Red tape thwarts job creation

A cumbersome bureaucracy is thwarting the Swazi government's attempts to attract investment and create jobs, says a new report. "Several investors note that despite efforts to help smooth the way for investors, agencies frequently offer bureaucratic resistance and delay approval procedures," said a report by the Swaziland Investment Promotion Authority (SIPA). Increasing foreign direct investment has been the cornerstone of government's goal of poverty alleviation through job creation. The national unemployment rate, which dropped from 45 percent to 40 percent three years ago when garment industries arrived to take advantage of preferential trade benefits offered to Swaziland by the US under the African Growth and Opportunities Act (AGOA), has again risen above 45 percent. Government has promoted independent small and medium start-up businesses as way of enabling Swazis to create jobs for themselves, but red tape was blocking progress, said Henry Ndlangamandla of the Swaziland Association of the Unemployed, whose hopes of setting up a bus service have crashed. "[The transport ministry] told me they have issued too many permits, but they do not make a follow-up to see whether the buses that were granted permits to are still on the road," Ndlangamandla complained to the Minister of Enterprise and Development, Lutfo Dlamini, at a meeting last week. An aspiring sugar farmer, Obadiah Sibiya, claimed at the meeting, "We cannot access loans from local banks because the processes take too long; we cannot access land for commercial purposes unless we pay cows to the chiefs." Dlamini announced that all small business licenses issued to foreigners would be revoked in December, to clear the way for Swazis. No business can operate without a government license, and applicants from small-scale Swazi entrepreneurs to large indigenous corporations are encountering problems in acquiring the necessary permits, the SIPA study reported. One frustrated Swazi businessman, who wanted to open a photo shop in the commercial town of Manzini, told IRIN, "I paid lawyer fees and government fees for a business permit, and it has been sitting on an official's desk in Mbabane [the capital city] for three months. They won't tell me the reason for the delay. I am capable of providing for my family; I am ready to work. They are frustrating me, and I wonder if they are waiting for a 'favour' to move my papers along." Another recent SIPA report, 'Swaziland Investor Roadmap', called for scrapping trading licences altogether. "The licence [issued by government for operating a business] is not linked to any monitoring or oversight mechanism, and is not linked to protecting any public purpose, such as a license to ensure that a restaurant conforms to minimum food hygiene standards," the report said. The study also noted that a business must apply for a separate license for every activity the business wishes to perform, such as operating a bakery within a restaurant or selling auto parts within a repair shop. "This imposes a series of nuisance procedures and costs on the investors," the report noted. "Government policy is short-sighted - it just wants to collect a lot of license fees. If they made it easier for businesses, we would flourish, and government would collect more taxes," said Oswald Kunene, a barber at the Matsapha Industrial Estate outside Manzini. Kunene cuts hair in a roadside shack he threw together from castoff timber. He would like to set up a legitimate business rather than run an informal one, but is not eager to deal with government bureaucracy. The Immigration Department of the Ministry of Justice, the Ministry of Enterprise and Employment, and the Ministry of Health and Social Welfare, which handles health inspections, are all involved in granting business licenses. "It makes me tired when I think of what I must go through," Kunene said.