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FORGET ECONOMIC RECOVERY

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A draft Action Plan: The Kingdom of Eswatini, Strategic Road Map 2018-2023 has been circulating in social media, it is highly likely this will be the reference document to resuscitate the economy in the medium term.

 If this Strategic Roadmap document is indeed the blueprint for economic recovery, then the country has completely lost the plot. Like I had warned before, tax and more taxation will not lift the economy out of the current recession.


 Government has collected huge amounts of money before, especially with the Eswatini Revenue Authority (SRA) now at large and took that money and flushed it down the gutter, investing in useless things that to date have failed to grow the economy. The problem is not an issue of money per se but more so of how government spends the money once it has been collected from emaSwati.


To pick the economy out of the gutter, government has prioritized agriculture, energy, ICT and education, manufacturing and agro processing, and tourism as key sectors that will drive economic growth and will achieve it through improving the ease of doing business, enforcing fiscal prudence, building infrastructure capacity, delivering social impacts and building a culture of service excellence. Great direction in terms of the sector priorities but a huge yawn in terms of new ideas and details on how to establish these sectors as new engines for growth.


 Many times before government has tried to prioritize fiscal consolidation and tightening of the G-wallet, but has done nothing but deliver fiscal crises one after another every four to five years. 

The current fiscal crunch means government is spending more money than it is able to collect from all the economic activities that fall under the tax hammer. This means government has to find money somewhere and quickly before the country hits a nose dive into a full blown financial crisis.


 So to fund the gaping hole that has become of the G-wallet, government, in this new strategic direction, wants to increase taxes by 25 per cent, increase speeding and court fines by 100 per cent, increase casino levies to 10 per cent, increase fuel taxes by E1.20 for roads rehabilitation and maintenance, create a sustainable budget for bogogo, scrap or increase to E20 graded tax payments, introduce a capital gains tax, increase withholding of taxes on dividends to 15 per cent and taxes on management fees to 20 per cent, increase company tax rates in the banking sector to 30 per cent, and increase minimum taxable incomes from E41 001 to E51 001 as well as introduce a 39 per cent marginal rate on incomes above E400 000.


In short, rather than identify new economic sectors to invest in and grow the economy, government is looking into people’s personal incomes to lift itself out of the fiscal crunch it put itself in. Granted those on very low incomes below E50 000 a year will escape the taxman; however, people who are earning decent salaries/incomes to support the business activities in the economy will see more of their pay cheques being taken to SRA. Besides a war on personal incomes, government is hell-bent on having a stake in all activities in which people spend their hard-earned money.

By taking more money from the people who fund the G-wallet, who in turn get nothing from government in return, the economy will continue to struggle to grow. In fact, government is punishing people who apply themselves diligently every day to earn a decent living by putting a huge tax hammer on their extra incomes beyond E400 000. It is through these people that government is able to collect tax and pay for Free Primary Education, health services, and all the other social services that the general population expects from government.

The slap on the face to these people is that they have to support their own livelihoods as well as carry government on the shoulder to pay for other people’s education, health, etc, because government has simply failed to spend money in the right kind of things that will grow the economy, provide a wider economic base for increased government revenue.


There is nothing new spelled out in this strategic document that the country has not done before. Increasing taxes is just a coping out argument that will give government more money to waste for a short period of time but to the detriment of people’s livelihoods, business sustainability, and the economy at large. The country can simply forget about improving the ease of doing business because even if the country reduces the time it takes to register a business to one day, what use will those registered businesses be if they will die before they even create any value in the economy due to high taxes from SRA? At the same time, who will have money to support these businesses? We were kind of expecting something better especially with the private sector now in charge of government!

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