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Namibia has been warned against an over-reliance on Southern African Customs Union (SACU) revenues, with the country set to rack in N$24.3 billion for the FY 2023/24, a 71.6% increase from N$14.2 billion in the FY2022/23. Given the volatile nature of SACU revenues and the fact that they are often driven by external factors outside member countries’ control, an overreliance on this source of revenue can complicate fiscal management and undermine fiscal consolidation efforts.
Namibia has been warned against an over-reliance on Southern African Customs Union (SACU) revenues, with the country set to rack in N$24.3 billion for the FY 2023/24, a 71.6% increase from N$14.2 billion in the FY2022/23. Given the volatile nature of SACU revenues and the fact that they are often driven by external factors outside member countries’ control, an overreliance on this source of revenue can complicate fiscal management and undermine fiscal consolidation efforts.
It is therefore important that the government continues to broaden the domestic tax base and diversify its source of revenue, said FirstRand Namibia Economist, Ruusa Nandago. She said proposed tax administration reforms, combined with wider structural reforms in the business environment, will go a long way in widening the net of government revenues. The government plans to boost domestic tax revenue collection through tax administration reforms aimed at improving tax compliance and collections on tax arrears. Such reforms, if combined with wider structural reforms in the business environment, will go a long way in widening the net of government revenues and stabilising the fiscus.
This is a welcome relief to the fiscus as it provides an upside to government revenue which is expected to increase by 16.5% from N$64.1 billion in FY 22/23 to N$74.7 billion in FY 23/24. A breakdown of revenue sources shows that SACU receipts will now account for 32.6% of the total revenue for FY 23/24 – making them the single largest source of revenue for the Namibian government.
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The Southern African Customs Union is the oldest customs union in the world, established in 1910 between five member states: Botswana, Eswatini, Lesotho, Namibia, and South Africa. The Union allows for these five countries to share trade-related customs and excise revenue and for the free movement of goods and services within the Union. All customs and excise duties are collected in a Common Revenue Pool and shared among the countries according to a revenue-sharing formula. South Africa is the largest contributor to the pool, making up 97% of the total contribution, followed by Namibia at 1.4%, Botswana at 1.0%, Lesotho at 0.4% and Eswatini at 0.2%.
