Sacu revenue formular to die the day SA goes broke- Grynberg
Outspoken economist Professor Roman Grynberg reiterated that the current Sacu revenue sharing formular continue to be an economic liability which is causing unemployment in Namibia while developing South Africa.
Grynberg aired his strong views in a no-holds-barred panel presentation at a Sacu publicity awareness campaign at the University of Namibia last week.
“Until we have an evolution of Sacu away from its current revenue sharing formular, we will have something that inherently distorts the trade regime in Southern Africa. It benefits us from a revenue stand point but it is an enormous liability from a trade and economic stand point.”
“It is not because Sacu is a bad idea, it is the revenue sharing formular where you already depend upon a share of Sacu imports. Now what’s the consequence of that? The consequence for southern Africa is in Namibia we derive 30% of revenue from Sacu, and most of that money is a subsidy for us to continue to import from South Africa. I know this is not going to make me friends. It doesn’t matter,” he said.
He said that Namibia is bagging more money from Sacu than from its diamonds and gold exports combined.
“Weighing those benefits, weighing those massive subsidies that we get against the loss of jobs for our children, are we better off by keeping our children living in Kamabashus in Katutura with no jobs and you and the rest of the governments of Sacu are able to pay public servants fabulously higher salaries?” quizzed the professor.
The over-reliance on SA, the Big Brother within the pool, sees Swaziland and Lesotho’s revenue standing somewhere between 60% and 70%, most which the professor said was a subsidy.
“If tomorrow Sacu were torn up, the political leadership in SA knows that Swaziland and Lesotho will become two more Zimbabwes,” added Grynberg.
Grynberg is convinced that the only way the current status quo will be disrupted is the day when South Africa gets broke and takes a begging bowl to the International Monetary Fund or the World Bank.
“Then they will say we will not give you any money if you continue giving out billions to BLNS countries and they will have to do away with this. So I think only external forces can change this revenue formular,” he said.
The professor suggested that Sacu revenues be channeled towards building the country’s industrial capacity for economic growth rather than paying salaries.
However, deputy director of revenue management in the Sacu secretariat, Donald Ndwandwe, pointed out that there is a development component which provides for funds to develop the poorest economies within the pool.
However, “We can not control on the other end where that money goes,” he stressed.
Deputy director of policy research and international affairs at the bank of Namibia, Erwin Naimhwaka, begged to differ with the professor that Sacu’s formular was a disaster, and that Namibia was exporting virtually nothing to SA save for “the gifts of God” like grapes, fish and salt.
“Truth is static,” he said, “We are also making progress with other products like beer which does not come directly from nature.”
But he agreed that there is a need to use the revenues to develop the economy.
Commenting on the sidelines of the presentation, dean of the faculty of economic and management sciences, Jacob Nyambe said, “Lets settle for what we have and not just to aspire to have what we can have years away.”
However, the economist predicted that the political stability within South Africa should give a positive outlook to revenue projections although the issue around land expropriation without compensation stand as a downside risk.
Meanwhile, BLNS countries will be receiving their revenue shares this month.
Sacu projects growth in the revenue on account of positive growth prospects in South Africa at : ZAR 99.6 billion in 2017/18, ZAR 93billion in 2018/19, ZAR 104 billion in 2019/20 and ZAR 112 billion 2020/21.
The executive secretary for Sacu, Paulina Elago, also said there has been a significant increase in intra-trade among member states, with exports having increased from ZAR 134 billion in 2012 to ZAR 210 billion in 2016.
Intra-Sacu imports have also increased from ZAR 138 billion in 2012 to ZAR 194 billion in 2016, she said.
“The figures clearly show that the Sacu market is growing and therefore provides opportunities for the member states, especially the smaller economies, to increase their trade, especially in imports,” she said.