Transcript Folie 1 - Training Workshop Programme

Public Private Partnership for Swaziland
Training workshop, Swaziland, 16 – 20 July 2012
Swaziland Economic and Contextual
Kimon Paxinos
Overview
Economic and
Development Planning
Context of Swaziland
Economic Context
Perpetual Question: How does the above support PPPs?
Concultion
• Global economic armageddon posses increased
challange for Swaziland.
• Increased investment into Swaziland is
fundamnetal to growth and employment.
• Economic and social prescription is wellestablsihed.
• A more productive civil service is fundamental
capable of implementing policy.
• Effective PPP implemention is critical to
investment, job creation and economic
diversification of Swaziland .
Policy Review 1
Policy Document
Detail
Smart Programme on
Economic
Empowerment and
Development
• Supersedes Economic Recovery Commission Report (1995)
• Economic and Social Reform Agendas (1997/99)
• National Development Strategy of 1999
•
Poverty Reduction
Strategy and Action
Programme (2007)
• For period 2007 – 2015
• Policies aimed at a) macro-economic stability; b) good
governance; c) equitable access to productive assets; d)
human capital development; e) policy and regulatory climate
stimulating private sector for job creation and income
generation; f) rural development for agricultural and other
activities; g) provision of infrastructure, extension services;
technology, markets, financial services.
Vision 2022
• Social and economic visioning document aims to place
Swaziland in top 10% of peer HDI index countries based on
sustainable economic development, social justice and political
stability.
United Nations Country Team, Swaziland United Nations Development Assistance Framework: 2011-2015
Policy Review 2
Policy Document
Detail
Government
• Period 2008 – 2013
Programme of Action Aims at: a) prudent management of the economy to ensure
macro-economic stability, rapid, sustainable economic growth
and development; (b) poverty reduction, job creation and
food security; c) efficient access to, and delivery of, basic
social services (education, health, water, etc); d)
strengthening governance institutions for improved
governance; and e) disaster risk reduction especially
for vulnerable groups. Government policies have also been
guided by global frameworks, such as the
MDGs and the six Dakar Education for All (EFA) goals.
National MultiSectoral HIV and
AIDS Policy (2006)
• Multi-sectoral framework for the national HIV and AIDS
response.
Three 1’s: one action framework, one national coordinating
authority, and one Monitoring and Evaluation system
Policy Review 3:Economic Recovery Strategy ‘11
Policy Document
Detail
Economic Recovery
Strategy (2011)
• plans to achieve 5% real economic growth per annum and
create 30,000 jobs
• Key sources of growth
• FDI
• Domestic investment
• Trade
• Tourism
• Infrastructure
• ICT
• Fiscal sector
• Agriculture
• Financial sector
• Human capital development
Suggested reforms
• Enabling regulatory environment
• Greater competition
• Increased productivity, and innovation
Existing Challenges 1
Challenge
Detail
HIV / Aids
• Very high incidence rate. 26% of population.
• Feminisation of the disease places women at greater risk.
PPP impact:
Breakdown of social service delivery
Severely limiting economic productivity
High Poverty Levels
•GDP per capita is US$2,415
•69% of nation lives below poverty line
• Skewed income disparities: 56% of wealth held by top 20%
of population
• Gini Coefficient of 51%
•PPP Impact: limited markets that can afford a tariff.
Sluggish Economic
Growth
• Pre 1990, higher FDI resulting from political turmoil in SA and
Namibia.
• Slower growth attributed to
• Recurrent droughts
• declining export receipts
• volatile exchange rates
• loss of textile quotas to EU market
Existing Challenges 2
Challenge
Detail
Weak Human
Development
• Increasing unemployment since 1990’s
• HDI peaked at 0.623 in 1990.
• HDI declined to 0.772 in 2007
• 40% of rural people lack access to potable water
• 55% lack proper sanitation.
• Attributable to:
• Decelerating population
• Weak educational and training systems
• Frail health system with increasing communicable, noncommunicable and epidemic diseases. [TB at
1,198/100,000]
•
Existing Challenges 3
•
Governance
• 2005 constitution provides for fundamental rights and
freedoms and decentralisation of service provision.
• Reported issues are:
• Protection of social, cultural and economic rights
• Transparency and accountability in public sector
• Strengthening of justice system
• Domestication of international regional conventions and
treaties.
Food security
• 25% of population is food insecure
• Estimated 39% of children are nutritionally stunted.
