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PRIVATE SECTOR MUST FIND A NEW CUSTOMER

28/11/2018 00:46:00 By Thabiso Dlamini

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THE private sector needs to find a new customer ASAP. The Government of Eswatini has no money and the fake tenders between the private sector and government can no longer sustain the economy.

As it is, the economy is in bad shape because of the widening fiscal deficit, coupled with an accumulation of arrears as a result of government failing to pay its suppliers.

Just a quick recap, in the 2018/19 financial year, the g-wallet had E15.96 billion in government revenue, of which, excluding the E5.8 billion from SACU, the rest of the monies came from you and me in all the taxes such as PAYE, VAT, Fuel Tax, etc, we shell out to government. Non-tax revenue only contributes about E0.68 billion and money received through external grants is close to nothing. This means the taxpayer, you, me and everyone who earns an income and or consumes anything liable to tax, is a major stakeholder when it comes to how government gets funded and spends the E16 billion that flows through the g-wallet every year.

How then does a government that taxes its people through the roof (be it personal incomes or the goods and services we consume on a daily basis) come back to say it has no money? It only has about 1.1 million people to take care of and surely with E16 billion in the g-wallet, Eswatini could be among the top performing economies in Africa.

What happened to the E16 billion plus the E6 billion in loans that it got hold of to fund a E22 billion 2018/19 budget? It is quite simple: government has become a glorified administrator of the wage bill, transfers to parastatals, and an interest payer on all the loans the country acquires in the name of development. Just on the wage bill and transfers to parastatals alone, government spends more than 70 per cent or E11.2 billion out of the E16 billion total revenue.

There is less than E5 billion which government has to pay interest on loans, provide essential goods and services, and maintain a healthy economy. Where do you think the E3 billion owed to suppliers would come from? In this current state, the reality is that government is spending more on wages with little or no money to spend on actual goods and services that these salaried civil servants need to do their work.

They are being paid to sit in their offices without the ink and paper to do the work. The spenders include the Ministry of Education and Training, the Ministry of Health, Defence, central transfers, and the police service.

Then there is the issue of the loans the country keeps taking to fund capital projects that turn to white elephants before they even begin. It is becoming more crystal clear that when government spends money on major national projects, it does not consider the concept of return on investment (ROI). The ROI concept is a financial metric of profitability that measures the gain from an investment. It is just a simple ratio of the gain from an investment relative to its cost.

Eswatini’s major investments include the Lower Usuthu Smallholder Irrigation Project (LUSIP), the King Mswati III International Airport, the Five Star Hotel in Ezulwini, just to name a few. When one takes a step back to consider the ROI on these projects, one begins to understand, perhaps why these projects keep draining the economy than contributing to improve livelihoods and more money to the g-wallet.

To date, the international airport is still not complete and the Eswatini Civil Aviation Authority is still advertising tenders for work that needs to be done at the airport. Will it ever end? The staff at that airport is more than the traffic that goes through that multi-billion Emalangeni investment the country has made for the nation.

To make do with the little scraps that remain of Eswatini’s economy, the private sector must stop relying on government as its major customer for business. Government is in a mess that might take forever to fix. As private people and businesses, let us find new ways of doing business and engaging in viable investments that are independent of the disorganisation and mess that has become of our government.