Improved political stability in SA can benefit Namibia

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Improved political stability in SA can benefit Namibia

THE SouthernTIMES Mar 20, 2018

    > Magreth Nunuhe

    Windhoek – The Namibian Finance Minister, Calle Schlettwein, says the improving political stability in South Africa will have positive ripple effects on Namibia’s economy and is optimistic of the country’s economic growth prospects for 2018.  

    South Africa recently changed guards after the ruling party, the African National Congress (ANC), mounted pressure on beleaguered former president Jacob Zuma to resign from office as Head of State amid prolonged alleged corruption scandals and economic decline. Former vice-president Cyril Ramaphosa has been appointed Head of State until fresh national elections are held next year.

    It is hoped that Ramaphosa, who was sworn in on February 15, 2018, would turn around the fortunes of South Africa, which has seen negative economic growth with multiple credit rating downgrades since 2016.

    Despite Zuma’s demise, Namibia’s Finance Minister, said “we were very happy with South Africa for having recommitted itself to the principles of the South African Customs Union (SACU)”.

    The Southern African Customs Union (SACU) is a customs union among five countries of Southern Africa: Botswana, Lesotho, Namibia, South Africa and Swaziland, which provides for a common external tariff and a common excise tariff to this common customs area.

    Namibia’s share of SACU receipts has grown in tandem with the growth in the size of the common revenue pool, increasing from 16 percent in 2008/9 to 19.3 percent by 2015/16.

    Schlettwein said he hoped South Africa’s new Head of State would continue with the commitment to SACU.

    “We maintain to say that there is a situation better than last year, politically,” he added.

    SACU revenue increased by R2.7 billion to R9.8 billion in 2017 compared to R7 billion recorded in 2016.

    But in the 2018/2019 financial year, SACU revenue for Namibia is expected to come in at R17.4 billion - R2.2 billion short of the R19.6 billion recorded in the Ministry of Finance’s books.

    Namibia remains highly reliant on SACU revenue, as 39.1 percent of taxes collected last year were generated from the SACU revenue                                         pool.

    Namibia’s share of the SACU revenue averages 17.3 percent, but with tax collection expected to come in lower than expected, experts project government revenue to be under severe pressure.

    The overall government revenue is expected to decrease by 5.7 percent to R53.9 billion for FY2018/19 compared to the estimated budgeted revenue of R57.2 billion, which is -5.6 percent for FY2018/19.

    Each SACU member state’s share of the excise component is calculated from the value of its gross domestic product.

    South Africa is the dominant economy in SACU and because of its interests and policy needs, it tends to dictate what policies are adopted via SACU structures.

     
     
     
     

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