Monday, 18 July 2011

SACU bail-out for Swaziland?

The Mail&Guardian in South Africa is reporting that the Southern African Customs Union (SACU) is set to provide Swaziland with a R400-million bail-out package as part of the next quarterly revenue payments. Swaziland is in financial crisis and many, including South African trade unions and civil society, are calling for political reform. The country is Africa's last absolute monarchy and some blame the current financial crisis on King Mswati III. South Africa is currently considering providing bail-out loans, rumoured to total more than R1-billion, but there is intense pressure in the country for political reform conditions to be attached. Attempts to raise loans from the IMF and African Development Bank have stalled on reform conditions.

In the meantime, Swazi unions have baulked at the suggestion of salary cuts, with the Swaziland Principals' Association threatening to close all schools if any move is made to cut salaries. The legal fraternity, meanwhile, is considering action against the Chief Justice over his suspension of a high court judge and directive disallowing legal action against the king.

The current financial crisis was precipitated partly by a drop in revenue from the SACU. The SACU, a little known and (technically) non-political body, is made up of South Africa, Namibia, Botswana, Swaziland and Lesotho. Income from this body, derived largely from South African trade, is redistributed disproportionately in favour of the smaller member states. It is unlikely, though possible, that the R400-million payment is a routine quarterly payment, given the slow recovery of economies in the region. Perhaps this is a humanitarian move or perhaps an attempt by South Africa to delay long enough to put together a more carefully negotiated bail-out. Political instability in Swaziland is not good for anyone in the region but it will be difficult for South Africa to justify a bail-out without stiff conditions in the face of pressure both at home and abroad. The SACU move may provide a welcome tide-over until more funds can be secured.

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