SCOPING THE FEASIBILITY AND IMPLICATIONS OF A STABILISATION FUND FOR SACU

The paper concludes that a regional SACU stabilisation fund is inappropriate and infeasible because member states experience different degrees of revenue volatility driven by different sources. While Lesotho, Namibia, and eSwatini are primarily affected by the SACU revenue pool's distribution formula, Botswana is driven by commodity revenues and South Africa by its internal tax base. The author argues that the core issue for the BLNS countries is the current revenue-sharing formula, which links their revenues to South African import patterns. The paper recommends that member states focus on revising the revenue-sharing formula or implementing country-level fiscal tools—such as medium-term expenditure frameworks, fiscal rules, or national stabilisation funds—rather than pursuing a regional fund.

• A regional stabilisation fund for SACU is deemed inappropriate and infeasible because member states face varying levels of revenue volatility emanating from different sources.
• Revenue volatility drivers differ by country: for Lesotho, Namibia, and eSwatini, the SACU revenue pool is the main driver; for Botswana, it is commodity revenues; and for South Africa, it is the internal tax base.
• The current SACU revenue-sharing formula amplifies volatility for Botswana, Lesotho, Namibia, and eSwatini (BLNS) because they receive a much larger share of customs revenue than they collect, making them dependent on South African import patterns.
• The process for distributing SACU pool revenues creates further uncertainty due to a disconnect between annual collections and actual payments, often involving adjustments based on data from several years prior.
• There is no known precedent for a multi-country regional fiscal stabilisation fund, as such an arrangement would require member states to externalise national fiscal management and adhere to common regional rules.
• Stabilisation funds are not the only tool for managing budget volatility; other viable fiscal instruments include medium-term expenditure frameworks, fiscal rules, fiscal councils, and revenue earmarking.
• The only comprehensive solution to address the root cause of revenue volatility for the BLNS countries is a complete revision of the SACU revenue-sharing formula.
• Effective stabilisation funds typically require high levels of institutional transparency, accountability, and strict adherence to predefined deposit and withdrawal rules.

APA

Ramkolowan, Y. (2018). SCOPING THE FEASIBILITY AND IMPLICATIONS OF A STABILISATION FUND FOR SACU. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2018/07/GEG-africa-DP-Ramkolowan-JULY-2018-FINAL-WEB.pdf

Chicago

Ramkolowan, Yash. SCOPING THE FEASIBILITY AND IMPLICATIONS OF A STABILISATION FUND FOR SACU. South African Institute of International Affairs, 2018. https://saiia.org.za/wp-content/uploads/2018/07/GEG-africa-DP-Ramkolowan-JULY-2018-FINAL-WEB.pdf.

Wikipedia

{{cite report |last1=Ramkolowan |first1=Yash |title=SCOPING THE FEASIBILITY AND IMPLICATIONS OF A STABILISATION FUND FOR SACU |publisher=South African Institute of International Affairs |date=July 2018 |url=https://saiia.org.za/wp-content/uploads/2018/07/GEG-africa-DP-Ramkolowan-JULY-2018-FINAL-WEB.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ramkolowan2018scoping, author = {Ramkolowan, Yash}, title = {{SCOPING THE FEASIBILITY AND IMPLICATIONS OF A STABILISATION FUND FOR SACU}}, institution = {South African Institute of International Affairs}, year = {2018}, month = jul, url = {https://saiia.org.za/wp-content/uploads/2018/07/GEG-africa-DP-Ramkolowan-JULY-2018-FINAL-WEB.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }