RT.HON. PM’S RESPONSES TO EDITORS FORUM QUESTIONS, NOVEMBER 2019

Question 1

 The Editors Forum marks 20 years on the 29^th November 2019. We have an established understanding that the head of government would be transparent and accessible to the public through a regular, monthly open dialogue with the Forum. Since the Honourable Prime Minister has set a record for meeting editors only 2 times a year, does this suggest the Prime Minister has issues with transparency?

I wish to congratulate, first and foremost, the Editors Forum for reaching such a milestone. It is through such gatherings that Government gets an opportunity to articulate issues of national importance before Editors and the media which is duly transmitted to the Nation.

Let me assure Editors that I personally treasure this forum as it is in the best interest of the country that we share government’s positions. You will all appreciate that the first 12 months have been hectic as the new Cabinet had to hit the ground running. It was not that I was reluctant to attend this forum but time was an impeding factor when there was so much on the plate. The absence of this forum however does not deter journalists from filing questions to Government as we have a communications team that deal with the media on a daily basis to ensure transparency. I surely have no issues with transparency.

 

Question 2

His Excellency’s cabinet is in office now for exactly a year. Can the Honourable Prime Minister update us on cabinet milestones during the past 12 months. In particular:-

 

 

1. Progress towards an economic turnaround

 

The inflation rate moderated to be below 2 percent due to the zero tariff increase stance which was effected on the 1st of April 2019. This had a direct impact on the cost of utilities particularly electricity, water and housing, which contribute a high weight of 29.15 percent toward the consumer basket.

However, the recent increase in the fuel levy poses a risk to the low inflation rate as it is anticipated to increase prices for transport and food. The low inflation will not be sustained into the future years due to the high imports content into the cost structure of the provision of these services.

GROSS OFFICIAL RESERVES LEVEL OF 3.1 MONTHS OF IMPORT COVER:

As of October 2019, the gross official reserves were recorded at E7.16 billion bolstered mainly by SACU receipts. This is sufficient to cover 3.1 months of import cover, which is just above the international benchmark of 3 months of import cover recommended. This should be sufficient to boost investor confidence and protect the Lilangeni/Rand peg. Reserves are normally up during the first month of the quarter when the SACU transfer is received. 

LOAN FOR CLEARING ARREARS INCREASING CONFIDENCE WITH SUPPLIER:

Government efforts to secure a loan for clearing arrears with suppliers, has boosted supplier’s confidence in doing business with Government. This is anticipated to provide financial relief for suppliers and also stimulate economic activity as suppliers will be able to continue their operations without cash-flow constraints. 

Furthermore, this will increase the credibility of Government in terms of delivering on its promises.

PRIVATE SECTOR CONFIDENCE’S ON THE NEW CABINET

Private sector players have positive sentiments and a sense of confidence in the new cabinet. 

This is evidenced by the recent arrival of multinational companies to invest within the economy such as Kellogs, Jonsson Workwear and increased investment for expansions by the Clockwork Giant Clothing.  

HALF YEAR FIGURES PORTRAY IMPROVING GROWTH PROSPECTS FOR 2019.

On a year-on-year comparison, second quarter GDP for 2019 was estimated at 6.0 percent, portraying a significant growth from the revised 3.3 percent attained in the first quarter of 2019. 

The growth was mainly attributed to the financial and insurance sector (29.58%), electricity and water sector (26.94%) as well as the manufacturing sector (16.95%).

 

1. Success in containing government expenditure patterns

 

Government’s policy stance over the past 12 months has been premised on fiscal consolidation, this also informed the formulation of the 2019/20 budget. In spite of the budget cuts implemented over the past years aimed at reducing the high budget deficits and slow down the accumulation of arrears, Government felt the need to pursue implementation of austerity measures such as the freeze on hiring and filling of vacant positions, containing expenditure on external travel, reducing expenditure on CTA and the medical referral funds (Phalala and Civil Service Medical Referral) and other cost cutting measures. An update on these measures is provided below:

• Freeze on hiring and filling of vacant positions:

Implementation of the hiring freeze policy is indeed proving to be a success story. Month to month comparisons between the years 2017/18 (the period before the hiring freeze) reflect negative growth in the civil service head count, right from the beginning of October 2018, when the policy was pronounced. Our numbers show that, compared to an average growth of 1797 in the year preceding the adoption of the policy, the hiring freeze policy resulted in an average reduction of 692 people in the civil service during the year 2018/19. It is only after the circular that Government was able to record negative percentage growth to an average of -2% in 2018/19 as opposed to a 4% growth in 2017/2018.

