By a quirk of apartheid history, the customs union also makes South Africa probably the most generous donor in the world. Peter Fabricius of Independent Newspapers points out that in 1969, the apartheid government took the decision to use SACU to curry favour in Southern Africa. Instead of 99% of the customs revenue collected going to South Africa, the distribution formula was adjusted to transfer the lion’s share to Botswana, Lesotho, Namibia and Swaziland. Fifty years later, this has created the perverse relationship in which South Africa now transfers just over R50 billion a year to these countries with no strings attached. R50 billion a year is more than 5% of government revenue, which is proportionally more than double the United Nations target. It is more than double what the world’s most generous international donors spend on aid. In terms of sheer volume, R50 billion a year puts South Africa in the same league as international donors, such as Ireland or Denmark.

With South Africa’s most recent budget speech reflecting serious constraints to the fiscus, one would expect more debate about whether the volume of this spending is still in South Africa’s interests. Notably, one cannot help begging a justification for Botswana still receiving this enormous subsidy even though the country’s GDP per capita is a tenth larger than South Africa’s. Similarly while Namibia is not as rich as South Africa, it is far from being a poor country and one that traditional, richer donors struggle to justify supporting with aid. Furthermore, the funding provided is not at all a small contribution to these governments’ budgets. As Fabricius reported, the SACU grant “now funds 50% of Swaziland’s entire government revenue, 44% of Lesotho’s, 35% of Namibia’s and 30% of Botswana’s.”

Available: http://www.sacsis.org.za/site/article/2318