When they last met to discuss a joint industrialisation bid last April, member states of the Southern African Customs Union (SACU), opted for diplomacy and spoke of regional unity for investment, rather than the restless elephant in the room.
Last week, at a year-end media briefing in Windhoek, Namibian president, Hage Geingob, lifted the lid on the long-simmering issue of industrial imbalance in the region and pointed accusing fingers at South Africa. The 82-year-old political veteran who retires in just over a year is well-known for shooting from the hip, earning a reputation for blunt frankness in his remarks.
“I met with Ramaphosa during the year and talked about SACU that we are like beggars there,” he said.
“The way this thing is, we have to discuss really seriously that we cannot import or industrialise.
“So long as the SACU tariff issues are not reconciled and democratically decided as we agreed; South Africa plays a game so we have to serious look at the future of SACU.
“Are we really together in that or are people planning something else and we are just sitting with our hands folded not looking at alternatives?
“We are not begging anybody.”
Geingob’s remarks on South Africa, the current structure of SACU and his country’s under-industrialisation, were triggered by what he said was the decision by French automaker, Peugeot, to close an assembly plant in Namibia. According to The Namibian newspaper, Peugeot has filed a lawsuit against the Namibian government for its alleged failure to ensure that Peugeot’s joint venture, Peugeot Opel Assembly Namibia, would be exempt from excise and customs duties, taxes and levies for exporting vehicles assembled at Walvis Bay to SACU and SADC.
For many in Botswana, the Peugeot situation is frighteningly familiar; a case of déjà vu. Twenty-three years ago, Botswana’s own automotive hopes were crushed and 900 jobs lost when the Hyundai assembly plant in Broadhurst closed due to South Africa reportedly filing a rules of origin complaint.
Critics of SACU, which is the world’s oldest customs union, say to a large extent, it has deliberately been structured, from its apartheid beginnings, to facilitate industrial imbalance between South Africa and the four smaller members. South Africa has benefited the most from the union’s position itself as a common bloc for trade with the world.
Part of the imbalance stems back to the apartheid era, where economists such as Roman Grynberg say authorities at the time included a secret clause where member states could not seek infant industry protection within union unless capable of supplying 60% of the SACU market.
The Revenue Sharing Formula, set up in part to monetarily compensate the smaller members for this industrialisation imbalance, has been pending revision for several years, even though one of the agreed principles is “economic convergence” among member states.
In terms of economies of scale, cost of labour, geography and other factors influencing the attractiveness of countries to investors, South Africa has been able to leverage SACU to drive its own industrialisation agenda, with the agreement also providing the regional giant with easy passage of its exports into the smaller members.
Figures shared last April when the SACU members met in Gaborone, underscored the scale of South Africa’s economic overshadowing of its fellow union members.
For 2020, South Africa’s Gross Domestic Product, a rough estimate of its economic output, measured US$302 billion, about nine times the combined size of the other four SACU member states. In terms of Foreign Direct Investment (FDI), South Africa attracted US$2.5 billion worth of inflows in 2019, compared to US$492 million for the other four states combined.
The imbalances in the region are a touchy subject in a region where the member states include a former coloniser/colony relationship and former Frontline States that fought against apartheid. The smaller member states historically have a close economic relationship to South Africa, but as unequal partners. South Africa, some critics have said, is eager to retain its position as the sun around which the smaller members rotate like planets.
In his recent remarks, Geingob said amongst the smaller members, Namibia had found an ally in Botswana. He also hinted that the two countries were planning on unspecified action to address the situation.
“SACU involves five countries and two are completely together,” he said.
“We and Botswana have the same views and it’s a question of Lesotho as you know they have a very difficult situation dependent totally on South Africa, and Eswatini is also similar.
‘So two of us are talking and we are not happy and if you are not happy and you are planning, you cannot come to the public and say ‘I’m going to do this and this’.
“It’s like what Americans do when they are trying to attack people and they say ‘on such and such a day we will come from the left direction and hit you’.
“We are not like that.”
Geingob said Botswana and Namibia would seek to negotiate the smaller countries’ interests out of the imbalance in SACU.
“Our neighbouring country, our Big Brother, we will negotiate until we reach that stage where we say enough is enough.
“But so far, as long as SACU is handled this way, we cannot industrialise.
“Even when I was the minister of trade, I told my colleagues that as long as SACU is this way, we cannot industrialise and that’s the truth up to now. “We have to really decide on the way.”