An analysis of the movement in basic salaries on the other hand also shows positive effects in terms of the wage bill reduction. The year 2018/2019 depicts slight growth to an average of about 71 million owing to the hiring freeze circular whilst during the year 2017/2018 a noticeable 337 million growth on basic salaries was recorded. The growth in 2018/19 translates to a 1% increase on basic salaries compared to about 6% growth in 2017/2018 from year 2016/2017. Even after adjusting for the impact of the policy on personnel allowances the average increase in the wage bill is still lower in 2018/19 (about 2%, with an average increase of E117 million) compared to 2017/18 (about 4%, with an average of increase of E294 million), the period before the introduction of the policy.

• Reducing Expenditure on CTA:

Through the Ministry of Public Works and Transport, Government has been implementing numerous austerity measures aimed at reducing expenditure on CTA. These include among other things:

Reducing the size of rented fleet and prioritising replacement of critical vehicles. Almost all rented vehicles have been returned, the last fleet was returned at the end of October 2019. Vehicles rented for Cabinet Ministers, including the PM and the DPM were among the first fleet to be returned, resulting in substantial savings. If they were to be retained, the fleet rented for Cabinet Ministers alone would easily translate to an annual minimum expenditure of E20 million. The returned fleet initially rented for Government ministries and departments would have costed Government a minimum of E40 million per annum. In addition to returning the rented fleet, Government also managed to reduce expenditure on the replacement of vehicles. In the current year a commitment authority was only issued for the replacement of critical and totally worn out vehicles in spite of the standard mileage-pegged replacement requirement. 

• Expenditure on Phalala and Civil Service Medical Referral Funds:

Since the beginning of the financial year 2019/20, changes have been introduced to ensure that there are no budget overruns on the Phalala Fund. These include allocating a clearly defined budget ceiling, suspending the services provided by a middle man and introducing appropriate structures to monitor expenditure and manage referral of patients.

Suspension of the services provided by the middle man has not only brought about savings in terms of elimination of service charges but has also resulted in significant improvements in the processing of invoices and monitoring of patients to ensure they do not overstay the stipulated treatment period in the hospitals they have been referred to. Specialists have been engaged, a Technical Working Group and Board have been appointed to assist the Ministry with the verification of referral cases. All these improvements have led to significant improvements in expenditure. Our projections show that by the end of the financial year 2019/20, expenditure on these referral funds will be around E200 million compared to over E360 million spent in the financial year 2018/19 and in previous years. It is also worth noting that, the E200 million already includes a substantial amount used to clear previous years’ arrears.

• Containing Expenditure on External Travel:

Mechanisms and appropriate structures have been put in place to monitor and evaluate all external travel – these have indeed been enhanced to ensure that only assignments of national importance are embarked upon by civil servants. The Deputy Prime Minister now reviews and signs-off all travel requests that have been evaluated by PPCU and examined by the Cabinet Sub-Committee. Government external travel per diem rates are also being reviewed in order to generally reduce the incentive to travel.

• Expenditure Monitoring and Control:

 

In addition to the controls on budget releases and commitment control measures implemented during budget execution, an expenditure monitoring and management forum has been established at PBC level. Controlling Officers in all line ministries and government departments are expected to report to this forum every two months, giving an account of all expenditures they have incurred. The performance over the first six months shows that all ministries are spending within their budget ceilings, which is one of the main objectives behind the establishment of the forum.

