Tag / Southern African Customs Union

by Mike Poverello

India revives Preferential Trade Agreement initiative with SACU

Discussions between Southern African Customs Union (SACU) [South Africa, Namibia, Botswana, Lesotho, Eswatini] and India to achieve a Preferential Trade Agreement (PTA) have been revived with the two sides holding a virtual meeting last week to discuss various aspects of the PTA. 

The Indian side at the dialogue was led by Srikar Reddy, Joint Secretary, Department of Commerce while SACU was led by Amb. Steve Katjiuanjo, Executive Director, Ministry of Industrialization,Trade and SME Development of Namibia. 

Reddy underlined India’s historically close ties with Southern Africa and its steadfast commitment to deepen economic engagement with this region. He informed that in 2019-20, trade between India and Africa as a whole stood at $ 66.7 billion, of which the India-SACU trade was $ 10.9 billion with an immense potential to expand further. 

Amb Katjiuanjo called India as a strategic partner for SACU. Trade is currently in SACU’s favour, thus showing that the region is benefiting from access to the vast Indian market. 

Prashant Agrawal, High Commissioner of India to Namibia, said on the occasion that in these unprecedented times of Covid-19 pandemic and its economic challenges, economies of the region, including of Namibia, could vastly benefit by enhanced trade and commercial links with India’s $ 2.9 trillion economy. 

India stood fully committed and ready to support manufacturing and industry in Namibia in areas such as agriculture, irrigation, renewables, ICT, pharma and medical supplies. Both sides reviewed the progress made and discussed steps to quickly move forward on the PTA. 

India-Namibia bilateral trade during 2018-19 was $ 135.92 million with India’s exports valued at $ 82.37 million, while India’s imports stood at $ 53.55 million. Mining sector is an area of mutual interest. Namibia is rich in uranium, diamonds, copper, phosphates and other minerals. Indian technological prowess in IT, engineering, pharmaceuticals, railways and SMEs is of interest to Namibia. Bilateral cooperation in the energy and agricultural sectors also has good prospects. 

Meanwhile exports from India to South Africa include vehicles and components thereof, transport equipment, drugs and pharmaceuticals, engineering goods, footwear, dyes and intermediates, chemicals, textiles, rice, gems and jewellery, etc. Imports from South Africa to India include gold, steam coal, copper ores & concentrates, phosphoric acid, manganese ore, aluminium ingots & other minerals. India-S Africa bilateral trade was $ 10,584.5 million during 2018-19. 

Source: India Times, 19 July 2020

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by Mike Poverello

SACU – All’s not fair in proposed Customs Union reforms

SACU mapThe Southern African Customs Union (SACU) is an almost invisible organisation. Yet it has arguably had a profound impact on South Africa’s economic and even political relations with its much smaller neighbours – and on those four small countries themselves. But there are also deep differences among its five members – the others are Botswana, Lesotho, Namibia and Swaziland (BLNS) – about what the essential nature of SACU should be.

This weekend, SACU ministers will be meeting in South Africa for a retreat to try once again to set a new strategic direction, a roadmap into the future, for this critical body.

The leaders of the member countries will meet in a summit, also in South Africa, sometime before 15 July – when South Africa’s term as SACU chairs ends – to adopt or reject this roadmap. The aim of the changes in the SACU treaty would be to turn it ‘from an arrangement of convenience held together by a redistributive revenue formula to a development integration instrument,’ South African Trade and Industry Minister Rob Davies said during a press briefing in Kasane, Botswana, last Friday.

Davies said there were still ‘lots of differences’ among SACU members, which they had been unable to resolve despite years of negotiations.

SACU was founded in 1910 – the year South Africa was also created. Since then, the common external tariff it created has functioned as an instrument for the much larger South Africa to support the much smaller BLNS economically, by re-distributing to them a disproportionate share the customs tariffs collected at the external borders. Or, depending on your point of view, to relegate them to being passive markets for South African products.

The new African National Congress government, which came to power in 1994, ‘democratised’ relations with the BLNS by creating a Council of Ministers to make decisions by consensus in a new post-apartheid SACU treaty, which came into force in 2004. But the basic deal remained the same, as Davies implicitly acknowledged in last Friday’s briefing when he said: ‘we have historically just set the tariffs on behalf of SACU … and … in return for that, provided compensation … in the revenue-sharing formula.’

Also read – SACU Retreat announced by President Zuma

The re-distributive revenue-sharing formula has been hugely important for the government revenues of the BLNS. In South Africa’s 2015-2016 budget year, for example, the total revenue pool was expected to be about R84 billion, of which the BLNS would receive R46 billion – according to Xolelwa Mlumbi-Peter, Acting Deputy Director-General in South Africa’s Department of Trade and Industry, in a briefing to the parliamentary portfolio committee on trade and industry last year. She added that South Africa contributes about 98% of the total pool, while BLNS receive about 55% of the proceeds.

That meant South Africa was losing – or re-distributing – about R44.3 billion in that budget year, as de facto ‘direct budgetary support’ to the BLNS, to use the language of Western development aid.

‘This is seen as “compensation” for BLNS’s lack of policy discretion to determine tariffs, and for the price-raising effects of being subjected to tariffs that primarily protect SA industry,’ Mlumbi-Peter said.

A glaring example of that dynamic is South Africa’s maintenance of import tariffs on foreign automobiles to protect its own automobile industry. That, of course, makes automobiles more expensive in the BLNS countries.

And should South Africa choose instead to grant rebates on some tariffs – for example to encourage imports of inputs into South African industrial production – this would also impact negatively on the BLNS by reducing their tariff revenues, Mlumbi-Peter suggested.

In 2011, South African President Jacob Zuma chaired a SACU summit to review these inherent disparities. It agreed on a five-point plan to change SACU’s fundamentals, including a review of the revenue-sharing formula; prioritising work on regional cross-border industrial development, including creating value chains and regional infrastructure; promoting trade facilitation measures at borders; developing SACU institutions; and strengthening cooperation in external trade negotiations.

Nonetheless, as Davies said in Kasane, ‘we haven’t really been able to reach an understanding of what does development integration in SACU mean.’ And so Zuma had just completed a tour of visits to his counterparts in the BLNS countries to discuss these plans, and the upcoming retreat and summit. Davies said Zuma had found the BLNS leaders ‘flexible’ – though regional officials suggest otherwise.

Does South Africa, as the only really industrialised nation in SACU, not have inherent and irreconcilable differences with the rest of the body? Davies acknowledges that South Africa – with about 85% of the combined population, and about 90% of the combined GDP – also has most of the industries that demand tariff protection.

