SACU Receipts Up 69% Year-On-Year

Botswana’s share from the Southern African Customs Union (SACU) common pool shows increased inflows in the first quarter of fiscal year 2023/24. In an updated brief, the Ministry says “The receipts amounted to P6.1 billion, reflecting a significant growth of 69 percent when compared to the same quarter of the fiscal year (FY) 2022/23”. “(The) increase is due to higher budget allocations to member states [ihc-hide-content ihc_mb_type="show" ihc_mb_who="1,2,3,4" ihc_mb_template="1" ] and excess collections repayment to Botswana above what was anticipated.” Downside risks “Botswana anticipates to get P3.4 billion repayments during FY2023/24.” However, the brief notes that the situation may change in the near future. “The continuous appreciation of the Pula against the Rand is expected to offset some of these gains,” it says. “Weak economic performance from South Africa, which is the largest contributor to the SACU pool, poses downside risks to the total pool.” Meanwhile, the United Nations has expressed fears that COVID-19 may have worsened inequality among SACU member states. In a recent report assessing Botswana’s progress in Sustainable Development Goals, the United Nations notes that the issue of high inequality is a sub-regional one, and is not limited to Botswana. Women more impacted “Countries in SACU are among the most unequal in the world,” the report says. “The socio-economic impact of the pandemic would have likely increased vulnerability, worsened outcomes for the poor, and thus increased inequality.” According to the report, women are overrepresented in pandemic-affected occupations such as the retail, travel and hospitality industries and are prevalent in the informal sector. It notes that while inequality within SACU has come down from record levels, it remains very high for all countries. Botswana and Lesotho recorded the most rapid declines while Eswatini and South Africa were the slowest. In South Africa’s case, the decline is described as marginal, from a Gini coefficient value of 68 to 67 over the course of a decade. Higher income inequality Although it warns that the latest estimates are based on data prior to the pandemic, the report states: “Inequalities and poverty would have likely worsened. Analyses suggest that events of this kind are associated with higher income inequality.” Citing a recent study by the World Bank highlighting key drivers of inequality, the United Nations notes that these drivers can differ from one country to another. “For Botswana, employment/labour related outcomes (i.e. wage differentials, occupation types, skills, etc.) and demographics are the primary contributors to income inequality, contributing 36 percent and 28 percent respectively to overall inequality,” it says. It states that in the labour market, differences in skills play a critical role in determining wage levels. Given the limited number of skilled workers, returns to post-secondary education are high, which in turn increases wage disparities. Male labour income up tenfold by age 25 The gender wage gap is also substantial. Says the report: “A closer look at the economic life cycle reveals significant differences in wages between genders, substantially favouring men at virtually all ages except for those under the age of 30. Male labour income increases tenfold by age 25.” By age 35, male labour income is nearly one-quarter (23.4 percent) higher than the peak labour income for women. According to the report, the female labour income profile reaches its peak at just under 85 percent. [/ihc-hide-content]

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SACU Receipts Up 69% Year-On-Year

But the finance ministry warns: “The continuous appreciation of the Pula against the Rand is expected to offset some of these gains.”

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SACU Receipts Up 69% Year-On-Year

But the finance ministry warns: “The continuous appreciation of the Pula against the Rand is expected to offset some of these gains.”

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