 

1. Success in attracting new investment.

 

We are very excited with the level of confidence that investors have shown in the Kingdom of Eswatini over the past year. To date, Government has created an estimated 7 000 direct jobs and a sizeable number of indirect employment through investments from multinational companies such as Kellogg’s, Jonsson Workwear and TRIOMF Fertiliser, amongst others.

Following the unveiling of eight investment companies in May this year; whose investment value was at over E1.3BN, Government has continued to attract new investments while some investors that are already operating in the country have expanded their investments.

Quick update:

• Kellogg’s – Progress on the Kellogg’s site in terms of construction is ongoing as earthworks have begun on their 15 000 square metre factory in Matsapha Industrial site. The company’s project team is in the country working with Government institutions and contractors to do the foundational earthworks. An estimated E250Million has been invested and about 270 jobs will be created in their noodles factory. A further investment into a cornflakes factory is on the pipeline.
• Jonsson Workwear – They have already registered their company, and Government is currently considering viable options for their factory construction. About 2 000 direct jobs will be created at full scale with the value of the investment being an estimated E100 Million.
• TRIOMF Fertiliser – This is a new investment. TRIOMF is a South African company that deals with inorganic fertiliser. They have already finalised the installation of their machinery on site and are now finalising logistics for the launch of their project. About 65 Emaswati will be employed and a sizeable number of indirect jobs will be created particularly in the area of Agriculture. Government is currently working on linking TRIOMF with Taiwan Fertiliser Company with the view of producing organic fertiliser.
• Kingsgate Clothing – The textile company was launched earlier in the year and is already operational at Buhleni where they currently employ over 200 Emaswati. The number will rise to over 1 000 at full scale. Government, through the Eswatini Investment Promotion Authority (EIPA), has also allocated another factory to Kingsgate at Siphofaneni; which will create about 300 direct jobs.
• Artemis Pharmaceuticals – This is another new investment. The company will be producing pharmaceutical nutritional supplements using Moringa. They have already cultivated about 50 hectares of Moringa in Siphofaneni and have completed construction of their factory.
• Air Liquide – This was an expansion project which was launched in Matsapha in August 2019.
• There are other prospective interests that Government is currently following based on our mission across Africa and the rest of the world. These include investors in the area of energy, mining, ICT, Agriculture and agro-processing and aviation. Africa Gold and Crowne Aerospace are some of the prospective investors currently under Government’s Radar.

 

Question 3

 

1. There is another speculation doing the rounds that your office has special ‘ministers’ who are allegedly calling the shots while it is difficult to work for the other ministers as they feel sidelined. In the 10 months you have been in office, have you been monitoring the working relationship with all the Cabinet ministers? How is the office working with each one of them?
   1. i. Are you aware of the speculation doing rounds that there is some division between Cabinet ministers and PSs? In the event that the speculation holds water, how will your office deal with it to ensure that the thematic focus of good governance does not fail?

 

You will all agree that perception or speculation are not necessarily facts.

It is a given that in any working environment there would be different opinions, but that does not translate to conflict. In fact, it is healthy to have robust engagements in any workplace. There is unity within Cabinet and we are all pulling in the same direction albeit after the necessary debates and engagements.

Most of you here, if not all, were at one time accused of being favourites for your bosses by your workmates. It does not necessarily mean it is true and even in this case it is further from the truth.

I have a good working relationship with the Cabinet I lead and they have a normal working relationship with their Principal Secretaries. Not to agree on certain issue is a component of team spirit towards a common purpose than confirmation of division.

1. Are you aware or has government sanctioned the multi-million optic fibre network which was recently signed for by two locals and a foreign company?

Government is working round the clock to upgrade the Information Technology backbone infrastructure in the country. We are currently engaging a number of relevant companies. The process is still ongoing.

1. Are you aware or has Cabinet concluded that EPTC it will continue to run as is and that no unbundling will take place anymore. Can government give us a clear position?

The unbundling of EPTC went through Cabinet. It transpired that EPTC needs to present a viable business case that will show the sustainable of the three new entities; Postal, Telecoms Retailer and Infrastructure.

