On 21 September 2020 the Southern African Customs Union (SACU) Finance and Trade Ministers met through a virtual meeting. The following media releases are important to consider from a customs and international trade perspective.
MEDIA STATEMENT - FINANCE MINISTER CHAIRED THE JOINT VIRTUAL MEETING OF FINANCE AND TRADE MINISTERS OF THE SOUTHERN AFRICAN CUSTOMS UNION (SACU)
South Africa’s Finance Minister chaired the 4th joint Finance and Trade Ministers’ virtual Ministerial Retreat meeting on 21 September 2020. The Ministers agreed on refined development priorities for the Southern African Customs Union (SACU) within the changing global and regional developments that have impacted on the Union; as well as agreed on activities that could be prioritized for SACU going forward and their sequencing.
Ministers observed that much disagreement remains around issues involving the Revenue Sharing Formula (RSF) and Tariff Setting architecture, respectively. However, in the spirit of unity, they were unanimous that specific attention should be put on those issues that propel SACU forward.
The Ministerial Retreat noted:
- The long-term impact of the COVID-19 pandemic on the SACU common resource pool.
- Agreed to work jointly to implement the African Continental Free Trade Agreement (AfCFTA).
- That SACU’s development trajectory should be anchored on a clear industrialization path that provides for the development of regional value chains to strengthen SACU’s productive capacity.
As a result, there was strong support for SACU Member States to work together through a regionally co-ordinated approach to advance industrialization, trade market access regionally and continentally, and to strengthen resource mobilization. In this regard, the Retreat reaffirmed the outcomes of the SACU Ministers of Trade and Industry of 28 August 2020 as forming the basis for co-operation for regional industrialization, investment and export promotion. At the same time, Ministers acknowledged that a trade and industrialization agenda would require the mobilization of substantial financial resources.
Going forward, SACU must design appropriate and effective financing instruments by mobilizing the national Development Finance Institutions (DFIs) and private-sector enterprises within the region to finance this vision. The role of the private sector through collaboration with regional business chambers for improving the business environment was also highlighted.
Ministers committed to finalize a clear roadmap and strategy within the next six months and to advance a streamlined SACU work programme through efficient institutional processes.
Issued by the Ministry of Finance
Date: 21 September 2020
REMARKS BY THE EXECUTIVE SECRETARY ON THE OCCASION OF THE 4TH SACU MINISTERIAL RETREAT
MONDAY, 21 SEPTEMBER 2020
Honourable Tito Mboweni, Chairperson of the Council of Ministers,
Members of the SACU Commission,
Ladies and gentlemen.
1. Allow me to express on behalf of the Secretariat and my own behalf our sincere appreciation and thanks to all the Honourable Ministers for taking time from your busy schedules to participate in this 4th Ministerial Retreat. This Retreat provides an opportunity for the Members of the Council to reflect and exchange views on how best to move the Ministerial Work Programme forward.
2. In order to facilitate the discussions by the Honourable Ministers, the Secretariat has circulated a Background Paper, which provides the Status of Implementation of the Ministerial Work Programme to date and the challenges encountered as well as issues for possible consideration. The Secretariat has also circulated the national position papers submitted by the Republic of Namibia and South Africa on the Ministerial Work Programme and their proposals on the way forward. Botswana, Eswatini and Lesotho indicated that their positions have remained the same as previously communicated.
3. This Retreat reminds us of the 3rd Ministerial Retreat held in Mulderdrift, South Africa in 2016, where the Council had an opportunity to introspect on the Southern African Customs Union (SACU) as an organisation that supports the economic development of the Member States and agreed on the current Ministerial Work Progamme.
4. Of importance to note is that since the commencement of its implementation in 2017, there is some progress, however it is minimal. These are in the areas of public policy interventions to promote regional values chains, Trade Facilitation and long-term management of the Common Revenue Pool.
5. In these areas, where there is some progress, there is a need to keep the momentum, and for Member States to avail the necessary resources to facilitate the earlier conclusion of this work. For example, in the area of industrialisation, which has been identified by the Council as an overarching objective for SACU, there is now an opportunity to accelerate the work with a view to adopting a clearly defined and focused programme that entails identification and implementation of concrete and bankable regional projects to attain the objectives of industrialisation in SACU.
6. The Ministers of Trade and Industry, during their strategic and policy discussion on 28 August 2020, agreed on the need for a common vision to advance work on industrialisation both in SACU and at the continental level to take advantage of the opportunities that will be created by the AfCFTA. In this regard, the SACU Senior Trade Officials supported by the private sector have been mandated to undertake an analysis of the strategic priority sectors for SACU and to map out practical steps to be undertaken in SACU to advance its industrialisation vision both within the region and at a continental level.
