Building capacity to help Africa trade better

Does SACU face a Crisis?

Trade Briefs

Does SACU face a Crisis?

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It may sound alarmist to suggest that a regional trade arrangement which has been in existence for more than a hundred years finds itself in a crisis. On the other hand, many a commentator now writes about a looming political and economic crisis in South Africa, the engine of SACU. How is the Organization affected and what additional challenges does it face? Does SACU have institutions capable of dealing with the dangers ahead? This Trade Brief discusses these questions as well as the consequences for the region if certain problems are not properly and expeditiously dealt with.

The first reason why SACU is truly unwell is that the Organization has been in institutional limbo from the moment its new Agreement entered into force. Its own game plan has never been implemented. Another and related reason for SACU’s dilemma flows from South Africa’s domestic troubles. The South African economy suffers from severe job losses, fiscal and trade deficits, energy insecurity, labour conflict, a declining mining sector, policy uncertainty, weak investor confidence, a weak currency, corruption, and a deterioration in competitiveness. The slowdown in the South African economy has pushed unemployment to over 34% in 2014 when considering the broad unemployment rate (this includes discouraged workers). South Africa faces its own crisis; which will not leave SACU intact.

Where do these developments leave SACU and the BLNS countries? What lies ahead? If the 2002 SACU design has definitely been abandoned (and this has not been officially announced) it needs to be replaced with a new and workable arrangement. SACU needs a new game plan; the present state of affairs amounts to a stalemate with detrimental consequences for the BLNS countries in particular. How should this task be undertaken and what principles should guide the exercise? 

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 authors and do not purport to reflect the views of tralac.


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