Each of the Common Monetary Area (CMA) Member States presented their 2014/15 Budgets during February 2014. An overview of the Budgets of Lesotho, Namibia and Swaziland reveals Namibia as the only country proposing fiscal amendments of any significance. A common theme of these Budgets is a concern about the increased uncertainty regarding the future of the South African Customs Union (SACU) and a firm intention to reduce reliance on SACU revenue.


The Minister of Finance, Dr Leketekete Victor Ketso, presented the 2014/15 Budget on 20 February 2014.

Government expenditure for 2014/15 is estimated at M15.4 billion (a 7.6% increase from the 2013/14 Budget), of which M10.4 billion is allocated to recurrent expenditure and M5 billion to capital expenditure. The Minister admitted that the growth of the wage bill is alarming and proposed an across-the-board increase in public sector salaries and wages of only 4 percent, despite the projected inflation rate of 6 percent.

The proposed financing of this Budget is estimated at M15.7 billion. This will include domestic tax revenue of M6.3 billion, M1.3 billion non-tax revenue, M7 billion from the SACU and M1 billion through budget support, donor grants and loans to achieve the proposed overall fiscal surplus of 1.3 percent of GDP.

Given the volatility surrounding the SACU revenue, it is proposed that, to the extent possible, SACU receipts are restricted to the investment budget and additional domestic revenues be mobilised to reduce dependence on SACU.

A draft minerals and mining policy is currently under review and expected to be finalised during the first half of 2014. With the assistance of the International Monetary Fund (IMF), the Government reviewed the fiscal regime governing the mining sector and it is expected that a new mining tax regime will be finalised as part of a wider review of the mining code.

A geological survey to determine the country's potential mineral resources will be advanced and a feasibility study will be conducted in 2014/15 for the establishment of a diamond centre, which will provide facilities for the sale of raw diamonds, cutting and polishing. The construction of the Letaeng cutting and polishing centre, aimed at supporting local production and beneficiation, has been completed and awaits agreement with Government on its operation.

The Money Transfer and Forex Regulations and Credit Reporting Regulations have been promulgated during the past year and the Insurance and the National Payment Systems Bills are being considered in Parliament and expected to become laws by end of 2014.

It is admitted that Lesotho's 'Doing Business' ranking is still very low at 136 out of 189 countries, which compares unfavourably with the rest of the sub-region. To improve the investment climate, Government intends to pursue legislative and regulatory reforms, including development of an investment policy.

To reduce the personal tax burden and encourage tax compliance, the Budget proposes reduction in both the lower and upper personal income tax rates, from 22 to 20 and 35 to 30 percent, respectively.

It is proposed that the 15 percent Value Added Tax (VAT) rate on alcohol and tobacco be abolished in order to simplify the VAT system. With the exception of zero-rated items, electricity and telecommunications (which is subject to VAT at 5 percent), all items will be taxed at the standard VAT rate of 14 percent. To curb abuse of alcohol and tobacco that could possibly arise from a reduction in the cost to consumers it is proposed that an additional 4 percent levy be imposed on purchases of these two items.

In order to promote regional integration and eliminate unfair competition, it is proposed to abolish the zero corporate tax rate on extra-SACU exports and the standard 10 percent rate to apply to all manufacturers.


Namibia's 2014/15 Budget presented on 19 February 2014 by the Minister of Finance, Ms Saara Kuugongelwa-Amadhila, announced that the budget deficit is expected to narrow to 5.4% of GDP from 6.4% of GDP in 2013/14, while the GDP growth rate is expected to average around 5.0%. Government expenditure for the 2014/15 financial year is expected to increase by 26.7 percent to N$60.28 billion. 79.6% of the spending commitment (N$48 billion) is allocated to operational expenditure. Analysts questioned the considerable allocations towards wage increases for civil servants.

N$5.3b was allocated to finance the 800 mega-watt Kudu gas-to-power plant and state-owned mining company, Epangelo Mining.

