FOLLOWING the 5th Summit of the heads of states and government of the member states of the Southern African Customs Union (SACU), which was held in Lozitha, Swaziland last month, many questions have arisen for the regional body, on which Namibia highly depends, in terms of revenue.
In many ways SACU is an unsung success story.
It is technically a customs union for trade in goods among South Africa and the BLNS nations of Botswana, Namibia, Lesotho and Swaziland, and has been registered as such with the World Trade Organisation (WTO).
It is also an excise union, and has gained important additional de facto features, over time.
Its origin and unique design have contributed to a successful regional arrangement, with benefits that stretch way beyond tariffs and customs administration.
SACU is a well-integrated commercial space; albeit one dominated by the presence of South African firms and service providers. To some extent, this has been unavoidable. The South African economy is by far the biggest.
South African firms have enjoyed first-mover advantages, and have benefited from exposure to international markets.
South African imports generate more than 90 percent of the income available to SACU’s unique revenue-sharing arrangement, from which the BLNS countries have benefited substantially.
However, SACU faces very specific challenges. These include policy and institutional challenges, as well as significant difficulties associated with regional disparities.
A new customs union agreement was adopted in 2002, in order to rejuvenate the organisation, and to bring it in line with new multilateral developments, such as the establishment of the WTO in 1995, as well as form a better union in the post-apartheid era.
However, the expectations articulated at the time of the adoption of the new agreement have not materialised.
With these challenges in mind, the heads of member states have been quick to acknowledge and reaffirm the importance of SACU as an organisation, in deepening the regional economic integration, industrialisation and economic diversification of SACU economies as a common goal, while positioning the organisation to take advantage of regional and global economic developments.
With clear uncertainty on the direction that the regional organisation will seek to take, the responsible authorities have adopted a work programme that will seek to review and develop a suitable architecture for tariff setting, rebates, duty drawbacks and trade remedies, while reviewing the revenue sharing formula and the long-term management of the Common Revenue Pool.
It was also decided to establish a stabilisation fund and explore the feasibility of a financing mechanism for regional industrialisation, while identifying financing options for regional projects, and developing public policy interventions to promote and align industrial development and value chains.
King Mswati III of Swaziland has urged the organisation’s member countries to ensure that SACU is mutually beneficial to all member states and that they all have an equal voice as partners.
At this stage it remains uncertain what these mini-reforms will accomplish, but one hopes that Namibia will get a favourable deal, particularly when the revenue-sharing model is fully reviewed.
Confidente. Lifting the Lid. Copyright © 2015