SACU Stabilisation Fund to offset cyclical revenue fluctuation

Home Business SACU Stabilisation Fund to offset cyclical revenue fluctuation

Edgar Brandt

WINDHOEK – Part of the ongoing discussions regarding the revision of the revenue sharing
arrangement between Southern African Customs Union (SACU) member states includes the consideration of a Stabilisation Fund to offset the cyclical fluctuation of SACU receipts.

This was confirmed this week when a SACU team, led by Executive Secretary, Paulina Elago, met with President Hage Geingob and other senior government officials at State House. The meeting took place to brief Geingob on the upcoming sixth SACU Heads of State Summit scheduled to take place in Gaborone, Botswana, at the end of June.
According to Elago, a SACU Stabilisation Fund would be crucial to offset the fluctuation of SACU receipts, particularly during those periods when SACU revenue to members states declines.

Echoing Elago’s sentiments, President Geingob’s Economic Advisor, Dr John Steytler, yesterday told New Era that a SACU Stabilisation Fund would have made a world of difference to the Namibian economy, particularly during the challenging economic performance of the domestic economy during the last two years. “A sharp reduction of SACU receipts is one of the reasons for the current challenging economic climate,” said Steytler during an exclusive interview with New Era. He noted that the decline in SACU receipts coupled with a tough global economy was in fact a ‘double whammy’ for the Namibian economy.

The SACU Council of Ministers last year decided, according to the current revenue sharing formula for member states, that Namibia would receive more than N$17 billion from SACU in the 2018/19 financial year. This was after SACU informed the government that it had been overpaid for previous SACU receipts and therefore has to repay about N$3 billion to SACU.

Other SACU members are expected to receive N$19.4 billion (Botswana), N$5.5 billion (Lesotho), N$43 billion (South Africa) and N$5.8 billion (Swaziland) during the 2018/19 financial year.

SACU’s revenue sharing formula was implemented for the first time in 2004 to calculate revenue shares for member states. The formula has three main components, namely; customs, excise and development. The customs share is allocated on the basis of each country’s share of intra-SACU imports.

The excise component is allocated on the basis of each country’s share of gross domestic product (GDP) while the development component, which is fixed at 15 percent of total excise revenue, is distributed according to the inverse of each country’s GDP per capita.

The percentage share of revenue shares distributed for SACU member countries in 2016/2017 was 20 percent for Botswana, 6 percent for Lesotho, 18 percent for Namibia, 50 percent for South Africa and 7 percent for Swaziland.
At Tuesday’s State House meeting, Elago reiterated that SACU needs a new revenue sharing arrangement that will take into account the needs of all member states.

According to SACU the objectives of a new agreement includes facilitating cross-border movement of goods between member states. Other objectives include creating effective, transparent and democratic institutions to ensure equitable trade benefits to member states, promoting conditions of fair competition in the common customs area and increasing investment opportunities in the same area.

A new agreement is also expected to enhance the economic development, diversification, industrialisation and competitiveness of member states and facilitates the development of common policies and strategies.

Among the responsibilities of the member states is to jointly determine customs and excise duties, and to apply a
common external tariff to non-SACU members, while creating tariff-free trade between members.

All customs and excise duties are then to be transferred to a common revenue pool. Disbursements will be made to member states based on the agreement’s revenue sharing formula.
Photo: SACU