More articles in this category
Top Stories

Swapo 2017: What Have They Done This is the second part in a series where The Villager will analyse what each of 11 Swapo Party top four candid...

Adv. Vekuii Rukoro has said that the German government is trying to avoid the charges lodged against it for the Ovaherero and Nama genocide during...

Swapo 2017 What Have They Done Series This is the first part in a series where The Villager will analyse what each of 11 Swapo Party top fou...

The Attorney General Sakeus Shanghala said the recent shack demolitions at Katima Mulilo were illegal because the town council did not have a cour...

SWAPO party Secretary General Nangolo Mbumba has today inaugurated the SWAPO disciplinary Committee at the party’s Head Office. The Commi...

Other Articles from The Villager

SACU revenue solid despite SA downgrade

Thu, 13 April 2017 22:37
by Kelvin Chiringa

Leading economic analysts confi rmed that the country can still look up to the projected increase in Sacu revenues this fi nancial year to bolster economic growth despite South Africa’s downgrade to Junk Status.

This comes in the background of South Africa being the largest contributor to the Sacu revenue pool and budget documents show that in 2014-15, South Africa paid out some R51.7 billion to the BNLS countries out of a total estimated revenue pool of R80 billion, and was projected to pay out R51 billion again in 2015-16.

Research Analyst at IJG Securities Dylan van Wyk affi rms that the fact that Sacu revenue pools are calculated in advance based on expectations directly translates that this year’s allocation will be a given.

“However, when revenue is collected, Sacu does recalculations, which determine a surplus or defi cit in the revenue allocations. Last year Sacu members received lower pay-outs due to under collections,” he says. On the other hand, the economist submits that since South Africa forms a large part of most Sacu countries revenue, a slowdown will negatively impact on transfers to Namibia and other member countries.

“Generally, after a county is downgraded, it results in a devaluation of its currency, higher interest rates and lower infl ation. This usually results in lower growth and resultantly lower imports. We have already seen some devaluation in the rand, and expectations are for higher interest rates. In all probability Sacu revenue would decline next year,” he adds.

Economic Association of Namibia’s Executive Director Klaus Schade also concurs that that Sacu transfers for this year have been agreed upon and therefore there shouldn’t be any changes although if there are to be any adjustments to the Sacu Common Revenue Pool, then Sacu member states will receive either additional transfers next year (in case of over-recoveries) or they will need to pay back in the case of under-recoveries as it happened last year.

“The downgrade of RSA and consequently of other public and private sector institutions will have a negative impact on investor confi dence and hence on investment and economic growth. Weak economic growth will impact on imports and thus on custom duties paid into the Sacu Common Revenue Pool. This could result in downward adjustments of the Sacu CRP,” says the analyst.

Namibia Equity Brokers analyst Ngoni Bopoto adds that the Sacu revenue pool will not be affected by the mere impulse of a downgrade of South Africa to sub-investment grade as focus is rather put on SA’s real economy while the impact will rather be felt on the fi nancial market side.