SACU Revenue Sharing Formula: The History of An Equation

“The purpose of this paper is to examine 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).This 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.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 final section of the study reviews the issues that need to be considered by SACU members in an adjustment of the revenue formula so as to avoid a macroeconomic crisis in Southern Africa.”