Improved revenue collection good news for SACU members states

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Edgar Brandt

Windhoek-Southern African Customs Union (SACU) Executive Secretary, Paulina Elago, yesterday told President Hage Geingob that an improvement in revenue collection was good news for members states of Botswana, Lesotho, Namibia, South Africa and Swaziland. While Elago, who paid a courtesy call to Geingob yesterday, was not at liberty to divulge the exact figures on the improved revenue collection and SACU’s revenue sharing formula, she noted that all will be revealed shortly when the SACU Council of Ministers meets in March.

“The revenue sharing formula review is an ongoing and intense process. The Council of Ministers have agreed on the principles of revenue sharing and they have agreed that no country should be worse off,” said Elago after meeting the President. The percentage share of revenue shares distributed for SACU member countries in 2016/2017 are 20 percent for Botswana, 6 percent for Lesotho, 18 percent for Namibia, 50 percent for South Africa and 7 percent for Swaziland. SACU determines the revenue share based on how much is collected in terms of customs and excise duties during a particular year.

During the SACU Ministerial Retreat in South Africa last year, the Ministers of Finance and Trade from all SACU Member States reflected on how to move the SACU Agenda forward in accordance with a roadmap which was approved by the SACU Heads of State and Government, in November 2015 during a meeting in Windhoek. The 2016 retreat also focused on Regional Industrial Development; Review of the Revenue Sharing Arrangement; Trade Facilitation; Development of SACU Institutions; Unified Engagement in Trade Negotiations; and Trade in Services.

More recently concerns have also been raised regarding SACU’s Common External Tariff (CET), which is criticised for a possible negative affect on smaller economies like Botswana, Lesotho, Namibia and Swaziland (BLNS). This adverse effect could come through in the form of structural constraints which impact on consumer welfare and economic activity in the BLNS economies. This is due to higher prices of imports from the rest of the world and the price dynamics of intra-union imports. Tariffs are used as a form of protection of domestic industry against competition with imports.

South Africa accounts for most of the goods imported by the BLNS, hence, the SACU revenue-sharing formulae is structured such that the customs component is shared based on intra-SACU imports. This to some extent compensates BLNS for the adverse impacts arising from economic polarisation and price-raising effects attributable to the common external tariff.

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