Sugar - the economic cornerstone
By Tom Nevin.
Swaziland is one of the biggest sugar exporters in Africa and the commodity is the country's principal export earner. Although, as a money-spinner, it holds a key position in the economy and presents many upstream and downstream opportunities, it is not without its problems.
Peace has returned to the sugar-cane fields of Swaziland and neighbouring South Africa. This time last year, the two producers were locked in a bruising battle over markets and marketing, but that's all settled now and the two are once again friends and allies. And that's just as well, because sugar is of such strategic importance in the region that the greater business of blueprinting a general free tariff arrangement of the SADC (Southern African Development Community) and the redrafting of SACU (South African Customs Union) were hog-tied until the sugar industries sorted themselves out.
Swaziland and South Africa are the only sugar producers in SACU, a customs and duty free association of South Africa, Swaziland, Lesotho, Botswana and Namibia. And while the area is also supplied from Zimbabwe, Malawi and Zambia on preferential terms, it was the two sugar giants who had to come to terms before serious regional negotiations could begin.
It still rankles South Africa that Swazi sugar has such a free and easy ride into regional and international markets, while South Africa must sell on the fickle open market at prices far lower than Swaziland is guaranteed in Europe and North America.
Swaziland production will probably close in on the 600,000 tonne mark soon after the turn of the century after the Maguga Dam comes on stream. Last year's production totalled about 500,000 tonnes, of which 185,000 tonnes was sold into the European Community under the Lome Convention at a premium of three times the world price. The United States takes a further 30,000 tonnes at 2,5 times the world price, while the remainder is sold on the world market. A combined 250,000 tonnes is consumed domestically and sold into the region. All in all, sugar sales earn around E900m for the Swazi treasury, 24% of GDP, 13% of total exports and about 51% of total agricultural production.
Overseeing the wellbeing of the local industry is the Swaziland Sugar Association (SSA), an organisation founded in 1964. It is controlled on an equal basis by the Sugar Millers and Cane Growers associations.
"One of the big success stories is the number of small-scale growers who have entered the Swazi sugar industry," says Dr Busa Xaba, SASA's public affairs manager. "In 1992 we began in earnest to encourage Swazis to grow sugar, and the programme succeeded beyond expectations."
The number of emerging growers is expected to accelerate now that the Maguga Dam has come on stream and irrigation systems are being installed. The rehabilitation of Maputo port as part of the South Africa-Maputo Corridor initiative will attract an increasing amount of Swaziland's sugar exports. "As an association," says SSA CEO Professor Mike Matsebula, "we now control, through a long-term lease, a terminal in Maputo jointly with the Zimbabwe Sugar Association." The Lubombo corridor linking northern Zululand in South Africa to Maputo through Swaziland could also stimulate an expansion of the industry.
The trade orders that have shaped and directed third world economies, specifically the former colonial possessions, are under scrutiny and treaties such as the Lome Convention could well be rewritten in the next year or two. Income to countries such as Swaziland, especially from its sugar industry, would be affected were such treaties to be abolished. Is this a worry? "It worries us a lot," says Matsebula. "It worries us if we were to lose some of those markets which enabled us to generate wealth and allowed the economy to restructure. But we take comfort from the fact that the EU/ACP sugar protocol has an independent lifespan. It is independent of the Lome Convention as such, so that when Lome is reviewed, that does not automatically mean a review of the sugar protocol."
Matsebula conceded, however, that there will be pressures to start reviewing the protocol and SSA must be ready for that. Matsebula cites the example of molasses which could provide a basis for new investors wishing to produce cattle feeds or beverages. "Swaziland's sugar industry has a potential far beyond simply sugar," Matsebula points out. "The investment possibilities are enormous."
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