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Reflections From The South: South Africa’s $350 Million Loan To The Kingdom Of Swaziland – Implications For Democracy And Good Governance

21 September 2011 21 September 2011 Tags: , One Comment Print This Post Print This Post


King Mswati. Source: pigeonproject.com

In response to Swaziland’s fiscal crisis and its inability to pay for essential services such as the provision of health care, public education and salaries of civil servants, the government was grateful to receive a financial life-line from its neighbor, South Africa, early August 2011. The R2.4 billion ($350 million) loan the South African Reserve Bank granted the Central Bank of Swaziland was guaranteed by the South African government after the government of Swaziland failed to secure fresh loans from the International Monetary Fund (IMF) and the African Development Bank (AfDB) due to its failure to meet specified fiscal performance related targets.

Labor and human rights organizations in Swaziland and South Africa were however not so grateful and objected to the loan. The main concerns in this regard were that the loan will be used to maintain the current system of government in Swaziland, they were opposed to, and that there were insufficient conditions attached to the loan in order to foster democratic changes and bring about good governance in the country. There were also concerns that the loan will simply be used to maintain the lavish lifestyle of the ruling elites in Swaziland at the expense of the poor – King Mswati III of Swaziland, the last absolute monarch in Africa with 13 wives, has an estimated wealth of more than $100 million, making him one of the richest monarchs in the world. The spokesperson of the Swaziland Solidarity Network, Lucky Lukhele, described the loan as ‘a handout from a sugar daddy,’ due to personal relations between prominent South Africans and the Swazi Royal family – President Zuma was engaged to a niece of the Swazi King whilst one of the wives of the South African Zulu King, Princess Mantfombi, is his sister.

The deputy-president of the Congress of South African Trade Unions (COSATU), Zingiswa Losi, following her arrest and deportation from Swaziland during a pro-democracy march on September 7, 2011 in support of multi-party democracy was of the opinion that the South African loan ‘does not address the need for democratization in any serious manner,’ and the secretary general of COSATU, Zwelinzima Vavi, said the granting of the loan to Swaziland was a mistake. And in a much stronger language, the South African Transport and Allied Workers Union (SATAWU), an affiliate of the Congress of South African Trade Unions, described the loan as a ‘treacherous life-line to a reactionary regime.’

The position of the South African government was that the loan was made in order to avoid the collapse of the economy of the Kingdom of Swaziland and the consequences of such collapse for South Africa and that the loan would also help to bring about necessary democratic changes in the Swaziland. The South African ruling party – the African National Congress (ANC) – was in favor of the loan and naturally supported the position taken by the South African government.

What is of fundamental importance however, are the underlying issues and circumstances that led to the loan – the challenges for democracy and good governance under the rule of an absolute monarch – and how these will be addressed in order to avoid another life-line being thrown to the Kingdom of Swaziland and an eventual collapse of its economy.

Underlying issues behind the loan

Swaziland protests against the King. Source: royaltyinthenews.com

The effects of the 2008-2009 global economic crisis that also affected other Southern African states and the 60 percent loss of revenue from the Southern African Regional Customs Union (SACU) in particular – Swaziland’s main source of revenue – were the killer punch that forced the kingdom with its already ailing economy to turn to its neighbor for assistance.

Due to its economic challenges, the kingdom currently, as per data compiled by the Office of the UN High Commissioner for Human Rights (OHCHR), has about 69 per cent of its population living in poverty (Swazi government puts this at 63%) and 20 to 25 percent suffers from food insecurity. The country also has a high unemployment rate estimated at 25 percent according to the 2011 World Economic and Financial Survey report of the International Monetary Fund (IMF). Its human development index of 0.498 for 2010 is worse than that of 1990 at 0.511 as indicated by the United Nations Development Programme (UNDP). Public schools and the University of Swaziland were unable to open their doors in August 2011 due to the country’s crippling financial crisis.

The irony and concern about this turn of events is that Swaziland’s economy was doing relatively well since its independence, from the United Kingdom on September 6, 1968, until the early 1990s. Swaziland’s development indicators during its early stages were, according to the World Bank, ‘broadly on par with those of East Asia and Arab states and well above those of Southern Asia.’ The country’s economy performed better in 2000 than in 2009 and thereafter, as indicated by the World Bank. In 2000 for example, it had a 10.1 percent economic growth (GDP growth) compared to a growth of 0.4 percent in 2009; an inflation rate of 0.2 percent in 2000 and 5.5 percent in 2009 and $91 million of Foreign Direct Investment in 2000 as opposed to $66 million in 2009.

The demise of the economy of Swaziland which has seen a reversal of its developmental progress over many years is, according to the World Bank, due to ‘a combination of policy choices (especially in the areas of microeconomic fiscal policy, public expenditure management and allocation of social expenditures) and governance challenges, compounded by exogenous shocks.’ The challenges and reversals in Swaziland’s fortunes occurred under the reign of King Mswati III, who ascended to the throne on April 25, 1986.

Relation between good governance and sustainable economic development

The relationship between economic development, peace and security and good governance (democratic governance that is accountable and that allows adequate participation of citizens in public affairs) is now recognized and widely accepted.

Heads of state and government in the 2005 UN World Summit acknowledged that ‘development, peace and security and human rights (pillars of the United Nations System) are ‘interlinked, mutually reinforcing and are the foundations for collective security and well-being (paragraph 9)’. The UN Millennium Declaration of 2000 (at paragraph 13) also acknowledges that good governance is a key element in the elimination of poverty and in advancing economic and social development.

