The Southern African Customs Union (SACU) has often been described as the world’s oldest functioning customs union. For Namibia, it has also been one of the country’s most important economic pillars since independence. Every year, SACU revenue contributes significantly to the national budget, helping finance education, healthcare, infrastructure and public services. Yet as global trade patterns shift and geopolitical competition intensifies, the question is no longer whether SACU has served Namibia well in the past. The more pressing question is whether it is adequately preparing Namibia for the future.
The recent remarks by South African Finance Minister Enoch Godongwana during the 9th SACU Summit in Cape Town highlight both the strengths and vulnerabilities of the customs union. His warning that powerful economies are increasingly attempting to negotiate bilateral trade agreements with individual African countries instead of regional blocs should concern every SACU member. His insistence that South Africa remains committed to negotiating collectively demonstrates an understanding that, in today’s increasingly fragmented global economy, smaller nations often possess greater leverage when acting together rather than alone.
For Namibia, this principle is particularly relevant.
On our own, Namibia represents a relatively small consumer market of fewer than four million people. Through SACU, however, we become part of a regional market of more than 70 million consumers. That immediately changes the negotiating dynamics with major trading partners such as the European Union, China, the United States and emerging Asian economies. Collectively, SACU members command far greater attention than any individual member could achieve independently.
This bargaining power should not be underestimated.
At the same time, it would be naïve to assume that collective negotiation alone is enough to secure long-term prosperity. Customs unions cannot survive indefinitely by simply sharing customs revenue. They must evolve into engines of industrial development, innovation and regional competitiveness.
This is precisely why President Cyril Ramaphosa’s call to transform SACU from primarily a revenue-sharing arrangement into a catalyst for industrialisation deserves serious consideration across the region.
Namibia should support this vision, but with important qualifications.
The uncomfortable reality is that South Africa remains the overwhelming industrial powerhouse within SACU. Most manufactured goods entering Namibia originate there. Our supermarkets, hardware stores, pharmacies and shopping malls remain heavily stocked with South African products. While this demonstrates the efficiency of regional trade, it also reveals the structural imbalance within the customs union.
If industrialisation simply means expanding South African manufacturing while neighbouring countries remain primarily consumers, then Namibia will continue to struggle with trade deficits, limited value addition and insufficient industrial growth.
Regional integration should not reinforce existing inequalities. It should reduce them.
Namibia therefore needs SACU to become more intentional about developing complementary industries across all member states. Rather than competing to manufacture identical products, countries should specialise in sectors where they possess comparative advantages while building integrated regional value chains.
Namibia is exceptionally positioned to contribute in green hydrogen, renewable energy, logistics, uranium, critical minerals, fisheries, agriculture and beef production. Botswana has strengths in diamonds and financial services. Eswatini has manufacturing capabilities in specialised industries. Lesotho has developed a competitive textile sector. South Africa possesses extensive industrial capacity and sophisticated financial markets.
Together, these strengths could create a genuinely competitive regional economy if properly coordinated.
Unfortunately, coordination has often lagged behind ambition.
As an entrepreneur, one of my biggest frustrations is that moving goods across borders within Southern Africa can still involve unnecessary delays, inconsistent regulations and bureaucratic inefficiencies. A customs union should make business easier, not merely collect and redistribute customs duties.
Infrastructure remains another critical weakness.
Efficient rail networks, modern border posts, reliable ports and digital customs systems determine whether businesses can compete internationally. Namibia has made considerable investments in the Port of Walvis Bay and regional logistics corridors, positioning itself as a gateway to Southern Africa. However, these investments generate maximum value only if neighbouring countries improve cross-border connectivity with equal urgency.
Trade corridors are only as efficient as their weakest link.
Another issue deserving honest discussion is Namibia’s reliance on SACU revenue itself.
For many years, SACU receipts have represented a substantial share of government income. While this has undoubtedly supported national development, it has also created a degree of fiscal dependence. Revenue distributions fluctuate according to regional trade volumes and economic performance, making national budgeting vulnerable to external shocks beyond Namibia’s control.
An economy should not become comfortable depending primarily on customs receipts generated elsewhere.
Instead, SACU revenue should increasingly be viewed as developmental capital—money that finances productive investments capable of generating sustainable domestic economic activity. Investments in manufacturing, digital infrastructure, skills development, research, entrepreneurship and export industries would ultimately reduce dependence on customs transfers while strengthening Namibia’s own economic resilience.
This brings us back to Minister Godongwana’s warning about bilateral trade agreements.
While collective negotiations undoubtedly strengthen the region’s bargaining position, SACU must also ensure that the interests of smaller members remain fully protected during negotiations. Economic integration cannot become synonymous with dominance by the largest economy. Every member state must see measurable benefits through increased investment, industrial diversification, job creation and export opportunities.
Otherwise, political commitment to the customs union will gradually weaken.
The emergence of the African Continental Free Trade Area (AfCFTA) also changes the equation. Rather than viewing AfCFTA as competition, SACU should position itself as Southern Africa’s launchpad into the wider continental market. If regional industries become globally competitive, SACU businesses will be better placed to expand throughout Africa.
For Namibia, this presents an extraordinary opportunity.
Our strategic location, political stability, expanding energy sector and world-class logistics infrastructure provide a strong foundation for becoming a regional manufacturing and export hub. But this requires deliberate industrial policy, improved ease of doing business and stronger collaboration with regional partners.
Ultimately, the success of SACU should no longer be measured simply by the size of annual revenue transfers. It should be measured by the number of factories established, businesses expanded, exports diversified, jobs created and entrepreneurs empowered across all member states.
SACU has served Namibia well over many decades, but the next chapter must be different. The customs union should remain united in international negotiations while simultaneously ensuring that every member participates meaningfully in regional industrial growth.
Namibia does not need a SACU that merely distributes wealth. It needs a SACU that helps create it.
That is the difference between surviving global economic uncertainty and thriving within it.
