ActionAid South Africa Draft Discussion Paper – Financing for Development? The Development Bank of South Africa and its Footprint in Africa

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The Development Context

Since the formation of the Organisation of African Unity (OAU) in 1963 and with its successor the Africa Union (AU), the pan-African dream of continental integration has been on the table. In January 2013, at one of many celebrations of the 50th Anniversary of the founding of the OAU, AU commission chairperson, Dr Dlamini-Zuma noted that the AU and the African Development Bank (AfDB) together with the support from the UN’s Economic Commission for Africa (ECA) undertook to “cooperate on the development of a transformation agenda for the continent for the next fifty years”.

Based on figures on sustained GDP growth and steady progress in good governance, a key issue she raised was the immense challenges the continent faced in terms of “structural underdevelopment and dependency, huge backlogs in infrastructure, basic services and human resource development and the need to build people-centred, inclusive and developmental public and private cultures and institutions”. She pointed out that Africa has a “window of opportunity” to set sail for the next 50 years towards integration, prosperity and peace by mobilising sources of funding including “tapping into Africa’s own resources” and those available globally.

This window of opportunity is reinforced by “continental endowments (a youthful and growing population, the potential unleashed by women’s empowerment, urbanization) and natural resources (land, minerals, energy and marine resources), which if harnessed in the interest of Africa’s people, bodes well for the future.”

On 1 February 2013 the UN High Level Panel released the preliminary Post 2015 Development Agenda, a new vision and action plan around a set of goals and targets that will replace the Millennium Development Goals adopted in 2000. In the words of the Eminent Panel the Post 2015 Agenda is not “business as usual and is not an option”. This is a very bold statement and hopefully marks a turning point in which the UN family, nation states, civil society, corporations and citizens interact with each other. Serious civil society commentators have criticised the report as being big on rhetoric but weak on detail and based on previous promises will deliver little yet again.

The report articulates the need for the agenda to be driven by “five, big transformative shifts” viz. “ leave no one behind, put sustainable development at the core, transform economies for jobs and inclusive growth, build peace and effective open and accountable institutions for all and forge a new global partnership”. The panel believes that these five shifts can end the “inequality of opportunity” suffered by billions of people and bring together social, economic and environmental issues in a coherent, effective and sustainable way that can build a new generation not only to believe in but also act collectively in different ways to build a better world that “leaves no one behind”.

The African Economic Conference hosted by the AfDB, the UNECA and the UNDP, in South Africa will take place under the theme of “Regional Integration – Key to Transformation and Development”. In a press release issued before the conference the three organisers noted that whilst Africa is experiencing high levels of (economic) growth, there has been limited impact on ordinary people. They note that “weaknesses persist in the quality of institutions; infrastructure, macroeconomic policies, education and adoption of new technologies, while there are big gaps between its highest and lowest ranked economies”.

They go on to state that “… this great gathering should do more than restate the case for regional integration: it must examine how to push the African continent to the next level, to become a global growth pole in its own right,”

In addition, they state that “because of its focus on capital-intensive, commodity-based industries, Africa has seen limited economic transformation” and therefore job creation for the youth to “build better futures has lagged behind.” The conference looked at how integration could be achieved by harmonising laws and standards, common approaches to macro-economic policy and job creation and effective management of natural resources for sustainable poverty reduction and structural economic transformation. They urge “greater political will and vision” to address this problem.

The hunger and thirst for Africa’s natural resources driven by the mineral commodity boom in Asia and the global food shortage crisis have been the prime drivers of export-led growth in many countries in Africa. Narratives on “Africa Rising” are been written by both governments and the global finance industry. One of the key barriers to further growth listed by these institutions is the lack of transport and energy infrastructure – roads, bridges, larger ports and power generation and distribution plants. These kinds of projects are long-term, high risk and low-returns from an investment perspective and therefore not particularly attractive for the private sector.

Under colonialism the political economies of SADC countries were primarily commodity producers of minerals and agricultural products for export. The majority of the people remained poor and lived in under-developed rural areas without access to basic public services and social infrastructure. When global commodity prices dropped, countries were forced to adopt economic structural adjustment programmes in return for bail out loans from the World Bank and the International Monetary Fund leading to major cuts in public expenditure for basic goods and services e.g. education, health and welfare and reduced state investments and involvement in strategic sectors and the privatisation of state owned enterprises in energy, water, housing and agriculture.

