SOUTH AFRICAN DEVELOPMENT AND THE THREAT OF FOREIGN AID

PCDForum Column #30,  Release Date March 1, 1992

by David C. Korten

My recent visit to South Africa revealed more starkly than any experience in my thirty year development career the threat posed by international aid to authentic development. The easing of international sanctions there is attracting aid agencies like vultures to a fresh carcass including a recent visit by World Bank president Lewis Preston.

In many respects South Africa seems an unlikely candidate for international aid. With a per capita GNP of nearly US$2,500 it ranks as an upper middle income country. It grows enough food (if equally distributed) to provide each South African 6,000 calories per day, produces 60 percent of the African continent's electricity, and has some of the world's best medical facilities.

Yet some 50 percent of South Africans live below subsistence level. More than a third of black children suffer severe malnutrition, and two-thirds of the total population lack access to electricity. Hardly incidental to the interest of lending institutions such as the World Bank, South Africa has emerged from an extended period of international economic boycott with a still manageable international debt and rich stores of exportable strategic mineral resources. In bank parlance it is under-borrowed a condition the multilateral development banks abhor as nature abhors a vacuum.

I had come to South Africa prepared to experience a country very different from any I have known. Yet I left impressed with the extent to which it replicates in microcosm the political and economic dynamics of the larger global society. It is distinctive primarily in the blatant callousness of the intentional social engineering by which a dualistic economic structure has been imposed to systematically build the affluence of one racially defined social class on the poverty of another.

Apartheid was imposed in South Africa in part by uprooting and separating nearly all people of color (collectively referred to as blacks in contemporary South Africa) from their homes, land, and most any other productive asset or means of livelihood and relocating them in crowded barren homelands or in isolated racially defined townships. Assetlessness and physical isolation were then combined with preferential lending, zoning, and licensing restrictions to assure that blacks were totally dependent on white controlled firms and institutions for employment and could spend their earnings only in white businesses. Even the pervasive informal sector activities of small shops, sidewalk stalls, and street vendors characteristic of poor communities around the world were nearly non-existent in the black communities I visited.

Public finance and facilities are similarly biased. Local political boundaries include in white tax jurisdictions nearly all industries and commercial establishments contributing to the tax base even the heavily polluting industrial facilities invariably located in or adjacent to black residential areas. Abundant public operating budgets provide for social services, physical infrastructure, and subsidized housing in white areas, assuring most whites a quality of life that may exceed the average standard enjoyed by whites anywhere else in the world.

Not only are public service expenditures for black areas meager by comparison, they are commonly funded under irregular "development" budgets administered by specialized public "development" agencies such as the Development Bank of Southern Africa and the Independent Development Trust. In other words, whites receive public services as entitlements delivered by tax-funded government agencies accountable to them, while blacks are intermittently "developed" through the "charity" of outside agencies over which they have no influence.

The white South African government, with the seeming concurrence of South Africa's black political leadership, is actively presenting South Africa to the world as a poor Third World country dependent on international financing to provide its economy with a "jump start" to alleviate the poverty of its black population. The fact that South African poverty is largely and intentionally structural and can be alleviated only through a reversal of the processes that created political and economic apartheid is conveniently ignored. Without a strong domestic commitment to structural reform, foreign assistance will almost surely do what it has historically done elsewhere in the world confirm and strengthen existing structures. This will leave South Africa's blacks dependent on international aid delivered through central government, the white business community, and foreign funded NGOs even as loan funded aid increases the country's international debt and subjects it to the commonly anti-poor policy dictates of the IMF and World Bank.

Few countries of the world are better endowed than South Africa with the necessary financial, natural, and technical resources to provide a decent life for all their people if its institutions were structured toward this end. A substantial influx of foreign aid will only draw attention away from the essential institutional reform agenda.

David Korten is a fellow of the People-Centered Development Forum, which prepared and distributed this column.

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