Sacu quarrel could spell the end of a century-old African institution

IT’s been less obvious than the spat between the African National Congress and the Congress of South African Trade Unions, but another important fire has broken out for the Zuma government to deal with, and this is the decision by Botswana, Lesotho, Mozambique and Swaziland to break ranks and sign interim economic partnership agreements with the European Union (EU).

The importance of their decision is huge; effectively it means four of SA’s six neighbours decided to side with a distant economic union rather than the country next door, which is quite bizarre.

Even more bizarre is that two of the four are not only members of the century-old Southern African Customs Union (Sacu) but also of the rand monetary area. It’s a little known fact among SA’s taxpayers that the customs union agreement effectively operates as a huge windfall for countries in the region — for example, supplying about 40% of Lesotho’s budget.

This is why the anger and threats that followed the decision of the four to side with the EU included a veiled threat about the effect of the decision on Sacu payments.

It’s hard to know who is responsible; either the South Africans are asking too much and willing to grant too little, or the four countries are just being had by the EU’s sophisticated blandishments.

But it is worth remembering the US trade representatives have just given up on us too.

The people running SA’s Trade and Industry Ministry don’t give me the impression they truly understand how free trade works and how it helps create industry.

In the meantime, a century-old institution is crumbling.