This weekend, the economic roads for five Southern African countries, including Eswatini, lead to the Cape Town International Convention Centre, where the 9th Southern African Customs Union (SACU) Summit is underway.
For Eswatini, this summit is not just any ordinary meeting or regional get-together. There is a major plan on the table that could completely transform SACU, turning it from a source of easy money into a driver of regional economic integration. The fact that His Majesty the King is attending makes it significant for us, economically speaking, as our future is at stake, requiring high-level decision-making. For a long time, we have seen SACU as a regional cash cow that occasionally pours billions of Emalangeni into our country’s treasury and funding between 30 and 50 per cent of our budget, if numbers from the SACU Secretariat’s Directorate of Trade Facilitation are anything to go by.
The high-level agenda focuses heavily on a midterm review of the SACU Strategic Plan (2022–2027) and a structural report detailing a ‘Re-imagined SACU’. The bloc is re-imagining its core purpose. The priority is no longer about how the customs pool is divided, but how the five member States can build co-dependent industrial ecosystems across borders. From what the SACU Senior Trade Officials Secretariat has shared, the idea is to create regional value chains that cross borders, focusing on five key areas: Making cars, processing agricultural products, producing medicines, developing critical minerals and creating green energy.
The goal here is not for each country to work alone, but for a shared production line that spans the region. This means that instead of every country trying to do everything on its own, they will work together, each contributing its strengths to create something bigger and more efficient.
For the Eswatini businessperson, this structure introduces distinct advantages and disadvantages. On the positive side, the opportunities for market expansion are promising. When it comes to fruit production in the Southern African Customs Union, South Africa is the dominant player, accounting for a whopping 97 per cent of the total. On the other hand, Eswatini’s share is a mere 1.5 per cent, with most of its production focused on citrus, grapefruits and sugar. However, there is a plan to change this imbalance. The SACU Fruits and Vegetables Value Chain Report reveals a deliberate effort to decentralise the sector, aiming to spread the wealth and opportunities more evenly across the region. This move could have a significant impact on the local economies and communities and it will be interesting to see how it plays out. By promoting a more balanced distribution of fruit production, the region can work towards a more sustainable and equitable future.
Our experts, who are working closely with these companies, believe that businesses in Eswatini that process agricultural products can make a big change by switching from exporting basic raw materials to making high-quality processed products, like special sugars and extracts, that are in demand by big food companies in South Africa. These food companies are now required to buy more of their ingredients from local suppliers, which creates a tremendous opportunity for Eswatini’s agro processors to meet this need and increase their profits.
They also note that with the African Continental Free Trade Area (AfCFTA), local manufacturers have the chance to play a key role. For instance, SACU has already finalised 7 111 tariff lines, as stated in the SACU Secretariat’s fact sheet on Continental Trade. This means local manufacturers can become vital suppliers of African components, which is a big opportunity.
By making some key changes to products at the local level, our companies can help them comply with the continent’s rules of origin, which are quite strict.
However, there is a downside that could throw many businesses off track if they are not ready. It has been explained to me that the way SACU is set up still heavily favours South Africa. Due to its large industrial base, businesses in Eswatini will likely be stuck supplying cheap, low-profit raw materials like timber or farm products, while the high-profit work of assembling, branding and owning intellectual property will remain controlled by areas like Gauteng or the Western Cape.
Therefore, it is really important that our local leaders and His Majesty the King have a strong voice in Cape Town. We cannot let big corporations run the show in this trade bloc.
We need to keep in mind that the ups and downs in our region are exactly what His Majesty has been warning us about all along and calling for a diversification of our economy. It seems like the only thing that has really happened is the setting up of the Revenue Stabilisation Fund.
Given recent developments, perhaps we need to use what remains of the current SACU operating model to set up an infrastructure bond fund.
The country needs to financially back, guarantee and empower businesses like local contractors and manufacturers to avoid a repeat of the devastating decisions that have seen an estimated E17.2 billion worth of major State tenders being issued to foreign multinational companies that are fully backed by the financial muscle of their home governments.
We need to make sure our team negotiates for a system that helps local businesses and gives them a fair chance to compete with bigger companies that control the market. So, whichever way the cold SACU wind blows in Cape Town, our hopes lie with the King and delegation to ensure the re-imagined organisation creates a level playing field where everyone in member countries has an equal opportunity to succeed.
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