Namibia Concerned Over Decline in Revenue from SACU

(3 Minutes Read)

The Bank of Namibia says the country faces a projected decline in Southern African Customs Union (SACU) revenue from N$28 billion in 2024 to N$21 billion in 2025.

Head of Investments at Simonis Storm, Max Rix, explained that the main contributors to the decline are global economic factors and shifts in SACU’s revenue-sharing formula.

This decline is driven primarily by the global downturn in commodity prices, particularly in the sectors that underpin SACU’s revenue calculations. Namibian exports, notably in mining and energy, have suffered from this downturn, reducing the overall revenue pool available for distribution among SACU members,” he said. He also noted that adjustments to the SACU revenue-sharing formula have worsened the situation.

The decline in SACU revenue will impact Namibia’s national budget. Rix explained that the government would need to make tough decisions about spending priorities, particularly in areas like social programs and infrastructure. He further warned that this could lead to fiscal instability as the prospect of increased borrowing to make up for the revenue shortfall also looms large.

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To address these challenges, Rix emphasized the need for Namibia to diversify its revenue sources and strengthen its domestic fiscal base. Rix also highlighted the importance of economic diversification to reduce Namibia’s reliance on SACU transfers and argued that investing in sectors such as renewable energy, mining value addition, and tourism is crucial for long-term sustainability.