SACU won’t give in to SA’s demands

By Timo Shihepo

WINDHOEK – THE Southern African Customs Union (SACU) says it will not increase South Africa’s revenue from the pool until such time the union reviews the current revenue-sharing agreement.

Over the years, South Africa has been crying foul over the current revenue-sharing agreement saying that it gets less money than what it actually puts into the common revenue pool.

The current 2002 SACU revenue-sharing formula agreement allows South Africa to get the lion’s share (48 percent) but the country feels its portion does not translate into a sizeable amount.

South Africa receives the largest share because it influences the direction of trade within the customs union, as the other members import more than 80 percent of their goods and services from there.

Other members share the remaining portion with Botswana getting 18 percent, Namibia 15.7 percent, Swaziland 9.7 percent and Lesotho 8 percent.

South Africa has also expressed concern that the focus of SACU, as an institution, is more on revenue sharing than other areas such as industrial development.

At some point South Africa also threatened not to participate in any SACU ministerial meetings until such time that the SACU revenue-sharing formula was on the table of the Summit of Heads of State and Government.

SACU Executive Secretary, Paulina Elago, after meeting President Hage Geingob at State House on Tuesday said the customs union has engaged all member states, including South Africa regarding the sharing formula.

She said the sharing formula is a legally binding agreement that all member states have signed. It makes provision for collection and distribution of shares and that is what is currently being used.

“But, yes, there is an understanding that the formula needs to be reviewed. South Africa has also expressed concern that the union has to prioritise other areas apart from the revenue sharing only. But this is again why the discussion is broader than just the review of the sharing formula,” she said.

Elago said the union is now also looking at industrial development, looking at putting in place finance mechanisms for industrialisations, looking at tariffs settings and negotiations of trade agreements with third parties.

“It’s a whole menu of issues that we are to be discussing and coming up with new programmes.”

The South Africans are also not entirely happy with the money they pump into BLNS (Botswana, Lesotho, Namibia and Swaziland).

“There is always this certain notion about the transfers from South Africa to the BLNS but the point is, SACU agreement is a legal instrument and inside it there is a provision for revenue sharing arrangement and formula, which is used to collect and distribute the shares. Really what is applied is that formula and so that’s the appreciation that one has to get. It’s not just transfers,” said Elago.

SACU has also admitted that the current global economic conditions are likely to hamper the profit from the revenue pool.

As the commodity and oil prices continue to decline combined with the current exchange rate, imports are also becoming expensive.

“All these factors will impact on the duties that are collected. Good news is that the declines from the revenue pool are not expected to be of the same magnitude of what was experienced last year.

“There has been an improvement in the pool and that’s a good thing for the member states,” said             Elago.

February 2017
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