Which future for the SACU ?
It seems the future of the Southern Africa Customs Union will be decided next week Tuesday when the SA foreign affairs minister Dlamini-Zuma meets EU trade negotiator Peter Mandelson.South Africa is holding out on signing a so-called EPA (Economic Partnership Agreement) with the EU while all other SACU members have signed preliminary agreements. This has cast doubt on the viability and future of SACU.
If SACU is battling to find its Raison d Etre, it must just widen its horizons to a bigger southern Africa.
Taking the past ten years as a window, it is fairly obvious that substantial progress has been made with bringing the northern countries, Angola, Zambia, Zimbabwe, Malawi and Mozambique, closer to the southern belt - Namibia, Botswana, South Africa, Lesotho and Swaziland.
In terms of infrastructure, there now exists linkages which were unheard of a decade ago.
For this reason, I propose that we take the 2002 SACU agreement, which took a long time to renegotiate, and go knocking on the doors of our northern neighbours. In short, I want to see a SACU that includes all the countries I have mentioned above.
When I read the Southern African Customs Union Agreement, I am impressed by the clear and precise way it is drafted. It does not sound like typical legal jargon; instead it is practical and addresses specific issues important for running a customs pool. Yet, it is an international agreement and it contains all the elements an instrument of this nature requires. All we have to do is extend the membership but only to those countries that are already linked in many ways.
I realise the process will not be easy, but the awards will be enormous.
An aggressive programme of integration between my proposed members will create a financial incentive to integrate our economies. During all the talk over many years of intra-regional trade, I always wonder where the immediate and the long-term incentive is. Talk about boosting trade in the region always departs from a political or a developmental platform without much regard for the practicalities and for real tangible immediate benefits. A combined large customs pool will rescue the concept from the politicians and puts it squarely in the domain of the fiscus.
Now that should be an incentive to any government to integrate, especially if it views us as an example with almost a third of the fiscal income originating from the customs pool.
With such a serious fiscal incentive, I am sure it will lead to a rapid reallocation of resources. This process will start with homogeneous policies on further infrastructure development, particularly those that determine the sharing of utilities like water and electricity.
The nine members will also need to harmonise their customs, excise, and revenue models as well as their methodologies, administration and operations.
But the nice thing is, we do not need to go figure out everything from scratch, it already exists in the current SACU and the renegotiated 2002 agreement should, with minor adjustments, be acceptable to the newcomers. It has been tested and tried so to speak.
The moments we have an agreement on a much larger customs pool, I am fairly confident we shall be successful when asking the IMF and World Bank to assist us with the cost of extending this trade umbrella. It will also create significant synergy since the eight smaller partners will have a common model to align themselves to, and from the senior partner, South Africa, will be obtainable every possible expert we may need to iron out the growing pains.
If I go by the pivotal role of SACU in assisting us to have at least part of our fiscal income guaranteed, I can only imagine how attractive this prospect is for smaller members who still battle to diversify their sources of fiscal income. All these lessons we have already learned and our experience can provide the newcomers with workable solutions how to expand the revenue base.
What will be our position to SADC ?
I think it is only natural that SADC should basically stay in tact but it has a different agenda than SACU. In my view SADC is mostly political and I am sure in fifty years or so, it may even be a reality. But it lacks a financial incentive and its members are too diversified and spread-out.
I view the dream of a United Africa as just that: a dream. In reality, I believe Africa will develop around four core units, i.e. the South, West, East and North.
Enlarging the customs pool in the South is just the first logical step in creating an effective vehicle to promote the much-bespoken regional trade block. I also believe it will lead to a rapid integration of the economies in the pool.
