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POVERTY, EQUALITY IN KINGDOM – A DIRECT APPROACH

03/05/2023 12:34:00 Sanele Sibiya

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Today I weigh in on the poverty situation and inequality situation in the country.

As a primer I will preface by giving current statistics on the levels of poverty and inequality in the country, I will also delve into policies that we can adopt to ensure that we eradicate poverty and inequality in the kingdom. Recent statistics show that 58 per cent of the population in the country leaves below the poverty line. Eswatini is also classified among the top 10 most unequal countries in the globe.

The paradox

Eswatini is also classified as a lower middle income country, with a GDP per capita of US$3 978.40, according to 2021 statistics. If life was as linear as we wanted it to be and the income of the country was equally distributed among the population, each person in the kingdom ought to have US$10.90 to spend a day. However, life is not linear and it is unfathomable to expect perfect equality as capital and entrepreneurship require commensurate returns to ensure that the economic engine continues to thrive. However, it would serve the country to thrive for a fair distribution of the income and wealth of the kingdom. Imagine if we achieved a fair distribution such that each person had at least US$4 per day; then no liSwati would be classified as poor according to the international benchmark of US$2 per day as the poverty line, well at least in terms of income poverty.

Curse of mainstreaming

I have been studying the current development policy discourse in the country and it seems the current approach is that of mainstreaming. Simply put, we ensure that growth is market driven through mass employment creation, ensuring that our people earn money and are thus able to subsist. We are also seeing a heavy investment in critical enablers to growth and development such as health and education. Again, this is commendable, a healthy and educated people are easy to absorb and assimilate into the job market; reduced morbidity improves productivity as absenteeism is reduced.

This approach, however, works well if you have an economy that is growing and has an inherent natural comparative advantage to attract the right capital to come into the country. Comparative advantage refers to a situation where a country is, in relative terms, doing better than other countries in terms of cost minimisation so that capital can be attracted to the country. In the past era, the democratisation of South Africa and Eswatini had comparative advantage due to the prevailing peace and stability in Eswatini compared to South African countries; this is an edge which was lost due to the liberation of South Africa. Hence we cannot keep doing things the way we were doing before we lost that comparative advantage, something has to change.

Bull by the horns

Tackling our problems requires that we tackle the bull by the horns. We have a poverty problem as a country and we also have a problem of inequality that requires deliberate action for the country to solve. The current developmental thinking is just poised to ensure growth in the country, if all was well and the economy was creating jobs. However, we need to repackage Eswatini and our development discourse. There is need to structure our approach to direct foreign investment and to our overall infrastructure development programmes so that they can help the country grow in a sustainable manner through locally led growth. There is also need to re-design our tax policy as a country. If we take this approach, we are likely to grow jobs that are sustainable and build an economy that works for all emaSwati regardless of their background.

Re-packaging

We need to start building a narrative around a country with highly skilled human capital ensuring high productivity, not a low labour cost destination. We need to invest in high tech training programmes so that we build an equivalent skills set in the country as compared to a number of countries in the global north. This is an attainable goal, which requires a complete overhaul of the education system. The country needs to continue to enforce local partnerships with international conglomerates that get big tenders. If we ensure that a sizable share of the capital expenditure is retained in the country and flows within to increase the multiplier effect. It is imperative that we ensure adequate skills transfer from the international conglomerates to local companies. We also need to ensure that we focus on value chains instead of supply chains, ensuring that even the smallest of local companies get involved in all government programmes and they benefit as such.

Tax system

Wealth is transferred from generation to generation, the tax system needs to be alive to this fact and we need to tax this generational transfer of wealth. The ultra-rich, believe me you we do have the ultra-rich in Eswatini, are not employed, but they are employers and as such they do not pay income tax. We need to redesign the tax system and redistribute the income in the economy.