The Swaziland Sugar Association

CHAIRMAN'S MESSAGE
Senator Obed Dlamini


		INTRODUCTION The sugar Industry plays a crucial in the Swazi economy because its size and performance have a significant impact, both directly and indirectly, on the rest of the economy. As background to understanding its importance and relationship to the rest of the economy, its historical development and current profile will be outlined. At the same time, events occurring elsewhere in the economy, particular national socio-economic process, have an impact on the Sugar Industry. It will therefore, be useful to highlight theses events in process. Because the Swazi economy is very open, it is subject to influences emanating from the rest of the world. Thus, to place the performance of the Sugar Industry in a fuller perspective, it is necessary to highlight these influences. HISTORY AND PROFILE The history of the sugar Industry dates back to the mid-fifties when commercial sugarcane growing resulted in the establishment of a small mill at Big Bend (in the south-eastern part of the country). This was replaced by a larger mill in 1960. That year also saw the establishment of a second mill at Mhlume in the northern lowveld. At that time, total sugar production was approximately 57 000 tonnes. In 1980, a third mill was established at Simunye (approximately 30 Kilometers south of Mhlume). This pushed total sugar production to above 300 000 tonnes. By the end of the 1997/98 season, total sugar production stood at 475 727 tonnes. The mills at Big Bend, Mhlume and Simunye have developed sugar growing estates to ensure adequate throughput. The year 1962 saw the entry of small scale Swazi growers at Vuvulane through the assistance of the Commonwealth Development Corporation. They now number about 270 and deliver their cane to the Mhlume mill. Other small scale sugar growing schemes have developed in recent years as opportunities for generating better incomes becomes more apparent. The Industry has encouraged the small growers by creating special sucrose quotas and has considerable technical and financial assistance provided by the three mills. As the Industry expanded over the years, so did its contribution and influence on economic activities elsewhere in the country. These contributions will be discussed in terms of two topics - namely, output and employment, and then social services and corporate responsibility. OUTPUT AND EMPLOYMENT The Sugar Industry comprises sugarcane growing and sugarcane manufacturing. In terms of national income accounting, the former is classified as an agricultural activity whereas the latter is classified as an industrial activity. These classifieds can be used as a framework for assessing the size of the sugar industry in relation to the rest of the economy. Over the period 1995-96, sugarcane growing contributed 53% to total agricultural output and 34% to total agricultural wage employment. During the same period, sugarcane milling contributed 37% to total manufacturing output and 22% to total manufacturing wage employment. In addition to these direct contributions, the Sugar Industry has promoted indirectly other activities in both the formal and informal sectors. The formal activities span all sectors of the economy. The informal activities include sugar sales, fruit and vegetable retailing, sewing and knitting household utensil repairs, woodwork, metal work, general trading, etc. Industry contributions to total exports and tax revenues are a direct result of the generated output and employment. Over the period 1990-96, sugar exports comprised 22% of total exports. Contributions to public revenues in the form of company tax, sugar levy, sales tax and personal income tax from employees makes the Sugar Industry by far the largest contributor to the fiscus. When this is taken together with the savings associated with those social services provided by the industry which would otherwise have had to be provided by government, it makes the total contributions enormously important for the country. The corollary to this is that an adverse change in any aspect of the Industry will have significant negative impact on the rest of the economy. SOCIAL SERVICES AND CORPORATE RESPONSIBILITY The Industry is actively involved in the provision of social services - namely, medical care, education, housing, water and recreation. Medical care is provided through clinics and hospitals at heavily subsidised prices. Education is provided not only through pre-schools, primary schools and secondary schools, but also through scholarships tenable at the tertiary level. This raises the actual direct output and employment contributions of the sugar industry beyond those indicated above. The industry always responds quickly and significantly to normal disasters. This was demonstrated by enormous contributions to help local communities in the wake of the devastation by Cyclone Domoina in 1984 and the debilitating drought experienced in 1992-94. The sugar industry also contributed to the rebuilding of some of the schools whose roof-tops were blown away by storms during the early part of 1998. Scholarships for training Swazis mainly at the tertiary level of education amounted to E254 000 during the year ended March 1998. NATIONAL PROCESSES One important national process involves the Constitutional Review Commission (CRC) during 1977, the CRC completed its first phase which comprised the distribution of a booklet on the current constitutional dispensation. It also started on its next phase which involves civic education. The Economic and Social Reform Agenda (ESRA) was officially launched by the Prime Minister in February 1997 and was implemented during the year. Its primary objective is to revitalise the economy, which has shown little growth over the past few years. This is to be achieved through the provision of an enabling environment (including good economic, management, improved infrastructure and rule of law) within which the private sector is expected to act as the engine of growth. One of the important components of ESRA is the Public Sector Management Programme (PSMP). A number of management audits and workshops were held in 1997/98 under the PSMP. The process of compiling the National Development Strategy (NDS) was completed in August 1997. This was marked by the production of a document which had the support of all the national stakeholders involved in its compilation. The stakeholders came from a wide cross section of the Swazi economy and community. The NDS contains a vision for the country to be achieved over the next twenty five years and the strategies for achieving that vision. The vision (known as vision 2022) is stated as follows: " By the year 2022 the Kingdom of Swaziland will be in the top 10% of the medium human development group of countries founded on sustainable economic development, social justice and political Stability". INTERNATIONAL AND REGIONAL EVENTS World output is estimated to have grown by an average of 4.5% in 1997 (with output growth in Sub-Saharan African estimated to have grown by an average of 7.8%. These are the strongest expansion rates recorded in a decade. The economic expansion was underpinned by low inflation rates in more developed economies estimated at an average of 2.5% and relatively high but declining inflation in less developed countries. The South African economy (Swaziland's largest trading partner) performed less well than expected in 1997. This has meant that demand for Swazi exports has been adversely affected. The poor performance of the South African economy was partly due to the poor performance of the gold industry and manufacturing particularly during the last quarter of the year. The membership of the South African Development Community (SADC) increased from twelve to fourteen in 1997 as a result of the accession by the Democratic republic of Congo and Seychelles. The ratification of the SADC Trade Protocol is, however, still awaited from the required proportion of the members. Negotiations between South Africa (SA) and the European Union (EU) on a trade and development pact proceeded during 1997. The smaller partners in the Southern African Customs Union (SACU) have been following these negotiations closely because their outcome will have significant implications for their own economies. In these negotiations, sugar is to be subject of special treatment because of the distortions existing in the various markets. The SA-EU negotiations have, in turn, contributed to the delay in reaching finality on negotiations among the SACU partners for a new agreement. Discussions on the Lubombo Spatial Development (SDI) initiative continued during 1997. The SDI is a corridor linking the kwaZulu/Natal Province of South Africa, Lubombo Region in Swaziland, Southern Mozambique and Mpumalanga Province in South Africa. The Swazi Sugar Industry forms a belt stretching from the south to the north of Swaziland through the Lubombo SDI. As such, it is well positioned not only to contribute meaningfully to the SDI, but also to benefit significantly from it. In March 1998 SASA and SSA signed an important agreement which harmonies sugar trading between Swaziland and south Africa. We welcome such a move. APPRECIATION I wish to record my appreciation for the cooperation I have received from the members of Council during the year. In addition, I wish to express my appreciation for the good work performed by the management of Swaziland Sugar Association. In particular I wish to thank Mr. Andrew Clhoun for his contribution as a General Manager of the Association. Taking over from Andy is Dr Mike Matsebula. He is the first Swazi to do this job. We look forward to working with him and wish him success for the future.