Harewelle News

PMTC Lesotho wins Central Bank Project

PMTC Lesotho working with Development Network Africa (DNA), a leading regional economic consultancy with specific expertise on trade and regional integration has been contracted by the Central Bank of Lesotho to provide advice on the factors that are currently changing the fundamental relationship within the Southern African Customs Union (SACU). Lesotho has been a member of SACU since 1910 and in many ways, the Customs Union has defined how Lesotho engages with the rest of the world: a significant portion of the trade, investment and revenue that flows into Lesotho, can be explained by the country’s role and position within SACU; and a large amount of Lesotho’s exports and its people depend on the country’s preferential access to other SACU markets.

At present questions are being asked about the about the future shape of the region and the role of SACU which have been compounded by a number of external factors including:

• SADC Heads of States have committed themselves to establishing a regional customs union in 2010. This raises questions about the future of SACU – as part of a larger customs union or as the core of a new one.
• Negotiations on an Economic Partnership Agreement (EPA) with the EU have split SACU down the middle, with two of the five member countries refusing to sign the interim agreement.
• The global economic crisis, which has led to a sudden and significant reduction in imports into SACU and therefore a rapid contraction in the SACU revenue pool.

The Central Bank of Lesotho has an important contribution to make in evaluating and advising on the future.  To do so, the Bank requires accurate and recent information on the state of the Customs Union and the key negotiations in which it is involved, a synthesis of the views and positions of key role-players, and an economic assessment of the most likely scenarios. This work aims to assist the Central Bank of Lesotho with the information it needs to provide accurate and appropriate advice going forward.