When SACU announced the creation of a E5 billion Fund of Funds to be rolled out in 2027/28 and 2028/29, the news barely registered beyond policy circles. Yet this initiative could prove to be one of the most consequential decisions in SACU’s modern history. This, for the kingdom, presents an opportunity to break free from the cycle of dependency on customs receipts and to chart a new path of industrialisation and resilience.
For decades, SACU has been defined by its revenuesharing formula, a mechanism that has kept smaller economies afloat, but also locked them into a precarious reliance on tariff inflows. When global trade slows, when imports fall or when South Africa’s economy stumbles, Eswatini feels the tremors almost immediately. The Fund of Funds is SACU’s attempt to rewrite this story. It is not about distributing what already exists; it is about creating new value, new industries and new opportunities. In short, it is about transformation.
Closing structural gaps
The fund is designed to close three stubborn gaps that have long undermined SACU’s collective strength. First is the industrialisation deficit. Too many of our economies remain commoditydependent, exporting raw materials while importing finished goods at a premium. The fund aims to stimulate manufacturing, agroprocessing and valueadded exports, sectors that can anchor longterm growth.
Second is the financing gap. Smaller economies like Eswatini and Lesotho often struggle to access largescale development capital. By pooling resources regionally, SACU creates bargaining power with development finance institutions and private investors. E5 billion may not be enough to industrialise the region, but it is a credible signal that SACU is serious about building a pipeline of bankable projects.
Third is the resilience gap. Rising energy costs, food price volatility and global protectionism have exposed SACU’s fragility. The fund is a buffer against these shocks, enabling proactive investment in strategic sectors rather than reactive crisis management. This is an opportunity that we must embrace to calibrate a brighter trading future.
Strategic opportunity
The fund is both an opportunity and a test of foresight for the kingdom. The country must position itself not as a passive recipient, but as a proactive architect of projects that align with SACU’s industrialisation agenda. Agroprocessing clusters, light manufacturing hubs and renewable energy investments are obvious candidates. Infrastructure projects—rail, energy and logistics- could be framed as regional enablers, strengthening Eswatini’s role in SACU value chains.
Equally important is diversification. Eswatini’s economy has leaned heavily on sugar and textiles, sectors vulnerable to global price swings and trade policy shifts. The fund offers a pathway to reduce this reliance by investing in industries that can compete under the AfCFTA. If the country can secure financing for new industries, it will not only stabilise its SACU receipts, but also expand its export footprint across the continent.
The immediate fiscal implications cannot be ignored. In the short term, 2027 to 2029, Eswatini’s SACU receipts may face pressure as part of the Common Revenue Pool is redirected to capitalise the fund. This could mean leaner inflows at a time when government budgets are already stretched. Policymakers must prepare for this adjustment, ensuring that expenditure plans are realistic and that fiscal discipline is maintained.
Yet the medium-term outlook is far more promising. If the fund is well-managed, it should generate returns through industrial growth, expanded trade and higher customs revenues. For Eswatini, this translates into more stable and potentially higher SACU receipts, driven not by the vagaries of imports, but by the strength of diversified exports and regional integration. In other words, short-term sacrifice could yield long-term stability.
Safeguards
No fund, however ambitious, is immune to failure. For SACU’s initiative to succeed, robust safeguards must be built into its governance. Equitable access is paramount; smaller economies must not be overshadowed by South Africa’s industrial base. Allocation criteria should prioritise readiness and regional impact, not size alone. Transparency and accountability are equally critical, with clear reporting mechanisms to prevent politicisation and misallocation. Project pipeline readiness is another safeguard, as countries with well-prepared projects will benefit first. Eswatini must invest in technical capacity to design bankable proposals that withstand scrutiny. Finally, the fund must have a recapitalisation strategy. E5 billion is significant but insufficient; leveraging private capital and DFIs will multiply its impact.
Onwards to the future
The SACU Fund of Funds is a bold experiment in regional financing. For Eswatini, it is a chance to reposition itself within SACU, not as a passive recipient of customs revenues, but as an active driver of industrialisation and regional value chains.
The challenge lies in preparation. Without competitive projects and strong governance, Eswatini risks being left behind. With foresight, however, this fund could mark the beginning of a new era in Eswatini’s economic story.
The choice before us is stark. We can treat the fund as another regional initiative, nod politely, and continue business as usual. Or we can seize it as a turning point, a moment to invest in industries that will define Eswatini’s future. The latter path demands courage, discipline and vision. But it is the only path that offers true transformation.
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