President Hage Geingob has raised concerns about the trade regulations of the Southern African Customs Union (SACU), saying in its current form it does not allow for industrialisation.
The President said SACU’s failure to conform to open trading is one of the reasons that led to the crumbling of the local car manufacturing Peugeot Opel Assembly Plant, due to issues related to import duties and taxes.
“For many years we have requested to review the tariffs including regulations to be balanced because as it stands it affects industrialisation in member countries,” Geingob said.
“We have German cars here for instance, but we cannot directly buy them, instead they need to be shipped and assembled in South Africa. And during that process, they are creating value addition, employment and growing their economy, yet we cannot do the same.
“What kind of brotherhood is this? Anyways, I will engage with my counterparts again, and we are dealing with the matter, as we try to find an amicable way for a win-win. Right now, I cannot tell you what measures or interventions we are going to take, but we shall handle it. SACU is the problem as we are tied to importing within, without the option of sourcing from elsewhere, this is because of high taxes and restrictions, hence as members, we need to deal with this collectively,” the Head of State said during a media engagement.
He added that other countries in SADC are willing to join but due to SACU’s current conditions, they cannot do so.
SACU consists of five Member States such as Botswana, South Africa, Lesotho, Eswatini and Namibia. It seeks to link the Member States by a single tariff and no customs duties between them.
The Member States form a single customs territory in which tariffs and other barriers are eliminated on substantially all the trade between them for products originating in these countries and there is a common external tariff that applies to non-members of SACU.
South Africa sets the common tariff schedule for SACU with consultation from members.
Meanwhile, the Peugeot plant which was set up in 2018 with a N$190-million investment, is a joint venture between French company Groupe PSA which owns 51%, and the government through Namibia Development Corporation (NDC), holding 49%a. The plant was poised to create jobs and be able to produce 200 vehicles per annum.
However, it was met with stiff resistance from the National Association of Automobile Manufacturers of South Africa (Naamsa) which alleged that the vehicle plant was set up in breach of trade rules.
As a result, it could not compete within the market due to import duties of between 18% and 25% into the SADC and SACU.
In addition, it was accused of importing items from other markets with a 5% import duty, thus giving it an unfair advantage of not paying 18%. Following this back and forth, Groupe PSA, instituted legal action against the government for failing to secure its interest for the exemption from excise and customs duties, taxes, and levies for exporting assembled vehicles to SACU and SADC.