Nevertheless, he added, ‘We are all committed on paper to seeing tariffs as tools of industrial development… But there is also an obvious temptation for a number of other countries to see the revenue implications as more important.’ And, he did not add, there is also a growing feeling in South Africa that it could do with that R44 billion a year or thereabouts, which it gives to the BLNS every year.

The coincidence of the signing, on 10 June, of the Economic Partnership Agreement (EPA) between the European Union (EU) and the Southern African Development Community (SADC), and the attempt to revive SACU, underscored an ironic analogy of South Africa’s and the EU’s predicaments.

Also read – Historic Economic Partnership Agreement between EU and SADC 

With the EPA, the EU hopes to shift its relations with the SADC nations away from the traditional donor-recipient type of arrangement, to one of more equal and normal trade and industrial partners. That, essentially, is what South Africa is also hoping to achieve with its proposed reforms of SACU.

But it’s hard to see how South Africa is going to convince the BLNS to give up R44 billion a year of hard cash in hand, in exchange for the rather dubious future benefits of being absorbed into South Africa’s industrial development chains.

Source: Peter Fabricius – ISS Consultant.

by Mike Poverello

Crossing the SACU bridge

600px-Flag_of_Swaziland.svgMartin Gobizandla Dlamini, the new Minister of Finance, is aware of the challenges of the country’s economy in case South Africa pulls out of the Southern African Customs Union (SACU).

However, the minister warned against pressing the panic button. He said there were no pellucid pointers that South Africa might pull out of the union.

Asked what measures were in place to sustain the country economically if South Africa pulled out or reviewed the revenue sharing formula to the negative, he said: “Let us cross the bridge when we get there. I am aware that South Africa calls for changes in the revenue sharing formula. This is a matter that has been on the table for quite some time.”

“I can’t comment now on how to survive with or without SACU receipts but I can mention that we are a sovereign state.” He did not expand on the sovereignty of Swaziland. Dlamini said SACU member states would meet in February 2014 for a strategic session.

These are South Africa, Namibia, Swaziland and Lesotho. “We were to meet in February in the first place, to discuss strategies on how to modernise SACU and make it relevant to our needs. It’s not like we are going there for shocks or breaking news about South Africa’s position on SACU,” said Dlamini, the former Governor of the Central Bank of Swaziland.

The country’s Gross Domestic Product (GDP) stands at E37 billion for 2012 while that of South Africa is E3.8 trillion as at 2012. In the absence of SACU, Swaziland is left with a few companies that add value to the economy in terms of taxes. They include among others Conco Swaziland which is understood to be contributing 40 per cent to the GDP, which translates to E14.9 billion and the sugar belt companies; Royal Swaziland Sugar Corporation (RSSC) which makes a turnover in excess of E1 billion and Illovo Group’s subsidiary Ubombo Sugar Limited (USL). Illovo Sugar has a 60 per cent shareholding at Ubombo Sugar while the remaining 40 per cent is held by Tibiyo Taka Ngwane, a royal entity held in trust for the Swazi nation. To Illovo Group’s profits, Ubombo Sugar contributed E272 million.

Bongani Mtshali, the acting Chief Executive Officer (CEO) of the Federation of Swaziland Employers and Chamber of Commerce (FSE&CC), said the country could be in a very bad economic situation if South Africa were to pull out of SACU. He said the economic problem could still persist even if the revenue derived from the union was decreased. Mtshali advised Swazis to expand the revenue base and work hand in hand with the Swaziland Revenue Authority (SRA) in its collection of domestic taxes.

The taxes include company tax, pay-as-you-earn, sales tax, casino tax and value added tax. He said people and companies should be encouraged to honour tax obligations. He also called for business innovation. “We will be able to produce and sell if we innovate,” he said. He said there was a need to have an innovation institution of some sort to produce talent, nurture and release it for productivity.

As it were, he said, it was suicidal to depend entirely on SACU revenue. It can be said that over 60 per cent of the country’s budget comes from the union. The SRA collects over E3 billion and this money cannot finance the national budget of E11.5 billion.

Ministries that can save Swaziland from an economic crisis are the Ministry of Commerce, Trade and Industry; Ministry of Agriculture, Ministry of Natural Resources and Energy and the Ministry of Economic Planning and Development.

It can be said that Swaziland is an agricultural economy but the closure of the factory at SAPPI Usuthu and destruction of timber at Mondi by veld fires, spelled doom to the economic outlook of the country. It can also be said that the country’s mainstay product is now sugar.

Despite maize being the country’s staple food, government spent E123 million on maize imports from South Africa last year. This year, preliminary figures indicated that government could spend E95 million on maize imports.

The import price has decreased because the country recorded a higher maize harvest of 82 000 metric tonnes compared to 76 000 tonnes recorded the previous year.

Swaziland is still clutching at straws in terms of food security. The unemployment rate is also high as there had been no massive investments witnessed on the shores.

Jabulile Mashwama, Minister of Natural Resources and Energy, said there were plans to expand the mining sector and reopen closed ones like Dvokolwako Diamond Mine.

There are only two official mines currently operational; Maloma Colliery, which made an export revenue of E126 million in the 2011/2012 financial year and Salgaocar which extracts iron ore from dumps at Ngwenya Iron Ore Mine.

Mashwama, the minister, said she would give details on the programme to revive the mining sector at a later stage. She hinted that the nation could also bank its hopes on her ministry for job creation and revitalisation of the economy.

Gideon Dlamini, the Minister of Commerce, Trade and Industry, has been given a task to industrialise the economy as one of the five-point plan by SACU. The industry minister was reported out of the country and was not reachable through his mobile phone. Source: Times of Swaziland

by Mike Poverello

SACU – the Day of Reckoning has Arrived

South Africa has been courting major player Botswana’s support for changes to SACU.

South Africa has been courting major player Botswana’s support for changes to SACU. (Mail & Guardian)

The Mail & Guardian reveals that South Africa has requested an urgent meeting with members of the Southern African Customs Union (SACU) for as early as ­February next year in what could be a make-or-break conference for the struggling union.

In July this year, a clearly frustrated Trade and Industry Minister Rob Davies told Parliament that there had been little progress on a 2011 agreement intended to advance the region’s development integration, and it was stifling its real ­economic development.

South Africa’s payments to SACU currently amount to R48.3-billion annually – a substantial amount, considering the budget deficit is presently R146.9-billion, an estimated 4.5% of gross domestic product.

