The success and challenges facing SACU and SADC

1. • There is free movement of goods and services between member states.
• This means that no tax is charged on goods moving through member
states.
• For example, if Botswana imports cars from South Africa, there should
be no tax restrictions on those cars to either South Africa or Botswana.
• Custom duties are charged on goods entering any member country from
non-member countries.
• Similar duties charged on goods from other countries outside SACU are
collected and deposited into a central fund in South Africa for two years
after which are shared among member states.
Operations of SACU

2.  The unification of the four countries means that
goods produced in countries with small populations
or small domestic markets such as Botswana has an
opportunity to sell to a larger market because of
combined populations.
 For example, Botswana has a small population of
only about 2.3 million but can sell her goods to a
population of over 46 million in the SACU region.
Successes of SACU

3.  The money collected as custom duties from goods
from outside the SACU region is shared among the
member states.
 This money helps poor member states such as
Botswana, Lesotho and Swaziland as an important
source of income for their development activities.
Successes of SACU cont.

4.  The money collected as custom duties from goods from outside
the SACU region is shared among the member states.
 This money helps poor member states such as Botswana,
Lesotho and Swaziland as an important source of income for
their development activities.
 For example, in the 1981/82 financial year SACU earning provided
37% of Botswana's government revenue, 60% of Swaziland's
government revenue, and 71% of Lesotho's government revenue
(Seidman, 1985).
 You can imagine how dependent poor countries such as
Swaziland and Lesotho are on this money to fund their
development activities.
Successes of SACU cont.

5.  Differences in levels of industrialisation are related to
the amounts of goods any member country can
produce and export.
 This means that South Africa, the richest and most
industrialised member, has been the main producer
and exporter in SACU so she benefited more from
free movement of goods than the poor, less
industrialised member states.
Challenges to SACU

6.  The two year waiting period before sharing custom
revenues allows inflation to devalue the money.
 Furthermore, the keeping of the custom duties in a
central fund in South Africa allows South Africa to
earn huge interests on that money which is not
shared with the other countries.
 This is unfair because the money belongs to all
member states.
Challenges to SACU

7.  South Africa being the richest member and owner of major
sea ports uses her influence to control the poorer member
states.
 For example, membership to SACU makes it difficult for
Botswana, Lesotho and Swaziland to object to South
African policies or cut their economic ties with South Africa
because they need to get their imports through South
Africa.
 Furthermore, member states cannot protect their industry
from competition from South African goods or restrict
some imports since SACU is a free trade area.
Challenges to SACU cont.

8.  Members should be allowed to limit the amount of
goods imported from other SACU members especially
if such goods are already produced within the
country.
 For example, Botswana should not be forced to allow
South African bread into Botswana because
Botswana has her own bread which she wants to sell
to people at home without any competition from
South African bread.
Ways of Strengthening SACU

9.  There is need to set up a new agreement on the
sharing of revenue in such a manner that even the
poorer, less industrialised members can benefit from
the customs union.
 An example of this change of agreement was done in
1969.
 The 1969 agreement allows a country to receive a
share according to the amount of goods imported.
Ways of Strengthening SACU

10.  There is need to make agreement on the sharing of
interest from the money deposited in the central
fund.
 Such an arrangement can boost financial situation of
the poorer countries rather than being taken by the
richer member, South Africa.
Ways of Strengthening SACU cont.

11.  Customs revenue collections should be shared in a
shorter time rather than two years.
 This will help avoid effects of inflation that usually
occur because of delays in sharing the money.
 I believe you have studied enough content about
SACU and should now be moving on to study about
Southern African Development Community (SADC)
and its membership.
Ways of Strengthening SACU cont.

12.  SADC is the unification of Southern African countries for the
purposes of development through sharing resources and
working together.
 It originally started as Southern African Development Co-
ordinating Conference (SADCC) established in 1980, but later
in 1992 changed to SADC with increased membership.
 Members of SADC are independent countries of Southern
Africa. Original members are Angola, Botswana, Lesotho,
Malawi, Mozambique, Swaziland, Tanzania, Zambia and
Zimbabwe.
 They were later joined by Namibia, South Africa, Democratic
Republic of Congo, Mauritius, Madagascar and Seychelles
Southern African Development
Community (SADC) and Its
Membership

13. (i) The Summit of Heads of State and Government
 This is the meeting of Heads of States and government where decisions for
the community are made.
 Such meetings are held annually although special meetings can be called
whenever it is necessary.
(ii) Council of Ministers
 This is made up of Ministers of Finance and Development Planning from
member states.
 The work of this council is to supervise the work of the community.
 It also chooses issues to be discussed by Heads of States.
Operations of SADC

14. (iii) The Executive Secretariat
 This is the administrative part of SADC where the Executive Secretary runs the affairs
of the community.
 The Secretariat identifies the needs of the community and forwards them to the
Council of Ministers.
 The SADC Secretariat is housed in Gaborone.
(iv) Specialised Committees or Commissions of SADC
 Different committees are set up to look into different projects and different countries
are assigned responsibility for each project.
 The allocation of responsibility is based on the climate and natural resources that each
country has to favour it for the identified activity.
Operations of SADC cont.

