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

ActionAid South Africa

- Draft Discussion Paper –
Financing for Development?

The Development Bank of South Africa and its Footprint in Africa

30^th November 2013

Contents

1.Introduction 2

2.South Africa’s Transition from Apartheid 3

3.DBSA – the early years 4

4.The DBSA and the Transition 4

5.The DBSA Today 9

6.Straddling the Tension between the “D” and the “B”? 10

7.The Development Context 11

8.The DBSA beyond South Africa 14

9.Gearing for the Future – DBSA, BRICS and International Relations 16

10.Conclusions and Recommendations for ActionAid and progressive civil society more broadly 19

References: 23

1. Introduction

ActionAid South Africa, in partnership with ActionAid International seeks to embark on a study project into the role, conduct, and impact of public finance institutions in Brazil, Russia, India, China, and South Africa (BRICS) that provide development project finance in Africa.

Part of the study will also examine the role of South African public institutions, in particular the Development Bank of South Africa (DBSA) in promoting private investment in Africa, the nature of these investments and the relevant policy framework/s under which these are undertaken and its developmental impact.

In the context of BRICS and the announcement at the 2013 Durban Summit of its intention to establish a development bank, this paper lays the basis for an understanding of the mandate, strategy and operations of public finance institutions in South Africa e.g. The Development Bank of Southern Africa, the Land and Agriculture Development Bank and others such as the soon to be launched SA Partnership for Development Agency (SAPDA) by the Department for International Relations and Co-operation (DIRCO).
In the medium to long term ActionAid will examine:

1. 
   How and whether the mandate, strategy and operations are compatible with similar institutions in Africa e.g. the African Development Bank and in other selected countries.
   
2. 
   How and whether land acquisition and usage projects financed and facilitated by the South African institutions, either enable or prevent the promotion, respect, and protection of rights-based approaches to sustainable development which eradicates poverty and inequality and places human development and environmental protection above profit.
   
3. 
   How and whether such projects are aligned with SA’s foreign policy commitments and relevant international treaties and instruments with particular emphasis on human rights, equity and ecology issues.
   
4. 
   What are the main issues and challenges for South African Development Finance Institutions (DFIs) in the context of BRICS.
   

Multi state groupings and blocs both formal and informal are part and parcel of international politics relations and co-operation. What makes the newly formed BRICS bloc significant is the potential power it has in the context of the current global political economy to contribute to build new narratives towards the realisation of a just, equitable, sustainable and peaceful global society.

This paper is explorative. It is part of the process of understanding the DBSA and to make a few initial suggestions of possible areas of engagement with the institution in line with its mandate on working with people across the globe to eliminate poverty. As part of this process the paper suggests some ideas on building collaboration and solidarity action with potential civil society partners interested in issues of development and, whether and how development finance institutions in BRICS and other developing economies could build new models of sustainable development which emphasises the indivisibility between human development and environmental protection for future generations.

2. South Africa’s Transition from Apartheid

South Africa’s negotiated transition from an apartheid pariah state to a democratic state after the first non-racial elections on 27 April 1994 and the subsequent adoption of a new constitution, heralded an opportunity for the progressive forces to build a new agenda for a better life for its people on the one hand and construct a new set of international relations with nation states on the other. The former exiled liberation movements, led by the African National Congress together with the internal mass democratic movement now in power, set about dismantling old laws and institutions whilst simultaneously creating new laws and building new institutions in line with prescripts of the new constitution and a vision of a united, democratic, non-racial, non-sexist South Africa. This period was described as the “honeymoon period” and a new activist optimism swept the country.
Whilst the democratic government together with its social partners, civil society and citizens as a whole were mobilised in transforming society as envisioned in the Reconstruction and Development Programme (RDP), this process was not immune and isolated from the global political economy, including and more especially its role and relationships with African states. The RDP was drafted by the African National Congress (ANC), the South African Communist Party (SACP) and the Congress of South African Trade Unions (Cosatu) in consultation with key mass based organisations and supported by a wide range of policy research institutes.
It represented a programme by a government-in-waiting to build post-apartheid South Africa – through reconstruction, restructuring and development. In summary the RDP created the following development targets for the democratic government:

• 
  The creation of 2.5 million jobs over a ten-year period;
  
• 
  The building of one million houses by the year 2000;
  
• 
  The connection to the national electricity grid of 2.5 million homes by the year 2000;
  
• 
  The provision of running water and sewerage to one million households;
  
• 
  The distribution of 30% of agricultural land to emerging black farmers;
  
• 
  The development of a new focus on primary health care;
  
• 
  The provision of ten years of compulsory free education for all children;
  
• 
  The encouragement of massive infrastructural improvements through public works; and
  
• 
  The restructuring of state institutions by 1997 to reflect the broader race, class and gender composition of society.
  

An important commitment of this programme was one of co-operation with Southern African states. During this period, following the independence of Namibia and the transition to a democracy in SA, the Southern Africa Development Coordinating Conference (SADCC) at a conference in Windhoek in August 1992 adopted the Windhoek Declaration paving the way for the formation of what we know today as the Southern Africa Development Community. It must be noted that the precursor to the SADCC was the Frontline States, created in the 1960’s by the liberation movements and newly independent states with the sole purpose of eliminating colonialism and apartheid in Southern Africa.

3.