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SACU trouble for Swaziland

Business Section

By FAITH SHONGWE -23-Jul-2009

MBABANE – There might be trouble for countries like Swaziland, as the Southern African Customs Union (SACU) revenue pool has already registered an estimated E9 billion shortfall for the year end to March 2009.

This could threaten the country’s budget, as SACU receipts make up over 60 per cent of the country’s revenue. According to News24.com, South Africa would have to help finance the other SACU member states, which include Swaziland, Lesotho, Namibia and Botswana since SA would have to assume responsibility for the deficit in the SACU revenue pool.

“This union earns its revenue from regional import and excise duties for the region, which are subsequently divided among member states. The SACU income has however, been shrinking owing to reduced economic activity, particularly in South Africa. A R9 billion shortfall has already been registered for the year end to March 2009,” the report says.

Estimates on how much is expected from the SACU revenue pool are done every year by all the SACU member states and when the actual figures of the money collected are recorded and there is surplus, it is then shared among member states.

SACU income over the past financial year has been considerably less than the estimates and further shortfalls in the SACU income pool are expected in the next two years. The report adds that in terms of the SACU agreement, the shortfall must be recovered from member states and that any surpluses are divided among the member states. It says that Botswana, Lesotho, Namibia and Swaziland already owe R5.6 billion.


“But it seems unlikely that South Africa can collect the R5.6 billion Botswana, Lesotho, Namibia and Swaziland owe. These countries have already been severely impacted by the economic crisis, which has brought their government revenues under tremendous pressure. Botswana, the richest of these members which, under normal circumstances, is least dependent on income from SACU, because of its income from diamonds, will probably see its diamonds exports tumble to an estimated 55 per cent this year,” reads the report.

Matthew Stern, Director of consultancy group Development Network Africa (DNAfrica) is quoted saying the income of Lesotho and Swaziland, which funds more than 60 per cent of both countries’ budgets from SACU transfers, could decline by 50 per cent by next year if the shortfall is recovered and the decline in the SACU income is taken into account. “This would cause a systemic shock which Lesotho and Swaziland could not handle,” he reportedly said. On another note, the report says imports through the SACU member states were almost 46 per cent lower in the first five months of 2009 than in the corresponding period in 2008.

When reached for comment, Minister of Finance Majozi Sithole disputed the fact the South Africa would have to fund the other member states but agreed there may be a shortfall this year.


“SACU member states do not get handouts; instead we all get what we deserve from the pool. When the SACU member states did their forecasts for the year, they did anticipate the actual outcome to be below the anticipated figure. Therefore, it is possible that there will be a shortfall, although I cannot confirm that it is the E9 billion.

I do dispute the point which says South Africa will have to fund the other member states because if there is a shortfall, our technicians will have to sit together and find the best possible way forward. The shortfall is funded by the revenue pool and not South Africa,” Sithole explained. He further said there was a scheduled meeting for Finance Ministers from all the SACU member states in September where all these issues would be discussed in depth.

According to the South African Treasury, budgeted payments to the Botswana, Lesotho, Namibia and Swaziland for the next two years amount to R27.9bn and R26.2bn, respectively

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