Some countries may be reluctant to engage deeply with South Africa on trade because of the Southern African Customs Union (Sacu).
To potential partners, the customs union often appears opaque and unpredictable. Many are interested in South Africa itself, not the wider region. Pretoria should therefore press for Sacu reform while preserving the development programmes that provide social support to neighbouring states.
In today’s changing global trade environment, countries must be agile in forming new agreements that sustain their economies. South Africa is on a path of export expansion. And when other countries see their interests aligned with South Africa’s, government must be able to sign trade agreements.
But this is not always the reality. South Africa generally has to consult with Botswana, Eswatini, Lesotho and Namibia, which are part of Sacu. In the past, this practice worked well, as there was no urgency. And most trade matters took years to be concluded.
Putting own interests first
Negotiating as a customs union also ensured that countries interacting with the region could access a slightly larger market. But the world has changed, and each country must put its interests first.
For South Africa, unlike other countries in the region, there are pressures in key markets such as the US. And there is a need to expand export markets as the domestic industry increases output across various sectors of the economy.
Therefore, the pressure on South Africa’s policymakers and business leaders isn’t the same as in other countries in the region. Thus, South Africa must have the flexibility to move at its own pace in finalising trade matters.
The modern version of trade arrangements in this region should allow countries to enter into bilateral trade agreements with various partners while maintaining low tariffs within the bloc.
Revenue sharing
Another less-discussed matter in Sacu is the financial support that South Africa provides to the region, often under the guise of “revenue sharing”. We cannot continue to ignore this unrecognised generosity. A new development finance mechanism is required for Sacu. And this responsibility must be shared with multilateral development institutions and other development partners.
In moving to this new and ambitious arrangement that is in South Africa’s interest, there should be no destabilisation of the region. South Africa would ultimately suffer the consequences of such economic difficulties if it didn’t apply a careful approach of adjustment.
Still, we should move with determination and work to leave or reform Sacu.
Beyond this review, it is also clear that some countries within Sacu do not follow the rules. And this typically causes non-tariff barriers.
The case in point, which I have highlighted several times, is Botswana and Namibia banning imports of South African vegetables.
Domestic food security
The rationale they typically provide is understandable. They have sufficient domestic supplies for now. And they therefore seek to protect their farmers and secure the market without exposing them to competition from South Africa. One can sympathise with a country seeking to boost its food security.
Another way of thinking about this is through proper and effective coordination and communication with other countries in the Sacu region.
The blockage of products from other member countries in the customs union, without national risk or disease threat, generally amounts to protectionism. And this is against the spirit of the customs union.
Reform in trade markets
Taking this matter into account, along with the changing global trading environment, it is fair that South Africa seeks to comprehensively review Sacu and ensure that the country has the necessary flexibility to enter bilateral trade agreements without having the burden of first considering the views of the region.
Still, as a major economy in the region, South African policymakers would need to consider the implications of their actions on regional economies.
Taking this path is not necessarily a call for an irresponsible approach to regional prosperity, which must remain a priority. But South Africa’s interests must come first in trade matters.
