Africa-Press – Eswatini. Disruptions happening around December are anticipated to yield higher socio-economic costs.
According to Economist George H. Choongwa, the disruptions which happened yesterday and anticipated to continue today are likely to yield even higher socio-economic costs during the festive season.
The Southern African Research Foundation for Economic Development regional coordinator said economic disruptions, mainly caused by trade unions were likely to cause increase strain on disposal income at household level.
He said it must be understood that when there is a constant disruption of economic activities, both supply and demand side of the economy is negatively affected, causing an increase in poverty and vulnerability.
“Poor households, mainly within the lower and middle class are expected to move into and out of poverty because of exogenous shocks like disruptions caused by strikes and their inability to manage risks of uncertainty only increases their vulnerability,” Choongwa stated.
He said it was vital for all stakeholders to understand that achieving sustained poverty reduction requires thoroughly understanding the nexus of poverty, risks and vulnerability that could emerge from the exogenous factors caused by economic disruptions.
The economist explained that most of the lower and middle class in Eswatini are basically unbanked due to inability to save earned income.
He said this was supported by steadily increase in cost of living due to inflationary reasons and therefore, the majority of people within the lower and middle classes were also characterised by a shadow economy, which is estimated at about 38 per cent, representing approximately US$4 billion on GDP based on Purchasing Power Parity levels. Choongwa said all these people are expected to be disadvantaged when there are perpetuated economic disruptions.
“Eswatini’s poverty trends have traditionally been associated with the rural majority who were mainly dependent on subsistence farming and sale of agriculture supplies to the nearby cities, spread out in all the four regions of the country,” Choongwa stated. He went on to elaborate that these rurally produced products were mainly of low value and produced at a small scale.
He said, however, with increased rate of economic disruptions, the rural communities are expected to face a challenge in the availability of a reliable supply chain as they could be faced with both challenges of transportation and purchasing power given by the urban consumers who could have negatively been affected by inactivity induced by the disruptions caused by the trade unions.
“The cost of higher economic uncertainty comes a cost of long term negative impact as this could degenerate into higher prices of commodities, as well as massive loss of employment due to anticipatory reasons,” the economist explained. According to Choongwa the performance of the public sector (schools, health facilities, and infrastructure, among others) is mainly dependent on the revenue structure.
He said, with continued disruptions, the country’s revenue basis is expected to shrink, of which in return could be negatively affecting the public service that government and its stakeholders provided to the economy.
It was mentioned that the long term effect to such imbalance could be that of reduced Human Development Index for the country, of which it had maintained a significant positive trend with an average of about 0.96 in 2021 compared to about 0.94 in 2010.
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