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NO ONE SHOULD BE LEFT BEHIND

04/04/2018 07:10:00 By Thabiso Dlamini

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WHEN people spend money, their spending behaviour is usually driven by their basic needs and wants. For those with more money in their pockets, there is usually an extra element of their spending, which is to signal their wealth and to attain some social status.

The same goes for government spending, even though it may seem a little more complicated as it involves spending very large amounts of money involving multiple national and international accounts.
Governments of rich nations tend to spend money on things that will give them global power and status, while developing nations try to spread their last cent on investments that seek to eradicate poverty. An interesting observation about spending behaviour is that poor people around the world usually spend a significant share of their income on visible expenditure or ‘status goods’ often in order to ‘keep up with the Joneses’. Even the father of economics, Adam Smith, in the Wealth of Nations, coined the problem and noted that his counterparts spent too much on ‘status goods’ that were not a necessity of life, and which they most likely did not afford.

Unfortunately, spending on frivolous goods has negative implications on asset accumulation, household indebtedness, and investments on crucial life essentials, such as food, health and education. The point here is that it is easy to get trapped on spending on the surface for glitz and glamour while the core, which includes the necessities, simply withers away.

In Swaziland, we are hanging in the balance. Development is definitely happing in this country. If you are not sure, look around: there is a new Hilton Hotel in Mbabane; a new hospital for Mbabane; a five-star hotel will soon be completed down the valley; a five-star Parliament building is in the pipeline; not to forget the five-star airport in Sikhuphe; and five-star road networks from Manzini all the way to Sikhuphe and beyond. This is all good – but it seems like we might be, as a country, running into the trap of spending on visible expenditures and status goods while social necessities take a back bench.

In the country’s revised National Development Strategy, government emphasises inclusive development and inclusive economic growth, yet more and more of the G-wallet seems to be dedicated to capital projects that are draining government coffers and compromising spending on social development.

Since 2009, government has been operating on a negative balance from E900 million in 2009/10 to about E4.8 billion in 2017/18. It simply indicates that government is spending money it does not have and there will come a point where something will have to give. At household level, budgets are getting tighter and tighter because it is becoming impossible to afford anything in Swaziland. Everything is being taxed, and for those things that were already being taxed, new tax hikes are being effected beyond the income the average Swazi makes.

At the same time, government is spending money on projects that it does not afford, and on top of that, on the very same ‘status goods’ that the average Swazi cannot afford. Yes, capital spending is a necessary aspect of development and part of the economic engine for growth, but government needs to be careful that the development and growth it spends on does not leave 63 per cent of the Swazi population behind.
Vision 2022 is not just for the 37 per cent that can afford the basic necessities of life but very much a development vision for all Swazis in all the four regions of Swaziland. What is clear is that the country’s current spending behaviour cannot be sustained into the future. Government needs to be thoughtful about spending money to sustain long-run growth and welfare, and it can only do so if it balances expenditure on social goods versus the amount of money it spends on glitz and glamour.
Unfortunately, there are no quick gains in life. No quick wins! Government needs to spend money on developing its people so that average Swazi income increases rather than spending all efforts to take the little bit of money that people make. When government starts seeing its people as valuable human citizens– rather than cash cows – households will be in a better position to start saving and accumulating assets/wealth that will sustain the viability of the economy in Swaziland.
In the same vein, with richer citizens, a vibrant private sector and a broad tax base, government will in turn also be in a position to start saving and accumulating wealth for the whole nation and for future generations. This is really simple. If more people are uplifted from poverty to participate in the economy, government is in a better position to generate income and accumulate sustainable wealth in the long-run. To turn the deficit into positive gross operating balance, government needs to put people first when it spends money. No one should become a missed opportunity in the country’s development path. No one should be left behind.