Several scholars such as Ian Bremmer (The J Curve: A New Way to Understand Why Nations Rise and Fall), Paul Collier (The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It and Wars, Guns And Votes: Democracy in Dangerous Places) and Amartya Sen (Development As Freedom) have also written and commented on this relation. Paul Collier for example, states that ‘terrible governance and policies can destroy an economy at an alarming speed’ and argues that the lack of accountability and its resultant socioeconomic conditions is one of the reasons the world’s poorest nations are still poor today.

On the relation between political pluralism – that is best attain by a multiparty political system- and responsive and accountable governance Amartya Sen in his book, Development As Freedom, correctly observed that:

Political and civil rights give people the opportunity to draw attention forcefully to general needs, and to demand appropriate public action. Governmental response to the acute suffering of people often depends on the pressure that is put on the government, and this is where the exercise of political rights (voting, criticizing, protesting and so on) can make a real difference. This is part of the instrumental role of democracy and political freedoms (at pp 150-151).

The current system of government in Swaziland, where political parties have been banned since 1978 and where the executive authority in terms of the 2005 Constitution vests in an absolute monarch who is immune from taxation, criminal and civil ligation is responsible for much of the policy choices and governance challenges referred to by the World Bank that have led to much of the country’s economic demise.

The power of the King – who is also the head of the defense force, police and correctional services – to appoint at his discretion, 20 of the 31 senators and 10 of the 76 members of the House of Assembly, makes accountability of the executive to the legislature difficult if not an impossible task.

Implications of South Africa’s loan for good governance and democracy

While the loan by South Africa is important in alleviating Swaziland’s current precarious financial situation; the main question and challenge is whether the conditions attached to South African loan will help to bring about meaningful and desired changes in the country in terms of good governance and democratic participation or, as maintained by those opposed to it, the loan will have no such effect and would instead be used to maintain the status quo including the lavish lifestyle of the King and his supporters.

The Confidence Building Measures, one of the four conditions – whose implementation by the government of Swaziland will be monitored over the five-year loan period entails measures pertaining to the promotion of democracy, good governance and respect for universal human rights and the rule of law. This condition is based on a 2004 Agreement pertaining to the establishment of a Joint Bilateral Commission for Cooperation (JBCC) between the two countries.

The difficulty with this loan condition however, is that very little was done by the government of Swaziland to honor the 2004 Agreement (JBCC) in respect of human rights, good governance and democratic participation and it is doubtful whether much has changed in this regard. The South African government, as borne by the current state of affairs in Swaziland, did nothing much since signing the Agreement.


The current system of government in Swaziland – rule by an absolute monarch- is not sustainable and conducive to economic and social developmental needs of the country and should be changed. The system is also not in accordance with international standards and is contrary to the objectives and guiding provisions of the Constitutive Act of the African Union pertaining to popular participation and good governance. The continued ban of political parties in Swaziland also goes against the provisions of the AU’s 2007 African Charter on Democracy, Elections and Governance requiring member states of the African Union to recognize the role and rights of political parties through their national laws – Swaziland signed the Charter on January 29, 2008 but has yet to ratify it.

Challenges of democracy, human rights and good governance in Swaziland if not addressed would have a far greater impact on South Africa – beyond the $350 million loan it has already agreed to extend to Swaziland – and would also affect the much needed sustainable economic development in the Southern African region as whole.

The current financial and related political challenges in Swaziland and the renewed demands by many of its citizens for changes in how the country is governed should hopefully spur the kingdom in the right direction and help it to bring about a system of government that allows for greater political pluralism through the recognition of political parties; that promotes accountability and transparency; and that is responsive to the needs and welfare of the citizens.

The South African government should also play a greater role in promoting democracy, respect for human rights and good governance in Swaziland and should ensure that the loan guarantee conditions based on the 2004 Joint Bilateral Commission for Cooperation (JBCC) agreement between the two countries are implemented.

As the country enters its 44th anniversary of independence – as it did on September 6, 2011, amidst pro-democracy protests in which t-shirts bearing the King’s picture were burnt – it stands at the cross roads and has to make a choice to either maintain the status quo or take necessary steps towards promoting good governance and democratic participation in order to ensure sustainable economic, social and political development that prevent a possible downward spiral that could eventually turn the country into another failed state.

By Tseliso Thipanyane


Tseliso Thipanyane, independent consultant on human rights, democracy and good governance and former chief executive officer of the South African Human Rights Commission. Tseliso is Director-Editorial and Marketing at AfrobeatRadio. He can be reached at tseliso@afrobeatradio.com.


One Comment »

  • Mark B said:

    This article touches on a practical dilemma of what is more important: whether to advance the democratic process by any means or to keep improving an available governance framework. Consequently, the most of "democratic progress" might be (just might be) accomplished through a revolution (as exampled by the "Arab Spring" reacting to the absent constitutionalism) or, alternatively, the most reliable progress may be accomplished through a sociopolitical involvement (as exampled by South Africa managing its progress without a need for an all-out revolution).

    I think that, as long as financial-aid and "democracy-building" institutions have for-profit objectives, such as, for example, World Bank being a for-profit entity responsible to it's shareholders, or US Government with it's tight ties to big business, the main objective will never include a free flow of information – the core engine of effective democracy and constitutionalism.

    In any case, to be good judges of what is the best solution for Swaziland, we need to know what are all the objectives of the South African government in maintaining the Swaziland regime and supplying a "financial life-line" in the first place.

    I hope that in the near future democracy building will take a more practical approach. Why not, as a condition of a "financial life-line", to immediately establish and protect free-press posts in Swaziland and to provide free access to information and information distribution including uncensored free wireless Internet. But, that seems to be just too radical in the current democracy-for-profit reality, isn't it?

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