Swazi Observer

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SACU COUNTRIES BACK ESWATINIâ€™S BID FOR BIGGEST TRADE OFFICES

By Kingâ€™s Office Correspondent | 2018-06-30

GABARONE, BOTSWANA –The Kingdom of Eswatini has received a major boost in her bid to become host to Africa’s biggest trade offices.

SACU member countries; South Africa, Namibia, Lesotho and Botswana, have unanimously endorsed Eswatini as befitting to host the Continental Free Trade Area(CFTA) offices.

This was announced at the close of the 6th Southern African Customs Union (SACU) Summit yesterday.

“The Summit supports the bid by the kingdom of Eswatini, to host the Secretariat of the African Continental Free Trade Area,” SACU Executive Secretary Paulina Elago announced as she read the Communiqué.

The African Union (AU) has launched a CFTA which seeks to boost Intra-African Trade from the current 16 per cent, to about 53 per cent by removing tariff barriers.

According to the AU, the CFTA will create a wider market of more than 1.2 billion people with a combined GDP of $2.19 trillion.

Eswatini’s bid is expected to be submitted by His Majesty the King at the 31st Ordinary Session of the Assembly of Heads of State and government in Nouakchott, Mauritania tomorrow.

The CFTA agreement was signed by African leaders in March this year during a summit in Kigali, Rwanda. The Kingdom of Eswatini returned home to ratify it through Parliament recently, which now puts the country in a favourable position for consideration as a host country. Interviewed after the meeting yesterday Finance Minister Martin Dlamini said the endorsement by SACU was significant.

“If the whole of Africa could have an office in the country, this would boost the hospitality industry, the property sector, transportation while meeting centres would remain a hive of activity throughout the year,” he said.

He likened the benefits of having these offices to that of the AU itself in Ethiopia which created spin-offs for that country as it created confidence in other international organisations like the United Nations that opened offices there.

Should it succeed, this would see Eswatini host offices for what is set to become the largest free trade area created since the formation of the World Trade Organisation (WTO). The CFTA will not only be a substantial landmark for Africa's integration and unity, but it will also buttress Africa's position in global trade.

SACU revenue sharing formula review deadline postponed to 2019

More time is needed to reach a consensus on the Southern African Custom Union (SACU) revenue sharing formula.

This emerged at the close of the 6th SACU Summit yesterday where the task teams were given a further 12-month extension to the December 2018 deadline in order to resolve this matter and conclude others assigned to Ministerial Task Teams.

Changes to the sharing formula could affect the Kingdom of Eswatini either positively or negatively, as the SACU receipts constitute over 60 per cent of the national budget.

The SACU Executive Secretary noted at the close of the Summit yesterday that the implementation of the Work Programme for the Ministerial Task teams on Trade and Industry and on Finance, entailed extensive national consultations to ensure an inclusive and comprehensive engagement with the relevant stakeholders,

“In this regard, the council has agreed on the need to extend the completion date, by an additional 12 months from December 2018,” she said. Asked to elaborate on this decision, Finance Minister Martin Dlamini said there were a number of diverging views on the reports received from consultants.

“The experts we asked to carry out the exercise need to get direction from the ministers. However, since our leaders have indicated which way to go and what to do to come up with the formula we hope we will speed up the process so that it doesn’t take another year. Hopefully our upcoming meeting in September will help us avoid prolonged uncertainty over what is due to our national budgets,” he said.

He pointed out that the troublesome area is the fluctuation of the SACU receipts which makes it difficult for countries to budget on and that this was a sticky point where a lot of engagement was still needed in order to reach a consensus.

“Luckily we have agreed to meet in September to discuss this issue until it is resolved. The good thing is that the leaders engaged on this matter extensively and agreed that the current arrangement has a detrimental effect on budgeting and cash-flow. “This experience has created a need for a Stabilisation Fund that would serve as a buffer in the event the receipts fall below expectations so that countries are not paralysed by their budgetary obligations,” he said. The summit was chaired by Botswana President Mokgweetsi Masisi and attended by His Majesty King Mswati III, Namibia President Dr Hage Geingob, South African President Cyril Ramaphosa and Lesotho Prime Minister Dr Thomas Thabane.

SA RESERVE BANK COULD SOON MANAGE SACU POOL

The management of the revenue accrued by the Southern African Customs Union (SACU) could in future move to the South African Reserve Bank.

Currently it is managed by the national treasury, which means it sits in the South African government’s consolidated fund.

Finance Minister Martin Dlamini said the ongoing talks around the review of the revenue sharing formula and the long term management of the Common Revenue Pool are leaning towards removing these funds from the national treasury.

“The current arrangement would make an ignorant person assume these are South African taxpayer funds that are being donated to the other countries.

“Now we want the SACU pool to stand alone and be managed by whoever will be delegated to do so by the member countries,” he said. The minister said so far, the SACU member countries have agreed that it can be deposited at the Reserve Bank of South Africa where it will have an independent account that will be audited.

“This is essential because right now we do not know exactly how much is in the Revenue Pool. We are only told by South Africa how much there is and how much we are to receive,” he said. Minister Dlamini said a meeting with SACU Finance Minister in September, will serve as finalisation meeting for the sharing formula and the other funds.

“The urgency around the sharing formula is that member countries are in suspense over what they are to receive in the following year if the direction of formula remains unknown, so this needs to be concluded quickly,” he said.

The positive outcome from the Summit on this matter, according to the minister, was that the leaders support that SACU needs to grow as a regional organisation that caters for the development needs of the people in the member states.

He said they called for close cooperation to ensure that there was a fair distribution of revenue so that no country ends up at an advantage over another.

“The leaders are eager to see SACU play a meaningful role in the industrialisation process and creating employment for the people,” he said.

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