This section contains two separate studies analyzing the benefits and drawbacks of Mozambique joining the Southern Africa Customs Union (SACU).
The first study, carried out in 2004 by the USAID-Funded Regional Trade Hub, assesses the main economic implications for Mozambique from joining the Southern African Customs Union (SACU). The report seeks to highlight and quantify the costs and benefits to Mozambique from removing duties on trade with the five members of SACU – Botswana, Lesotho, Namibia, South Africa and Swaziland- amending its own trade policy to conform with the SACU Common External Tariff (CET) and participating in the common revenue pool.
The second study, carried out in 2006 by Overseas Development Institute (ODI) experts working in the Ministry of Industry and Trade and the Ministry of Planning and Development in Mozambique, uses a partial-equilibrium methodology, this paper estimates and discusses the likely impact on imports, prices, tax revenue and welfare in Mozambique of a number of potential trade policy regimes: full implementation of the SADC free trade area, membership of the SACU customs union (with or without an accompanying FTA with the EU), and full unilateral MFN liberalization. Initial findings are that liberalization scenarios imply a welfare loss due to the fact that consumer surplus from cheaper imports does not fully compensate revenue loss. However, when suitable adjustments are made to the revenue calculations to account for exemptions, fraud and, in the SACU scenarios, revenue redistribution from the SACU revenue pool, the MFN and, especially, the SACU scenarios become welfare-improving. This implies a significant positive revenue transfer from the SACU pool.