7. Therefore, the work done so far and the above-mentioned decision and initiative by the Ministers of Trade, provide a foundation to build on in advancing the industrialisation agenda. What is required is a practical and pragmatic approach to move the Programme forward.
8. In the areas of tariff-setting and the review of the revenue sharing arrangement, not much progress has been made due to the fundamental differences among the Member States and entrenched national positions on these two issues. As an example, the process of reviewing the Revenue Sharing Formula first started in 2010 and 10 years on, Member States have still not reached an agreement nor proposed new ideas to progress this work.
9. Due to minimal progress and delayed implementation, the Programme has been extended twice by a period of 12 months each, first to December 2019 and again to December 2020. At the same time, Member States have invested time and extensive resources in the implementation process.
10. A key question is how SACU should move forward with the implementation of the Ministerial Work Programme, taking into account the limited progress made so far, especially on issues related to tariff-setting and review of the revenue arrangement as highlighted earlier? What will be the way forward on these issues? What will be the focus, priority, ambition, scope, and sequencing of the future Work Programme? Should we continue with programme as is or should it be adjusted to perhaps focus on few areas where progress is being made? What the Member States envision to have in place taking into account the Vision and objectives of SACU as well the role of SACU in relation to how the Member States wish to position themselves as a region amidst ongoing regional and global developments.
11. These are fundamental issues requiring careful consideration by the Council and clarification to facilitate advancing of the Work Progamme.
12. Today, the Council has the opportunity to address these key policy issues and provide clear political and strategic guidance that will enable us to advance and drive forward the Ministerial Work Progamme. This should take into account the ongoing economic and social challenges arising from the effects of the COVID-19 pandemic, and the regional and international developments. It is therefore paramount for the Council to reflect on how SACU will position itself in addressing these challenges through a responsive, practical yet realistic Ministerial Work Progamme.
13. Honourable Ministers, in preparing for this Retreat, the Secretariat held consultations with the Member States on the Agenda and the approach to the Retreat. I wish therefore to express my appreciation to the Honourable Ministers for availing themselves and for accommodating the Secretariat in your busy schedule for these consultations.
14. Some of the outcomes of the consultations were a commitment to continue to advance the implementation of SACU Work Progamme and for the Member States to reflect on their vision for SACU on the basis of which specific priorities and sequencing of these could be based. Member States also reaffirmed the importance for Member States to discuss all issues in an open and frank manner.
15. The Ministers also reiterated that industrialisation and the development of regional value chains in SACU remain important and requires to be prioritised. They were of the view that the Roadmap agreed to by the Ministers of Trade and Industry, during their strategic and policy discussion Meeting held on the 28th August 2020, as I alluded to earlier could serve as basis to build on in advancing the industrialisation Agenda. Other priorities that could be considered include the development of the elements and enablers for a financing mechanism for infrastructure development in SACU; and advancing the Trade Facilitation Programme to enhance cross-border trade.
16. Furthermore, the Council Members underscored the need to further reflect during the Retreat on the effectiveness of the current institutional arrangements to ensure efficient use of resources. They further stressed the importance for SACU to work and positions itself as a block and the need for cohesion in the region. Finally, the Members of the Council also noted that the Summit has not convened since its last meeting in 2018 and expressed the need for the Summit to convene its Meetings reflect on the issues and provide the necessary strategic direction.
17. As an outcome of this Retreat, the Secretariat is looking forward to a clearer guidance and direction from the Council, not only on the scope of the areas of work and key elements of the Ministerial Work Programme that should be pursed, but on how they will be implemented based on agreed principles and timelines. Clarity on the SACU Work Programme will be critical to enable the Secretariat to develop a realistic yet practical Progamme that can be implemented within agreed timeliness to ensure full realization of the agreed objectives.
18. In conclusion, it is our view that this Retreat serves as a timely and critical impetus for SACU in regard to how it positions itself as an engine of economic growth and a building block for regional integration amidst the challenging economist environment. What is required is a political commitment and a clearer strategic direction on how to move forward with a view to attain the vision and objectives of our organisation.
19. With these few remarks I wish the Honourable Ministers fruitful deliberations
OPENING REMARKS BY HONOURABLE TITO MBOWENI
CHAIRPERSON OF THE SACU COUNCIL OF MINISTERS AND
MINISTER OF FINANCE, SOUTH AFRICA
21 SEPTEMBER 2020
4th SACU MINISTERIAL VIRTUAL RETREAT
Madam Executive Secretary,
Members of the SACU Commission,
Senior Government Officials of the Member States,
Officials of the SACU Secretariat,
1. It gives me great pleasure to extend a very warm welcome to you all on the occasion of this 4th SACU Ministerial Retreat. I hope the IT arrangements and the facilities made available to the Honourable Ministers will allow us to have fruitful discussions.
