Members to review Sacu revenue-sharing formula

Heads of state and government
of the five Southern African
Customs Union (Sacu) member
states – Botswana, Lesotho,
Namibia, South Africa and
Swaziland – agreed to review
their revenue-sharing formula
when they met in Pretoria
earlier this month.
Tralac researcher Sean
Woolfrey points to mounting
discontent within South Africa
– by far the largest economy
in Sacu – at the current
arrangement. South Africa’s
National Treasury, for example,
believes that South Africa’s
bankrolling of the smaller Sacu
states through customs duties
collected in South Africa and
added to the revenue pool,
places an unnecessary fiscal
strain on the country.
In a discussion forum on
the Trade Law Association
website, he explains: “The
current state of affairs where
the smaller Sacu states receive
a disproportionately large
share of Sacu customs duties
exists because, historically,
the revenue-sharing formula
evolved as a means by which
the smaller Sacu member
states were compensated
for submitting to de facto
South African leadership of
the customs union in terms
of dictating trade policy and
setting the common external
tariff.
“Any change to the current
revenue sharing arrangement
which leads to smaller transfers
from South Africa to the other
Sacu member states is likely
to have a severe negative
effect on those states, as they
have come to rely heavily on
these transfers as a source of
government revenue,” he added.