SACU businesses have new market
MBABANE - Southern African Customs Union (SACU) businesses will soon access the African Continental Free Trade Area (AfCFTA) market.
SACU category A products will be the first to be traded in the AfCFTA market, which is beneficiary to the country. Category A products are those that are traded in the agriculture sector. The availability of the new market will boost SACU receipts, which declined by more than eight per cent in Eswatini last year. The Minister of Commerce, Industry and Trade, Manqoba Khumalo, as Chairperson of SACU Ministers, informed AfCFTA member States that the SACU region was ready to trade.
This was during the 11th AfCFTA Council of Ministers Responsible for Trade, which was held in Gaborone, Botswana on Saturday. Khumalo indicated that SACU members have finalised internal negotiations on the AfCFTA tariff offer, which meets the level of ambition of 90 per cent for category A products, which he said were those to be liberalised immediately. “The offer will be endorsed by the Assembly after undergoing the necessary verification process by the AfCFTA Secretariat. Thereafter, SACU member States can start trading preferentially under the AfCFTA Agreement and the business community will enjoy the benefits of the continental market,” mentioned Khumalo. The minister added that SACU Secretariat would work with the AfCFTA Secretariat to ensure that the offer was available to all AfCFTA State parties once all technical verification had been finalised. The market comes at a necessary period as SACU member States recorded a trade deficit of R323.9 billion in 2021 with the rest of the world and population in SACU grew from 65.5 million in 2018 to 68.9 million in 2022, according to the SACU report. Locally, the government has been running persistent fiscal deficits in the recent past. This was as a result of volatile SACU receipts causing large swings in revenue collection coupled with inadequate response in government expenditure controls. SACU receipts for Eswatini declined from E6.38 billion in 2021/22 to E5.82 billion in 2022/23, which is equivalent to 8.88 per cent in the current year. In the previous quarter, E 2.9 billion was received from SACU receipts compared to E3.2 billion in the year 2021/22. This reflects the decrease of SACU receipts expected this year when compared to last year, as shared by the minister of Finance in Parliament last quarter.
Expected
The Minister of Finance, Neal Rijkenberg, said SACU receipts were expected to rebound and average over E7 billion in the medium-term. He said in the 2023/24 financial year, SACU was expected to grow by 67.2 per cent to E9.66 billion from E5.8 billion, followed by E7.09 billion in 2024/25 and E7.12 billion in 2025/26, assuming some of the SACU receipts were put in the proposed SACU Stabilisation Fund. “In tandem to that, total domestic tax collection is expected to increase over the medium-term by an average six per cent, amounting to E12.98 billion in 2023/24 followed by E14.95 billion in 2024/25 and E14.81 billion in 2025/26,” he said. The minister exclusively mentioned that the projected increase in domestic revenue collection in the medium-term was largely attributed to a number of proposed revenue measures forming part of the efficiency gains and favourable economic growth.
Enhancement
He said the government was working tirelessly to ensure that revenue enhancement reforms were put in place, the strategy includes the establishment of the SACU Stabilisation Fund, wherein draft regulations are already with the attorney general. One of the exporters to the SACU region, Vusi Matsebula said the challenge was tax-related. He said they were tripled taxed when they sale abroad, which was affecting their revenues. “The tax is the main issue and it continues to affect our revenues, we kindly urge the government to revise the manner of tax as it is crippling,” he said. Matsebula also mentioned that unionising based on commodities would also help their business succeed and trade at equivalent sums.