Working Papers

Enhancing benefits of market and financial integration in SACU: some policy options

Enhancing benefits of market and financial integration in SACU: some policy options

Registration to the tralac website is required to download publications.

13 Dec 2019

Author(s): Paul Kalenga

This Working Paper provides some policy options confronting members of the Southern African Customs Union (SACU) and the Common Monetary Area (CMA) arrangements, which are closely associated with each other. It argues that these arrangements are beneficial in a sense that they lower transaction costs for cross-border trade and investment as well as the maintenance of price and financial stability. Despite some implementation challenges, concerted efforts should be made to safeguard their benefits, minimise associated costs and address adjustment challenges towards leveraging mutual beneficial growth and development of their members.

Given the level of trade, financial and monetary integration, opting out of these arrangements is likely to be costly. However, there are critical policy options related to asymmetry in decision making, institutional and governance challenges as well as the extent to which these arrangements can be transformed further into deeper levels of sub-regional economic integration. Addressing these challenges will require a paradigm shift from a top-down process limited to government officials towards an inclusive engagement with stakeholders, particularly traders, investors and consumers, who are the direct beneficiaries of these arrangements.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.