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MBABANE – The country should brace itself for a lower share from the SACU revenue pool as a result of reduced economic activity in South Africa.

SACU is the Southern African Customs Union and Eswatini is a member alongside Botswana, Namibia, Lesotho and South Africa.
Statistics South Africa, which is the neighbouring country’s data agency, released figures on Tuesday morning showing South Africa’s economy shrank by 1.4 per cent in the fourth quarter of 2019 after a 0.8 per cent reduction in the third quarter. By Stats SA definitions, a recession is said to have taken place when the economy experiences negative growth over two successive quarters.

For the full year 2019, the South African economy grew only by 0.2 per cent in real terms, compared to 0.8 percent growth for 2018.
Eswatini is expected to release its own fourth quarter 2019 GDP figures before the end of the month, following real annual growth of 1.4 percent in the past year.

Lower growth in South Africa is associated with declines in the regional economies closely associated with Southern African powerhouse. For Eswatini and fellow SACU members, a recession in South Africa suggests a lower shared revenue pool.
Traditionally, South Africa is by far the biggest contributor to the shared revenue pool, reaching as high as 97 per cent contribution. For 2018-2019, the pool distributed about E98 billion, with South Africa receiving E44 billion. 


For 2019-20, SACU receipts for Eswatini increased from E5.8 billion to E6.3 billion and contributed about 36 per cent to the total revenue which is equivalent to nine percent of gross domestic product (GDP).
Analysts told this publication that the recession in South Africa was bad news for Eswatini, which relies on the regional powerhouse for most of its imports.

 “Given the proximity and deep integration of the Eswatini economy with that of South Africa, a recession in South Africa will have considerable negative implications for the country and it has the potential to derail it from the growth path it has set itself,” an economic expert told this publication yesterday. In the last five years, total imports from the South African market have been in the 70 - 73 per cent market share range. South Africa remains the main source of service imports for the country.  The positive trade balance amounting to E3.9 billion in 2019 is explained by a 16.2 percent rise in export receipts, largely dominated by the country’s export of soft drink concentrates, followed by sugar exports. On average, 67 per cent of the country’s exports are destined to the South African market.

When presenting his budget estimates for 2020/21 last month, Minister of Finance Neal Rijkenberg had said Eswatini was in a year of improved SACU receipts.


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