Would you lend money to the Swazi King?

South Africa has been approached for a loan to Swaziland, rumoured to be in the R10bn ballpark.

Swaziland’s economy is teetering. Amongst other causes, HIV/AIDS is probably worse than any other place on the planet.

But most shockingly of all, it’s still a monarchy with political parties banned.

If we lend them money, we probably won’t get it all back. The only possible way this should be considered if it comes tied with pre-conditions for full democracy. Then at least it will do some good, and the cost to South Africans will be, partially, offset by a reduced regional crisis that is otherwise just a matter of time.

The link between Rand and Emalangeni is also at risk, so a question of currency for the loan must be critical to the request.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.

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