QUESTION 4

 

The minister of works last week signed an agreement promising to increase economic activity at the KM3. Can His Excellency provide more details of this agreement.

 

The MoU signed between Government represented by the Ministry of Public Works and Transport and Crowne Aerospace last week was for the very initial arrangement where the latter proposes to establish a cargo hub at King Mswati III International airport, and operate cargo aircraft that would service the regional and international cargo markets. The prospective investor proposes to establish and operate an airline in the Kingdom and obtain the requisite airline operation certificates and licenses which include the Air Service License (ASL) and the Air Operators Certificate (AOC) based on the Kingdom’s civil aviation regulations. These two licenses are to be issued by the Eswatini Civil Aviation Authority (ESWACAA) after the prospective airline has fulfilled all the requirements pertaining to these two licensees.

The MoU is an initial document which merely indicates areas of cooperation between Government and Crowne Aerospace with the next phase being to vigorously subject the latter to all the approvals process by the ESWACAA for the airline to obtain the Air Service License and the Air Operator’s Certificate. The MoU merely indicates Government commitment to attracting FDI in the country through our slogan, “Eswatini is open for business”. In a way Government is facilitating and giving assurance to the investor that his business here in the country will be protected. The company only needs land on which to construct their structures which include a terminal, a parking bay for at least 4 aircraft with an access taxiway to the runway plus an office block and pilot accommodation. The proposal by Crowne Aerospace is different from that which was advanced by UNICORPE. Crowne Aerospace is a Foreign Investor intending to establish an airline here while UNICORPE came into the country as a consultant to assist Royal Swazi Airway for the revival of the national airline. Crowne is coming in as an independent investor with his own independent financial resources.

 

 

1. Three years ago a similar agreement was signed with a company that promised to revive Royal Swazi Airways, but disappeared with millions of emalangeni down the drain. What do we know about the present company and what improvements can we expect from the airport.

 

The company referred to here is called Crowne Aerospace (Pty) Ltd, a company formed and registered in the Republic of South Africa. Locally, it has commenced the process of registering a company in the Kingdom to be known as Air Inkwazi (Pty) (Ltd) to provide passenger and cargo services and establish and operate the Maintenance, Repair and Overhaul facility (MRO Facility) based at the KM III International Airport.

The company will operate in two divisions; Crowne Air Cargo to trade as Air Inkwazi Cargo and Air Inkwazi to serve as passenger airlines bearing the brand name “FlyEswa”.

 

1. The press statements have referred to significant export cargo volumes. Can His Excellency indicate what are the products that will be exported.

 

According to the business plan received by ESWACAA, the company intends to establish a cargo hub at King Mswati IIII international airport where they will consolidate cargo from the region, repackage it for exports to different international destinations which include South Africa, China, Ghana, Senegal, DRC, Seychelles, Belgium, Zambia, Zimbabwe, Namibia, USA, Mozambique, Botswana, Malawi, Tanzania hence the company intends to operate large cargo aircraft for long haul. The company, apart from sourcing the cargo from the region, will also be open to source cargo from locals such perishables from companies such as I-Fresh among others and pharmaceuticals. Ifresh is a local exporter dealing with perishables and is known to the Ministry of Agriculture but who does not have aircraft to transport his produce to his international and regional clients. As part of this, the company intends to expand the cargo facility at King Mswati III International airport and provide the requisite infrastructure such as cold rooms.

Key points

• This is an investment of E15 Billion ($1.1 Billion)
• The initiative will bring 600 permanent jobs in the aviation industry and 9000 indirectly linked jobs to EmaSwati.
• The company will invest within the cargo terminal Eswatini with at least 180 different take-offs from the King Mswati III International Airport to an array of destinations internationally within Africa, Europe, USA and Asia.
• The Eswatini Civil Aviation Authority (ESWACAA) will be the statutory body regulating all civil aviation activities, as its mandate in the Kingdom and in accordance with international standards.

