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SACU revenue sharing plan on the cards

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As the Southern African Customs Union (SACU) heads of state and Council of Ministers met in Gaborone on Friday for the fourth summit, it was noted that work is currently on-going to review and develop options on a future SACU Revenue Sharing Arrangement.

 

“The review also aims to investigate financing mechanisms to support regional industrial and infrastructure development in SACU. The heads of state and government also noted that a proposal on a new Revenue Sharing Arrangement will be presented to the Council of Ministers in December 2013 for consideration. It further noted that a long-term Arrangement on the Management of the Common Revenue Pool is being developed.”

 

Botswana Institute for Development Policy Analysis’s (BIDPA) paper 32 of 2012 on the SACU revenue sharing formula prepared by research fellows, Professor Roman Grynberg and Masedi Motswapong, stated that the intention of member states is to fulfil the SACU vision and then delivering SACU revenue as national and regional development projects – rather than transfers to the general revenue, is more likely to positively impact on the development of Botswana, Lesotho, Namibia, Swaziland ( BLNS) than the current arrangements and should , subject to appropriate dispersal arrangements, be supported.

 

The paper stated that the removal of SACU transfers from general revenue of the BLNS would necessitate a severe fiscal adjustment, even for Botswana with its considerable diamond resources, but it would without a renegotiated fiscal relationship be very unlikely to succeed for two small low income economies such as Swaziland and Lesotho.

 

“Like all previous adjustments to the SACU revenue sharing formula this change will also need to be preceded by a shift in the political arrangements in Southern Africa. The move to development fund, as opposed to transfers to general revenue will have to be carefully phased over a sufficiently lengthy period to allow Botswana and Namibia to adjust,” it stated.

 

The paper further noted that if South Africa does not move patiently and prudently with any proposed reforms then it runs the risk of not only destabilising SACU but also creating at least two fiscally insolvent states in and on its borders.

 

Meanwhile, the delegates at the Gaborone Summit also noted that Competition Policy forms an integral part of industrial development and emphasized the importance of completing the work on regional cooperation on the enforcement of competition laws and regulations.

 

With respect to Trade Facilitation, a regional Customs Policy was endorsed, which seeks to promote; the common strategic objectives of facilitating legitimate trade; the protection of the fiscal interests of member of states and the Customs Union through the maximisation of revenues and the provision of accurate trade data; and the protection of societies in member of nations.
SACU Transport Sector Programme was approved and further it was noted that work on the regional road safety strategy will focus specifically on standards and permits as they impact on trade facilitation.

It was also emphasised that the application of similar customs and exercise legislation is essential to facilitate trade, as well as to combat illicit trade in the Customs Union.

The need to expedite all necessary processes for the establishment and operationalisation of the Tariff Board and national bodies was also emphasised.

The Summit was chaired by Lieutenant General Seretse Khama Ian Khama, and was attended by King Mswati III of Swaziland, President Hifikepunye Pohamba of Namibia, South Africa’s President Jacob Zuma, and Lesotho Prime Minister, Dr Motsoahae Thomas Thabane.

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