The impact of these policies not only reduced the capacity of states to meet basic needs of the poor majority but also the growing indebtedness through servicing loans to these finance institutions. This created increased poverty, unemployment and the through deindustrialisation, the collapse of local indigenous industry and growth of informal unregulated sectors in the economy particularly in fast moving consumer goods.

Following almost three decades of IMF-World Bank policies and the poor overall performance in achieving targets under the Millennium Development Goals, countries are working on new long term plans to drive socio-economic development and regional integration. Given the relative stages of development between states and within states, one of the most important challenges facing SADC is the creation of a regional framework to promote inter-generational social, economic and environmental development that is sustainable.

Within the region, efforts have been made to advance a civic movement to come together to advance a people-centred development strategy. The Southern Africa Civil Society Forum (CSF) is an alliance of faith based organisations under the Fellowship of Christian Councils in Southern Africa, and national trade union federations affiliated to the Southern African Trade Union Co-ordinating Committee and non-governmental organisations affiliated to the SADC Council of NGO’s. One of the most important reasons for the alliance is to bring the “collective experiences, knowledge, strengths and capacities to work together” towards people-centred regional integration and development.

In 2008, the SADC Council of NGO’s initiated a regional wide study into poverty and a consultative process to develop a basis for a common analysis and the causes of poverty, and to develop a position on regional integration and development within SADC that is sustainable and people-centred. The purpose of the study was to lay the basis for an agenda for engagement by civil society in SADC’s Regional Indicative Strategy and Development Plan.

In a process involving over 1800 civil society organisations through direct and representative participation over a two-year period, the organisation developed and adopted at a regional assembly a “Southern Africa Civil Society Poverty and Development Charter” aimed at building a consensus on the vision, the necessary steps, partnerships and structures to implement the provisions of the charter. Another outcome of the study was proposals for the establishment of a Regional Poverty Observatory

The charter notes that “poverty is not a natural phenomenon as often there is a paradox of abundant natural resources co-existing with widespread poverty. In this regard, poverty is socially constructed globally and locally, and can be deconstructed”. In the region poverty is “fuelled by deindustrialisation under neo-liberal economic reforms” which promote primary export of mineral and agricultural products without value-added manufacturing and in the process perpetuates the historical “colonial dual economies” (in which women which comprise the majority of the population) remain marginalised.

The charter describes the “SADC we wish to live in” as “people-centred, free from poverty within the context of pro-poor, high and sustainable economic growth and development and dynamic economies underpinned by equitable distribution of productive assets and income. Such a region “guarantees the rights to dignity, economic and social justice for all”. The charter proposes five areas of policy dialogue and engagement for poverty eradication in the region viz., pro-poor economic policies; social and human development; agriculture, food security and natural resources, governance and accountability, and infrastructure for regional integration. The latter pillar specifically highlights the transport, energy, water, sanitation and ICT sectors.

According to the organisation, there are approximately 35 legal instruments and protocols which bind SADC to poverty eradication and the “full implementation of these will go a long way to eradicating poverty in the region”. As regards financing, the charter notes that resource mobilisation at national and regional levels is a priority but calls for “effective, transparent, and regular monitoring and evaluation.

At the annual meeting of the CSF in 2012, delegates met under the theme “The SADC We Want” which expressed the ‘desire for a SADC that is characterised by a people-centred development paradigm; which guarantees rights and dignity of every citizen of being free from poverty; gender discrimination; with stable economies underpinned by equitable and sustainable development, fair and just trade, and redistribution of wealth and productive assets; which respects rule of law and upholds democratic values and human rights.”

Delegates also decried the structural problems in the political economy of the region that perpetuates high levels of poverty and inequality based on “increasing economic growth through trade liberalisation, foreign direct investment and export driven policies at the expense of the needs of the people of SADC.” Citing weak leadership and a lack of political will to implement SADC protocols, they resolved to embark on a campaign to take “The SADC We Want” to all countries and review the work done at the 2013 annual meeting.

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