A region of imports SACU’s trade deficit shocker

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By Timo Shihepo and Lahja Nashuuta

The Southern African Customs Union (SACU) member states continue to rely on imports resulting in increased trade deficits and subsequently affecting the livelihoods of the citizens.

Information provided to The Southern Times by the SACU Secretariat shows that most member states have been operating on a trade deficit making up a combined loss of R438.4 billion from 2013 to 2016 from trading with countries outside SACU. However, despite making a combined trade surplus of R62.2 billion in 2017 for the first time in five years, individual member states’ trade deficits persist and this is a concern that is likely to be discussed when the 6th SACU Heads of State and Government Summit takes place next week in Botswana.

SACU trade with the rest of the world

Namibia, which imports most of its products from South Africa, recorded the highest trade deficit of R19 billion after exporting goods worth R63 billion while importing goods worth R82 billion in 2017.

Eswatini imported goods worth R20 billion while exporting goods worth only R14 billion, representing a trade deficit of R6 billion.

On the positive side, Botswana, Lesotho and South Africa made a trade surplus in 2017. South Africa, the largest economy in southern Africa exported goods worth R1.174 trillion while importing goods worth R1.105 trillion, resulting in a surplus of R70 billion.

Diamond-rich Botswana ranks second among SACU member states that recorded a trade surplus in 2017. The country imported goods worth R77.4 billion and exported goods worth R92.6 billion, resulting in a R15 billion surplus. 

A clothing-driven industry led Lesotho to record a trade surplus of R2.5 billion after exporting goods worth R23 billion while importing goods worth R20.5 billion.

Intra-SACU trade

Meanwhile, South Africa continues to dominate intra-SACU trade making a profit of R96.5 billion from Namibia, Lesotho, Swaziland and Botswana in 2017. During the same year, South Africa exported goods worth R133.8 billion to these countries while importing goods worth only R37.2 billion.

Although Namibia is one of the top exporters (R21.7 billion) within the SACU member states – second to South Africa, it imported goods worth R50.2 billion, representing another trade deficit of R28.5 billion in 2017.

Swaziland just avoided a trade deficit by a whisker after exporting goods worth R16.5 billion while importing goods worth R16.1 billion resulting in a profit of R418 million.

Botswana made a loss of R38.9 billion from intra–SACU trade after importing goods worth R49.6 billion while exporting products worth only R10.7 billion.

Despite making a profit from trading with the rest of the world, Lesotho found itself on the negative side in the intra-SACU trade. The Kingdom exported goods worth only R4.3 billion while importing products worth R18 billion – resulting in a deficit of R13.7 billion.

All in all, SACU member states exported goods worth R187.1 billion to each other in 2017 while importing products worth R171.3 billion from each other.

Over a period of five years, the SACU member states exported products worth R954 billion to each other while R887.3 billion of goods were imported from each other. In the intra-SACU trade, South African accounted for about 80% of exported products while accounting for less than 50% of imports.

Ahead of the Summit, SACU executive secretary, Paulina Elago, said the summit would consider progress being made regarding trade within member states and that no country should be worse off.

After numerous complaints regarding SACU operations, the customs union developed a Work Programme following introspection of SACU’s relevance and as an organisation that supports the economies of its member states.

The key activities and focus areas of the work programme include the review and development of suitable architecture on tariff-setting and application of tariffs, rebates, refunds or duty drawbacks and trade remedies.

The work programme is also looking at strengthening existing cooperation and collaboration of trade facilitation to improve border efficiencies.  

t would further look at reviewing the revenue sharing formula, long-term management of the common revenue pool.

Additionally, Elago said it they will look at establishing a stabilisation fund and a financing mechanism for regional industrialisation. 

 Furthermore, work will be undertaken to explore the feasibility of financing options for regional projects and the development of public policy interventions to promote industrial development and value chains.

“We are looking at funding mechanism for industrialisation.

 In principle, members are in agreement that there must be some mechanism that will finance industrialisation – cross-border value chains and cross-border projects because even if we agree on this programme and we don’t have financing for it, how do we then achieve our industrialisation goal?” said Elago.

The Southern Times understands that the SACU Heads of State and Government gave the SACU Secretariat 24 months to complete the work programme.

“The progress of the work programme will be considered at the Summit. 

We are confident that we are on the right track. If we don’t complete or meet our targets with that period we then have to extend. 

At least, we were given a timeframe to do what we need to do and focus right now is to complete the work within that timeframe,” Elago told The Southern Times.

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