In the past, South Africa has had some room to reposition itself, but as Finance Minister Pravin Gordhan has pointed out, the South African fiscus has come under a lot of pressure as a result of factors such as the global slowdown, reduction in demand from countries such as China for commodities, and reduced demand from trade partners such as the European Union.

South Africa, which according to research data, last year contributed 1.26% of its GDP, or about 98% of the pool of customs and excise duties that are shared between union countries including Swaziland, Botswana, Lesotho and Namibia, wants a percentage of this money to be set aside for regional and industrial development.

The four countries receive 55% of the proceeds, and are greatly dependent on this money, which makes up between 25% and 60% of their budget revenue. South Africa has very little direct benefit, except when it comes to exporting to these countries. It receives few imports.

Changing the revenue-sharing arrangement

Efforts to change the revenue-sharing arrangement so that money can be set aside for regional development would result in less money going into the coffers of these countries.

It would also mean that a portion of the revenue that South Africa’s SACU partners now receive with no strings attached would in future include restrictions on how it is spent.

A source close to the department said adjustments to the revenue-sharing arrangement and the promotion of regional and industrial development were issues on which the South African government was not willing to budge.

So seriously is South Africa viewing the lack of progress on the 2011 agreement, a document prepared for Cabinet discussion includes pulling out of SACU as one of its options, a source told the Mail & Guardian.

This could not be confirmed by the government, but two senior sources said South Africa was very aware of the dependence of its neighbours on income from the customs union, in particular Swaziland and Lesotho, and the impact its collapse could have on these economies.

Professor Jannie Rossouw of the University of South Africa’s department of economics believes a new revenue-sharing arrangement is essential for the long-term sustainability of SACU countries.

South Africa’s contribution

He also said that South Africa’s contribution as it presently stands should be recognised as development aid and treated as such by the international community.

Between 2002 and 2013, total transfers amounted to 0.92% of South Africa’s GDP, which exceeds the international benchmark of 0.7% set by the Organisation for Economic Co-operation and Development, he said in his research.

“It is noteworthy that South Africa transfers nearly all customs collections to SACU countries. Total collection since 2002 amounted to about R249-billion, while transfers to SACU were about R242-billion,” Rossouw said. The South African Revenue Service (SARS) recognises that inclusion of trade with Sacu would have a substantial impact on South Africa’s ­official trade balance.

South Africa’s total trade deficit for 2012 was R116.9-billion and, according to SARS, had trade with the union been included, it would have been much reduced to R34.6-billion.

South Africa has budgeted to increase its allocation to SACU from R42.3-billion in the 2012-2013 financial year to R43.3-billion this financial year and in the 2014/2015 financial year.

In 2002, the SACU agreement was modified to include higher allocations for the most vulnerable countries, Swaziland and Lesotho, and it established a council of ministers, which introduced a requirement for key issues to be decided jointly. In 2011, a summit was convened by President Jacob Zuma in which a five-point plan was established to advance regional integration.

Review of the revenue-sharing arrangement

This involved a review of the revenue-sharing arrangement; prioritising regional cross-border industrial development; making cross-border trade easier; developing SACU ­institutions such as the National Bodies (entrusted with receiving requests for tariff changes) and a SACU tariff board that would eventually take over the functions of South Africa’s International Trade Administration Commission (ITAC); and the development of a unified approach to trade negotiations with third parties.

Davies told Parliament that there had been little progress in the past three years on these five issues.

Xavier Carim, the director general of the international trade division of the department of trade and industry, said there had been positive developments regarding agreements on trade negotiations, such as those with the European Union and India on trade, and progress had been made on the development of SACU institutions, but progress was slow on the other issues.

Davies told Parliament it was difficult to develop common policy among countries that varied dramatically in economic size, ­population and levels of economic, legislative and institutional development.

He cited differences over approaches to tariff settings as an example.

“South Africa views tariffs as tools of industrial policy, while for other countries tariffs are viewed as a source of revenue,” Davies said.

A proposal that cause all the problem

“A key problem that led to differences was the proposal by one member for lower tariffs to import goods from global sources that were cheapest, which ultimately undermined the industry of another member. This was primarily an issue of countries who viewed themselves as consumers rather than producers.”

The South African government is trying diplomacy as its first option. A senior government source said issues around SACU made up a large part of talks last week between Botswana and South Africa on the establishment of co-operative agreements on trade, transport and border co-operation.

Catherine Grant of the South African Institute of International Affairs said Botswana had long been considered the leader of the four countries. It would make sense for South Africa to bring Botswana on board before the meeting.

Grant said the SACU agreement needed to be re-examined and modernised.

“There needs to be a review of the revenue-sharing formula that is less opaque and is easier to understand. The present system is complicated, making it hard to work out exactly how much countries are getting. It’s clear that Rob Davies feels hamstrung by SACU and has done for some time, because decisions cannot be made without the agreement of all five members, who have different needs and requirements.”

The trade balance is one of the elements that resulted in South Africa’s current account, which has recorded significant deficits in recent months, coming in as high as 6.5% of GDP in the second quarter of 2013.

Trade between South Africa and SACU has always been recorded, but for historical reasons it has been kept separate from official international trade statistics. Source: Mail & Guradian

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by Mike Poverello

SARS – SA trade statistics will in future include trade data with BLNS countries

Import exportThe Minister of Finance has approved that South Africa’s trade statistics will in future include data in respect of trade with Botswana, Lesotho, Namibia and Swaziland (BLNS countries).

BLNS country-trade statistics have previously not been included in the trade statistics. This arose historically because of the free flow of trade from a customs duty point of view within the Southern African Customs Union (SACU).

BLNS merchandise trade however, has a material impact on South Africa’s trade balance. South Africa exported R103.8bn to and imported R21.5bn from BLNS countries. In the last full year (2012) this resulted in a positive trade balance of R82.3bn for trade with BLNS countries.

South Africa’s total trade deficit for 2012 was R116.9bn. Had the BLNS trade data been included, the deficit would have been R34.6bn.

The view is therefore that direct trade within the BLNS countries should be included in the calculation of the monthly trade statistics to provide a more accurate reflection of South Africa’s trade.

Furthermore, SARS’s customs modernisation programme has resulted in its systems moving to new technologically enhanced platforms that enabled better electronic capturing of trade data that was previously done manually. The modernised system greatly improves the accuracy of trade data and allows the reporting and analysis of trade data to be done in real-time.

SARS worked very closely with the National Treasury (NT) and the South Africa Reserve Bank (SARB) in preparing the trade statistics that includes trade with the BLNS countries.

