SOUTHERN African Customs Union’s role has always been seen as crucial in addressing the inequality in inter-state relations and South Africa has dominated in its hinterland for decades.
Whilst the inequality between South Africa and the BLNS states exists not only on economic terms but also in their respective views towards international politics a looming political and economic crisis in South Africa -the engine of SACU- may in the long run prove detrimental to the progression of the Customs Union.
We may recall how former South African Finance Minister Nhlanhla Nene publicly stated that his government was dissatisfied with the revenue sharing formula of the SACU saying South Africa was the “cash cow” of the customs union.
However, with very little doubt SACU’s dilemma today flows from South Africa’s domestic troubles. The South African economy suffers from severe job losses, fiscal and trade deficits, energy insecurity, labour conflicts, a declining mining sector, policy uncertainty, weak investor confidence, a weak currency, corruption, and deterioration in competitiveness. The slowdown in the South African economy has pushed unemployment to over 34 percent in 2014 when considering the broad unemployment rate (this includes discouraged workers). Indeed South Africa faces its own crisis; which will not leave SACU intact.
According to South Africa’s Minister of Trade and Industry, Rob Davies, South Africa currently pays about R48 billion to the customs union annually, which constitutes around 98 percent of the common pool of customs and excise duties shared amongst SACU members. Of this revenue pool, 55 percent is distributed to Botswana, Lesotho, Namibia and Swaziland. This is in line with the revenue-sharing formula agreed upon in 2002, which allocates customs revenue according to each country’s share of intra-SACU imports. There is also a development component, which is allocated according to a country’s GDP per capita in order to assist the less-developed SACU members.
With the smaller states hoping that South Africa’s woes vanish there is also reflection of how South African authorities are frustrated by the lack of progress in furthering a five-point plan agreed upon at the 2011 SACU Summit, which was intended to advance the region’s economic integration and development, and which included in its agenda a review of the revenue-sharing arrangement. This could be a problem on its own as South Africa increasingly becomes eager to conserve and maximise its resource in the midst of its economic crisis.
Economists have always said that the organisation has been in institutional limbo from the moment its new agreement entered into force. Its own game-plan has never been implemented and this may be the time that SACU needs to gear up for the not so clear future.
Confidente. Lifting the Lid. Copyright © 2015