BUSINESS SLOW AS SACU RECEIPTS DECLINE BY 8%

MBABANE – The local private sector is dominated by trade which continues to be a challenge on international level.

Eswatini currently has internal trade agreements with the Southern African Customs Union (SACU)-European Free Trade Area, SACU-MERCOSUR Preferential Trade Area, African Growth and Opportunity Act (AGOA) and Africa Continental Free Trade Area (AfCFTA). The government has been running persistent fiscal deficits in the recent past.  This is as a result of volatile SACU receipts causing large swings in revenue collection coupled with inadequate response in government expenditure controls. In this financial year, SACU receipts declined from E6.38 billion in 2021/22 to E5.82 billion in 2022/23 which is equivalent to 8.88 per cent in the current year.

In the previous quarter, E2.9 billion was received from SACU receipts compared to E3.2 billion in the year 2021/22. This reflects the decrease of SACU receipts expected this year when compared to last year. The Minister of Finance, Neal Rijkenberg, said SACU receipts were expected to rebound and average over E7 billion in the medium term. He said in the 2023/24 financial year, SACU was expected to grow by 67.2 per cent to E9.66 billion from E5.8 billion, followed by E7.09 billion in 2024/25 and E7.12 billion in 2025/26, assuming some of the SACU receipts were put in the proposed SACU Stabilisation Fund.

Increase

“In tandem to that, total domestic tax collection is expected to increase over the medium-term by an average 6 per cent, amounting to E12.98 billion in 2023/24 followed by E14.95 billion in 2024/25 and E14.81 billion in 2025/26,” he said. The minister exclusively mentioned that the projected increase in domestic revenue collection in the medium-term was largely attributed to a number of proposed revenue measures forming part of the efficiency gains and favourable economic growth.

He said the government was working tirelessly to ensure that revenue enhancement reforms were put in place, the strategy includes the Establishment of the SACU Stabilisation Fund, wherein draft regulations are already with the attorney general. One of the exporters to the SACU region, Vusumuti Matsebula, said the challenge was tax-related. He said they incurred a tripled tax when they sold abroad, which affects their revenues. “The tax is the main issue and it continues to affect our revenues, we kindly urge the government to revise the manner of tax as it is crippling,” he said. Matsebula also mentioned that unionising based on commodities would also help their businesses succeed and trade at equivalent sums.

Businesses

Business Eswatini (BE) Chief Executive Officer (CEO) Nathi Dlamini afore thanked the Eswatini Revenue Services (ERS) and the Ministry of Finance for listening to their plight as businesses of Eswatini. He said tax was one of the main challenges affecting the private sector and the introduction of Tax Amnesty by ERS was a golden opportunity for the private sector. Dlamini said he was grateful that tax amnesty was attained immediately after the Tax Indaba where the issue of compliance was discussed. He said when he approached the ERS, they were able to honestly engage following the discussions they were all in attendance. He said he could not wait to send a message of attaining one objective of the tax indaba to business people.

He further pleaded for more discussions on the issue of capital gains and other taxations that are a challenge to businesses.  He said he paid tax begrudgingly but he was happy when he saw that it was paying for the elderly grants, scholarship for students and fixing of the roads. Ministry of Commerce, Industry and Trade’s Cebile Nhlabatsi afore mentioned that Eswatini was seeking to find collectively, practical ways of unleashing the embedded potential of the continent. She said this was imperative to the continent and its people so that they can together build an integrated and peaceful continent, driven by its own people, representing a dynamic force in the international arena.

To achieve this, Nhlabatsi said Africa cannot be the raw material producing and exporting economy of the past. She said the continent had to be an economy based on value-addition and industrial activities, as well as trade with itself. “The role of the private sector is very critical for changing the landscape of the African continent,” she added. She added that there was, therefore, a need for the private sector to collaborate with government and prioritise private public partnerships in order for us to increase our proactive capacity.

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