The SARB has welcomed the revision of the trade statistics “as valuable additions to building block data used to compile South Africa’s balance of payments.”

“While the Bank has always included estimates of the trade between South Africa and this group of countries in its compilation of South Africa’s overall imports and exports, the new building block data will be incorporated in the balance of payments, leading to improved measurement. Previously published statistics will also be revised. The revised balance of payments data for South Africa will be finalised in the next few weeks and published in the Bank’s Quarterly Bulletin, due to be released on 3 December 2013,” the SARB said in a statement.

Although SARS is confident as to the accuracy of the BLNS trade numbers, it is SARS’s intention to approach the United Nations to review the treatment of South Africa’s trade data that will now include BLNS trade numbers.

In addition to the inclusion of the BLNS trade figures, SARS is also contemplating certain other revisions to improve the reporting of trade statistics in the future. Some of these include the following:

  • publishing of imports on both a Free On Board (FOB) and a Cost Insurance Freight (CIF) basis to align it with UN principles,
  • compiling statistics on the date when the goods are actually released into or from South Africa’s economy, rather than using the date on which the goods entered the customs’ system for ultimate release from or into the SA economy, and
  • publishing gold exports as recorded on the SARS system reflecting the physical export movement of gold as opposed to the current practice of reporting the SARB gold export data on the IMF change of ownership basis.
  • These changes will however, only be finalised and implemented after consultation with international experts and other relevant stakeholders.

For more details visit sars.gov.za

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by Mike Poverello

Africa’s first regional Customs – Trade Forum

Participants at the launch of the SACU Customs – Business Forum
Group photo of the SACU Steering Committee at its 9th Meeting

On the 8th of November 2013 in Maseru, Lesotho, the Southern African Customs Union (SACU) launched the first regional Customs – Trade Forum in Africa. The theme of the historical event was “Government and Business: partners for economic development through regional trade”. At the launch, the Minister of Finance and Chairperson of the SACU Council Leketekete V. Ketso and Minister of Trade and Industry, Cooperatives and Marketing, Sekhulumi P. Ntsoaole addressed the attendees as well as Director Capacity Building Erich Kieck from the WCO. Both ministers mentioned the funding from the Swedish International Development Cooperation Agency as a big contributor to undertake this event.

More than 30 representatives from the private sector in the SACU region attended the forum together with the five Heads of Customs and one delegate from each Member’s private sector presented their expectations on the continuous work within the Forum framework. The first working meeting of the Forum is tentatively scheduled to be held in April 2014. The event was acknowledged also by media and representatives from Lesotho Revenue Authority would discuss its importance in papers, radio and TV.

On the previous day, the 7th of November, the Steering Committee for the SACU – WCO Customs Development Program held its ninth meeting, providing guidance to the project. All project components, Interconnectivity, Risk Management/Enforcement, Legislation and Trade Partnerships were on the agenda. Source: World Customs Organisation

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by Mike Poverello

SACU prepares for launch of regional preferred trader scheme

handshakeThe Southern African Customs Union (SACU) consisting of Botswana, Lesotho, Namibia, South Africa and Swaziland collaborates with the World Customs Organization (WCO) in a trade facilitation initiative funded by the Swedish International Development Cooperation Agency (Sida). The initiative in which also the SACU Secretariat participates, aims among others at developing a regional Preferred Trader (PT) scheme.

From 30th of September to 4th of October a core team consisting of National Project Managers, audit experts, PT-experts and site managers met in Windhoek, Namibia, with WCO experts to further prepare for the launch of the PT-scheme by developing regional processes to be applied related to the benefits selected and designed for the SACU regional PT.

The selected pilot operators have been engaged, and in the near future also the relevant cross border regulatory agencies and Customs officials at the selected border posts will be sensitized on the regional PT-scheme.

During the intense working week, all participants actively contributed to the preparations for the launch of the PT-scheme, planned for the first half of 2014. Source: www.4-traders.com

by Mike Poverello

SARS to address Stakeholders on Customs Control proposals

SARS chief officer of legal and policy Kosie Louw (Picture: Robert Botha/Business Day Live)

SARS chief officer of legal and policy Kosie Louw (Picture: Robert Botha/Business Day Live)

The South African Revenue Service (SARS) has committed itself to further engagements with importers of all sizes in a bid to improve its proposals to transform the customs control regime.

Consultations have already taken place with organised business on the proposed Customs Duty Bill and the Customs Control Bill, and the process would now be taken to the level of traders to find out whether the proposals presented them with any problems. Amendments have also been proposed to the Customs and Excise Act to provide for the transition to the new system.

“We want to understand the situation at a micro level. We will sit around the table until we find a solution which will guarantee to us that we get the information we require but which will also facilitate trade.

“We do not want to clog up the ports,” SARS chief officer of legal and policy Kosie Louw said in an informal briefing on the proposals to Parliament’s standing committee on finance on Wednesday.

The customs bills are mainly concerned with improving the information about imported and exported goods so that customs officials can exercise greater control.

Business has expressed concern that the requirement of the Customs Control Bill that they submit a national in-transit declaration of goods at the first port of entry before they are sent to internal terminals, or depots such as City Deep, would cause delays.

The new declaration — of the nature, value, origin and duty payable on the goods — would replace the limited manifest used to declare goods and would include information on the tariff, value and origin of goods.

Business has argued that the manifest allowed goods to move seamlessly from the exporting country to the inland port or depot, and would change the contractual relationships between exporter and importer in terms of when duty is paid.

However, Mr Louw did not believe the provision would cause delays and had obtained legal advice that the contractual relationships and method of payment of duties would not change. The problem with manifests, he said, was that they provided very limited information and did not allow SARS to prevent the inflow of unwanted goods. Nevertheless, he said that SARS would discuss the matter with traders.

Mr Louw said the proposed system would “improve SARS’s ability to perform risk assessment and intervene in respect of potentially high risk, prohibited and restricted consignments at the ports”.

The bills have been in the pipeline for about four years and have been extensively canvassed with the Southern African Customs Union and business. They were needed, Mr Louw said, so that South Africa kept pace with global trends in trade, international conventions and advances in technology.

Anti-avoidance provisions have also been introduced into the bill which sets out the offences and associated penalties for noncompliance and attempts to avoid paying customs duties.

