SACU reforms dragging

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Timo shihepo

Windhoek - The Southern African Customs Union (SACU) has extended its working programme deadline to December 2020 after the customs union failed to implement it for the past two years.

SACU is struggling to implement reforms that are aimed at revamping the customs union to make the operations smoother.

SACU heads of state and government gave the SACU Secretariat a mandate in 2017 to implement this programme within two years but the Secretariat is yet to do so.

SACU is a customs union comprising five countries of Southern Africa, namely Botswana, Lesotho, Namibia, South Africa and Eswatini (formerly Swaziland).

SACU’s mandate is to make sure that member countries maintain the free interchange of goods. It provides for a common external tariff and a common excise tariff to this common customs area.

Paulina Elago, who is now in her second five-year term as the executive secretary of SACU, told The Southern Times that implementing the work programme is not a walk in the park.

“There are two work programmes, and the ministerial programme, which allow us to do some serious retrospection as SACU and how we take our agenda forward taking into account global and regional developments,” she said.

Elago said that the institution needed to look at those developments and how the customs union position themselves.

SACU’s work programme is to focus on key areas that include the review and development of a suitable architecture for tariff settings, review of the revenue sharing formula, a formula based on principles that no member states should be worse off.

Much of the reforms were prompted by South Africa – the biggest revenue generator for the union – which is not happy with the current revenue sharing agreement.

South Africa wants to be getting more money from the revenue pool because it is the top generator for the group. 

All customs and excise collected in the common customs area are paid into South Africa’s National Revenue Fund. The revenue is shared among members according to a revenue-sharing formula, as described in the agreement. South Africa is the custodian of this pool. Only the member states' shares are calculated, with South Africa retaining the residual.

“So the conversations that must be heard in some areas they are pretty straightforward in some areas they might be difficult conversations. The review of the revenue sharing formula is one such, and also how we set tariffs in SACU being a customs union. We are also looking at how we enhance industrialisation, how do we promote and develop cross border value chains, what tools and interventions are required for us to achieve that goal.  And what mechanisms we want to put in place to finance an agenda,” said Elago.

Elago said this was a wide ranging programme and not just a programme that would be done within a short period of time.

“This why it is being extended with another 12 months. We are hoping to accelerate so that by the time the SACU heads of state meet next year, they will have something concrete to look at.”

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