Swazi pay-off 'over-inflated'
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Swaziland is on course to get R2.4-billion from South Africa without any political conditions via a one-off back-door payment in the form of a windfall from the regional customs union—it has been claimed.
Negotiations for the loan, which was announced in August last year, had stalled due to King Mswati III’s apparent reluctance to accept democratic reform in his country where political parties are banned and he rules with absolute power.
But Swaziland’s Coalition of Concerned Civil Organisations (SCCCO) claims the kingdom will get the money instead via an inflated payment from the Southern Africa Customs Union (Sacu) and this will take away the need for Pretoria to impose political conditions on the loan—an assertion strongly disputed by the South African Treasury.
Sacu economists have forecast a near-doubling of imports into the region and thus a greater tax income for union members.
Sacu payments are done in advance, based on forward-looking estimates, and had the loan deal been signed off, disbursements and repayments were due to have been made via Sacu, which Pretoria said last year was a way to ensure Swaziland did not default.
Swaziland’s Anglican Archbishop, Meshack Mabuza, who heads up the SCCCO, said they suspected there had been deliberate over-estimation so that extra funds could be released to Swaziland without questions being asked.
“We believe these estimates are over-inflated in order to give the R2.4-billion to Swaziland without any political or fiscal conditions,” he told the Mail and Guardian this week.
“We just don’t see how with the current economic climate being so weak that regional imports are going to grow so rapidly,” the bishop added.
South Africa’s 2012 Budget Review reports a strong recovery of imports and regional trading conditions boosting transfers within the customs union to R42.2-billion in 2012/13, up from R21.8-billion the year before.
Under the formula for revenue distribution Swaziland will receive R7-billion, a substantial increase on the R2.6-billion it received in 2010 and the R2.9-billion in 2011 and well above forecasts for 2013 and 2014, which are around the R5-billion mark.
Mabuza said: “It just seems very suspicious that Swaziland should be getting so much more this year. We know there is R1-billion which was unpaid last year that is coming now, but still, we are concerned that this is a way of substituting a loan with political conditions with no-strings attached cash.”
He added: “And of course this does not solve Swaziland’s core problems, which relate to poor financial management and an under-developed economy due to poor governance. This is simply a sticking plaster.”
South Africa’s Treasury spokesperson Bulelwa Boqwana disputed the SCCCO’s claim as “factually incorrect”.
She told the M&G: “Sacu revenue shares are approved by a Council of Ministers [trade and finance] from the five Sacu member countries.”
These approvals were determined, she said, by “forecasted collection for customs and excise duties” and that the revenue-sharing formula had three components, which were “intra-Sacu trade, GDP size and population, and a development component and the calculated difference in the forecast payment and actual collections for the previous period”.
Boqwana added that the over-inflation of payments would not be possible because they would not “align with the forecasts”, adding: “It would be detected by the Council of Ministers, and by implication, would result in an increase in the revenue shares to all member countries, including South Africa.”
If a payment was over in one financial year, she noted, there would be a need to “recover the over-payment in 2012 in 2014 [two years later] when forecast payments and actual collections are reconciled”.
Swaziland shares Sacu revenues with Botswana, Namibia, Lesotho (which, along with Swaziland, are known collectively as BNLS) and South Africa, responsible for the lion’s share of the imports.
The BNLS countries are heavily dependent on Sacu revenue and it was the large fall in Sacu money which was the main trigger for Swaziland’s recent liquidity crisis.
Trade expert and director of Pretoria-based consultancy DNA Economics, Matthew Stern, explained: “The Sacu payments system is extremely volatile and very dependent on customs revenue from imports.
“Over the last few years we have seen imports fall sharply due to the slowdown in the South African economy which is the main importer of high value goods like cars and luxury items.
“We are seeing imports rising now but they could easily drop off very quickly, just as they have done and that has a big impact on countries like Swaziland and Lesotho which depend heavily on Sacu.”