SARS group executive for legislative research and development Franz Tomasek said the Customs Control Bill would introduce a new advance cargo loading notice for containerised cargo to prevent the loading of prohibited or restricted goods on board vessels bound for South Africa. However, to reduce the administrative burden on carriers, information submitted in advance will no longer be required on arrival or prior to departure. Source: Business Day Live

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by Mike Poverello

WCO/SACU Regional IT Connectivity Conference 2013

Delegates attending the WCO/SACU IT Connectivity Conference - May 2013

Delegates attending the WCO/SACU IT Connectivity Conference – May 2013

Representatives of the SACU member states recently met in Johannesburg to progress developments concerning IT Connectivity and Customs-to-Customs data exchange in the region. The session served as a follow up to the session held last year in February 2012 in Pretoria. The conference was convened by the SACU secretariat under the sponsorship of the Swedish International Development Agency (SIDA), and was once again pleased to have SP Sahu, senior technical expert from the World Customs Organisation, to facilitate the work session over 3 days. Representatives of UNCTAD ASYCUDA were also in attendance to observe developments. UNCTAD currently supports three (soon to be four) of the five SACU Customs administrations. The session provided an opportunity for delegates to progress this work as well as develop a terms of reference for an independent assessment of the two connectivity pilot projects that are currently being pursued between Botswana-Namibia and South Africa-Swaziland, respectively.

IT Connectivity serves as a catalyst for various customs-to-customs cooperation initiatives seeking to bring about a seamless end-to-end flow of information between point of departure and destination. Some examples include export/transit data exchange, approved economic operator, commercial fraud, eATA and at least 5 other key areas of customs mutual exchange.  The concept is driven out of the newly establish WCO model known as Globally Networked Customs (GNC). GNC was formally adopted by the WCO Council in June 2012 where a capacity building approach based on protocols, standards and guidelines (PSG) using utility blocks was recognised to provide the most realistic means to achieve efficiency gains, and a more effective way to manage the negotiation of international agreements between customs administrations.

There exist several pilot projects across the globe wherein customs agreements are being piloted under the GNC approach. Development of a Utility Block and supporting data clusters for interconnectivity within SACU and the broader Southern Africa sub-region already commenced at last year’s session. The concept gained sufficient traction and was soon adopted by both SACU and SADC  member states as the means to implementing IT connectivity within the respective regions.

A review of the Utility Block and data clusters was conducted to ensure alignment of customs data requirements across the member states. The resulting product now provides a standard ‘data set’ which members agree as the minimum data required to facilitate data exchange and advance risk management needs. It covers export and transit declaration requirements. Two important criteria exist for successful data exchange and data matching. The first being the availability of appropriate legal provision for two countries to exchange data. The second requires the use of an agreed unique identifier. The identifier is important for Customs as well as the trade community.

Delegates were also presented with current and future developments occurring at the WCO, in particular the on-going work being done to formalise standards for the “My Information Package” concept as well as the WCO Data Model, currently at version 3.3. Another interesting on-going development involves a unique Trader ID.  

Member states involved in respective pilot programmes are now preparing themselves for an up-coming evaluation, later this year.

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by Mike Poverello

Enforcement, Risk Management and Preferred Trade come together in the SACU Region

Enforcement, Risk Management and Preferred Trade come together in the SACU Region

Enforcement, Risk Management and Preferred Trade come together in the SACU Region

A WCO workshop on the topics of Enforcement, Risk Management and Preferred Trader was conducted in April in Johannesburg, South Africa, with the involvement of the WCO Secretariat, UK Customs and the member countries of the Southern African Customs Union – SACU (Botswana, Lesotho, Namibia, South Africa and Swaziland). Capacity Building in the mentioned areas in the SACU Region is part of the WCO Sub-Saharan Customs Capacity Building Programme financed by the Swedish Government through the Swedish International Development Cooperation Agency, SIDA.

An assessment including lessons learned was conducted concerning Operation Auto, targeted at second hand motor vehicles. This first ever regional enforcement operation in the 102 years of history of SACU presented good results as around 250 vehicles were seized by the Customs administrations. The Regional Intelligence Liaison Office contributed actively in the assessment process, ensuring that also future enforcement operations will benefit from the experiences gained.

The development of further risk management capacity is ongoing at the regional level and discussions were held concerning the establishment of common risk profiles. A number of high risk products have been identified and the formulation of profiles to engage illegal trade in these areas is ongoing.

Regarding the Preferred Trader program, progress can also be reported as SACU Members are approaching implementation at operational level. This project component fits very well with the risk management component as the latter is the foundation of the Preferred Trader approach. The process of selecting high compliant, low risk economic operators for the upcoming pilot scheme is well underway while capacity in verification and post clearance audit is being enhanced. A launch of (a pilot of) the regional Preferred Trade program is tentatively envisaged for the second half of 2013. Source: WCO

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by Mike Poverello

City Deep Inland Terminal [port] to be hit hard by Customs Bill

Trucks at Transnet Freight Rail's City Deep Terminal (Engineering News)

Trucks at Transnet Freight Rail’s City Deep Terminal (Engineering News)

Following up on last year’s meeting (click here!) of the minds, convened by the JCCI, a recent meeting in Johannesburg placed fresh emphasis on the dilemma which impending changes contemplated in Customs Draft Control Bill will have for the import and logistics industry in particular. The following report carried by Engineering News highlights trade’s concerns which are by no means light weight and should be addressed with some consideration before the Bills come into effect. Gauging from the content below, there is a clear disconnect between business and policy makers.

The closure of Johannesburg’s inland port seemed to be a “done deal” as Parliament deliberated the recently tabled Customs Control Bill that would leave the City Deep container depot invalid, Chamber of Commerce and Industry Johannesburg (JCCI) former president Patrick Corbin said on Friday.

The promulgation of the South African Revenue Services’ (Sars’) newly drafted Customs Control Bill, which, in conjunction with the Customs Duty Bill, would replace the current legislation governing customs operations, would have a far-reaching impact on the cost and efficiencies of doing business in South Africa and other fellow Southern African Customs Union (Sacu) countries, he added.

The Bill, which was the product of a three-year development process within the National Economic Development and Labour Council, declared that all imported goods be cleared and released at first port of entry. This was part of efforts by customs officials and government to root out any diversion and smuggling of goods, ensure greater control of goods moving across borders and eliminate risks to national security.

Speaking at the City Deep Forum, held at the JCCI’s offices in Johannesburg, Corbin noted, however, that City Deep had operated as an inland port for the past 35 years, easing the load on the country’s coastal ports, which were already strained to capacity. Despite customs officials assuring the chamber that the operations and facilities in City Deep/Kaserne would retain its licence as a container depot, he believed customs had failed to recognise the critical role City Deep had played in lowering the cost of business, easing the burden on South Africa’s ports and ensuring ease of movement of goods to neighbouring countries. As customs moved full responsibility of container clearances to the ports, port congestion, inefficiencies, shipping delays and costs would rise, and jobs would be lost and import rail volumes decreased, he noted.

