Southern African Customs Union should be beneficial to all: Mswati

By Gugu Mahlalela

MBABANE – The Southern African Customs Union outgoing chairman, King Mswati III of Swaziland, has urged the organisation’s member countries to ensure that SACU is mutually beneficial to all member states and that they all have an equal voice as partners.

King Mswati was speaking during the Fifth Summit of the SACU Heads of State and Government at Mandvulo Hall in Lozitha, Swaziland, last Friday,

He said the 2002 SACU Treaty was underpinned by the desire to transform and position itself at the centre for regional integration and to deliver the developmental agenda for the member states’ economies. He said to this end and despite many challenges facing the organisation, SACU had successfully contributed to the development of the member countries’ economies and would continue to do so.

“As we move forward with our integration agenda, it will be important to continue to work together as one family and to ensure that SACU is mutually beneficial to all member states. Its operations are transparent, accepted by all member states and have an equal voice as partners. Further, it would be fundamental to continue to pursue common approaches in trade policies and to the extent possible, in the areas of industrial policies. Common approaches are critical in the face of global challenges. It is precisely because of this consideration that we concluded the SACU Treaty in 2002,” he said.

King Mswati emphasized the need to increase industries in the region in a bid to increase the SACU revenue pool.

He said as SACU collected revenue in the region, it was imperative that industries were increased to generate more income for the organisation. He noted that the persistent slow growth for the SACU economies presented potential ramifications for the SACU region’s overall economic performance.

He said SACU had contributed immensely to the development of the member states economies. The king also disclosed that SACU was looking at ways to make the revenue collected effective to all member states. He said it was critical to continue with efforts to diversify the member states’ economies away from dependence on a few products and ensure integration in both the regional and global value chains.

SACU, the world’s oldest customs union, has been involved in negotiations for a new revenue sharing formula of monies collected as customs duties and injected into common a revenue pool and then shared among the five member states – Swaziland, South Africa, Lesotho, Namibia and Botswana.

The low income countries such as Swaziland and Lesotho that rely on SACU revenues to finance part of their annual budgets, would have to wait a bit longer before the finalisation of the review of the revenue sharing formula.

The SACU member countries last Friday endorsed a work programme which outlines detailed activities, key deliverables and the timelines within which the proposed activities would be undertaken based on the SACU Ministerial Retreat that was held in Swaziland earlier this year. The work programme, according to SACU executive secretary Paulina Mbala Elago, has been given a timeframe of 24 months. It will focus on a number of essential issues that include the review of the revenue sharing formula and the long-term management of the common revenue pool.

According to the SACU revenue sharing formula, South Africa gets the biggest portion (48 percent) followed by Botswana (18 percent), Namibia (15.7 percent), Swaziland (9.7 percent) and Lesotho (8 percent) and understandably so, Swaziland as a low income country is awaiting the review.

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

Elago said revenue sharing was important for the income of countries, especially those low income countries. She said the most essential part was that the review of the revenue sharing should not leave countries worse off than they were currently.

The work programme would

also focus on the establishment of a Stabilization Fund and exploring the feasibility of a financing mechanism for regional industrialisation. It will also focus on the review and development of a suitable architecture for tariff-setting, rebates, duty drawbacks and trade remedies; identifying financing options for regional projects; and the development of public policy interventions to promote and align industrial development and value chains.

Elago said SACU was well positioned to overcome challenges of trade barriers and facilitate the integration of the economies of its member states into the global economy.

She said that this was because through the free movement of goods, SACU could help build regional value chains, and thereby propel the region to tap into global value chains. She said supported by competitiveness-enhancing policies and strategies at individual country and regional levels, SACU could therefore be an important instrument for cross-border trade and thus an engine of inclusive growth.

King Mswati said the Council of Minister during their retreat in June 2016 identified broad principles that were crucial to enhancing the SACU work programme. He said in order to facilitate the urgent implementation of the urgent implementation of the outcomes of the ministerial retreat, the ministers had agreed to establish two dedicated task teams on trade and industry, and on finance.

He also assured Swaziland’s availability and support to the incoming SACU chairperson, President Ian Khama of Botswana in facilitating the full implementation of the SACU work programme.

South African President Jacob Zuma urged SACU member states to work together towards addressing the behind the border issues so as to enhance intra-regional trade.

Speaking during the summit, Zuma highlighted the need for SACU to move beyond its colonial history and architecture into an arrangement that facilitated growth of the region. He said the global economy was characterised by anti-globalisation sentiments that had resulted in an increase in protectionism.

“African economies are very small by global standards; our focus should be efficiencies in the regional market and promote regional integration. It is in our interest to work towards an early conclusion of the tripartite negotiations so as to give real meaning to Africa’s economic integration agenda and conclude the negotiations between SACU and the East African Community by the end of July 2017,” he said.

Zuma thanked the SACU Council of Ministers for having laid a solid foundation to facilitate the development of SACU economies and create employment for the benefit of the region and its people.

Meanwhile, King Mswati III congratulated Lesotho for the peaceful and successful elections held recently.

“On behalf of the SACU family, I wish to congratulate His Majesty King Letsie III, the government and the people of the Kingdom of Lesotho, for the peaceful and successful elections held recently. We wish the Kingdom continued success and prosperity. In the same vein, we congratulate Thomas Thabane, the new Prime Minister of the Kingdom of Lesotho on his appointment. We are looking forward to working with him and the government on advancing the SACU agenda,” he said.

July 2017
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