 

 

Question 5

Cabinet formed a committee to deal with corruption last November.

• May the office of the Prime Minister share the report of what has been achieved in the past 12 months in the fight against corruption.

Government has been able to fill vacant positions tenable in the ACC. On assumption of office, Cabinet found that a number of cases were either pending completion with the Courts or awaiting enrollment in the courts. It is our hope that these matters shall be speedily resolved.

The Commission is currently pursuing investigations of over 375 matters brought before it by members of the public. The concern is the turn-around time for these investigations. Besides investigations, the ACC has a mandate of educating the nation on the evil of corruption and related vices to society. This is being done through numerous platforms - the media, radio, Trade Fair reach-outs, public and private entities. As an achievement towards the fight against corruption the Ministry of Justice has recently launched a radio program through which the ministry in collaboration with the ACC is educating and sensitizing the nation on corruption.

 

• How often does the Chief Justice and the PM meet to discuss issues and how is the relationship between the two leaders? Has there been a discussion between the two leaders regarding the conduct of the judicial officers, without referring to any specific case? What is government doing to have the ACC effectively operational again instead of its current docile nature (has this been discussed with the CJ)?

When a need arises the Prime Minister can meet the Chief Justice, but these would ordinarily be private deliberations.

The Government of the Kingdom of Eswatini fully supports the fight against corruption and the operations of the ACC. Cabinet has positioned herself by creating a Corruption Prevention sub-committe under the headship of the DPM to assist and create an enabling environment for the agenda against corruption in the country. This includes assisting the ACC as well as all other stakeholders, especially in the justice value chain, in removing bottlenecks in the fight against corruption. One of the first steps has been to provide the ACC with a secure operating environment. They have since moved from Mbandzeni House to Sibekelo Building.

We are aware that ACC is thin on the ground and hence among the core tenets of the Strategic Roadmap is the strengthening of the ACC. Fighting corruption cannot be a responsibility of one entity, thus multiple partnerships are required. In that light, the Inter-Agency Task Force against Corruption which comprises, the ACC, Police and the DPP will be resuscitated to tackle serious cases of corruption and enhance speedy resolution of cases.

The Asset Recovery Unit placed under the DPP is already making interesting roadways in the recovery of crime tainted assets in the spirit of the Organized Crime Act, 2018. The message that should sink to all Emaswati is that corruption does not pay and that all perpetrators of corrupt practices shall be brought to book. All their ill begotten assets shall be seized through the due process of the law. Additionally, a National Anti-Corruption Policy will soon be finalized and rolled out to entrench Government’s position against corruption. This policy will be implemented across all sectors in order to combat corruption.

 

• In the Strategic Roadmap, there is a critical pillar under the economic recovery focus-country image. The pillar’s focus is the independence of the three arms of government in doing their work plus respect for the rule of law. Recently, the Chief Justice, Bheki Maphalala recently made startling revelations to the effect that there was political elite which was undermining and interfering with the constitutional mandate of the Judicial Service Commission (JSC).
  1. What does your office say about the country’s image when a whole CJ makes such revelations?
     1. i. Should the people of Eswatini even have confidence in the judiciary?
     2. ii. What has your office done to determine if the CJ’s statement is factual?

Indeed the three arms of Government are independent as enshrined in our Constitution. The statement by the Chief Justice referred to above is a matter that the Government is presently addressing with the relevant stakeholders.

Emaswati can continue to trust our courts and this statement does not impact the efficient operation of our courts.

 

 

Question 6

Government has been harping on about reviving the economy through the mining sector, but to date nothing has happened.  What is the challenge with setting up the Mining Board? Attached to this the Special Economic Zones Act of 2018 was made law not only to attract Foreign Domestic Investment (FDI) but encourage domestic investment as well. However, there seems to be less local companies benefiting from the tax holiday and other benefits outlined by the legislation.

The Minerals Management Board was never disbanded, it currently consists of four (4) members that constitute a quorum and the Board is still carrying out its mandate. It is a fact that the full complement of the Board is seven (7) members but the status quo does not decapitate the Board.