Economist Mike Schussler added that the closure of the City Deep inland port operations would add costs, increase unreliability and induce “hassles”, as the Durban port did not have the capacity to handle the extra volumes and its productivity and efficiencies were “questionable” compared with other ports.

“The volume of containers going to overstay or being stopped for examination in City Deep [will] need to be handled by [the coastal] ports. If they can’t cope with the volume at the moment, how are they going to handle increased volumes,” Iprop director Dennis Trotter questioned. He noted that only the containers cleared 72 hours prior to arrival would be allocated to rail transport. Those not cleared three days before arrival would be pushed onto road transport to prevent blocking and delaying rail operations.

This, Schussler said, would also contribute – along with port tariffs and the cost of delays – to higher costs, as road transport was more expensive than rail.

He pointed out that South Africa was deemed third-highest globally in terms of transport pricing. It would also result in less rail capacity returning for export from Johannesburg, further leading to increased volumes moving by road from City Deep to Durban.

Sacu countries, such as Botswana, would also be burdened with higher costs as they relied on City Deep as an inland port. Trotter noted that the region would experience loss of revenue and resultant job losses. Over 50% of South Africa’s economy was located closer to Gauteng than the coastal ports. Johannesburg alone accounted for 34% of the economy, said Schussler, questioning the viability of removing the option of City Deep as a dry port.

However, unfazed by the impending regulations, Transnet continued to inject over R1-billion into expansion and development opportunities at City Deep/Kaserne. Corbin commented that Transnet had accepted the assurances from customs that “nothing would change and the boxes would still be able to move seamlessly once cleared.” The City of Johannesburg’s manager of transport planning Daisy Dwango said the State-owned freight group was ramping up to meet forecast demand of the City Deep/Kaserne depot.

The terminal’s capacity would be increased from the current 280 000 twenty-foot equivalent units (TEUs) a year, to 400 000 TEUs a year by 2016, increasing to 700 000 TEUs a year by 2019. Transnet aimed to eventually move to “overcapacity” of up to 1.2-million TEUs a year. Dwango said projections have indicated that by 2021, the City Deep/Kaserne terminals would handle between 900 000 and one-million TEUs a year. Source: Engineering News

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by Mike Poverello

AU considers continental Customs Connectivity

500px-Emblem_of_the_African_Union_svgThe African Union (AU) Technical Working Group on Interconnectivity has developed a ‘draft’ Strategy and Roadmap for Customs-2-Customs IT Connectivity on the continent. This strategy will effectively guide the process of the continental Interconnectivity of Computerized Customs Clearance and Information Systems in Africa. The ‘draft’ Roadmap envisages that the process of interconnectivity will take a period of 11 years with a total of four stages.

Stage 1 – by 2014, National states should have engaged one another (within their respective regions) on the matter of Customs connectivity.

Stage 2 – between 2013 and 2017, the AU has an extremely ambitious expectation that national Customs Administrations would have (at least commenced) if not completed Customs ‘connectivity’ within the various Regional Economic Communities (RECs) in Africa.

Stage 3 – between 2017 and 2020, the suggestion that Customs interconnectivity will be occurring between RECs across the African continent – North Africa: AMU; West Africa: ECOWAS and UEMOA; Central Africa: ECCAS and CEMAC; East Africa: COMESA, EAC, IGAD; and South Africa: SADC and SACU.

Stage 4 – between 2020 and 2025, consolidation of Customs IT-Connectivity across the RECs.

The ‘draft’ Strategy spells out the strategic objectives and activities at the national, regional and continental level that will need to be taken for this to be realized. The strategy also indicates the roles of all the major stake holders in the process.  This comes in the wake of several regional and bi-lateral initiatives to bridge the ‘cross-border divide’ through electronic exchange of structured customs information.

All in all an ambitious plan structured to meet the equally ambitious deadlines of the coming into being of an African Union. The real challenge in all of this lies with the Member States in being able to set aside and commit to regional and continental ambitions, over and above the already pressing and complex national agenda’s of their respective sovereign countries. In context of the African Union, the multiplicity of RECs in themselves add a layer of duplication…..is an “integrated Customs Union” in Africa going to continue to permit the existence of the respective RECs or will they be absorbed into the African Union? Member states need to begin speaking up on this issue otherwise accept being swamped by onerous commitments. No doubt the ‘international donor agencies’ wait eagerly in the wings to capitalise on Africa’s deficiencies.

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by Mike Poverello

Zim Police make yet another cigarette bust

Beit Bridge Borderpost, Zimbabwe

Police in Beitbridge have recovered yet another consignment of cigarettes worth US$20 000 in Tshapfuche as they intensify their anti smuggling operation. The stash destined for export was recovered last Friday morning following the discovery of other contraband shipment worth almost US$500 000 in the same area the previous day.

Countries of the South African Customs Union (South Africa, Namibia, Botswana, Lesotho and Swaziland) charge high duties on cigarettes, meaning that even those bought retail in Zimbabwe can be sold for good profit in South Africa.

The police officer commanding Beitbridge district Chief Superintendent Lawrence Chinhengo said the second stash was recovered at the homestead of a security guard they had earlier on arrested.

The security guard was part of the three suspects who were arrested while looking after the “merchandise” at Edzisani Muleya’s homestead. Chief Supt Chinhengo said the suspect had hid 33 boxes at his sister’s homestead while he kept another 72 boxes at his house.

Three hundred and eleven boxes of Remmington Gold, 442 Cevils, 221 Dullas and 107 Newbury cigarettes worth US$500 000 were last week recovered from Muleya’s homestead. Police say the house had become an illegal transit warehouse.

Muleya has since gone into hiding and police have launched a manhunt. Chief Supt Chinhengo said the Ferret squad, made up of the ZRP, Zimbabwe Revenue Authority and other security agents raided the homestead on Thursday afternoon during an operation code-named Sukani Emanzini (Get out of the Limpopo River). Source: The Herald (Zimbabwe)

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by Mike Poverello

Building hard and soft infrastructure to minimise regional costs

I post this article given it ties together many of the initiatives which I have described in previous articles. The appears to be an urgency to implement these initiatives, but the real question concerns the sub-continent’s ability to entrench the principles and maintain continuity. At regional fora its too easy for foreign ministers, trade practitioners and the various global and financial lobbies to wax lyrical on these subjects. True there is an enormous amount of interest and ‘money’ waiting to be ploughed into such programs, yet sovereign states battle with dwindling skills levels and expertise. Its going to take a lot more than talk and money to bring this about.