•Declining food production attributable to:
• successive droughts
• HIV AIDS impact
• Limited irrigation
• Less use of agricultural technology
Existing Challenges 4
•
Gender equality
• 2007 Progress Report on MDG’s indicate improvement.
• Challenges include:
• Women have greater prevalence in poverty due to less
formal participation in economy
• Inequitable access to education
• Women still regarded as minors in terms of some laws
restricting access to Swazi National Land
• PPP implication: Reduced production in economy and
weaker probability of PPP’s
General Challenges
• Governance- Juxtaposition of Westminster
type constitution and traditional monarchy:
– Separation of powers between King and State
under constitution but powers blurred
– Friction between highly devolved tinkhundla and
centralised government decision processes.
• Peaceful nation but weak political, civil, labour
compact.
Source: African Development Bank: Country Strategy paper 2001
• Sugar industry – effect of tariffs
• Textile industry under Africa Growth and
Opportunity Act
• Govt to create more supportive means to
guide private investment
• Greater use of political insurance [MIGA]
• Domestic investment of pension funds.
Poverty Incidence by region 2001 /10
PPP implication: Poverty
eradication is improving
but still a weak market
ability to service PPP’s
dependant on a tariff.
Poverty Incidence: Growth incidence curves, national
level 2001 to 2010
Bottom 30% of
Swazi society has
become poorer
Economic growth has
benefitted middle-class the
most
Swaziland Household Income and Expenditure Survey (2010) Poverty in a decade of slow economic growth: Swaziland in the 2000’s
12.8%
30.0%
20.0%
73.2%
37.9%
28.2%
40.0%
36.4%
42.9%
60.0%
50.0%
79.9%
52.6%
74.9%
67.8%
75.6%
67.5%
59.7%
70.0%
65.6%
69.7%
80.0%
67.5%
78.3%
90.0%
76.6%
Governance performance relative to Botswana and Mauritius
10.0%
0.0%
Voice and
Accountability
Political Stability
Governmental
Effectivness
Swaziland
Source: African Development Bank: Country Strategy Paper 2001
Regulatory Quality
Botswana
Mauritius
Rule of Law
Control of Corruption
Swaziland Investment Climate Assessment: Key Findings
•
•
•
•
•
•
•
•
•
•
•
Economy closely linked to SA
60% of exports to SA
80% of imports from SA
60% of government expenditure
financed by SACU receipts
Fiscal deficits financed by government
financial assets
Swazi labour productivity is 2 to 8 times
higher than other low income countries
in the region.
70% of production exported is to SA
suggesting low international
competitiveness
Monopolised telecommunications
Heavy regulations
Limited access to land
Lack of a Swazi Brand
World bank Group, Africa Region, Private Sector Unit.
Also, 2012 Swaziland Economic Outlook www.africaeconomicoutlook.org
Per capita
growth
FDI as % of
GDP
1975-1994
2% p.a.
7% p.a.
1994-2006
0.7% p.a.
1994-2000
5% p.a.
2000-2006
2% p.a.
•
•
•
•
40% of firms export any part of output.
Labour wages are 2 to 4 times low
income comparator countries.
Low returns on education at 2 to 2.5 %
wage increase for each year of
schooling suggesting unsophisticated
economy.
Real exchange rate estimated to be 20%
to 30% below Rand given fiscal
imbalances, high wages, weak business
environment (Source IMF)
Constraints to investment: SMLE and Micro
Enterprises view of competitive constraints
PPP implication: These factors affect relative attractiveness of Swaziland for
investors. How competitive is Swaziland for private sector investment?
World bank Group, Africa Region, Private Sector Unit
Table 2: GDP by Sector (percentage of GDP)
Real GDP by sector and low growth factors
2006
7.8
2011
7.9
Mining and quarrying
Manufacturing
Electricity, gas and water
Electricity, water and sewerage
Construction
Wholesale and retail trade, hotels and restaurants
0.4
41.4
0.9
4
11.4
0.3
42.3
0.9
2.7
10.5
of which hotels and restaurants
Transport, storage and communication
6.6
6
-
-
7.3
5
-
-
18.4
22.8
Public administration & defense; social security, education, health &
social work
-
-
Public administration, education, health
-
-
Public administration, education, health & other social & personal
services
Other community, social & personal service activities
-
-
-
-
Other services
Gross domestic product at basic prices / factor cost
1.7
100
1.7
100
Wholesale and retail trade, hotels and restaurants
-
-
Agriculture, forestry, fishing & hunting
Transport and storage, information and communication
Finance, real estate and business services
Financial intermediation, real estate services, business and other service
activities
General government services
Source: http://www.africaneconomicoutlook.org/en/countries/southern-africa/swaziland/
• Swazi 2011 GDP very low
• Low growth factors:
a) Weak business
environment discouraging
private investment
b) Fiscal policy that did not
prioritize public investment;
c) An overvalued exchange
rate that hampered
exports; and
d) The highest HIV and AIDS
rate in the world that
weakened productivity.
