THE Southern African Customs Union (SACU) will host its sixth heads of state and government summit in Gaborone, Botswana, tomorrow to discuss the revenue sharing formula for its member states, among other things.
SACU is one of the world’s oldest customs unions and it consists of Botswana, Lesotho, Namibia, South Africa and Swaziland.
Tomorrow’s summit which Prime Minister Thomas Thabane is expected to attend, alongside other leaders, will be hosted by SACU chairperson and President of Botswana, Mokgweetsi Masisi.
Finance Minister Moeketsi Majoro recently told the Lesotho Times that the summit will deliberate on the revenue sharing formula, the long-term management of the common revenue pool and the establishment of a stabilisation fund among other things.
“The summit will review the revenue sharing formula (among SACU countries), the long term management of the common revenue pool, the establishment of stabilisation fund as well as discuss the feasibility establishment of a financing mechanism for regional industrialisation,” Dr Majoro said.
“SACU revenue is currently shared in the following three components: the Customs Component which uses intra-SACU trade data, the Excise Component which uses the gross domestic product (GDP) of each country and the Development Component which uses the GDP as applied to 15 percent of the Excise Component.
“Lesotho and other SACU member states acknowledge the advantages of the arrangement where South Africa manages the SACU revenue pool on behalf of the union which include lower borrowing costs given South Africa’s relatively advanced financial markets. We would like to see a situation in the future where the SACU revenue pool is managed as an independent account at the South African Reserve Bank and not as part of South Africa’s National Revenue Fund”.
“South Africa has made an undertaking to explore the creation of the Common Revenue Pool Account as a sub-account of the National Revenue Fund at the South African Reserve Bank,” Dr Majoro said.
Dr Majoro further said that the stabilisation fund was aimed at dealing with the uncertainty and instability of national finances that was caused by the volatility of SACU revenues.
A recent statement issued by SACU Executive Secretary Paulina Elago indicates that the leaders’ summit would be preceded by the meetings of finance and audit committee, the SACU Commission and the SACU council of ministers.
Ms Elago also told the Lesotho Times that the summit will consider progress being made on the implementation of the ministerial work programme whose key activities and focus areas are the development of a suitable architecture for tariff-setting, rebates, refunds or duty drawbacks and trade remedies.
“The programme is spearheaded by the two ministerial task teams on Trade and Industry and on Finance within an agreed time frame of 24 months. The two task teams are supported by the task teams of senior trade and industry and finance officials,” Ms Elago said.
The SACU meeting comes against the background of declining SACU revenues which negatively impacted on Lesotho’s ability to finance its national budget.
The Auditor General’s report for the 2016/17 financial year notes that “the main challenge confronting the SACU economies was the higher price of imported goods due to the (South African) Rand’s depreciation against major currencies and weaker commodity demand from China”.
“SAC receipts were budgeted at M4, 594 billion in 2017 which was M1, 8 billion less than the previous year’s budget of M6, 398 billion,” the report further states.