Namibia Expects Higher SACU Returns

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By Wezi Tjaronda WINDHOEK Namibia could get a little bit more revenue from the Southern African Customs Union (SACU) than expected in the 2005/6 Medium Term Expenditure Framework (MTEF). While the MTEF expects the SACU receipts in the range of N$4.2 billion, there are indications that the country may get higher returns. An economist with NEPRU, Klaus Schade says the receipts could be between N$4.5 billion and N$5 billion or even more. The receipts are crucial to Namibia as they contribute a third of the country’s total revenue. The expected increase in the returns is against a background of declining receipts over the past few years, which is attributed to declining imports, trade liberalisation and the new revenue sharing formula. Last year, four of the five members of the Southern African Customs Union (SACU) saw their combined surplus with non-SACU trading partners shrink by 31,7 percent to R8, 4724 billion. Botswana, Namibia, Lesotho and Swaziland experienced a 52,2 percent downturn in precious metal and diamond exports, which accounted for 53,9 percent of total exports to non-SACU members. In 2001, this category had accounted for 81,2 percent of exports. Imports from non-SACU countries fell by 11 percent to R2, 6476 billion last year. All customs and excise duties collected by the five members of the SACU are pooled into a Common Revenue Pool (CRP), and distributed to them according to a Revenue Sharing Formula (RSF). The revenue shares accruing to each member state are calculated from three components, namely a share of the customs pool, a share of the excise pool and a development component. The revenue pool has been gradually declining due to trade liberalization in the context of the World Trade Organization (WTO), the Trade Development and Co-operation Agreement (TDCA) between South Africa and the European Union (EU), SACU’s bilateral tariff liberalization with certain strategic trading partners (such as the US, MERCOSUR, China and India) and the prospective EU’s Economic Partnership Agreement (EU) with the BLNS countries. The SACU revenue Namibia got during the 2005/6 financial year amounted to N$3.7 billion and N$4.2 billion in the 2004/5 financial year, while the two previous financial years saw revenues amounting to N$3 billion and N$2.5 billion respectively. Recently, during a review of the last financial quarter of 2005 by Old Mutual Namibia, the company’s Chief Executive Officer Johannes !Gawaxab said there could be a windfall in SACU revenue that Namibia did not expect partly because of the way the South African economy is growing. “The fiscal situation is good. The economy is singing. The economy is in a shape that is quite commendable,” said !Gawaxab. Other reasons for the increase in the returns could be higher imports due to the growth in the South African economy and also an increase in excise duties on excisable products such as alcohol and cigarettes. South Africa’s Finance Minister, Trevor Manuel announced in his budget speech recently increased excise duties on wines by between 12.5 and 20 percent and by between four and 10 percent on cigarettes, cigarette tobacco and cigars. Due to the growth in the economy in South Africa, Schade said, its citizens would have more money to spend on these products. South Africa, which has the biggest population as well as the biggest economy of the five member states, gets a share of 92 percent, followed by Botswana with 4.2 percent. Namibia, Swaziland and Lesotho get 2.5 percent, 1 percent and 0.7 percent of the SACU revenue respectively.ÃÆ’Æ‘ÀÃ…ÃÆ”šÃ‚º