Single markets, customs unions and cross-border trade agreements are a feature of the modern global economy. The free trade of goods and services, protected by the shield of a common external tariff, creates the regional blocs that make for good international neighbours. The Middle East has the Gulf Co-operation Council. Europe has its European Union Customs Union. Africa, which is in the midst of the ambitious 54-country African Continental Free Trade Area (AfCFTA) project, has its own regional blocs, such as the East African Community; Economic and Monetary Community of Central Africa; and, of course, the Southern African Customs Union (SACU).

We say ‘of course’ because SACU is – or claims to be – the world’s oldest. Established in 1910 when SA became a union, SACU covered – and still covers – the territories of SA, Botswana, Lesotho, Eswatini and Namibia, where its headquarters are housed. The five SACU nations charge excise and customs duties on imports from the rest of the world, which are transferred into a pool managed by SA (which accounts for more than 90% of economic activity among the bloc). Funds from the pool are then redistributed back to the respective countries, based on an agreed-upon formula.

Through the decades, the agreements underpinning the customs union have been rewritten and renegotiated several times. In 2010, for example, the SACU Summit adopted a vision and mission, acknowledging the positive role it can play in promoting regional integration and the economic development of its member states. The founding principle of free trade, however, has remained unchanged.

That’s not to say there haven’t been a few glares over the fences along the way. In 2022, Botswana and Namibia stoked neighbourly tensions by unilaterally banning the importation of certain agricultural goods – ostensibly to protect their own production (they were quite happy to continue exporting to SA), but in clear disregard of the SACU agreement.

Opening the 8th SACU Heads of State and Government summit held in Eswatini in June, SA President Cyril Ramaphosa emphasised the importance of SACU fulfilling its mandate if its member states are to withstand the shocks of the COVID-19 pandemic, the Russia-Ukraine conflict, food and energy crises, surging inflation, debt tightening and the climate emergency – all of which, he said, are contributing to one of the lowest rates of global economic growth in decades.

‘We have always been deliberate about using this union as a vehicle for advancing and deepening integration,’ said Ramaphosa. ‘We are working to achieve this integration through co-operation in trade and industrial policies. We seek to build cross-border value chains among all SACU member states, underpinned by regional infrastructure programmes. The question for us is to what extent have we been successful in this regard? And, is SACU still fit for purpose and able to respond effectively to the needs of member countries?’

Ramaphosa called on SACU members specifically – and, in the spirit of the AfCFTA, African countries in general – to look internally for growth and development prospects. ‘The geopolitical and economic shifts taking place across the world necessitate that we must be quite intentional about what we hope to achieve as SACU,’ he said. ‘We must be quite deliberate when it comes to playing a developmental role in the region, on the continent and globally.’

A year ago, in mid-2022, SACU members agreed to a five-year strategic plan, which is designed to ensure that the bloc repositions itself to take full advantage of internal and external trading opportunities. It is centred on six pillars, namely industrialisation, export and investment promotion; trade facilitation and logistics; implementation and leveraging of the AfCFTA opportunities; trade relations and unified engagement with third parties; finance and resource mobilisation; and effectiveness of SACU institutions.

‘The implementation of the AfCFTA is a major priority for SACU as it presents the best opportunity for the region to achieve its integration objectives at both the regional and continental levels,’ SACU’s then-executive secretary Paulina Elago said at the time. ‘For SACU, the key is to position itself strategically to take full advantage of the export opportunities and ultimately diversify and broaden its industrial capacity to supply the African continent and beyond.’ In line with that strategy, SACU as a bloc recently revived trade talks with India, which began in 2007 but stalled in 2020.

Looking internally, SACU members signed a significant mutual recognition agreement ahead of June’s Heads of State and Government summit, which will enable accredited traders in the bloc to enjoy lower trade costs and simplified procedures for imports and exports. Under the Authorised Economic Operator (AEO) programme, customs authorities will share their compliance and security responsibilities with the private sector, while rewarding them with several trade facilitation benefits. New SACU executive secretary Thabo Khasipe described the programme as ‘a VIP system for trade […] that can assist in developing the region’.

Speaking at the deal announcement, SA’s SARS commissioner, Edward Kieswetter, said that the AEO programme ‘establishes a quid pro quo between revenue administrations and business through which we hold each other to the highest standards’. He added that it would further boost trade opportunities and contribute to the smooth flow of goods between SACU countries. Customs has two complementary mandates, Kieswetter said – to facilitate legitimate trade, and to enforce national laws. ‘These are not in competition,’ he said, appealing to private businesses to work with customs administrators. ‘A border is a dividing line between two countries, but ports of entry connect our countries. The AEO allows both partners to collaborate beyond their narrow self-interest.’

That notion of working together beyond one’s own self-interest lies at the heart of SACU’s century-old mission. A tighter bloc than the Southern African Development Community (SADC), which has 16 countries in a free trade area, SACU is a microcosm what the AfCFTA could someday be at a continental scale.

Ramaphosa recognises the importance of these blocs in driving Africa’s growth and development. ‘We cannot be content that Africa’s share in global trade is a mere 3%,’ he told his fellow SACU leaders in June. ‘This customs union should contribute to substantially increasing the African trade in goods and services. We will achieve this if we have clearly articulated programmes, sufficient resources, a robust governance framework and a commitment to executing the strategic plan.’

By Mark van Dijk
Image: Hakopike