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January 2012, Week 2

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Sat, 14 Jan 2012 20:24:00 -0500
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Re: Swaziland: Critics Want Coke d'etat in the Country

By Simon Allison
allafrica.com
January 10, 2012

http://allafrica.com/stories/201201101101.html

___________________

Reader Response - Swaziland: Critics Want Coke d'ttat in the
Country

By Chris Lowe

Jan 14, 2012

This story is highly problematic.  Versions of it are now
widespread across the web, nearly all based rather
uncritically on a Swaziland Democracy Campaign press release
and possibly a press conference.  While the Swaziland
democratic movement deserves support, basing solidarity on
inaccurate information is weak in the long run.

There is no way that Coca-Cola constitutes 40% of
Swaziland's GDP.  The earliest reference I have found to the
40% of GDP estimate for Coke in Swaziland is from an article
in The Hindu from 2010, which reports that "it is said" to
be that amount, by whom not stated.  There is no substantial
source for this estimate.  GDP figures in Swaziland are
highly unreliable in any case, due to the large parts of the
economy that are in the informal sector or involve non-cash
subsistence agriculture.  Formal unemployment is estimated
at 40% by the CIA and 25% by the IMF, showing the
squishiness of the figures.

Nearly all Coca-Cola revenue in Swaziland comes from export
of Coca-Cola concentrate, supplying Africa, parts of Asia
and Australia and New Zealand.  Coke likes Swaziland because
gets large tax breaks, and because it has easy access to
sugar, which is Swaziland's major commodity product.

ALL exports according to one source accounted for only 20%
of Swaziland's GDP in 2010.  Other sources give a figure of
$1.7 billion for the value of ALL exports in that year, when
the GDP was $6 billion, which would make 28% of GDP.
(Swaziland is about the size of Connecticut with a
population of about 1.4 million people.)

However Swaziland exports sugar in large quantities in other
forms than Coke extract, and gets EU trade concessions on
sugar.  Other transnationals are involved in processed sugar
exports on a large scale, including Cadbury-Schweppes in
beverages and Cadbury in other sugar products.  Moreover
Swaziland exports a substantial quantity and value of non-
sugar goods, especially to South Africa.  While still very
large, within the general frame of export values it seems
clear that Coca Cola must represent something closer to 10%
than to 40% of GDP.

Likewise the ENTIRE manufacturing sector of Swaziland is
estimated at between 40%-50% of GDP depending on source.
Coca-Cola concentrate processing is only one part of the
sugar processing sector, which includes basic sugar milling
on a large scale, and the additional sugar processing by
other transnational corporations related to the exports
previously mentioned.  In addition there are substantial
fruit canning and fruit juice operations.  Beverage
manufacturing of other beverages includes beer for both
Swaziland and South African markets.  There is food
processing, particularly bread, textile manufacturing tied
to local cotton production, and other smaller areas of
manufacturing.   Coca-Cola simply cannot constitute 80% to
100% of the manufacturing sector in Swaziland.  Even 40% of
manufacturing seems large, but it may be that a figure of
40% of manufacturing (= 16%-20% of GDP) was erroneously
applied to GDP.

It is true that in 2010 Swaziland manufacturing suffered a
large blow with the closure of wood pulp processing that
once was a major area of production, and that the mining
sector has been in decline for decades, with former tin and
asbestos mining gone.  In that sense sugar and its
ancillaries bulk larger, and with them the importance of
Coca-Cola and a few other large sugar based transnationals
has grown.  So the choice to target one of them may make
sense politically, though one could also imagine a campaign
that included other transnationals as targets for pressure.

But the claim that no one benefits in Swaziland ignores
Coca-Cola's workers, as well perhaps as some agricultural
workers in sugar and basic sugar processing upstream of
Coca-Cola's direct production. One wonders about what kind
of analysis has gone into the effects of disinvestment from
Swaziland.  If Coke leaves, they won't come back.  It's an
entirely different case from South Africa.  This looks like
a case in which the solidarity principle that people define
their own struggles may be in tension with the principle
that true solidarity must also be critical solidarity.

The story is misleading in other ways.  Coca-Cola did
relocate its concentrate manufacture from South Africa to
Swaziland in 1987, late in the apartheid period, but the
company has four different bottler/distributors in South
Africa, including one headed by former National Union of
Mineworkers general secretary and ANC secretary-general
Cyril Ramaphosa, and another that distributes widely in
Namibia and Central and East Africa, and has its Africa
continental headquarters in Johannesburg.

Likewise the claim that King Mswati III gets Coca-Cola tax
revenue misunderstands the sources of his wealth, and is
easily denied by Coca-Cola, who claim correctly that the
taxes go to the government, not the king's private wealth.
Yet Coca-Cola does contribute to the king's private wealth,
in a form that comes to him through an unusual form of
legalized post-colonial corruption.

A great deal of Mswati's wealth comes through two parastatal
investment companies, Tibiyo Taka Ngwane and Tisuka Taka
Ngwane, that Mswati controls personally, nominally "in trust
for the Swazi Nation."  Since royal ideology makes the king
the embodiment of the Nation, in practice the royal
companies represent an institutionalized rake-off of
national wealth that accrues to Mswati for both his personal
benefit and for patron-client politics.

Tibiyo was originally founded shortly after independence in
1968, with income from mineral concessions that the British
expropriated from the royalty when they colonized the
country in 1903 and began to return to royal control in the
1950s.  Tisuka was founded somewhat later with income from
Tibiyo.  It focused on re-investment to diversify sources of
income.  Through these corporations the royalty has bought
up land that had been alienated to white control early in
the 20th century, but kept it under private property tenure,
rather than returning it to quasi-traditional semi-
collective tenure under chiefs, as was done with some other
repurchased lands using special funds created for that
purpose.

Considerable Tibiyo and Tisuka land is used to grow sugar,
and the royal companies have investments in sugar processing
as well. So King Mswati does benefit from his relationship
to Coca Cola, but it is through selling them sugar for
manufacturing their concentrate, not from their taxes.  In
fact he benefits from Coca Cola paying abnormally low taxes,
which keep them in the country buying Swaziland sugar, grown
partly on national land he has appropriated to his private
benefit under pretext of being held "in trust for the
Nation," rather than say relocating the concentrate
production to the sugar areas of nearby KwaZulu-Natal in
South Africa.  His benefit from the low taxes deprives the
public fisc of revenues that might be used to more general
public benefit, say by eliminating school fees or improving
health care (Swaziland has the highest prevalence of HIV in
the world).

In effect Mswati has become a neo-concessionaire, and Coca-
Cola makes his land concessions profitable.  And in addition
to being the king and wielding power with the backing of
traditionalist political ideology (n.b. traditionalist, not
traditional -- much of the traditionalist ideology is quite
innovative and novel, although the Swazi royalty also have
deep history of institutional innovation since the early
1800s, a tradition of invention, as it were), Mswati through
Tibiyo and Tisuka is the largest comprador bourgeois in the
country.

Chris Lowe
Portland, Oregon
(Ph.D. African history, dissertation on the history of
Swaziland's colonial politics, Yale 1998)

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