Minister of Economic Planning and Development Dr Tambo Gina says government needs to support entities such as the Eswatini Economic Policy Analysis and Research Centre (ESEPARC) for analytical evidence that will inform public policy.
Speaking during a panel discussion at the IMF Regional Economic Outlook session held at the Royal Swazi Spa Convention Centre on Monday (November 12), Dr Gina said there is a need for experts who will objectively analyse government policies and programmes so as to inform policymakers’ decisions.
Meanwhile, consensus among the new government and experts is that the onus is on the private sector to turn the country’s economic fortunes around. ESEPARC Executive Director Dr Thula Sizwe Dlamini said priority should be on higher education, particularly because the country’s future lies with the youth.
He noted that the revised National Development Strategy (NDS) talks to the benefits of investments in education accruing to the individual, hence the need to revisit the NDS, as the benefits of Eswatini’s investments in education accrue to the country as a whole.
“If you look at issues of globalisation and how these have affected developing countries like ours, there certainly is a need for government to upskill and re-skill people,” he said.
“We cannot discuss higher education without talking about the need to channel more resources into research and development (R&D), which is like the laboratory for future growth. If Eswatini wants to have a greater handle on the economy in the future, there is need to increase funding into R&D. If you look at Eswatini’s current spending on R&D, it amounts to 0.26% of GDP and looking at the economic infrastructure for commercialising R&D outputs that we have as a country, certainly we need to increase our investment in R&D to 1% of GDP.”
Dr Dlamini advised Eswatini to prioritise R&D in line with the country’s developmental aspirations, adding that prioritisation should be in line with latest global developments that have seen the legalisation and commercialisation of crops deemed illegal in yesteryears. He also noted that there are opportunities to introduce cash crops that will help the country trap money in the economy, such as cassava to substitute wheat imports.
He pointed out that the private sector can lead by introducing the necessary technologies needed to produce and mill cassava, thus creating more jobs and forcing money to circulate within the economy. He went on to advise that government can help by providing incentives to the private sector to undertake such activities and a conducive environment for farmers to produce these crops by providing advisory services, farmer education, and funding for agricultural R&D.
“There is also an opportunity in the production of industrial hemp, which produces a lot of fibre using far less water than our current sources of fibre. There are also opportunities in the production of medicinal cannabis; it just requires channelling resources and finding a way of structuring the market such that it is not open to abuse,” he said.
Other opportunities, Dr Dlamini noted, are in the traditional sector. He said through R&D, the country needs to prioritise the traditional foods and medicine sectors to commercialise these products which would subsequently boost the tourism sector. He said there is a need for products that are made in Eswatini, and these could be basic goods like toothpaste, soap, etc.
“These are products that do not require a lot of money and yet when you begin to produce goods in your economy, you develop tacit productive capacities that are needed to attract FDI (foreign direct investment), so by engaging in the production of goods and services within the country, you are creating employment, widening the revenue base, and creating skills that will attract multinational companies,” he noted.
However, Dr Dlamini pointed out that there is still a challenge as most of the country’s income goes to South Africa seeing as the country imports about 90% of its goods and services from that country.
He said the ministry of finance needs to find ways to trap this income within Eswatini through fiscal policy, and perhaps invest in technology that will enable the country – alongside goods made in Eswatini – to emerge as a top economy of the future by trapping the Lilangeni within Eswatini and developing industries to conquer, first and foremost, markets in the Common Monetary Area (CMA) and across sub-Saharan Africa.
Minister of Finance Neal Rijkenberg acknowledged that the country has a major fiscal problem, particularly the over-bloated civil service wage bill. He said government needs to work out strategies to reduce the impact of its wage expenditure and therefore, they are reviewing different mechanisms and moving quickly to reduce this cost over time.
“In Eswatini we are a very small economy and I do believe we can do it if we move quickly. We have taken the first step, which is admitting that we do have a problem; for a long time we were saying we do not have a problem but the first step is acknowledging that there is a problem. We recognise that we have a problem and that we need to solve this problem and obviously it is not going to be an easy thing but the whole country recognises it.
“As cabinet, we will be working on a strategy and way forward, and hopefully in the next budget there will be indications and evidence of the fact that we are still to reduce the costs and identify revenue generating strategies without having to look at taxation, which again is not a simple task. We believe we will be able to come up with some strategic plans to be able to do just exactly that.”
On the other hand, Minister of Economic Planning and Development Dr Tambo Gina said in Eswatini, the first negative is the absence of development expenditure that will yield results in the medium term so that the country can expect higher growth rates in future. He said if the current trend continues, unfortunately, prospects for higher growth rates will be minimal.
“However, I believe that the government realises that top priority is creating conditions where there will be future growth. We must first and foremost recognise the fact that the health of the nation, in terms of trade relations, depends on the economic conditions prevailing in our neighbour, South Africa, which currently is undergoing a tactical recession, so our exports to that country are down.
“Of utmost importance is to create space for the private sector, that is, government must implement the necessary reforms, including improving the ease of doing business and conditions that will increase FDI and the economic activities performed by the private sector. We also need to leverage economic blocs to try and overcome some of the bottlenecks that come with being a small nation, so as to exploit trade opportunities and create conditions where we will be open to trade and remove the over-regulation that sometimes impede that avenue for us.”