Special Economic Zones are open to all investors; be it Emaswati or FDIs. This means, Emaswati can also benefit from the tax incentives as long as they meet the requirements set out in the Special Economic Zones Act of 2018. In terms of Section 15 sub section 2(a) of the Act, the Minister shall grant a licence if the application meets the objectives of the Act; and if the proposed business enterprise is incorporated in Eswatini whether or not it is 100 percent foreign owned.

Question 7

Two sectors which are key target areas under the strategic roadmap are performing poorly; namely education and health.  We now see some developments in education with English no longer regarded as a passing subject. The citizenry has not been receiving adequate medical supplies from some time in the national health centres. Personnel in the health sector have brought forth a myriad of challenges and they have been recurring.

1. Has government looked at means of dealing with the health sector challenges holistically and dealing with them for good?

Government through the Ministry of Health is multiplying efforts of dealing with health challenges, however challenges still persist in the following areas:

• Inadequate health personnel – the fiscal challenge has resulted in a slow-down in creating new posts for health workers such as nurses, doctors and radiographers to meet the health care demands from patients. Government has released the annual budget of the Health Ministry to ensure efficient provision of health services.

However the sector has made strides in improving and providing quality health services through the following activities:

• Training of 60% of health workers in quality management principles, and the evidence is the awards received by the National Blood Transfusion service during the recent Quality Awards organized by the Ministry of Commerce.
• Procurement of vaccines through the UNICEF Pooled Procurement Process has resulted in the Ministry saving E12 million through reduced bulk pricing of the vaccines.
• Increased numbers of cancer patients being assisted at the Mbabane Government Hospital Chemotherapy Unit. (Cancer is the leading conditions that has resulted in high costs of referrals to RSA and attending such cases locally is aimed at reducing the costs).

 

1. Will government follow suit to what the other SADC member States have done in relation to the medical sector – introducing a health insurance for the citizenry?

Government has been advised by Global organizations such as World Bank and World Health Organization that the financing of health services using global tax based financing is no longer sustainable.  All countries in the world including those in the SADC region are making plans to establish a National or Social Health Insurance (NHI).  Government regards NHI as a robust and sustainable system where all people in the country will be legislated to contribute a certain amount of funds to their healthcare and not wait to fall ill before looking for funds to access health care services.  It is hoped that this system will protect the people from catastrophic spending as a result of seeking health care.

Technical officers in the Ministry of Health have undergone training and been exposed to benchmarking visits to other countries in Africa such as Ghana, where a National Health Insurance Fund has been established.  In response the Ministry of Health has already moved forward in the development of:

1. A National Health Insurance Bill
2. A Health Financing Bill

 

Question 8

 

Is His Excellency surprised that the 2017 Census now sets the national population at 1.1million. Various official documents shared with the international community (including the Investor Roadmap in 2003) set the population at exactly 1.1 million, with a projected growth of 1.9% per annum. Can His Excellency assure us that this new population figure is credible, and if he has been provided with an explanation for how the population has shrunk by so much?

The population of the Kingdom of Eswatini has been increasing at a decreasing rate over the past three decades. Between the period of 1986-1997 the growth rate decreased from 3.2% to 2.8% per annum, in the period between 1997-2007 there was a marked decrease from 2.8% to 0.9% per annum. Then in the last decade of 2007-2017, the growth rate decreased from 0.9% to 0.7% per annum. In the last two decades, the growth rate has never been above 1% per annum.

The population has not shrunk but it has been increasing at a slow rate. The projected figure quoted in the 2003 Investor Road Map was based on projections produced for the 1997 population census. It is worth noting that projections are influenced by factors such as fertility, mortality and migration from which assumptions are made. Clearly, there were significant changes in the fertility, mortality and migration experienced in the decade between 1997 and 2007.

YEAR	POPULATION	GROWTH RATE
1986 census	681059	3.2
1997 census	929718	2.8
2007 census	1018449	0.9
2012 population survey	1040128	0.9
2017 census	1093238	0.7