ga_th3_dp-ginindza-et-al_20190920-e2d2b93722369c5a.pdf

This research paper examines the trade reform of the Southern African Customs Union (SACU), focusing on the challenges and opportunities for regional integration among its member states. Through eight case studies of small and medium enterprises (SMEs) in Botswana, Lesotho, Namibia, and Swaziland (BLNS), the paper identifies significant regulatory, infrastructure, and systemic barriers that hinder the development of cross-border value chains. It argues that the current SACU structure is dominated by South Africa and that a regional development fund could be a critical tool to finance infrastructure and reforms necessary to deepen economic integration and alleviate poverty.

• South Africa is the overwhelmingly dominant economic force in SACU, accounting for 92% of the region's GDP and 87% of its population as of 2014. Consequently, most value chains in the region depend on access to the South African market and are influenced by South African purchasing decisions.
• Member states are currently deadlocked over the 2002 SACU agreement, specifically regarding the revenue-sharing arrangement and the role of the SACU Tariff Board. South Africa seeks to incorporate a development fund into the revenue mechanism and reform the Tariff Board to maintain national authority over tariffs, while other members generally resist these changes.
• The BLNS countries (Botswana, Lesotho, Namibia, and Swaziland) are heavily reliant on the SACU revenue pool for government expenditure. In 2014/15, this pool contributed between 31% (Botswana) and 54% (Swaziland) of total government revenue, creating a disincentive for these governments to divert funds toward a regional development fund.
• Intra-SACU trade for BLNS countries is highly concentrated in a few product sectors and consists largely of raw materials and intermediate goods. For example, Botswana's exports to SACU are concentrated in mineral resources, precious stones, and machinery, while Lesotho's are focused on machinery, textiles, and food/beverages.
• Cross-border trade in the region is characterized by a high proportion of small-scale traders, many of whom are women. However, existing trade facilitation initiatives, such as the SACU preferred trader programme, primarily benefit medium and large enterprises, leaving SMEs and informal traders to face significant constraints.
• Firms in the BLNS face severe infrastructure and regulatory barriers, including unreliable electricity (particularly in Swaziland and Botswana), high transport costs, and a lack of harmonized standards. For instance, the lack of mutual recognition of pharmaceutical standards between Namibia (WHO) and South Africa (PICS) inhibits trade.
• Customs inefficiencies and non-tariff barriers (NTBs) significantly increase the cost of doing business. Issues include uncoordinated VAT systems in Swaziland, burdensome clearance procedures, and arbitrary fines for truck inspections in Botswana.
• There is a critical shortage of specialized technical and management skills in the BLNS, forcing firms to rely on South African specialists. This is exacerbated by restrictive immigration and work permit requirements that can delay essential equipment repairs for weeks.
• Export-oriented SMEs in the BLNS provide vital poverty alleviation by employing low-skilled workers, particularly women, and paying wages above the minimum. In Swaziland's agro-processing sector, over 80% of employees are women who often serve as the primary breadwinners for their households.
• The paper proposes that a SACU development fund should move beyond financing individual projects to addressing systemic regulatory and infrastructure barriers. Recommended reforms include establishing 24-hour one-stop border posts, harmonizing standards, and creating a regional trade finance facility.

APA

South African Institute of International Affairs (n.d.). ga_th3_dp-ginindza-et-al_20190920-e2d2b93722369c5a.pdf. https://saiia.org.za/wp-content/uploads/2017/07/GA_Th3_DP-ginindza-et-al_20190920.pdf

Chicago

South African Institute of International Affairs. ga_th3_dp-ginindza-et-al_20190920-e2d2b93722369c5a.pdf. n.d. https://saiia.org.za/wp-content/uploads/2017/07/GA_Th3_DP-ginindza-et-al_20190920.pdf.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=ga_th3_dp-ginindza-et-al_20190920-e2d2b93722369c5a.pdf |url=https://saiia.org.za/wp-content/uploads/2017/07/GA_Th3_DP-ginindza-et-al_20190920.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairsndgath3dpginindzaetal20190920e2d2b93722369c5apdf, author = {{South African Institute of International Affairs}}, title = {{ga\_th3\_dp-ginindza-et-al\_20190920-e2d2b93722369c5a.pdf}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2017/07/GA_Th3_DP-ginindza-et-al_20190920.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }