Political instability stops firms investing in Swaziland
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South African businesses may wish to sell their goods and services in Swaziland, but they have little interest in investing in their neighbour’s declining economy.
The first survey of South African business attitudes on Swaziland shows considerable agreement in negative perceptions about its political instability and uncertain economic future, which hinder investor confidence.
Of 400 firms chosen as a representative sample of the South African business community, 60 percent said they would not mind trading with Swaziland, although only 27 percent of them do. The polling, by Pretoria-based consultancy DNA Economics, found that less than 10 percent of the respondents would consider investing in Swaziland.
The survey quizzed 25 Swazi firms, which agreed that the country’s political situation was detrimental to the stable foundations desired by foreign investors, particularly when investors could do business in economically robust Mozambique or other regional economies, all of which are faring better than Swaziland.
“Swaziland has fallen behind in sub-Saharan Africa in terms of growth. The global crisis has affected every country but why is it that others have managed to do better? This could be attributed to domestic issues,” said Matthew Stern of DNA Economics.
Stern would not specify what domestic issues were impeding business confidence in Swaziland, and local and South African firms surveyed were equally non-specific.
One banker said: “We can’t openly discuss what is keeping Swaziland down, because it is governance. People are terrified to talk for fear of being labelled traitors and terrorists, which is what this government does with its critics, no matter how well meaning.”
He added that until it could be open to honest discussion, the root problems hindering its economy would fester.
“Swaziland is different from other sub-Saharan African countries, and until that changes investors will remain nervous about coming here. In fact, they’ve stopped.”
The closest anyone came to acknowledging the difficulty of promoting a free market in a politically closed society was when Stern noted: “Maybe this is a leadership problem.”
DNA Economics consultant Frank Flatters criticised the government’s spending priorities, which misused the funds received from the Southern African Customs Union. “The government budget is bloated through high wages. It’s good to get revenue but bad if it is for government support only.”
His remarks echo views long advocated by the International Monetary Fund but ignored by the government.
The Central Bank of Swaziland confirmed in its latest quarterly report that new foreign direct investment has dried up, and only South African and other foreign-owned firms already operating there are responsible for whatever investment monies come from outside as they maintain their operations in the country.