By Chilombo Olga Priscila
The African Continental Free Trade Area (AfCFTA) has reignited discussions around one of Africa’s most ambitious integration goals: a Continental African Customs Union.
While the vision promises deeper economic integration, stronger intra-African trade and enhanced global competitiveness, SACU Member States face a more practical question: will the benefits outweigh the costs?
The debate should not be about whether Africa should integrate, but whether a continental customs union would genuinely improve economic welfare, industrial development, fiscal sustainability and competitiveness across the continent.
SACU: Africa’s Customs Union Laboratory
The Southern African Customs Union (SACU) offers Africa a valuable case study. For over a century, Botswana, Eswatini, Lesotho, Namibia and South Africa have operated under a common external tariff, free movement of goods, coordinated customs administration and a revenue-sharing formula based on customs, excise and development components.
While SACU has facilitated regional trade and generated significant revenue for smaller member states, it has also exposed structural imbalances. South Africa remains the dominant manufacturing hub, while smaller economies rely heavily on customs revenue transfers.
If these disparities exist within a five-member customs union, how would they be managed across more than fifty economies with vastly different levels of industrialisation and development?
The Revenue Question Cannot Be Ignored
For several SACU members, customs revenue is a critical source of government income. A continental customs union would therefore require difficult decisions about revenue collection, distribution and compensation.
Who collects the revenue? How is it shared? Who gains and who loses?
Without credible answers, smaller economies could face fiscal uncertainty. Continental integration may be politically attractive, but it must be underpinned by rigorous economic modelling and transparent negotiations.
Trade and Industrialisation
Customs unions can create new trade opportunities, but they can also divert trade from more efficient global suppliers to less competitive regional producers. The key question for SACU is whether a continental customs union would expand markets or simply redistribute existing trade.
Similarly, larger markets alone do not guarantee industrialisation. Competitiveness depends on reliable infrastructure, affordable energy, access to finance, skilled labour and policy certainty. Without these fundamentals, a continental customs union could reinforce existing industrial concentration, allowing stronger economies to capture most manufacturing opportunities while weaker economies struggle to compete.
SACU’s own experience demonstrates that market integration does not automatically produce balanced industrial development.
Infrastructure Matters
Too often, discussions focus on tariffs while overlooking infrastructure.
Goods may move tariff-free on paper, but poor transport networks, congested ports, inefficient rail systems and lengthy border procedures continue to raise the cost of doing business.
For countries such as Namibia, investments in logistics corridors illustrate that trade agreements facilitate commerce, but infrastructure enables it.
Learning from Experience
Comparisons with the European Union are common but should be treated with caution. Europe’s customs union evolved alongside decades of institutional development, infrastructure investment, economic convergence and financial support for less-developed regions.
Africa’s realities are different. Rather than replicating external models, policymakers should build on Africa’s own experience. SACU provides valuable lessons on both the strengths and limitations of customs union arrangements.
The Real Question: What Problem are we Trying to Solve?
Perhaps the most important question is not whether Africa should establish a continental customs union, but what problem it is intended to solve.
If the objective is greater intra-African trade, are tariffs really the main obstacle? If the goal is industrialisation, are customs arrangements the principal constraint? Without a clear diagnosis, there is a risk of creating institutions that address symptoms rather than underlying challenges.
Looking ahead…
The vision of a Continental African Customs Union is bold and inspiring. Yet successful integration requires more than political ambition, it requires practical solutions to complex economic realities.
SACU demonstrates that customs unions can promote trade and cooperation, but also highlights the challenges of balancing industrial development, fiscal sustainability and equitable growth among unequal partners.
As Africa advances its integration agenda, the conversation must move beyond aspiration and focus on measurable outcomes. The true success of a Continental African Customs Union should not be judged by the agreements signed, but by whether it delivers greater prosperity, competitiveness and opportunity for African businesses and citizens. Share your thoughts.
| Disclaimer The Views and Opinions expressed in this article are those of the author alone, and do not necessarily represent or reflect the views, policies or positions of the author’s current or past employer, organisation or any other affiliated entities. |
* Chilombo Olga Priscila I BSc. (Hons), BASc. Is a Manager: Sector Research and Development at the Namibia Investment Promotion and Development Board (NIPDB)