15. SADC countries and their specialised
responsibilitiesCountry Responsibility
Angola
Botswana
Malawi
Mauritius
Mozambique
Namibia
South Africa
Swaziland
Tanzania
Zambia
Zimbabwe
Energy
Agricultural Research, Livestock Production
and Animal Disease Control
Inland Fisheries, Forestry and Wildlife
Tourism
Transport and Communications, Culture and
Information
Marine fisheries and Resources
Finance and Investment
Human Resources and Development
Industry and Trade
Mining
Food, Agriculture and Natural Resources
Country Responsibility
Angola
Botswana
Malawi
Mauritius
Mozambique
Namibia
South Africa
Swaziland
Tanzania
Zambia
Zimbabwe
Energy
Agricultural Research, Livestock Production
and Animal Disease Control
Inland Fisheries, Forestry and Wildlife
Tourism
Transport and Communications, Culture and
Information
Marine fisheries and Resources
Finance and Investment
Human Resources and Development
Industry and Trade
Mining
Food, Agriculture and Natural Resources

16.  Increase of trade between member states
 Self-sufficiency has increased as shown by reduction of imports
from outside SADC and encouragement of exports to places
outside the region. Also dependence on Multi-national
Companies is being reduced.
 There has been increased production within the region as a
result of specialisation. As shown in the table you have studied
earlier, each country has concentrated on production activities
for which it has natural resources, and this has resulted in
efficient production of goods and services.
 There has been diversification of industry within the region.
Successes of SADC

17.  Member states have been helped by others in times of need.
 For example, Mozambique was assisted by other SADC member
states during her flood disaster whilst Lesotho was helped by SADC
forces to restore peace during an attempted coup.
 There has been some infrastructural development. Roads linking
major towns and sea ports are being improved.
 The Trans-Kalahari High Way linking Windhoek (Namibia) to
Botswana and South African road network is an example of a SADC
road project.
 Countries with small domestic markets such as Botswana have been
able to expand the market for their goods and services.
 SADC has been able to borrow funds from western donor countries
for some development projects.
Successes of SADC cont.

18.  The region is still dominated by western countries through historic and
colonial ties. For example, Botswana still continues to finalise her copper
refining process in the USA and yet such service is available in Zambia. Other
member states tend to have more trade with colonial masters such as
Britain than with other member states.
 Linking of all major centres by road, rail and air routes is not yet adequate
 Since her acceptance into SADC, South Africa dominates the region. Due to
her strength in military power, wealth and economic development, South
Africa is able to influence most of the decisions for the whole region.
 Location of new industries for the region may be difficult to decide since the
rich countries tend to be advantaged because of favourable economic
conditions
Challenges to SADC

19.  There is still lack of commitment to implement some SADC agreements and
policies by some member states.
 For example, Zimbabwe has shown unwillingness to implement guidelines
on voting and elections agreed upon at a Heads of States Summit in 2004.
 Conflicts within member states are slowing down production and
development, in addition to disturbing peace and security.
 For example, war in Angola has disturbed diamond mining there whilst
disagreements over land issue between white farmers and the government
in Zimbabwe has resulted in loss of agricultural production and
unemployment in the country.
 The impact of the Zimbabwean conflict is already felt by her neighbours
such as Botswana and South Africa where Zimbabwean illegal immigrants
have become an immigration problem.
Challenges to SADC cont.

20.  Acquired Immuno Deficiency Syndrome (AIDS) - This incurable
disease is killing many skilled people in the region.
 Member states are using a lot of hard earned income in the fight
against HIV/AIDS. It has been observed that major roads which
were constructed to facilitate transportation of goods by trucks
are unfortunately promoting the spread of AIDS.
 The main road from Pretoria in South Africa to Zimbabwe,
Mozambique and Malawi through Messina / Beit bridge border
has been nicknamed "the Death Corridor" because of high risk of
contracting AIDS due to high numbers of prostitutes and
mobility along the road through trucks.
 Foreign debt - The SADC region has accumulated foreign debts
which are difficult to pay back.
Challenges to SADC cont.