Southern Africa: The future of the Southern African Customs Union

Tensions over the future of the Southern African Customs Union (SACU) and trade relations with the EU are rising, as reflected in the plethora of recent media reports. Unfortunately they are so complex that they defy simple categorisation. The most difficult problem concerns the future of revenue distribution within SACU. South Africa substantially subsidises the smaller members - particularly Lesotho and Swaziland - and the South African Treasury is uncomfortable with the subsidy’s extent, given competing domestic fiscal demands.