e) SME’s dependant on
government work
World Bank Ease of Doing Business
Angola
Starting161
a business
180
172
158
Getting electricity
Lesotho
143
Deling with Constuction
Permits
160
140
120
100
Sub Sahara Average
80
137
Swaziland
69
124
47
60
Resolving insolvency
128
40
Registering property
20
0
Zambia
84
Namibia
48
Enforcing contrcts
171
78
Getting credit
60
Botswana
54
122
South Africa
148
Trading across borders
35
0
50
100
Ease of doing Business
150
200
Protecting Investors
Paying Taxes
Business Environemnt Factors
Dropped from position 128 to 134/142 countries in Global Competitiveness Index in 2011
Source :World Bank Doing Business Report 2011
Southern African Custom’s Union Share
“Asset Bubble Days”
30000
Rebound
Fiscal Stimulus
EU Austerity
25000
20000
15000
10000
?
5000
0
06
07
Botswana
Data: SACU Annual Report 2011
08
Lesotho
09
Namibia
10
South Africa
11
Swaziland
12
PPP Implications
• Even greater requirement for investment
into economy by private sector to support
growth.
• Public sector reforms impelled by liquidity
crunch
• Capital investment vs operational
investment of funds. Need to fund PPP
viability gaps.
• Swaziland to use PPP’s to diversify the
economy.
• SA Corporates sitting on half trillion Rand
cash. Money not the chief constraint.
• Need to design PPP’s with traction with
private sector to compete for investment.
Swaziland,
45.80%
Botswana,
61.70%
South Africa,
13.70%
Namibia,
48.40%
Lesotho,
41.10%
Long-term FDI Flows and FAR Recommendations
Fiscal Adjustment Roadmap:
• Broaden tax base
• Reform public sector. Right size. Productivity
• Improve governance to bolster investor
confidence
• Improve export base esp for SME’s
• Attract FDI and support domestic investment
All of the above fundamentally supported by PPP capability!!
Data: Fiscal Adjustment Road Map 2010 to 2015
Real GDP Growth Southern Africa
9.0
Swazi growth in 2012 to be
driven by sugar, mining and
services to drive economy
Europe major trading partner
and thus financial crisis may
stunt Southern African growth.
Needed: Innovative ways to
invest in the economy.
8.0
7.0
6.0
5.0
4.0
Europe Sovereign
Debt Crisis
3.0
2.0
1.0
0.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-1.0
Real GDP growth (%)
Southern Africa - Real GDP growth (%)
Africa - Real GDP growth (%)
PPP implication: Swaziland competing with SA for private investment. SACU
receipts dependant on SA performance – less funds available for viability gap.
Data: www.africaeconomicoutloo.org
?
Swaziland economic growth rate
Conclusion
• Public service must become more productive.
• Swaziland’s chief challenge is economic
diversification and integration with global
economy.
• Heightened competition for FDI/private
investment.
• Unique opportunities can be unlocked through
PPP’s that are co-funded and provide required
returns to commercial funders.
• A PPP competence across public service is the
cornerstone of policy implementation.
Inflation edges upward driven by fuel and food costs
Increasing pressure on
personal and public
budgets as purchasing
power diminishes
Public Debt
30.0%
25.3%
Increasing debt
25.0%
2.4
0.9
1.3
2005
-1.4
2006
2.5
2.6
2007
2008
3.3
2.6
18.9%
2000
15.0%
2009
2010
-2.8
-5
13.6%
16.9%
17.1%
17.3%
18.1%
0
17.9%
20.0%
5
-4.6
-4.6
-6.7
-10
10.0%
2.8%
2.5%
2.8%
2.0%
1.9%
1.7%
5.0%
3.9%
-12
-15
-16.6
-20
0.0%
2000
2005
2006
2007
Public Debt as % of GDP
2008
2009
2010
2011
Debt Service to Imports
Stable debt service
External reserves as % of imports
Current Account Balance as %GDP
Foreign reserves used
to finance fiscal deficit