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South Africa throws lifeline to a king

King Mswati lll of the Kingdom of Swaziland
(UN Photo/Eskinder Debebe)

A “no-strings attached” R2.4 billion (US$350 million) South African loan to Swaziland to prevent a meltdown of the tiny economy has met with dismay and anger from civil society bodies in both countries.



Swaziland, ruled by sub-Saharan Africa’s last absolute monarch King Mswati III, turned to South Africa as a last resort after international financial institutions - among them the International Monetary Fund, the African Development Bank and the World Bank - declined to throw an economic lifeline to the country: The government had refused to accept austerity measures, including cuts in the public sector.



The loan, a quarter of what Mswati had reportedly been seeking, has been shrouded in controversy as civil society groups - including the ruling African National Congress’s alliance partner and South Africa’s largest union federation, COSATU - were demanding that democratic reform and respect for human rights be a quid pro quo for the three-tranche loan.



COSATU spokesperson Patrick Craven said in a statement the loan “fails to acknowledge that this crisis has arisen because of the looting of the economy by the royal family and a small elite so they can maintain their luxurious lifestyle, while the cost of this crisis has fallen on the shoulders of the workers and the poor.”



The financial crisis has been blamed on a 60 percent drop in revenue from the Southern African Customs Union (SACU), financial mismanagement, as well as Mswati’s profligate lifestyle, which includes building a dozen or so palaces and frequent overseas trips and shopping excursions for his relatives, 13 wives and estimated 27 children.



Swaziland has a 40 percent unemployment rate, pensions have gone unpaid, and there are fears that 65,000 HIV-positive people could miss out on life-prolonging antiretrovirals (ARVs). Food is in such short supply in some areas that people have even resorted to eating cow dung.



Swaziland has the world's highest prevalence of HIV - 26.1 percent. One in four Swazis aged 15-49 is HIV-positive.



Security forces cracked down on pro-democracy and cost of living protests earlier this year. Political parties are banned and the donor-dependent government is increasingly unable to pay for health and social services; over 70 percent of the 1.1 million population lives below the poverty line.



Reprieve for public sector workers?



Finance Minister Majozi Sithole has refused to divulge to parliament how the loan would be spent. However, it was expected to provide a reprieve for public sector workers, “bloated by nepotism and patronage jobs”, and facing non-payment of salaries, a member of the umbrella Congress of NGOs (CANGO), who declined to be identified, told IRIN. 


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The loan, was confirmed by “a visibly angry [South African] Finance Minister Pravin Gordhan”, according to South African daily Business Day, at a hastily arranged press briefing in Pretoria on 3 August 2011, after Mswati prematurely announced the securing of the loan.



Analysts told IRIN the terms of the loan were vague but included a 5.5 percent interest rate and repayments of it through the deductions of SACU receipts to Swaziland. In a 2004 bilateral agreement South Africa urged Mswati to promote human rights and institute democratic reforms.



Dimpho Motsamai, a researcher with the Africa Conflict Prevention Programme at Pretoria-based think-tank Institute for Security Studies, told IRIN: “An implicit call for the respect of human rights is just a call… At the end of the day the status quo remains unchanged.”



“What it [the loan] may do is give the [Swazi] regime some confidence because there is no explicit articulation of the political conditions [attached to the loan] and this makes it more difficult to have a conversation in the coming months as it [democracy and human rights] was not put to the fore,” she said.



Propping up the Swazi currency



Thogozani Simelane, an investment broker with a financial institution in the capital Mbabane, told IRIN the loan had provided some financial stability as it had specified the local currency, the lilangeni, would remain pegged to the South African rand.


''If the lilangeni were to be de-coupled [from the rand] it would go into freefall, plunging tens of thousands of people into poverty overnight''

“If the lilangeni were to be de-coupled [from the rand] it would go into freefall, plunging tens of thousands of people into poverty overnight. Prices would skyrocket, wages and savings would be worthless and a flood of economic refugees would cross the border into South Africa - which was a key reason why South Africa granted the loan, to avoid that exodus,” Simelane said.



A worthless national currency would make the procurement of ARVs prohibitively expensive, he said, and imports of emergency food, agricultural inputs and other items all but unaffordable.



“For the sake of our ARV supplies we are happy this happened, but the loan fails to correct the underlying causes of the crisis - and that is unaccountable spending by a government that is unanswerable to the people,” Sammy Ndwandwe of the Swaziland National Association of People with HIV/AIDS, told IRIN.



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This article was produced by IRIN News while it was part of the United Nations Office for the Coordination of Humanitarian Affairs. Please send queries on copyright or liability to the UN. For more information: https://shop.un.org/rights-permissions

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