On the Future of the Southern African Customs Union

The author identifies three primary points of divergence within the Southern African Customs Union (SACU): revenue distribution, trade and industrial policy, and foreign policy orientation. South Africa's role as a primary subsidizer of smaller members creates fiscal tension, while Botswana, Lesotho, and Swaziland seek trade diversification via an Economic Partnership Agreement (EPA) with the EU, contrasting with South Africa's state-led industrial policy. The author warns that dismantling SACU could lead to the collapse of administrations in Lesotho, Namibia, and Swaziland, triggering mass migration into South Africa. Proposed solutions include a 'quid pro quo' where smaller states accept lower revenue in exchange for more policy influence, and the EU dropping the 'MFN clause' in EPA negotiations.

• South Africa provides substantial subsidies to smaller SACU members, particularly Lesotho and Swaziland, but the South African Treasury is concerned about the sustainability of these transfers given domestic fiscal pressures.
• There is a policy divide between South Africa and the 'EPA 3' (Botswana, Lesotho, and Swaziland); the latter seek trade diversification and liberalization through an Economic Partnership Agreement with the EU, while South Africa prefers a sector-based industrial policy with state-owned enterprises and potential tariff increases.
• Foreign policy tensions exist between South Africa and Botswana, specifically regarding the government of Zimbabwe and the influence of Western powers, which complicates trade negotiations and the 'MFN clause' in the EU's EPA.
• The collapse of SACU and the cessation of revenue transfers would likely lead to the immediate collapse of governments in Lesotho, Namibia, and Swaziland, potentially causing a migration crisis into South Africa.

APA

South African Institute of International Affairs (2009). On the Future of the Southern African Customs Union. https://saiia.org.za/research/on-the-future-of-the-southern-african-customs-union/

Chicago

South African Institute of International Affairs. On the Future of the Southern African Customs Union. 2009. https://saiia.org.za/research/on-the-future-of-the-southern-african-customs-union/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=On the Future of the Southern African Customs Union |date=9 July 2009 |url=https://saiia.org.za/research/on-the-future-of-the-southern-african-customs-union/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2009future, author = {{South African Institute of International Affairs}}, title = {{On the Future of the Southern African Customs Union}}, institution = {South African Institute of International Affairs}, year = {2009}, month = jul, url = {https://saiia.org.za/research/on-the-future-of-the-southern-african-customs-union/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }