Schlettwein seeks balanced view on SACU
Much to the ire of South African policy-makers, the Namibian government is seeking a balanced view on discussions pertaining to the Southern African Customs Union revenue sharing formula which will come under spotlight again later this year.
The revenue sharing formula has been a bone of contention amongst South African politicians, some reportedly within ANC ranks and economists of late.
Delivering his budget address this week Tuesday, newly appointed Minister of Finance Calle Schlettweinn said, “Regarding the drag on receipts on the Southern African Customs Union revenue sharing formula and the perceived dependence on SACU receipts, our stance is that revenue matters cannot be seen in isolation. Associated trade and balance of payments benefits, rebates, duty drawdowns and industrial and agricultural development policies must be considered as well.
According to Schlettwein, progress remains stalled regarding the current Southern African Customs Union revenue sharing and institutional arrangements. Gerhard Erasmus of the Trade Law Centre wrote in November 2014 about SACU’s failure to establish a tariff board and an ad hoc tribunal, characterising the situation the biggest let-down. He wrote, “The absence of a tribunal leaves an important vacuum, disputes cannot be settled in a rules-based manner. This leaves SACU in limbo, at least when measured against its original expectations.”
“A more balanced view on the revenue sharing formula through which all member states of the Southern African Customs Union can grow should therefore be our aim,” said Schlettweinn. Newly appointed Minister of Finance, Nonhlanhla Nene is of a different opinion however. Said Nene, “It is a matter which we want to conclude as soon as possible because there are other avenues that we are beginning to explore than [an] unfair revenue sharing formula that we are subjected to at the moment,” as quoted by South African weekly, Business Day when he addressed the standing committee in parliament in March.
At the same occasion, Nene described South Africa as the cash cow of the Customs Union. “Work is being done but working with five countries that entirely rely on the revenue that comes out of this formula is a difficult task. We are the cash cow so when the cash cow raises issues we always get resistance.”
Said Schlettweinn, “Namibia believes in the relevance of the Southern African Customs Union (SACU) as the engine of regional integration and industrialisation. We believe that SACU revenues are currently broadly shared in a manner that reflects the realities of the SACU economies and the proportional benefits accruing from the market share of the member states in the Customs Union.”
Excitedly for Schlettweinn is a Tripartite Free Trade Agreement between and among members of the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA) which is envisaged to be launched in June this year.
“This promises for a larger market of some 625 million people and represents 58% of the continent’s Gross Domestic Product. Schlettwein stressed that Namibia would have to improve her productive capacity in order to reap the benefits stemming from the tripartite agreement.