Now, many would tell you that the main source of revenue is actually import duty from the Southern African Customs Union (Sacu), which is only partially right. By 2014 Sacu revenue for Namibia's tax coffers was estimated at 37% of total government income. This is down from the peak of 47% in 2007, but Namibia remains highly dependent on Sacu income.

 

A customs union like Sacu exists when several countries Southern Africget together and decide to set one common rate of tariff on all goods coming in from outside the member states. They then pool the tariff revenue on goods coming in from say the USA, the EU or China and the normal way to distribute this revenue is based on what is called the 'destination principle'. If 5% of total Sacu imports went to Namibia then Namibia would get 5% of revenues.

 

But Sacu has one of the strangest revenue sharing formulas of any customs union in the world. Sacu tariff revenues are distributed among the five members based on the share of intra-Sacu imports. At the end of each year the five Sacu members get together and decide what was imported the previous year within their borders.

 

As a result, the smaller states - Botswana, Lesotho, Namibia and Swaziland (BLNS) - get most of the revenue because they import almost everything from South Africa while South Africa imports very little from the BLNS states.

Depending on the year, about 80% of Sacu customs revenue go to BLNS. South Africa, which has 53 million people and dominates the bulk of Sacu's foreign imports, gets less than 20%. That is why the South African treasury, unions and much of civil society hate this arrangement, that was inherited from the apartheid era to shore up the colonial system, because they are in effect transferring about N$20 billion a year to BLNS.

 

From the Namibian perspective it means we are subsidised to import and, thus, discouraged from producing for export. And on this basis Sacu is extremely successful because BLNS states have bloated governments but produce nothing, allowing South Africa to produce virtually everything that is consumed in the entire region.

 

But suddenly something very new has happened in Namibia's trade with Botswana. From being a very minor trading partner, Botswana has suddenly become Namibia's biggest export destination at somewhere close to N$11 billion in 2014. Those exports are almost entirely Namibia's diamonds.

 

In the past, diamonds from Namibia used to go to De Beers head office at Charterhouse in London and sold to De Beers sightholders there. But a 2011 marketing agreement between De Beers and Botswana meant that De Beers moved its trading sites from London to Gaborone. Diamonds produced in the 'De Beers zone' i.e Botswana, Namibia, South Africa and Canada would be traded out of Gaborone.

 

Source : allafrica.com