Windhoek - Members of the Southern African Customs Union (SACU) have been hit hard by the COVID-19 pandemic, incurring heavy revenue losses due to depressed commerce.
SACU consists of Botswana, Eswatini, Lesotho, Namibia and South Africa.
Eswatini’s Minister of Finance Neal Rijkenberg was this week quoted saying there was need to diversify revenue streams flowing into the bloc’s pool in addition to finalising a more equitable revenue sharing formula.
Last year, members of the world’s oldest customs union shared N$120 billion. South Africa received N$57,7, billion, followed by Botswana with N$23,7 billion, Namibia with N$22,3 billion, Lesotho with N$8,9 billion and Eswatini with N$8,3 billion.
The pot will likely be far smaller this year as the COVID-19 pandemic has drastically reduced trade, as such also impacting negatively on customs revenue.
Minister Rijkemberg this week said,
“Our key focus now is to find ways of growing the economy, improve revenue generation and also hope that we will soon conclude the revenue sharing agreement with other members,” he said.
Namibian Economist Dr Kakujaha Matundu said the revenue slump predated COVID-19 and had only been accentuated by the pandemic.
“SACU receipts have lagged for about two years, and the real COVID-19 impact will be felt in 2022... the SACU pool is derived from import taxes; the pool will come under a lot of strain. With The resultant reduction in government revenue, (the consequences will be) with more borrowing, ballooning public debt to unprecedented levels.
“... Diversification of revenue sources away from the SACU has been touted by the smaller Sacu economies for a long time. But owing to the asymmetries experienced in the bloc, smaller economies stifled by South Africa failed to diversify their revenue sources,” he said.
Dr Kakujaha-Matundu said the revenue slump should spur South Africa to assist less developed economies to diversify their economies.
“Now as South Africa's captured market feels the wrath of COVID-19, South Africa will also feel the pinch from diminished market demand. ... It is thus not so much about improving the Sacu revenue sharing, but more about how the bloc seriously rethink common economic development policies.”
Another Namibian economist told The Southern Times Business said SACU economies could lose as much as N$7 billion monthly this year because of reduced exports since March.
South Africa gets the lion’s share (48 percent) of SACU collections because of its contribution to the pool.
In 2018, SACU members exported R1,39 trillion worth of goods, and imported products valued at R1,48 trillion.
In all, customs and excise revenue totaled
R90,29 billion in 2017/18.