South Africa is championing an ambitious integration and development agenda in Southern Africa in an attempt to advance what Trade and Industry Minister Rob Davies describes as trade and customs cooperation within the Southern African Customs Union (SACU), the Southern African Development Community (SADC) and other regional trade organisations.

Central to pursuing this intra-regional trade aspiration are a series of mechanisms to combine market integration and liberalisation efforts with physical cross-border infrastructure and spatial-development initiatives. Also envisaged is greater policy coordination to advance regional industrial value chains. “Trade facilitation can be broadly construed as interventions that include the provision of hard and soft infrastructure to facilitate the movement of goods, services and people across borders, with SACU remaining the anchor for wider integration in the region,” Davies explains.

This approach is also receiving support from the US Agency for International Development (USAid), which recently hosted the Southern African Trade Facilitation Conference, held in Johannesburg.

Trade programme manager Rick Gurley says that virtually every study on trade in sub- Saharan Africa identifies time and cost factors of exporting and importing as the most significant constraints to regional trade potential. Limited progress has been made by SADC member States and SACU partners to tackle the factors undermining trade-based growth, limiting product diversification and increasing the price of consumer goods, including of foodstuffs. However, far more would need to be done to realise the full potential of intra-regional trade.

Regional Alliance
One high-profile effort currently under way is the Tripartite Free Trade Area (T-FTA), which seeks to facilitate greater trade and investment harmonisation across the three existing regional economic communities of the SADC, the Common Market of Eastern and Southern Africa and the East African Community.

The existing SADC FTA should be fully implemented by the end of the year, with almost all tariff lines traded duty-free and, if established, the T-FTA will intergrate the markets of 26 countries with a combined population of nearly 600-million people and a collective gross domestic product (GDP) of $1-trillion. At that size and scale, the market would be more attractive to investors and could launch the continent on a development trajectory, Davies avers. It could also form the basis for a later Africa-wide FTA and a market of some $2.6-trillion.

However, as things stand today, intra- regional trade remains constrained not merely by trade restrictions but by a lack of cross-border infrastructure, as well as poor coordination and information sharing among border management agencies such as immigration, customs, police and agriculture.Cross-national connectivity between the customs management systems is also rare, often requiring the identical re-entry of customs declarations data at both sides of the border, causing costly and frustrating delays.

USAid’s regional economic growth project, the Southern African Trade Hub, is a strong proponent of the introduction of several modern trade-facilitation tools throughout the SADC – a number of which have already been successfully pioneered. These tools, endorsed by the World Customs Organisation (WCO) Framework of Standards, which offers international best-practice guidelines, are aimed at tackling the high costs of exporting and importing goods to, from, and within Southern Africa, which has become a feature of regional trade and discouraged international investment.

Bringing up the Rear
A country’s competitiveness and the effec- tiveness of its trade facilitation regime are measured by its ranking on World Bank indices and, with the exception of Mozambique, Southern African States perform poorly – with most in the region settling into the lowest global quartile of between 136 and 164, out of a total of 183. “Our transaction costs in Africa across its borders are unacceptably high and inhibit trade by our partners in the private sector,” says WCO capacity building director Erich Kieck. “We need our States to develop good ideas and policies, but the true test lies in their ability to implement them,” he notes.

He adds that not only does trade facilitation require efficient customs-to-customs connectivity, but also demands effective customs-to-business engagement, adding that, while customs units are responsible for international trade administration, they are not responsible for international trade. “The private sector is the driver of economic activity and international trade, and government’s responsibility is to understand the challenges faced by the business community and develop symbiotic solutions,” Kieck notes.

Despite the establishment of regional trade agreements and regional economic communities in Southern Africa, many partner- ships have failed to deliver on their full potential to increase domestic competitiveness.

In a report, African Development Bank (AfDB) senior planning economist Habiba Ben Barka observes that, despite the continent’s positive GDP growth record – averaging 5.4% a year between 2005 and 2010 – it has failed to improve its trading position or integration into world markets. In 2009, Africa’s contribution to global trade stood at just under 3%, compared with nearly 6% for Latin America and a significant 28% for Asia.

“Since 2000, a new pattern of trade for the continent has begun to take centre stage, as Africa has witnessed an upsurge in its trade with the emerging Brazil, Russia, India and China economies. Overall, Africa is trading more today than in the past, but that trade is more with the outside world than internally,” says Ben Barka. She adds that while many African regional economic communities have made some progress in the area of trade facilitation, much greater effort is required to harmonise and integrate sub-regional markets.

To address enduring trade barriers, consensus among business, government and trade regulators appears to lean towards the adoption of one or a combination of five facilitation tools. These include the National Single Window (NSW), the One-Stop Border Post (OSBP), cloud-based Customs Connectivity, Coordinated Border Management (CBM) and Customs Modernisation Tools.

A National Single Window
NSWs connect trade-related stakeholders within a country through a single electronic-data information-exchange platform, related to cross-border trade, where parties involved in trade and transport lodge standardised trade-related information or documents to be submitted once at a single entry point to fulfil all import, export and transit-related regulatory requirements.Mauritius was the first SADC country to implement the NSW and consequently improved its ranking on the ‘Trading Across Borders Index’ to 21 – the highest in Africa. It was closely followed by Ghana and Mozambique, which have also reported strong improvements.

Developed in Singapore, the benefits of government adoption include the reduction of delays, the accelerated clearance and release of goods, predictable application, improved application of resources and improved transparency, with several countries reporting marked improvement in trade facilitation indicators following the NSW implementation.

In South Africa, the work on trade facili-tation is led by the South African Revenue Service (SARS), which focuses on building information technology (IT) connectivity among the SACU member States, and strengthen- ing risk-management and enforcement measures. However, SARS’ approach to the NSW concept remains cautious, Davies explains. “SARS has considered the viability of this option as a possible technological support for measures to facilitate regional trade, but considers that this would fall outside the scope of its current approach and priorities in the region,” he said.

One-Stop Border Posts
As reported by Engineering News in December last year, effective OSBPs integrate the data, processes and workflows of all relevant border agencies of one country with those of another, which culminates in a standardised operating model that is predictable, trans- parent and convenient. An OSBD success story in Southern Africa is the Chirundu border post, where a collaboration between the Zambia and Zimbabwe governments has culminated in a single structure, allowing officers from both States to operate at the same location, while conducting exit and entry procedures for both countries.

