DELAYS IN SACU REVENUE SHARING FORMULA REVIEW

MBABANE - The Southern African Customs Union (SACU) Council of Ministers’ failure to regularly meet to approve essential documents is said to be derailing many policies and programmes.

SACU brings together Botswana, Eswatini, Lesotho, Namibia and South Africa and its mandate includes ensuring smooth movement of goods and services through a common external and excise tariff.

SACU Executive Secretary Paulina Elago was quoted saying that delays in approvals of recommendations meant delays in implementation of resolutions and stifling of operations in general.

Adopted

The executive secretary said the electronically transmitted round-robin approval process adopted because officials cannot physically meet due to the COVID-19 pandemic was proving to be inefficient.

The delays in approving reports in said to have resulted in delays in implementing SACU’s most vital project, the work programme. 

SACU’s work programme is to focus on key areas that include the review and development of a suitable architecture for tariff settings and constant revision of the revenue sharing formula to ensure no member State is short-changed.

All customs and excise collected in the common customs area are paid into South Africa’s National Revenue Fund and subsequently shared among members according to a revenue-sharing formula. South Africa is the custodian of this pool.

According to the SACU Agreement of 2002, the revenue-sharing formula uses three components to calculate revenue shares for member States. These are a customs component, an excise component and a development component.

Share

Using the customs component, revenue is allocated on the basis of the share of each country in intra-SACU imports, while the excise element allocates the funds on the basis of each country’s share of Gross Domestic Product (GDP).

Revenue allocations using the development component are fixed at 15 per cent of total excise revenue and distributed according to the inverse of per capita GDP of each country.

Under the present arrangement, South Africa is the custodian of CRP and all customs and excise duties collected in the common customs area are paid into the South African National Revenue Fund. The revenue is then shared among SACU member States according to the revenue-sharing formula as described in the agreement.

Calculated

Only the shares for the BLNS (Botswana, Lesotho, Namibia, and Eswatini) countries are calculated, with South Africa receiving the remainder.

The BLNS countries have complained over the years that the revenue sharing formula does not fully compensate them and that there is a lack of consultation by South Africa of its SACU partners.

Another complaint is that the countries allege that there are various non-tariff barriers preventing their access into the South African market.

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