Simon Segal
The government has finally moved to smooth the
path of foreign aid, after years of
difficulties and frustrations encountered by
foreign donors.
It has closed the interdepartmental
International Development Co-operation
Committee chaired by Elty Links, who has been
appointed South Africa’s ambassador to the
European Union. Instead, all official
development assistance now falls under the
Department of Finance, which acts as a one-
stop point of interaction with donors.
This should go some way to improving the
interaction with donors and disbursing the
monies, as well as data gathering. Finance
department figures show that since the
government of national unity came to power in
1994, up to the end of the 1995/1996 fiscal
year, a total R12,8-billion had been pledged
to South Africa. Of this 69% is to the
government and parastatals; the rest to non-
government and private institutions.
From government’s latest survey, in 1994, the
biggest donors include:
l United States — $600-million over three
years;
l Britain — 1,25-billion, 100-million
over three years; the rest being guarantees
for export credit;
l Japan — $1,3-billion over two years,
$300-million in official development
assistance, $500-million in export/import
loans and $500-million in government
guarantees for commercial loans;
l France — R3-billion, mainly in
concessionary loans and
l The European Commission — 110-million
ecus (some R450-million). This still has to be
finalised.
The R12,8-billion in pledges includes some R2-
billion in grant aid (48% earmarked for
government), technical assistance of R1,6-
billion (58% for government), R1,8-billion in
government trade guaranteed loans and R6,5-
billion in pledges of concessionary finance.
So far, disbursements have been slow. For
instance, the grant monies for government go
through the Reconstruction and Development
Programme Fund. By January about R130-million
had been paid out. In addition, about R1-
billion has been committed in concessionary
loans.
Finance officials are confident this will
change rapidly — monies will flow more
smoothly now that agreements have been reached
with virtually all the donors. Project
agreements are starting to be implemented.
Normalised international relations have
shifted the focus of development co-operation
with South Africa to enhancing trade, private
investment and development loan funding. Grant
assistance will be more limited once this
initial flurry is spent.
Thus international development financial
institutions will gradually replace aid donors
in providing concessionary finance.
Monies mentioned are $1-billion from the World
Bank once it finalises South Africa’s country
assistance strategy, 300-million ecus from the
European Investment Bank, $300-million from
the African Development Bank, R1,5-billion
from the European Investment Bank and $250-
million from the Japanese.
With this aid projects will also shift to
being more value-added as opposed to “soft”
projects such as democratisation programmes.
In the end, aid and donations are useful for
social upliftment, but cannot support long-
term economic growth. Only long-term fixed
investment can do this.
But South Africa is still waiting for
foreigners to play a big role in that arena.