Southern African Customs Union (SACU) agreement

Definition

The Southern African Customs Union (SACU) agreement is a regional trade arrangement established to promote economic cooperation and integration among its member states in Southern Africa. 

What is the Southern African Customs Union agreement?

SACU is one of the world’s oldest customs unions, comprising five member countries: Botswana, Eswatini (formerly Swaziland), Lesotho, Namibia, and South Africa. It operates as a customs union, which means that member states have established a common external tariff (CET) for goods imported from non-member countries. Member states also eliminate tariffs on trade among themselves, creating a single market for goods and services within the union.

A unique feature of SACU is its revenue-sharing arrangement, where customs duties collected on imports entering SACU member states are pooled and then distributed among the member countries based on a revenue-sharing formula. This formula considers factors such as the relative size of each country’s economy and its share of total imports, ensuring a fair distribution of customs revenue among member states.

SACU aims to facilitate trade and promote economic development in the region by reducing trade barriers, improving customs procedures, and increasing trade facilitation measures. Member states implement initiatives such as the harmonisation of customs documentation, the automation of customs processes, and the development of trade infrastructure to expedite the movement of goods across borders and reduce trade costs.

Example of Southern African Customs Union agreement

An example of the Southern African Customs Union (SACU) agreement in action is when a company in South Africa exports goods to Botswana. Under the SACU agreement, the company does not face tariffs or customs duties when shipping its products to Botswana, as both countries are members of the customs union. This streamlined process allows for smoother cross-border trade, reduced trade barriers, and increased economic cooperation between SACU member states.