10 Feb 2014

Concerns have been raised about the implications of murmurs coming from some quarters in South Africa regarding the latter pulling out of the Southern African Customs Union (SACU) arrangement and what it would do to Botswana’s economy.

Mr John Cairns, currency strategist at Rand Merchant Bank, said such a move would spell disaster for countries such as Swaziland who were solely dependent on the revenue they got from SACU.

“It would also be bad for Botswana since revenue from SACU is the second largest earner in the country’s GDP,” he said. Mr Cairns was speaking at a budget review seminar organised by First National Bank Botswana (FNBB).

He said it was understandable that South Africa had been calling for the review of the formula used to share the SACU revenue. “They are the big dogs within the region with their own heavy budget and as such would want to add as much as they can to their budget,” he said.

Mr Cairns said he could not predict what would happen regarding the issue of SACU and reports that South Africa wanted to pull out of SACU.

Speaking about the overview of the global economy, he said since the economic recession, the United States’ economy has shown growth and as such was leading the way out of the recession.

“Even though economic growth has been patchy and slow, developing world is also picking up steam with regards to recovery,” he said.

The chief executive officer of FNBB, Ms Lorato Boakgomo-Ntakhwana, said the budget review seminar afforded stakeholders an opportunity to interrogate the budget speech and enabled the nation to derive some meaning from it.

“It also gives us the opportunity to discuss pertinent issues and also gives us the direction the economy will take in the next few months,” she said.

Mr Rudi Binedell, audit partner at Pricewaterhouse Coopers said what he got from the 2014/2015 budget speech regarding tax implications were three things that are likely to change.

“Revenue base to be expanded and tax regime simplified, meaning amendments to the income tax act which will prevent erosion of the tax base,” he said.

Mr Binedell said the second change that was likely to occur was the value added tax act amendments, resulting in increasing threshold and a range of basic foodstuffs expanded and exempted and also farming equipment exempted.

The third change is likely to be the transfer duty act amendments, resulting in lower transfer duty charges, especially for first time buyers. ENDS