swaziland's continued weak economic performance." The Fund advised the Mbabane government "to tackle the impediments to higher growth and improved living standards" through improving the business climate, implementing structural reforms, introducing fiscal reforms, lowering the wage bill, strengthening governance and improving investor confidence.
Potential investors and donors however will add several demands to this list. There is little confidence in Swaziland's future as long as long-awaited democratisation reforms are not carried out. Investors and donors expect that a revolution may be around the corner and prefer to do their deals with the next, democratic rulers of Swaziland.
Situated between some of the most tourist dense regions of South Africa and Mozambique, many see a great potential for rapid growth in exotic Swaziland as soon as democracy and political stability is secured.
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