EU – SADC ECONOMIC PARTNERSHIP AGREEMENT (EU-SADC EPA)
The EU-SADC Economic Partnership Agreement (EPA), provisionally applied since October 2016, is a trade agreement between the European Union and six Southern African Development Community (SADC) Member States: Botswana, Eswatini, Lesotho, Mozambique, Namibia, and South Africa. Its primary objective is to foster regional integration, promote sustainable development, and enhance trade and investment flows between the two blocs by providing duty-free, quota-free access for most SADC EPA products to the EU market.
The projected impact of the EU-SADC EPA is to stimulate economic diversification, industrialization, and job creation in the SADC EPA states. Securing predictable market access to the EU encourages greater production, investment, and adherence to international standards, thereby enhancing the competitiveness of SADC EPA exports.
For Lesotho-based investors, the EU-SADC EPA presents significant market opportunities through preferential access to the substantial European Union market. This market currently comprises over 450 million people with a combined GDP of approximately $17 trillion (2024 estimates) [Source: World Bank Data, IMF World Economic Outlook]. By 2030, the EU market is projected to reach a population of around 440 million people with a collective GDP exceeding $20 trillion [Source: Eurostat, OECD Economic Outlook]. This agreement enables Lesotho businesses to export a wide range of goods, including agricultural products, textiles, and manufactured goods, without facing tariffs or quotas, thereby increasing their export potential, attracting foreign direct investment, and facilitating integration into global value chains.
SACU – MERCOSUR PREFERENTIAL TRADE AGREEMENT
The Southern African Customs Union (SACU)-MERCOSUR Preferential Trade Agreement (PTA), signed in 2004 and effective since 2016, is a trade agreement between the SACU member states (Botswana, Eswatini, Lesotho, Namibia, and South Africa) and the MERCOSUR bloc (Argentina, Brazil, Paraguay, and Uruguay). Its primary objective is to promote and expand trade relations between the two regions by offering preferential tariffs on a range of products.
The projected impact of the SACU-MERCOSUR PTA is to diversify trade flows, enhance market access for specific goods, and foster economic cooperation between Southern Africa and South America. While not a free trade agreement, the PTA aims to reduce trade costs and improve competitiveness for listed products, encouraging new trade opportunities.
For Lesotho-based investors, the SACU-MERCOSUR PTA offers market opportunities through preferential access to the MERCOSUR bloc. This market currently comprises over 270 million people with a combined GDP of approximately $2.8 trillion (2024 estimates) [Source: World Bank Data, IMF World Economic Outlook]. By 2030, the MERCOSUR market is projected to reach a population of around 280 million people with a collective GDP exceeding $3.5 trillion [Source: ECLAC, IMF World Economic Outlook]. This agreement provides Lesotho businesses with reduced tariffs on certain exports to the MERCOSUR countries, potentially increasing their competitiveness and allowing them to explore new consumer markets in South America.
European Free Trade Association – SACU (EFTA SACU) Free Trade Agreement
The European Free Trade Association (EFTA)-Southern African Customs Union (SACU) Free Trade Agreement (FTA), signed in 2006 and entered into force in 2008, is a comprehensive trade agreement between the EFTA member states (Iceland, Liechtenstein, Norway, and Switzerland) and the SACU member states (Botswana, Eswatini, Lesotho, Namibia, and South Africa). Its primary objective is to liberalize trade in goods, services, and investment between the two blocs, fostering closer economic ties and promoting sustainable development.
The projected impact of the EFTA-SACU FTA is to create enhanced market access for products from both regions, stimulate economic diversification, and encourage foreign direct investment. By reducing or eliminating tariffs and non-tariff barriers, the agreement aims to improve the competitiveness of EFTA and SACU products in each other’s markets.
For Lesotho-based investors, the EFTA-SACU FTA presents significant market opportunities through preferential access to the EFTA market. This market currently comprises over 15 million people with a combined GDP of approximately $1.6 trillion (2024 estimates) [Source: World Bank Data, IMF World Economic Outlook]. By 2030, the EFTA market is projected to reach a population of around 16 million people with a collective GDP exceeding $1.9 trillion [Source: Eurostat, OECD Economic Outlook]. This agreement enables Lesotho businesses to export a range of goods, including agricultural products, textiles, and manufactured goods, with reduced or zero tariffs, thereby enhancing their export potential and attracting investment.