SA, neighbours battle over money

Pretoria - A tug-of-war over how to divide billions of rands earned from customs duties in southern Africa dominated a regional summit on Friday that could have a major impact on the region's poorest nations.

Leaders of Botswana, Lesotho, Namibia, South Africa and Swaziland met to review a proposal on a new system for dividing up the revenues earned by the Southern African Customs Union (Sacu).

The five nations have a unified tariff regime. Money collected is put into South Africa's general revenue fund and then divided amongst the members.

Trade slumped during the global recession, meaning South Africa's payouts to the four smaller members were halved.

South Africa is also keen to keep a greater portion of the revenue for itself, arguing that it accounts for the lion's share of regional trade. The revenue totalled about R45bn in the 2008-2009 fiscal year.

"The summit reiterated that the review of the revenue sharing arrangement is critical, particularly in the context of the volatility of the customs revenues," the summit's final communique said.

"The summit directed that this work be pursued and concluded urgently."

Any changes could have potentially dramatic effects on the group's poorest members, Swaziland and Lesotho, which rely on Sacu payments for more than half of their governments' income.

Reduced payments over the last two years have already sparked street protests in Swaziland, where the kingdom wants to slash salaries for civil servants to escape from a crippling budget crisis.

Tension over changes to the revenue-sharing regime prompted the bloc to hire an Australian consultancy to propose a new system, which the leaders reviewed on Friday. A final decision on it is expected in April.

President Jacob Zuma led the meeting in Pretoria, also attended by Swazi King Mswati III, Namibian President Hifikepunye Pohamba, Lesotho Prime Minister Pakalitha Mosisili, and Botswana's acting deputy president Ponatshego Kedikilwe.