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THE very least of what is expected of our government, or any government for that matter, is to trim down all impediments to economic growth, particularly those challenges met by the private sector that tend to increase the cost of doing business.

The budgetary resources available should in fact be growth-enhancing, but also maintain a level of financial sustainability, and overall stability to the economy at large. Economic growth and overall economic stability depends on the status of the G-wallet, and unsustainable public expenditures inevitably lead to crisis.

Fiscal sustainability, though an important concern for all governments, cannot be applied as a one size fits all notion. It tends to have unique implications for each respective country at its different stages of development. For developing countries like Swaziland, every Lilangeni counts, and so any additional spending needs to be prioritised to promote development, and stimulation of future economic growth and increases in government revenue.

The challenge, however, is how to do this in light of an inadequate tax base, chronic financial imbalances, and the need to invest in human and physical resource given that in Swaziland 63 per cent of the population live below the poverty line? In order to raise the long-term economic growth potential of their economies, richer countries have the flexibility to unremittingly invest in human and physical capital in addition to increased savings.

For us poorer countries, we have to carefully pick our investments, and our capacity to save is much more limited and thus inhibiting our long-term growth potential. Every decision made on how to spend every cent of the G-wallet must take into account whether that additional spending will lead to additional payment in the future.

Swaziland continues to experience subdued growth levels owing to the 2015/16 drought, sharp decrease in SACU revenues, combined with increased spending generating higher fiscal deficits and a growing public debt. For instance, the current fiscal position could see the public debt to gross domestic product (GDP) ratio increase from 17.4 per cent in 2015 to 24 per cent in 2018, increasing risks of fiscal unsustainability.

The African Economic Outlook points to the fact that the growth challenges experienced are not just unique to Swaziland, but to Africa as a whole. Africa’s economic performance is taking a hit from the perils of the global economy: the region’s real GDP growth decelerated to 2.2 per cent in 2016 as a result of falling commodity prices and weak economic growth.

The African Economic Outlook also indicates that East Africa and North Africa are the fastest growing regions with real GDP growth rates of 5.3 per cent and 3 per cent respectively.

For the rest of Africa, growth is proving to be a thing of the past, with suppressed growth rates of 0.4 per cent in West Africa, and 0.3 per cent in Southern Africa. Again, the African Economic Outlook argues that unlocking Africa’s growth potential lies in increased investments in human capital such as health, education and skills, including developing stronger capacities to diversity financing and directing more efforts to structural transformations. It calls for the doubling of efforts to empower Africans with the necessary skills to promote development from the bottom up, driven by domestic innovation and investment.

To overcome these chronic growth challenges and the disadvantage of being a small domestic economy, Swaziland can accelerate structural and institutional reforms that capitalise on its comparative advantages. The country’s strategic location near South Africa is a real benefit that gives Swazis access to Africa’s largest economy, on top of market access to regional blocs such as SADC and SACU.

The onus is on both the private and public sector to maximise the use of local resources, increase local productivity and capacity building of domestic human resources and capital to deliver on the National Development Agenda and Sustainable Development Goals, particularly Goal 1 which seeks to eradicate all forms of poverty. Expansion of the manufacturing sector can create jobs and multipliers in the economy, particularly within the agriculture sector. This is because the main activities within the manufacturing sector are rooted in agriculture as they comprise commercial agro-processing of sugar, wood pulp, citrus fruit, pineapples and meat.

Now given that smallholders in Swaziland constitute 70 per cent of the population in about 75 per cent of crop land, a boost in agriculture activities in Swaziland linked to the industrial sector can promote Swazi entrepreneurship, particularly in small and medium enterprises leading to enhanced GDP production and government revenue that is much needed. 

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