WHY DOES A SACU DEVELOPMENT FUND MATTER?

This research paper explores the potential for establishing a Southern African Customs Union (SACU) development fund to deepen regional integration and mitigate trade constraints. By analyzing the European Structural and Investment Funds (ESI Funds), the CARICOM Development Fund (CDF), and the Eurasian Fund for Stabilization and Development (EFSD), the author provides recommendations on capitalization, governance, and project prioritization to move SACU beyond its current role of simple revenue sharing.

• The 2010 SACU Vision and Mission expanded the organization's scope from facilitating the free flow of goods to pursuing "equitable and sustainable development" for its citizens, aiming to serve as an "engine for regional integration and development, industrial and economic diversification, the expansion of intra regional trade and investment, and global competitiveness."
• Current SACU trade is hindered by significant constraints, including non-tariff barriers, deficiencies in energy, water, and irrigation infrastructure, lack of standards harmonization, and limited access to short-term trade finance and specialist skills.
• A proposed SACU development fund could reform the existing Common Revenue Pool (CRP) and Revenue Sharing Formula (RSF), shifting the focus from direct transfers to national budgets toward funding specific development projects and improving accountability.
• The European Structural and Investment (ESI) Funds utilize a complex capitalization model where the bulk of funding comes from the EU budget, supplemented by national co-financing, with a total potential amount exceeding EUR 637 billion (approximately $743.7 billion) for the 2014–20 period.
• The CARICOM Development Fund (CDF) employs a "pay-to-play" principle for more-developed countries (MDCs), using a formula based on regional GDP, GDP per capita, and net exports to determine contributions, while less-developed countries (LDCs) follow a different method to avoid disadvantage.
• The CDF generates a significant portion of its capital through an investment portfolio managed by an investment management committee, which focuses on balancing income growth and preserving capital.
• The Eurasian Fund for Stabilization and Development (EFSD), managed by the Eurasian Development Bank, provides a dual-function model that offers both stabilization mechanisms (financial credit for economic resilience) and investment loans for regional projects.
• Effective regional development funds often use co-financing strategies and partner with regional development banks; for example, the European Investment Bank (EIB) coordinates with ESI Funds through blending activities and technical assistance.
• The author recommends that a potential SACU development fund should have a clear, measurable mandate and a classification system for member states based on development levels to ensure equitable resource allocation.
• To ensure sustainability and inclusivity, the author suggests that a SACU fund should be open to both public and private sector borrowers and include private-sector representation on its governing board.
• The paper suggests that a SACU development fund should prioritize trade facilitation and infrastructure-related projects (such as water, electricity, and transport networks) rather than attempting to address all development issues.

APA

Ramsamy, R. (2018). WHY DOES A SACU DEVELOPMENT FUND MATTER? South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2018/02/GEG-africa-DP-ramsamy-FEB-2018-FINAL-WEB.pdf

Chicago

Ramsamy, Rebecca. WHY DOES A SACU DEVELOPMENT FUND MATTER? South African Institute of International Affairs, 2018. https://saiia.org.za/wp-content/uploads/2018/02/GEG-africa-DP-ramsamy-FEB-2018-FINAL-WEB.pdf.

Wikipedia

{{cite report |last1=Ramsamy |first1=Rebecca |title=WHY DOES A SACU DEVELOPMENT FUND MATTER? |publisher=South African Institute of International Affairs |date=February 2018 |url=https://saiia.org.za/wp-content/uploads/2018/02/GEG-africa-DP-ramsamy-FEB-2018-FINAL-WEB.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ramsamy2018why, author = {Ramsamy, Rebecca}, title = {{WHY DOES A SACU DEVELOPMENT FUND MATTER?}}, institution = {South African Institute of International Affairs}, year = {2018}, month = feb, url = {https://saiia.org.za/wp-content/uploads/2018/02/GEG-africa-DP-ramsamy-FEB-2018-FINAL-WEB.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }