- For a lower middle-income country to jump to the status of a high-income earning country is not possible in the short term.
- Eswatini would need to attain a sustained Gross Domestic Product (GDP) growth of above 5% for 20 years.
Mbabane-In his podcast “Blossom of Thought” Mpilo Nkambule invited the Political Sociologist, and Peoples United Democratic (PUDEMO) founding member Jabulane Matsebula to give some insight as to why Eswatini has not been able to achieve the envisioned First World by 2022.
His Majesty King Mswati’s vision of a First World by 2022 was supported by many senior government officials and local economists, however as we approach the end of the first quarter of the calendar year, it is clear that we are nowhere near this so called First World Status.
In his speech from the throne His Majesty King Mswati explained to the nation how the COVID 19 Pandemic and the unrest situation in March 2021 had an adverse effect on the economy to the extent that the First World by 2022 objective could not be realized.
Not so says Dr Jabulane Matsebula, the very notion of a First World by 2022 in Eswatini was never a concrete reality from the very beginning. In economic terms the proclamation had no basis because it was not supported by historical economic trends. Furthermore, it was not supported by an economic or governance plan. The country’s economy was already in decline even before the advent of Covid.
“For a lower middle-income country to jump to the status of a high-income earning country is not possible in the short term. For Eswatini to attain that status it would need to attain a sustained Gross Domestic Product (GDP) of above 5% for a long time of approximately 20 years.”
According to Matsebula this is not possible given the current economic growth trends of the country. The GDP which is the total monetary value of all the goods and services produced in a country during a specific period, either quarterly or annually. It measures a countries economic health.
Matsebula says “the GDP growth has been sluggish in Eswatini for many years. Between 2014 and 2019 it was around 1.8% on average which is pretty low. In the early 2000’s it averaged 2.9%. This can be compared to an average GDP growth of 20% in 1985 and 1986. This was at a time when political sanctions in South Africa forced the business fraternity to invest in Eswatini to escape the sanctions. When sanctions were lifted in South Africa in the mid 90’s there was a flight of capital to South Africa. GDP growth in Eswatini fell rapidly and it will never recover to those figures again.”
Matsebula contends that “one of the key reasons why Eswatini’s economy has been struggling for decades is because government has to manage two economies. The one economy is that of the general public and the other is that of the privileged few. Whatever is produced by the general public has to maintain the privileged few which is unsustainable because the general economy is marred by poor growth, unemployment and poverty.”
Poor fiscal management is another factor that contributed to economic decline. This is the failure of the government to control expenditure. The country spends more than it collects in revenue and the expenditure level is out of control. It would also appear that the financial system in Eswatini is not efficient enough to support economic growth. This takes into cognisant the budgeting and the country’s fiscal policy.
Related to this is the issue of consumer confidence. For the country to grow economically it has to consume the products that it produces. In order to consume these goods and services, the population must have money in their pockets. This can be achieved by the economy creating jobs thereby unleashing the buying power of the people.
In the absence of jobs, a phenomenon called the migration of labour capital or human capital sets in. If capital migrates from Eswatini to overseas, then there is a problem. Especially if highly skilled labour migrates.
Thirdly, government has to invest in the population that is actively engaged in the economy. The skills that are required in the economy must be invested in. The academic institutions must be developed according to the projected skills needs. The government must respond to the projected demands of the future.
Jabulani Matsebula also makes mention of the digital platform economy, which is the ability for people to communicate in real time across continents. “This has become the new economy and economies are going to rely on new technologies to produce goods and services. There needs to be a greater investment in this critical infrastructure and technology. Eswatini is a long way from doing that, in fact it is massively under performing in the investment of new technologies and hence cannot be declared a First World country.
These are some of the key excerpts from garnered from Professor Jabulani Matsebula to explain the reason why we have not been able the First World status that we were all looking forward to this 2022.
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