By Sifiso Ntombela
THE Southern African Customs Union (Sacu) is one of the oldest customs unions in the world, composed of Botswana, Eswatini, Lesotho, Namibia and South Africa. It was established in 1910, amended in 1969, and subsequently in 2002, to modernise and align its objectives with the current realities and developmental goals of the five countries.
The union seeks to promote cross-border trade, forge economic integration, facilitate development and investments, and enhance fair competition and democratic conditions amongst member countries. Essentially, Sacu is more than just trade promotion, it also fosters stronger cultural, social, and economic development amongst the five countries in the southern tip of the African continent.
The Sacu agreement recognises the common but differentiated economic pathways of each country. It also makes provisions for smaller economies in the Union to protect infant industries that are deemed important for domestic interests. However, such protection of infant industries should be agreed upon with member states in ensuring it does not prohibit the free movement of goods and investments but rather enhances fair competition and naturing of industries.
South Africa is the largest economy within Sacu and it has a competitive edge with respect to agricultural production and exports. Most South African farmers plan and plant farm produce intending to serve local South African customers as well as regional and continental clients.
Equally, agriculture is also an important economic and social sector for other Sacu members and some have invested resources and skills to boost domestic production. To protect their domestic agriculture, some countries within the Sacu have restricted or completely close borders for the importation of certain agricultural goods such as Botswana and Namibia. These trade-restrictive measures impact relations among the Sacu members and erodes the Union’s goals and spirit of regional integration and free-cross border trade.
On December 6, 2023, the government of Botswana announced that they are extending the restriction period for vegetable imports, which was due to expire at the end of December 2023. The extension period is up to December 2025 and the list of restricted vegetable products has been expanded, which does not bode well for South African farmers.
To South African farmers, Sacu is not only a destination market, but also a partner in developing agriculture and expanding Sacu’s agricultural export footprint in the continent and beyond. As such countries like Botswana and Namibia are strategic transit of vegetable products originating from South Africa.
Border closures also affects other agricultural products, which might have long-term consequences for Botswana citizens, especially products that cannot be grown locally due to environmental conditions, skills, and technical and physical infrastructure challenges.
Exploring mutual benefiting solutions
South Africa’s agricultural exports to Sacu countries were valued at $2.3 billion (R44bn) in 2022, which equates to 21% of total exports to the union. Agriculture is important to Sacu members states, where regional food value chains have been developed beyond just vegetables.
For example, Lesotho’s mohair and deciduous fruits are integrated to South Africa industries, Namibia’s goats, table grapes and cattle forms an integral part of South Africa food and export chains, Eswatini’s sugar and citrus is embedded to South Africa’s systems. This illustrate the connectedness of food systems in Sacu as well as investments that are at risks if free-movement of goods is constrained.
Fortunately, the Sacu Agreement does creates platforms for Ministers’ engagements on trade and developmental matters. On the December 6, 2023, South Africa’s Minister of Agriculture, Land Reform and Rural Development Thokozile Didiza informed the South Africa agricultural stakeholders that she will be engaging with her counterpart in Botswana to find an amicable solution.
It is important that the Botswana’s case of vegetable import restriction is attended to swiftly in a manner that recognises and supports Botswana’s efforts to build their domestic industries while also preserving and promoting the broader trade and investment objectives of Sacu.
There is a need to shift the inward-focus of protecting individual countries and move to an outward paradigm that integrates investments and policy priorities so that Sacu can capitalise of continental and global export opportunities.
Critically is to strengthen overall Sacu’s agricultural production capacity such that it benefits from the opportunities presented by the African Continental Free Trade Agreement, the Economic Partnership Agreement with the EU and other strategic partnerships that Sacu has secured over the years. Botswana should consider positioning its infant agricultural industries as part of overall Sacu capabilities and not view South Africa as a competitor to its small-scale vegetable industry.
Building on South Africa’s capabilities and economies of scale, other Sacu member states could be a strategic transit to the rest of the African market and this requires borders to remain open for all agricultural products.
Sifiso Ntombela (PhD) is an agricultural economist. He serves as the Special Advisor to Minister Thoko Didiza, in the Department of Agriculture, Land Reform and Rural Development. He is also an elected President of the Agricultural Economics Association of South Africa.