This study sets out to investigate how the volatility of income from the common revenue pool (CRP) of the Southern African Customs Union (SACU) is affecting health expenditures, particularly in the HIV/AIDS sector, in Botswana, Lesotho, Namibia and Swaziland (BLNS). Following an outline of SACU's rich historical background as well as its political economy and state of HIV/AIDS, the study provides evidence of declining revenues from the CRP accruing to the BLNS countries. Our investigation further reveals that this decline in receipts from SACU is likely to continue. Some of the factors responsible for the revenue decline include global business cycles, poor performance of the South African economy, and declining global trade tari¤s following developments in regional integration involving SACU and other countries/trading blocs. There are several policy options for the BLNS countries to counter the declining SACU revenue. We suggest that in the short run, the BLNS countries should lobby for an increase in donor support to cover a funding gap that is predicted to emerge. Donor funding may have to be complemented with fiscal restraint, cutting down expenditures in non-priority areas. Realising that the expenditure cuts need not be done in a way that constricts the economies, relatively larger fiscal deficits may be inevitable. In the long run, the BLNS countries should consider adopting an expenditure plan anchored on domestic revenue. Their fiscal framework may have to be restructured, moving away from reliance on SACU revenue, especially for recurrent expenditures. They will also need to aim at efficient and effective use of public resources.
Ngalaa, H.; Ahmad, K.; Whiteside, A. Public Health Expenditure Implications of theSouthern African Customs Union Revenue Volatility inBLNS Countries. Health Economics and HIV/AIDS Research Division, University of KwaZulu-Natal, Durban, South Africa (2010) 25 pp.