Launched in 2009, this OSBP model is a hybrid of total separation, joint border operations and shared facilities in a common control zone. Implementation of the model has reduced clearance times to less than 24 hours, significantly reduced fraudulent and illegal cross-border activity, enabled increased information sharing between border agencies and reduced the overall cost of export and import activities in the area.

Earlier this year, former South African Transport Minister Sibusisu Ndebele indicated that Cabinet was looking into establishing a mechanism that would bring all border entities under a single command and control structure to address the fragmentation in the country’s border operations, particularly at the high-traffic Beitbridge post between South Africa and Zimbabwe. “The ultimate vision is to create one-stop border operations to facilitate legitimate trade and travel across the borders,” he said.

Customs Connectivity and Data Exchange
Improved connectivity between customs limbs in sub-Saharan Africa has perhaps made the most indelible strides in the region, with improved IT connectivity between States identified as a priority by Sacu.

This includes customs-to-customs inter- connectivity, customs-to-business inter- connectivity and interconnectivity between customs and other government agencies. SACU members have agreed to pursue the automation and interconnectivity of their customs IT systems to enable the timely electronic exchange of data between administrations in respect of cross-border movement of goods. “As a consequence of this acquiescence, we have identified two existing bilateral connectivity programmes as pilot projects to assess SACU’s preferred connectivity approach, cloud computing between Botswana and Namibia and IT connectivity between South Africa and Swaziland,” says SACU deputy director for trade facilitation Yusuf Daya. He adds that a regional workshop was recently convened to explore business processes, functions, data clusters and the application of infrastructure at national level to improve and develop intra-regional links.

Coordinated Border Management
The SADC has been a strong proponent of CBM efforts in the region, which promotes coordination and cooperation among relevant authorities and agencies involved in, specifically, the protection of interests of the State at borders. “The union has drafted CBM guidelines for its members on implementation, based on international best practice, and has received indications of interest from several member States,” explains SADC Customs Unit senior programme officer Willie Shumba.He adds that CBM is a key objective of regional integration, enabling the transition from an FTA to a customs union and, eventually, to a common market, through effective controls of the internal borders.

Customs Modernisation
South Africa’s customs modernisation initiative is well advanced and came about following Sars’ accession to the WCO’s revised Kyoto Convention in 2004, which required customs agencies to make significant changes to it business and processing models. These changes included the introduction of simplified procedures, which would have fundamental effects on and benefits for trade and would require a modern IT solution.

Since its inception, the SARS Customs Modernisation Programme has gained tremendous momentum, with amendments to the Passenger Processing System and the replacement of SARS’s Manifest Acquittal System in the Automated Cargo Management system. Further adjustments were made to enable greater ease of movement of goods, faster turnaround times and cost savings, as well as increased efficiency for SARS. This phase included the introduction of an electronic case-management system, electronic submission of supporting documents, the centralisation of back-end processing in four hubs and an electronic release system and measures to enhance the flow of trucks through borders – in particular at the Lebombo and Beitbridge borders.

Proper Planning
AfDB’s Ben Barka warns that, prior to the implementation of any border improvement efforts by countries in Southern Africa, a thorough analysis and mapping of each agency’s existing procedures, mandate and operations should be undertaken.“Based on these findings, a new set of joint operational procedures need to be agreed upon by all involved agencies and must comply with the highest international standards,” she says.

Development coordination between States is essential, as the largest disparity among regional groupings, in terms of intra-regional trade, is clearly attributable to their differentiated levels of progress in various areas, including the removal of tariffs and non-tariff barriers, the freedom of movement of persons across borders and the development of efficient infrastructure. Source: Engineering News.

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by Mike Poverello

South Africa – Stalling Regional Integration

Yes, you’ll be forgiven if you thought this was some belated April-fools joke. South Africa has been accused of frustrating plans to create a regional customs union and instead preferring to bolster the South African Customs Union (Sacu), where it holds sway. 

A customs union is a trade agreement by which a group of countries charge a common set of tariffs to the rest of the world, while granting free trade among members. Regional Integration minister, Priscilla Misihairabwi-Mushonga, said there was a feeling that South Africa wanted to use Sacu as its basis to form a regional customs union, instead of working towards creating a new one.

“What we see is that South Africa wants to use Sacu as the basis for forming a regional customs union and sometimes, this is viewed as having a big brother mentality,” she said. Misihairabwi-Mushonga said, for this reason, negotiations towards a holistic Southern African Customs Union (Sadc) had not gone very far. Botswana, Lesotho, Namibia, Swaziland and South Africa make up Sacu, with the four countries having benefited by aligning themselves to South Africa, Africa’s largest economy. A Sadc customs union would involve the 15 countries of the region, instead of Sacu, which is considered narrow.

But Catherine Grant, the head of economic diplomacy at the South African Institute of International Affairs, reckons the smaller nations in Sacu, like Lesotho, may be opposed to Sacu morphing into a regional customs union. “This will be opposed by other Sacu members, not necessarily just South Africa, as this (Sacu) is not just a trade agreement, but involves a broader range of economic issues,” she said.

“Up to 60% of the Lesotho budget is Sacu revenue, so the vested issues, whether Sacu is the basis of a customs union, are not just South African.” Grant felt that it was impossible to expand Sacu in its current form, as it would cost South Africa too much and would dilute the resources that were meant for other projects.

The head of the trade and policy think-tank said instead, South Africa preferred to see the implementation of a free trade area (FTA) as a first step, since customs union negotiations were usually lengthy and time-consuming. “The preference is to first channel scarce resources to existing commitments and trying to make them as beneficial as possible,” she explained.

Grant said while South Africa was the dominant player in the region, hence engendering a feeling that it was imposing itself as the big brother, the country was actually holding back from taking a leading role and this cost the region.

“Sometimes South Africa holds back because they are conscious of not being a big brother and that could be detrimental to the region,” she explained. However, Grant said energies should be directed towards the conclusion of negotiations to set up the Tripartite Free Trade Area (TFTA), which includes the Common Market for East and Southern Africa, the East African Community and Sadc.

“The TFTA will resolve some of the overlapping issues that can be difficult to solve when it comes to a customs union,” she said. Since Zimbabwe adopted multicurrencies in 2009, there has been a call that the nation either join Sacu or push for the formation of a regional customs union. Zimbabwe remains wary of joining Sacu, as it fears for its economic independence, yet negotiations for a regional customs union are moving at a snail’s pace.

Sacu was established in 1910, making it the world’s oldest customs union. It consists of Botswana, Lesotho, Namibia, South Africa and Swaziland. Source: AllAfrica.com

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