‘Lesotho should retain SACU revenues’
THE impending revision of the South African Customs Union (SACU) revenue-sharing agreement among member states should not leave Lesotho worse off than it is at the moment, the government has said.
This was said by Trade and Industry Minister Joshua Setipa, in an interview this week, following his participation in the SACU Ministerial Retreat that was held in South Africa on 20 June 2016.
The retreat was attended by the Finance and Trade ministers from the SACU member states, namely Botswana, Lesotho, Namibia, South Africa and Swaziland.
Chaired by South African Finance Minister Pravin Gordhan, the retreat was meant to provide an opportunity for the ministers to reflect on how to move the SACU Agenda forward in accordance with a roadmap which was approved by the SACU heads of state and government in November 2015 in Windhoek, Namibia.
“The meeting was in preparation for the upcoming summit of the SACU heads of state and government scheduled for somewhere between this month and August,” said Mr Setipa.
“The meeting took stock of the status of the implementation of the SACU work programme to inform that summit. The work programme includes a review of the revenue sharing agreement, trade facilitation, and unified engagement in the trade negotiations, regional industrial development policy, and development of SACU institutions.”
He said the retreat was based on the recent bilateral consultations undertaken by South African President Jacob Zuma with the SACU heads of state and government in his capacity as SACU Summit chairperson.
Mr Setipa said while the revenue sharing formula was expected to be reviewed in the near future, the government wanted to ensure Lesotho’s share would not be reduced after the negotiations were completed.
“Our position as the government is that whatever happens during the review of the revenue-sharing arrangement, we should not be left worse off in the end,” he said.
“We hold this view because our share of the revenue has declined significantly in recent years due to the weak economic performance of the region.”
Lesotho’s share of SACU revenue has been steadily declining over the preceding years due to a slowdown in the performance of the global economy. The 2016/2017 SACU revenue share is estimated to account for 32 percent of Lesotho’s budget – down from 42 percent in 2014/15.
According to the SACU website, the current revenue sharing formula has three components, namely the customs component, excise component and the development component. The customs share is allocated on the basis of each country’s share of intra-SACU imports. The excise component is allocated on the basis of each country’s share of gross domestic product (GDP). The development component, which is fixed at 15 percent of total excise revenue, and is distributed according to the inverse of each country’s GDP per capita.
Mr Setipa said the ministerial retreat was convened after two years without holding the meeting.
“Last month’s ministerial retreat marked the return to work by the institution which had not sat over the past two years. And I believe we are going to see progress going forward,” he added.
A statement released by the SACU Secretariat after the ministerial retreat reaffirmed their commitment to SACU’s vision and the importance of the customs union to their economies.
“The ministers also agreed to continue engagement on the SACU Agenda, taking into account prevailing regional and global economic developments, with a view to seize opportunities and strengthen integration,” the statement read.