2. Allow me to take this opportunity to express my appreciation to you Honourable Ministers, for having availed yourselves to attend this important Retreat given your demanding schedules.
3. I wish to also thank the Executive Secretary, Ms. Paulina M. Elago and her team for their support in coordinating arrangements and preparations for this Retreat.
4. The objective of this Retreat is to afford us an opportunity as the Council, to reflect on the SACU Ministerial Work Programme and explore options on how we can advance our work. This is in line with the decision of our 40th Meeting held on the 9th July 2020, where we agreed to convene in the form of a Retreat, in order to engage on the Ministerial Work Programme in light of the minimal progress achieved so far.
5. This Retreat, therefore, provides us with an opportunity to reflect and exchange views on the vision for our organisation, being the oldest Customs Union in the world, and considering, regional and international developments that may affect SACU. Some of these developments include: the current challenges that we face as a region due to the COVID-19 pandemic, the imminent implementation of the African Continental Free Trade Agreement (AfCFTA), SACU’s approach and its positioning in relation to industrialisation, the development of regional value chains as well as the need to strengthen SACU’s productive capacity.
6. Our Agenda requires us therefore to consider how SACU should position itself as a building block for deeper integration in the Southern African region and how we wish to take SACU’s Vision adopted in 2010, forward. Having a clear vision on what SACU should aim to achieve, is critical in enabling us to identify programmes and activities that could be prioritised in the context of the Ministerial Work Programme as well as their sequencing. It will also enable us to agree on a realistic and practical programme that is result-oriented and that could serve as a catalyst for economic development and deeper integration for SACU.
7. SACU prides itself in being the oldest Customs Union in the world. This fact should be visible on the ground across the region, through seamless cross-border trading arrangements and initiatives. We should therefore put in place measures that will create a conducive environment for our economic operators to invest in cross-border projects, and in turn, make a meaningful contribution to the growth of our economies. This will ultimately improve the livelihoods of our people. As neighbours, our political and socio-economic inter-dependencies require us to strengthen our collaboration, to make SACU a successful organisation that we want it to be. Let our physical borders be invisible for purposes of facilitating trade in the region and beyond.
8. We may be facing different challenges at the national level. However, there is some commonality on issues that we can address collectively at the regional level, which would in turn provide solutions at the domestic level. SACU therefore provides us with unique opportunities to collectively advance the economic development of the region. This will in turn, strengthen and amplify our voice when we engage with other parties at different levels, such as the Tripartite and Continental levels, and indeed globally.
9. The 4th Ministerial Retreat is taking place at an unpreceded time when the COVID-19 pandemic continues to severely affect our people and economies. As of the 16th September 2020, the number of confirmed COVID-19 cases globally was over 29 million. Over 931,000 people have lost their lives due to the pandemic, while over 21.5 million people have recovered from the disease. We hope that more recoveries will emerge.
10. In the SACU region, the number of confirmed COVID-19 cases is now over 670,00 with South Africa recording about 651,521, followed by Namibia with 9,901, Eswatini with 5,128, Botswana with 2,463, and Lesotho with 1,327 cases. A total of number of 15,892 people have sadly lost their lives. May their souls rest in peace.
11. It is comforting, however, to note that the COVID-19 cases are now starting to decline, which is attributable to the measures our respective countries have put in place to contain the spread of the virus. We should however continue to be vigilant and implement precautionary measures required to further minimise and contain the virus. This will assist us to avoid a second wave of the virus, as experienced in some countries recently, following the relaxation of the restrictions.
12. On the economic front, the global economy is projected to contract by -4.9% in the current year. However, there is a glimmer of hope as the global economy is expected to recover in 2021 and record a growth of 5.4%.
13. In the SACU region, all our economies are projected to contract in 2020. The latest economic data show that Botswana’s economy is projected to contract by -13.1%; Eswatini -6.2%; Lesotho -5.3%; Namibia -7.8%; and South Africa -7.2%. The South African economy already contracted sharply in the first half (6 months) of 2020, falling by 51%. However, improved growth prospects are projected beyond 2020 amid a better global economic outlook. Consequently, Botswana is forecast to grow at 3.9%, Lesotho at 3.5%, Eswatini at 2.1%, Namibia at 1.1% and South Africa at 2.6% in 2021.
