By Tiri Masawi
Windhoek - An inconsistent revenue pattern from the Southern African Customs Union (SACU) has pushed the Namibian cabinet to look for other avenues to reduce the over-reliance on the world’s oldest customs union for sustenance, a senior Namibian government official said last week.
The call for diversification is expected to widen revenue options for the Namibian economy which has been experiencing a recession for the past two years.
Namibian Minister of Information and Communication Technology, Stanley Simataa, said the country’s cabinet has directed the Minister of Finance, Calle Schlettwein, to find other supplementary alternatives to quenching the Namibian government’s expenditure for both development and sustenance outside the usual SACU earnings.
SACU earnings cater for Namibia’s total annual budget.
According to a cabinet circular released last Thursday, Namibia wants to find different revenue inflow channels to feed government expenditure for development.
"Cabinet took note of the Southern African Customs Union meeting held recently in Maseru. Cabinet directed the Ministry of Finance in consultation with Ministry of Industrialisation Trade and SME Development to develop a national position for all SACU policy instruments to be reviewed.
“Cabinet also directed the Ministry of Finance to develop alternative policy options aimed at reducing resource dependency on SACU,” the circular said.
Other avenues being looked at by Namibia include widening the tax regimes and also making sure implementation of value addition and subsequent taxation of those that export raw materials in their original form.
According to the Bank of Namibia governor, Ipumbu Shiimi, Namibia received N$4.3 billion (approximately US$430 million) from SACU in the first quarter of this year.
Namibia is a member of the world’s oldest customs union, which also includes South Africa, Botswana, Eswatini and Lesotho in which member states share revenue collected from customs duty and covering cross border trading and earning of member states.
“One of the major reasons for our increased SACU foreign reserves is because of an increase in SACU receipts,” Shiimi said.
He added that in total, the country expected an average of N$18 billion Namibian dollars over the full financial year, marking a slight increase from the estimated N$17 billion.
However, despite an increase in SACU revenue, Shiimi insisted he was not in a position to announce growth prospects of the country.
“On the growth aspect, I think we should wait a bit until the 20th when the Namibian Statistics Agency announces the official figures.
We could expect an adjustment upward or downward but for now I am not in a position to give concrete responses to this,” he said.
The China effect
Namibia’s leading export markets in the second quarter of 2019 continues to be at N$5.437 billion, mainly copper and ores; South Africa was at N$3.618 billion comprised of precious stones and metals, live animals and fish; Botswana’s was N$2.405 billion, the country’s statistics agency said on Thursday.
The Namibian Statistics Agency said Namibia’s imports stood at N$24.390 billion after recording N$27.548 billion and N$28.376 billion in the first quarter of 2018 and fourth quarter of 2018 respectively
“Namibia’s imports were mainly sourced from South Africa (N$10.342 billion, motor vehicles and parts, industrial machinery, electrical machinery); Zambia (N$4.218 million mostly copper); Belgium (N$1.779 billion, ores), Botswana (N$0.960 billion, precious stones and metals), and China (N$0.859 billion, industrial machinery and articles of iron or steel).
NSA added that about 28 percent of Namibia’s total value of goods exported were destined to SACU, making that region the country’s largest export destination.
BRICS (a trading bloc comprising Britain, Russia, India, China and South Africa) and the European Union occupied second and third positions, accounting for 26 percent and 23 percent shares of total exports, respectively.
“SACU remained the largest source of domestic imports, accounting for 47 percent share of the total import bill, followed by SADC-non-SACU and COMESA with 18 percent each,” NSA said.