A proposal by the Movement for Democratic Change (MDC) that Zimbabwe join the Southern African Customs Union (Sacu) and the Southern African Common Monetary Area (CMA) has a variety of implications beyond the country’s borders, according to senior consultant and director at trade consultancy Tutwa Consulting Group, Catherine Grant Makokera.
She told FTW Online that it was difficult to determine whether the impact of adding Zimbabwe to the customs and currency blocs would be good or bad at this time. However, she believed that joining Sacu would only complicate an already difficult customs environment while joining the CMA would be beneficial to Zimbabwe as it would stabilise the local currency.
“Sacu is a customs union that shares a common external tariff and negotiates trade agreements as a bloc while customs duties collected at the borders from trade with non-Sacu countries are deposited in a revenue pool administered by the South African Revenue Service,” said Makokera.
She pointed out that the formula which determined how these jointly collected revenues were shared among members was already highly contested by members and would need to be changed in order for Zimbabwe to join Sacu.
Additionally, Makokera noted that while the Sacu agreement left space for new members to join on the basis of a unanimous decision by existing members, there was no clear precedent available for managing Zimbabwe’s accession to the customs union as membership had remained unchanged since its launch 108 years ago.
She pointed out that joining Sacu would require a complete overhaul of the tariff schedule of Zimbabwe to align it to the customs bloc’s common external tariff, including preferences given to the European Union and South American trade bloc Mercosur.
“This could undermine existing objectives of Zimbabwe’s trade policy aimed at protecting local producers and reindustrialising some sectors,” said Makokera.
However, she said that the proposal to join the CMA would have many benefits, especially to those in the Sacu region who conducted business with the country and who were trying to get money in and out of Zimbabwe, such as importers and exporters.
“Zimbabwe’s accession to the CMA has the potential to drive up trade and investment linkages between the region and Zimbabwe,” added Makokera.
She explained that businesses in Zimbabwe priced their goods or services in US dollars due to the currency situation in the country which had led to some of the liquidity challenges associated with paying for imports.
Zimbabwe joining the CMA, however, would mean pegging its currency to the rand instead of the dollar which would work to the advantage of Zimbabwe as well as CMA member countries – which currently comprise Lesotho, Namibia, Swaziland and South Africa.
