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Deal soft on demand for democratic reform, say activists

Louise Redvers

Commentators are doubtful that SA's R2.4-billion loan to Swaziland will secure long-term economic stability or meaningful political reform to them.

Commentators are doubtful that South Africa’s R2.4-billion loan to Swaziland will secure long-term economic stability or meaningful political reform in Africa’s last absolute monarchy.

The African Development Bank refused Swaziland a loan because it failed to meet various International Monetary Fund (IMF) fiscal reform targets. With government coffers running dry and public service wages at risk of going unpaid, it had no choice but to turn to South Africa.

King Mswati III, close personal friend of President Jacob Zuma, has made a number of secret trips to Pretoria in the past month, returning home this week to announce proudly that he had secured a bailout worth 8% of his country’s GDP.

Reports in the Swazi media that the loan was a done deal seemed to catch the South African government by surprise and a media briefing previously set up to deal with tax reform was hastily adapted to give the treasury a chance to explain.

Addressing reporters in Pretoria, Finance Minister Pravin Gordhan said: “It was our impression that [Swaziland’s] fiscal crisis — was indeed a serious one and I don’t think it’s in South Africa’s interest to have an economy that finds itself in trouble which will eventually place a greater burden on South Africa and its own citizens and services.”

Asked what South Africa would do if Swaziland did not comply with the loan conditions, Gordhan said: “When we get to that point, we’ll have to see what happens, but I think the clear understanding is that these were discussions and negotiations that took place in good faith.”

However, the opposition Swaziland Solidarity Network (SSN) has lashed out at the rescue plan and announced plans to march on the Union Buildings in protest. The ANC Youth League, Cosatu and the South African Communist Party also denounced the bailout.

SSN spokesperson Lucky Lukhele, in exile in Johannesburg, said: “We are extremely angry and disappointed by this decision. It’s clear that the friendship between President Zuma and King Mswati has overruled any political process.”

Payback
The loan, which will be disbursed in tranches, the first this month and two more in October and February, will be paid back at interest of 5.5% over five years through a debit order against Swaziland’s Southern African Customs Union account.

It is based on the four pillars: confidence-building measures; fiscal and related technical reform; capacity building; and co-operation in multilateral engagements. 

The fiscal and financial targets echo IMF recommendations, while there are timelines for tabling a Public Finance Management Bill and an explicit request to improve financial reporting and auditing.

The “confidence-building” section, which urges a broadening of the “dialogue process to include all stakeholders and citizens of the Kingdom of Swaziland” in a “conducive environment that is open and enjoys legitimacy amongst the people of Swaziland and the region” has been criticised for being too vague.

Deprose Muchena, the deputy director of the Open Society Initiative for Southern Africa (Osisa), said that increasing Swaziland’s debt burden would only create more problems in the long term and that South Africa had been too soft on the need for democratic reform.

“I’m disappointed that there is not a stronger focus on good governance and hope that more concrete indicators and milestones will come, so that South Africa is able to hold Swaziland to account and withhold the second tranche of the loan if there is no significant reform,” Muchena said.

“I’m surprised that South Africa has applied such a leap of faith here, it’s like they are just hoping that democratic dialogue will take place. It’s another example of a soft approach to foreign policy. People are already making comparisons with Zimbabwe and it is surprising that South Africa is going against the international principle that aid is effective only where there is good governance.”

Vincent Ncongwane, the secretary general of the Swaziland Federation of Labour and a leading member of the Swaziland Democracy Campaign, which lobbied against a financial bailout without guarantees of political reform, also questioned the agreement.

“What’s important is not just engagement, but the quality of engagement and who takes part,” he said. “Our government is always happy to sign documents, but the question is: Will it implement what’s written there?”

However, Nomfundo Xenia Ngwenya of the South African Institute of International Affairs argued that it was not for South Africa to lead the democracy process in Swaziland. “This is the moment for civil society in Swaziland to step up. It needs to drive this process itself and it needs to set the time frame and indicators,” she said.

The first tranche of nearly R1-billion will be transferred to the Central Bank of Swaziland this month, raising hopes among ordinary Swazis that public services will resume and that the outstanding accounts of small businesses, which rely heavily on government contracts, will finally be paid.

Trade unions, which have staged a series of strikes in protest against salary cuts and retrenchments, have said they will cease protesting, but will still take part in annual pro-democracy protests planned for September.

The IMF, due to visit Mbabane later this month, welcomed the loan package, but urged Swaziland to use the breathing space to drive reform.

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