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I have been following trends on the social and mainstream media, with a hot topic being the 890 000 leaked documents from the Eswatini Financial Intelligence Unit (EFIU). The contents of the leak have an adverse impact on the country’s image, affecting the country’s ability to attract foreign direct investment (FDI) and it also paints a bad picture of the country’s business environment.

At this stage all parties involved have come out to deny the veracity of the leaks, at this stage it is all allegations. Since this is an opinion piece, I will give my own opinion on the ongoing rumour mill, allegations, investigative piece or whatever you will call it.

Captured economy

The leaks reveal to the reader the level of capture within our economy, as a few individuals seem to wield too much power in country. This cannot be good for the country; Eswatini is classified among the top 10 most unequal societies in the globe. If true that a handful of individuals hold enough power to lobby individuals in high profile positions to sway decisions in their favour, then the inequality problem in the country will only worsen.

The truth of the matter is that individuals and corporations will always lobby policymakers in relation to certain decisions and policies that are being made. It is human nature to seek to extract as much profits from any business venture. It is for this reason that strong independent public institutions are set up to ensure that all business dealings in the country are above board. The leaks have put the spotlight on the independence of the Central Bank of Eswatini (CBE) and the EFIU. The central bank is a very important instrument of State and must always remain independent and autonomous.

Independence of CBE

An independent central bank is one whose mandate – to achieve responsible control of monetary policy – is unaffected by anything the government might do. An independent central bank would ‘not be subject to direct control by the Legislature’ and presumably the Executive as well. Divorcing the central bank from fiscal, political and election structures has been empirically proven to be potent in the attainment of the central bank’s mandate. Empirical evidence suggests that independent central banks aim for lower rates of inflation intended to keep aggregate economic performance steady. Furthermore, the financial system is much stronger under an independent central bank, making for a resilient economy.

Implications of leaks on CBE independence

The leaked documents, in my view, show greater autonomy and independence of the central bank. The fact that the investigations by the EFIU were done, documented and reported shows the unwavering commitment of the central bank to its mandate. These leaks paint the central bank as a strong institution that is not willing to renege in its mandate to allow for rent-seeking.

Based on evidence from the leaks, one can rest a bit easy knowing that the financial system is in good hands. A show of strong independent institutions is critical in painting a positive image of the country’s regulatory framework; and it contributes positively to the business environment. The strength of the central bank alone is not enough to get the country’s business environment to an optimal point.

Other institutions

The leaks have also shown some cracks in our policy environment, which we must attend to as a country. In a bid to attract investments and boost economic output, we have set up ‘special economic zones’ (SEZs) as a country. Again, I will put it that it is human nature to always search for loopholes that can be exploited within the regulatory framework, to improve profits.

Businesses always look for that one loophole that can allow them to retain maximum profits. It is important that we strengthen regulations around SEZs. A strong economy cannot be built on unscrupulous business practices and cannot rest on the country being painted as a hub for money laundering and racketeering. If what the leaks contain is true, all institutions of State must work in an concerted effort to ensure that these loopholes within the SEZ legislation are closed. The independence of the central bank alone is not enough to ensure a robust economy, all State organs must move in unison.

Bridging the chasm

As a nation we need to bridge the chasm; yes the leaks reveal that the central bank is an independent and autonomous institution, however, after reading the leaks, one gets a sense that there is scope to improve on the independence of the central bank. The country needs to revise legislation around the central bank to give it full autonomy.

Other countries have privately owned central banks and this tends to give them autonomy and independence from political influence. As a country, we must always take full stock of where we need to go and what needs to be fixed, periodically. Furthermore, the identification of suspected transactions without congruent efforts to enforce the laws and prosecute those responsible is only a quarter of the efforts, with a zero deterrent on those purporting to commit crime. It is important that the country introduces legislation that will result in the prosecution of those breaking the law. Law enforcement organs of the State must play their role.

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