Our summary of the August 2023 World Bank report on the Eswatini Economy and State Owned Enterprises

Written by Fundizwi Sikhondze

                    Publishing Editor

On Monday 7th August, in Mbabane the capital of Eswatini, the World Bank Group (the bank) released a report on the Eswatini economy and state owned enterprises in Eswatini titled ,"Economic update  , Raising the game with efficient public enterprises".

The report is split into two sections, the first section titled ,"Recent General Economic Developments" carried out an economic assessment of the country and then offered recommendations aimed at assisting the country to improve its economic performance. The second section, titled "Efficient State Owned Enterprises can boost Economic Growth" ,dealt with SOE's and then offered recommendations on how to improve the function and performance of SOE's in the country.

Economic Developments

Overall the bank suggested that the fiscal space in the country was improving but that more reforms were needed to maintain the upward trajectory.  One of the characteristic reforms recommended was a shift from a state led to a private sector led economic model. According to the world bank the previously utilised state led economic model had led to 'persistent deficits, high expenditure arrears, low international reserves and high debt levels'.  The time had therefore come to change it.

What could be of major interest to workers is the fact that this report by the world bank has expressly encouraged the government to continue to offer below inflation annual Cost of Living Adjustments (COLA) increments to public service workers. The bank argued that these conservative wage increments and hiring freeze were some of the key measures that  have improved the fiscal standing of the country that have also enabled the country to better  withstand the harsh economic environment brought about by COVID-19. Further, the bank has emphatically suggested that the wage bill ought to remain below 10% of the Gross Domestic Product (GDP) of the country.

The fiscal reforms have recently been brought to the spotlight when the country experienced a glaring health crisis which led to patients in Mbabane Government Hospital staging a protests at its main gate because of a lack of of both key personnel and medicines that could have facilitated operations for many of the patients with serious ailments that needed operations. Many citizens are suspected to have died as a result of these shortages. 

In the education sector it is also now an open secret that thousands of teacher positions in schools have not been filed by the government forcing parents in schools to resolve to hire teachers and pay them through contributions.

State Owned Enterprises (SOE's)

In reference to SOE's the bank's analysis was strongly critical of the SOE's sector, effectively accusing the government of playing multiple (conflicting) roles including owner, policy maker, implementer of public policy through the SOE's.

The report then suggested that there was a need to re-evaluate the role of the commercial SOE's in a way to reduce the governments involvement in them. This the bank suggested would allow the private sector to either compete or take over the roles. The bank also suggested that there regulatory functions of some of the SOEs needed to be separated from their operations and lastly they suggested that the government needed to strengthen their oversight to ensure proper governance of the SOE's.

Earlier reports on SOE's

The report on SOE's comes on the heels of an earlier report that had been commissioned by the Minister of Finance and carried out by the Eswatini Economic Policy and Research Centre (ESEPARC) on the same topic of reforming country's SOE's. The  minister of finance had commissioned the report in order to acquire advice on how to restructure the country's SOE's and reduce their reliance on the government ,particularly for funding.

SOE's are a key source of stable employment for thousands of workers in the country and their shipping off  to the private sector is most likely to get workers retrenched and or erode some of the key working conditions and benefits that workers already enjoy.

The report was received by an audience comprising of politicians, academics ,finance sector officials and SOE top level management.