The Southern African Customs Union (SACU) is comprised of Botswana, Lesotho, Swaziland (BUS) and South Africa and until 1975 when Botswana withdrew to establish her own central bank, all the four countries were members of the Rand Monetary Area (RMA). In this paper we review the performance of the BLS countries under both institutional arrangements focusing on industry and trade. The SACU and RMA are characterised by restraints and controls thathave a negative impact on the growth and development of the smaller partners. While we recognise the effect of polarisation due to market forces, we point out that polarisation is a result of institutional restraints and controls which enable South Africa to take advantage of the gains of economic co-operation in all aspects of economic activity particularly consumption activities, capital, supply of raw materials and labour resources.
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