Members of the private sector raised a number of concerns at a public discussion on the Budget, including the need to start diversifying revenue sources and reduce reliance on the SACU receipts due to the uncertainty regarding the future of SACU revenues. Namibia's share of revenue from the SACU is estimated at R18.1b in 2014, constituting 34.7 percent of the country's total revenue collection of N$52.5 billion. Several businesses are also still facing challenges that arise from the slow processing of VAT refund claims.

It was announced that the non-mining company income tax rate will be reduced by a further 1% to 32% and the withholding tax on royalties payable to non-residents will be reduced to 9.6%. The VAT registration threshold will be increased from N$200 000 to N$500 000.

To broaden the revenue base, the introduction of environmental taxes was proposed, which will encompass a carbon dioxide emission tax on motor vehicles, incandescent light bulbs, and motor vehicle tyres. The Minister also proposed an export levy on primary commodities and natural resources including minerals, crude oil, gas, fish and game in order to promote domestic value-addition.

Government undertook to continue with tax reforms to enhance efficiency, broaden and deepen the revenue base and increase the competitiveness of the tax regime.


Minister of Finance, Martin G. Dlamini presented the 2014/15 Budget on 21 February 2014, announcing an expected growth rate of 2 percent.

The total amount of resources available in fiscal year 2014/15 is estimated at E15.3 billion (a 19 percent increase from 2013/14). E5.9 billion (51 percent) of the 2014/15 Budget is projected to be financed by non-SACU revenue. This is in line with Government's plan to reduce dependency on SACU receipts which stood at 56 percent in 2013/14.

The balance of the Budget will be financed through grants by development partners and loan funding to achieve an estimated deficit of 3 percent of GDP.

Overall recurrent expenditure will increase from E9.7 billion in 2013/14 to E10.6 billion in 2014/15, with wages and salaries increasing to E4.7 billion in 2014/15.

Capital spending will increase by 44 percent to E3.7 billion in 2014/15. Approximately 81 percent of this funding will be allocated to completing the ongoing projects, including the completion of Sikhuphe International Airport, the Sikhuphe-Mbadlane Road, and the Sicunusa-Nhlangano road.

New capital projects include the construction of the Hotel and International Convention Centre, the Mhlume Siphon scheme, rehabilitation of Malkerns Canal and various roads projects.

Swaziland Railways and South Africa's Transnet have partnered to construct a railway line approximately stretching 146km from Lothair to Sidvokodvo, Lavumisa and into South Africa through Golela. Significant progress has been made towards the completion of the feasibility study which is projected to be completed in the second quarter of 2014. The project is expected to allow quicker and cheaper access to major ports.

To ensure optimal and responsible exploitation of the minerals and mining sector, the Government enacted the Mines and Minerals Act and Diamond Act in 2011. Government has allocated E4.4 million in the 2014/15 Budget to continue implementing the 2011 Mining legislation and to encourage mining investors to process minerals within the Kingdom.

The Government plans to develop an Independent Power Producer policy in collaboration with the Southern African Trade Hub, to enable more power generators to enter into the electricity industry. In addition, hydro power generation capacity at the Dwaleni Power station along Ngwempisi River is to be increased and the exploration of renewable energy sources such as wind and solar power is to continue to be promoted.

Government through the Swaziland Investment Promotion Authority (SIPA) has prioritized the creation of an investment climate that is conducive for doing business in the country, through the implementation of the Investor Road Map (IRM). As a consequence of implementing the IRM, the country's ranking improved by 10 places in the Global Competitiveness Index from 134 in 2012 to 124 in 2014.

SRA, in partnership with COMESA, has embarked on upgrading the Automated System of Customs Data (ASYCUDA), which will provide an improved customs administration platform, including the direct payment of VAT refunds at the border.

Government vowed to continue supporting the Anti-Corruption Commission (ACC) and the Directorate for Public Prosecution (DPP) to enhance their fight against corruption in Swaziland and allocated E20.2 million to them.

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