14. As a region, we are now faced with the major challenge of rebuilding our economies and ensure they are resilient going forward. Certainly, the economies will take many years to recover, meanwhile the health sector remains overstretched and requires extensive resources to respond to the COVID-19 pandemic. At the same time, the stimulus packages to revive our economies require additional financial resources from an already constrained fiscus.
15. Domestic revenues will not be enough to sufficiently finance our recovery plans and the provision of safety-nets to our people. It is, therefore, important that as SACU, we work together through a regionally coordinated approach not only to successfully weather this storm, but also in moving our regional integration Agenda forward through targeted programmes and interventions. Such collaboration will assist our economies to recover post COVID-19 amidst increased poverty levels as a result of massive job losses, amongst others.
16. Turning to our Agenda, I hope we will engage and deliberate extensively on how to advance the SACU Ministerial Work Programme in light of the minimal progress achieved so far. You will note that the Agenda has been carefully structured to enable us to reflect and exchange views on our vision for SACU; the ambition of the Ministerial Work Programme; and activities that could be prioritised for SACU going forward and their sequencing. This strategic discussion is paramount to setting the context in regard to the direction, focus and priorities for the Customs Union, going forward. The Agenda benefited from consultations undertaken by the Executive Secretary with all the Members of the Council.
17. Given the limited progress made so far, it is clear that we cannot approach the issues in the usual manner. We should therefore use this opportunity to deliberate on the issues at the political and strategic level with a view to provide guidance and strategic direction and set the tone for our organisation.
18. You will recall that at the 39th Meeting of the Council, we approved the prioritisation of the development of rapid regional value chains in the health sector, for the production of essential goods to combat the COVID19 pandemic and other similar pandemics. Following our Meeting, I am informed that the Ministers of Trade and Industry recently held a strategic and policy engagement where they underscored the importance of industrialisation in SACU and agreed on the need to adopt a common vision to advance the work on industrialization, both in SACU and at the continental level. I am also informed that technical work is underway to undertake an analysis of the strategic priority sectors for SACU and to map out practical steps to be undertaken in SACU to advance its industrialisation vision. I wish to commend the Trade Ministers for this achievement. I believe it is a step in the right direction and one that, to some degree, sets the context, which in turn should serve as a basis for the work ahead in this area.
19. Colleagues, you may also recall that the Ministerial Work Programme has other focus areas that are of mutual interest to all the Member States over and above the work on industrialisation. These areas are: (i) the review and development of a suitable architecture for tariff-setting and application of tariffs, rebates, duty drawbacks and trade remedies; (ii) the review of the Revenue Sharing Formula; (iii) the long-term arrangement on the management of the Common Revenue Pool; (iv) addressing revenue volatility; (v) exploring the feasibility of establishing a regional financing mechanism for SACU-wide infrastructure projects and industrialisation; and (vi) strengthening existing cooperation and collaboration on Trade Facilitation to improve border efficiencies.
20. Our discussions today will require us to reflect on whether or not the Work Programme in its current form, remains relevant or the extent to which it requires some form of refinement. Further, we need to consider the priorities, ambition and scope in order to determine, if at all there is a need to reduce the number of focus areas and activities. As we reflect today, it is important to come up with a Work Programme that is beneficial to all our Member States and responsive to our Vision as a region and contribute towards improving our economies, deepen regional integration, strengthen our collaboration as a single economic block, and fast-track the industrialisation programme.
21. In closing, it is my hope that at the end of our deliberations we will agree on a framework that will allow us to advance and conclude the Work Programme within reasonable timelines, given that we have spent almost three (3) years without concluding work and agreeing on any of the approved focus areas. The Work Programme has the potential of deepening regional integration, contributing to improvement of the national economies and the livelihoods of our people as well as to fasttrack the SACU industrialisation programme. This should therefore engender us to develop concrete options and solutions to achieve our objectives.
22. It is also important that we report and provide a positive outcome to the Summit of the Heads of State or Government.
23. You may be aware that the last SACU Summit held in June 2018 in Gaborone, Botswana, had emphasised the importance of expediting the conclusion of this work. This was with a view to ensuring that the outcomes of the Work Programme are translated into tangible and concrete results for the development of SACU economies. It is therefore my fervent hope that following this Retreat, we will have a clear roadmap and strategy to advance our Work Programme and make specific recommendations for consideration by the Summit.
24. I am confident and trust that with your support and cooperation, we shall be able to address these important issues within the time allocated and at the same time allow ourselves to engage on these issues. With these few remarks, I wish the Meeting successful deliberations and I thank you for your kind attention.
25. Allow me now to call upon the Executive Secretary, Ms Paulina Elago, to make her remarks.
Story by: Riaan de Lange