tralac hosted a roundtable discussion on the Southern African Customs Union (SACU) at the University of Cape Town Graduate School of Business on 17 September 2015. The meeting was held to reflect on the current status of SACU and to consider future scenarios for SACU’s development.

The meeting was opened with two presentations that set the context of the discussion. The first reviewed the history of SACU and its key features in terms of aspects covered in the Agreement. It highlighted the current impasse in SACU and the fragmented approaches and discussions at national and regional levels.

The second presentation highlighted how SACU has operated more as an organisation for intergovernmental cooperation than a regional arrangement with supranational authority. This has mainly been due to the lack of implementation of institutions provided for in the SACU Agreement, which has in turn contributed to some problems in the integration and development process of the region. In spite of these challenges, SACU has contributed to the maintenance of a stable region.

The revenue sharing arrangement was noted as the unique feature of SACU that has ensured such stability. However, this arrangement is now at risk, as evidenced by some public pronouncements by South Africa that it would like this arrangement to be reviewed. This is most likely as a result of economic and fiscal pressures that its economy is currently facing, further exacerbated by a slowdown of the global economy. At the same time, there seems to be growing discontent by the BLNS countries that their industrialisation prospects are circumscribed by the current SACU framework, which favours South African industrial development.

It was noted that there is regrettably a lack of movement from any of the SACU member states to resolve this impasse, the continuation of which is risky given the threat that it poses to stability of the region. This would particularly be the case if the fiscal constraints that South Africa is facing force it to unilaterally push for the review of the revenue sharing arrangement in isolation of a broader reconsideration of the SACU Agreement so as to make it one that effectively delivers on regional industrialisation and development.

The discussions resulted in the following suggestions as a way forward:

1. There is need for technical experts to motivate increased political engagement on SACU issues as a matter of urgency, both within countries and among partner countries.

2. It is necessary to take stock of the decisions that have been taken since the entry into force of the 2002 Agreement and to shape a common vision on SACU’s future. This should then inform the approach to resolving the current challenges. As the current Chair of SACU, South Africa must – in conjunction with the SACU Secretariat – take the initiative to move this process forward. Meanwhile, tralac could assist the process through research and analysis that can form inputs into the formulation of such a common vision and resolution of the challenges.

3. Consideration should be given to hosting a retreat to deliberate and agree on the way forward. This must be done taking advantage of the new political leadership that is currently in place in most SACU countries.

See a related Working Paper by Gerhard Erasmus: What future Scenarios for the Southern African Customs Union?