Where to now for SACU?

In the context of the African Continental Free Trade Area (AfCFTA), it is worth taking some learnings from the Southern African Customs Union (SACU).

The African Continental Free Trade Area (AfCFTA) is expected to create one of the largest single markets in the world, connecting over 1.3 billion people across 55 countries with a combined GDP exceeding US$3.4 trillion. Economically, it aims to boost intra-African trade by eliminating tariffs on up to 90% of goods, harmonising customs procedures, and facilitating the movement of services, investment, and people. For South Africa, the AfCFTA presents an opportunity to expand its export base beyond traditional markets, strengthen regional value chains, and attract manufacturing investment — particularly in sectors like automotive, agriculture, and consumer goods. Over the longer term, the agreement is expected to drive industrialisation, job creation, and infrastructure development across the continent, although its success will depend on coordinated policy implementation, trade logistics, and political stability among member states.

In short, this should be a huge boost for intra-African trade in the coming years.

Despite these clear opportunities, there remain some very operational considerations and this is well highlighted in a recent webinar and report released by XA Global Trade Advisors which takes a look at the SACU and what we can learn from it.

Two key questions posed:

• The five SACU states are rapidly becoming poorer per capita. What can be done?
• How much should SA pay to control the industrial policy of SACU?

SACU is one the world’s oldest customs union, consisting of Botswana, Eswatini, Lesotho, Namibia, and South Africa. It establishes a common customs area and a common external tariff, facilitating free trade among members and a unified approach to goods imported from outside the union. SACU aims to promote economic growth, integration, and fair trade within the region, coordinating policies and sharing customs revenues among its member state.

The webinar is available for viewing below:

XA Global Trade Advisors have a number of reports available for download and are available on their website.

Some key takeaways from the webinar:

• Being part of a Customs Union should make all members more competitive than if they operated independently rather than in isolation [13 mins]
• SA creates the majority of the trade policies for SACU and these policies are becoming increasingly protectionist and isolationist [18 mins]
• For SACU to deliver growth, SA must reduce its dominance [24 mins]
• Reward investments not imports [33 mins]

SACU provides some useful historical context for the AfCFTA – if we are serious about the success of this trade bloc, we need to learn from the past to maximise economic success.