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.