Cape Town — Finance Minister Trevor Manuel is worried about the effect the global recession will have on countries that derive a large part of their national income from the revenue pool of the Southern African Customs Union (Sacu).

Sacu consists of Botswana, Lesotho, Namibia, Swaziland and SA, which combine their customs and excise revenue into a common pool that is then divided under a revenue-sharing formula.

SA's transfers to Sacu members are forecast to decline by R1bn in the coming fiscal year from R28,9bn to R27,9bn, and by a further R1,5bn in the following year . Most vulnerable to the contraction will be countries such as Lesotho and Swaziland, which derive up to half their national revenue from the customs union.

Sacu revenue contribute more than 20% of the total budget revenue for Botswana and Namibia.

Replying to questions on the national budget tabled last week, Manuel said the revenue pool would shrink with the decline in imports. New car imports, which tended to be cyclical, were expected to drop sharply, as well as imports related to the construction of soccer stadiums.

"The impact of the falling revenues on Lesotho is very worrying," Manuel said, adding that issues of sustainability would be discussed at the next Sacu meeting in April.

The budget review noted that customs duty revenues were "extremely volatile", performing above expectation when the economy was growing strongly but poorly when the economy slowed.

"Customs duties for 2008-09 are expected to be R7bn less than expected. Where member states rely on this revenue to finance a significant part of their expenditure, falling import growth will present a substantial challenge to coming budgets."

Between 2000-01 and 2006-07, revenue transfers paid from the common revenue pool to the non-South African member countries grew 22% a year due to strong growth in imports and the growing demand for high-tariff imports such as cars.

In 2006-07, the revenue pool amounted to R41,3bn, of which R790m was derived from the four other countries and the remainder (98%) from SA.