SA may pull out of SACU?

Government will welcome reforms on Southern African Customs Union (SACU) and will not abandon the principle of getting what is due to her on revenue sharing formula, a top government official said this week.

Dr. Taufila Nyamadzabo revelation comes ahead of a make-or-break ministerial retreat scheduled sometime this month in which South Africa is expected to outline her frustrations with the current revenue sharing formula.

“We are still under discussions. These are formal discussions and will address issues as they come,” Dr. Nyamadzabo told Botswana Guardian on Wednesday.
As Secretary of Economic Affairs in the Ministry of Finance, Dr. Nyamadzabo is one of the leading negotiators in the sensitive negotiations that started in 2011.
In July last year, a clearly frustrated Trade and Industry Minister Rob Davies told South African parliament that there had been little progress on a 2011 agreement intended to advance the region’s development integration, and it was stifling its real ­economic development.

South Africa’s payments to SACU currently amount to R48.3-billion annually — a substantial amount, an estimated 4.5 percent of gross domestic product.
Botswana SACU receipts according to Nyamadzabo reached R19.2 billion in 2013/14 financial year, a substantial amount considering that the economy is reliant on mineral revenue to fund its budget.

A frustrated South Africa is believed to have tabled a take-it-or-leave-it offer to four other SACU members. BNLS members – Botswana Namibia, Lesotho and Swaziland, benefit substantially from SACU revenue. There are indications in Pretoria that South Africa may even opt out of the 102 year-old customs union.
Dr. Nyamadzabo did not want to be drawn into speculation and said to his understanding, Botswana’s share of SACU reflects the level of imports the country gets from other countries.

“This is not distribution of grant. South Africa should know that this is not a favour. It is what is due to us,” said Dr. Nyamadzabo. Dr. Nyamadzabo dismissed concerns that Botswana will be hard hit if South Africa proposes radical reforms. “One of the [SACU] principles is that revenue sharing should not leave the country worse-off than it was before.”

He said SACU meets on quarterly basis and is expected to meet in April this year. However he admitted that there has been request for ministerial meeting.
Trade Minister, Dorcus Makgto-Malesu could also not be drawn into discussing details of the forthcoming ministerial meeting and said SACU is a five member –country organisation with agreements that govern its operations.

“I know there has been attempt to hold a retreat this year beginning of this year, but it was not possible,” she said. Latest monthly Trade Digest for the month of November 2013 shows growth in total imports jumped to P6.4 billion from P4.7 billion in October 2013. The document also shows that 74 percent of imports came from South Africa in November last year.

Last modified on Friday, 07 February 2014 10:36

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