Scoping the future of SACU: a hundred years on

The Southern African Customs Union (SACU) faces existential threats driven by internal dissonance over revenue distribution and trade agreements. South Africa currently provides significant fiscal subsidies to Botswana, Lesotho, Namibia, and Swaziland (BLNS) through a revenue pool that is deemed unsustainable and procyclical. Tensions are further exacerbated by the interim Economic Partnership Agreements (IEPAs) signed by Botswana, Lesotho, and Swaziland, which South Africa and Namibia refuse to sign. The author argues that the dissolution of the customs union could occur if these trade differences are not resolved, potentially leading to the economic collapse of Lesotho and Swaziland. To ensure stability, the document proposes a regional development agenda and the creation of a development fund to reduce BLNS dependence on the revenue pool and preserve the common external tariff.

• The SACU revenue-sharing mechanism is flawed due to its procyclical nature, meaning revenues rose unsustainably before the financial crisis and dropped sharply afterward. There is a consensus within South Africa that it can no longer indefinitely sustain the fiscal burden of subsidizing the national budgets of the BLNS states.
• A divide exists regarding trade with the European Union: Botswana, Lesotho, and Swaziland have signed interim EPA agreements (IEPAs), while South Africa and Namibia refuse to do so. If implemented, these IEPAs would undermine the customs union by requiring South Africa and Namibia to enforce border controls to prevent the leakage of goods, potentially leading to the total dissolution of SACU.
• The economic dependence of the BLNS states on South Africa is extreme, with South Africa accounting for over 90% of the region's GDP. An abrupt end to revenue transfers would likely result in Lesotho and Swaziland becoming failed states, which would subsequently increase migration pressures on South Africa.
• To resolve the impasse, the document suggests establishing a development fund derived from the revenue pool to invest in public goods and create sustainable economies in BLNS states. This would reduce their reliance on direct budget transfers and mitigate resentment regarding South Africa's regional dominance.

APA

South African Institute of International Affairs (2010). Scoping the future of SACU: a hundred years on. https://saiia.org.za/research/scoping-the-future-of-sacu-a-hundred-years-on/

Chicago

South African Institute of International Affairs. Scoping the future of SACU: a hundred years on. 2010. https://saiia.org.za/research/scoping-the-future-of-sacu-a-hundred-years-on/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Scoping the future of SACU: a hundred years on |date=12 July 2010 |url=https://saiia.org.za/research/scoping-the-future-of-sacu-a-hundred-years-on/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2010scoping, author = {{South African Institute of International Affairs}}, title = {{Scoping the future of SACU: a hundred years on}}, institution = {South African Institute of International Affairs}, year = {2010}, month = jul, url = {https://saiia.org.za/research/scoping-the-future-of-sacu-a-hundred-years-on/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }