Tuesday, August 10, 2010

SACU Revenue Sharing Formula: The History of An Equation

This paper examines the evolution of the SACU revenue sharing formula (RSF) and what implications it has had on the revenue of Botswana as well as the other small state members of the customs union that include Lesotho, Namibia and Swaziland (BLNS). The paper does not attempt to review the three SACU treaties per se and they are discussed only to the extent that their other provisions bear on the distribution of revenues from the customs union. There has been adequate and extensive commentary by many authors. The first section carries a historical review of the SACU revenue sharing formula from a Botswana perspective. The formula is considered through its various iterations over the last century. It is argued that the SACU revenue sharing formula has been a bell-weather in the history of southern Africa. The initial formula and the two reforms have been preceded by seismic historical changes in the geo-politics of the region- the creation of the Union of South Africa in 1910, the independence of Botswana, Lesotho and Swaziland in the mid-1960‟s and the end of apartheid which signaled the commencement of the 1994-2002 renegotiations.

In the second section of the paper the historical experience from other customs unions, the theory of the distribution of customs union revenue and the more significant studies on this in the SACU region are considered. In the third section the distribution of the revenues between SACU members is considered under various scenarios with an emphasis on the case of Botswana. The impact of a shift to a "development funding‟ as opposed to general revenue transfers as broadly envisaged by South Africa would impact Botswana and the other BLNS is also considered. Click here to access the full paper.

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