Daily Archives: December 17, 2004

EU financial support to SACU lies idle

Namibia and three other Southern African Customs Union (SACU) countries, Botswana, Lesotho and Swaziland, have failed to take advantage of financial support promised by the European Union (EU). The funds were to help them cope with reduced income as a result of a trade agreement between the EU and South Africa, the biggest economy in SACU. Last year, the Bank of Namibia carried out a study that showed that Namibia will lose about N$549 million from SACU revenue over a period of 12 years as a result of losses from the SACU Common Revenue Pool.

In 2000, the EU launched a support programme for the economic integration of the four countries consisting of an amount of 6 million euro. The Economic Integration Support Programme (EISP) has never started and no disbursements were made.
The main objective of the project was to assist the countries in developing alternative sources of income in view of the expected decrease in customs revenue from the progressive implementation of the South Africa-EU Free Trade Agreement.
Information provided to the recent African Caribbean and Pacific (ACP)-EU joint parliamentary assembly held in Brussels last month, which was obtained by the Economist this week, said the four countries had not taken advantage of the offer due to the inertia of beneficiary countries who would have preferred an EU-SACU trade agreement rather then the a bilateral agreement between the EU and South Africa.

The EISP is expected, among other things, to strengthen the capacity to manage trade liberalisation and its effects on fiscal revenue, enhance the four countries competitiveness in the new international environment and encourage these countries to diversify their revenue base away from the current dependence on trade taxation.
On a positive note, the EU noted that the conclusion of the new SACU agreement in 2002 had put into place a number of new institutions. These included a Council of Ministers, the Customs Union Commission, the Tariff Board, Technical Liaison Committees, an ad hoc Tribunal and the Secretariat based in Windhoek. As a support structure at national level, the countries have agreed to establish specialised, independent national bodies, which will liase between the private sector and SACU, receive requests for tariff changes and other related SACU issues.

“In light of these changes, a review of the programme was undertaken in July 2004 to review the original programme’s objectives and adjust them to the changed environment. The original objectives were seen to be still highly pertinent and the bulk of the activities foreseen were still in line with the responsibilities afforded to the new SACU institutions. Consequently, the SACU member states request, and the European Commission endorses, an extension of the programme’s validity for four years and the enlargement of the programme objectives with a view to also support the SACU regional integration agenda and to strengthen the capacities of the SACU secretariat”, the EU said.

The EU feels the new developments have taken away the three main reasons for a lack of enthusiasm on the side of the four countries for the EISP. The EU said the implementation of the new SACU Agreement in July 2004 implies that the next few years will be crucial for the future of SACU. It is the first time in its almost hundred years of existence that it will be a truly democratic organisation and management.