The Dependent Economy: Lesotho and the Southern African Customs Union by Mats Ove Lundahl & Lennart Petersson

Author:Mats Ove Lundahl & Lennart Petersson [Lundahl, Mats Ove & Petersson, Lennart]
Language: eng
Format: epub
Tags: Ethnic Studies, African Studies, African, Social Science, Political Science, World, General
ISBN: 9781000243987
Google: VGQPEAAAQBAJ
Publisher: Routledge
Published: 2019-06-26T08:09:39+00:00

8

Withdrawing from the Union

The basic conclusion emerging from the analysis in chapters 6 and 7 was that the Southern African Customs Union has had mainly negative effects on Lesotho's economy. The union has been trade diverting, and consumers in Lesotho have had to pay high prices for imported goods. In addition, the country's industrialization has been hampered by the creation of industrial growth poles in South Africa as a result of the heavy protection given to manufacturing in the latter country since the 1920s, reinforced by certain articles contained in the 1969 customs union agreement. Given these findings, the obvious question is whether Lesotho ought to remain in the Southern African Customs Union. Should the country withdraw and attempt to buy at lower prices from countries outside the union and build its own manufacturing industry?1

Leaving the industrialization issue aside for the time being,2 there is a priori a case for leaving the union. Lesotho can obtain imports at a lower price from other countries than it can from South Africa.3 However, this does not mean that Lesotho will necessarily withdraw. Other mechanisms are at work which will tend to make the country stay inside. The present chapter will be devoted to a discussion of these mechanisms: the need for fiscal revenue, the problem of finding a market for the country's export products, the likely negative effects on Lesotho's industrial development and, finally, the possibility of retaliation from South Africa should Lesotho leave the union.

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