26. South Africa as a Development Partner: An Empirical Analysis of the African Renaissance and International Cooperation Fund

An intriguing dynamic within the contemporary global political and economic landscape involves the growing role of Southern powers, which have increasingly important roles within their own regions, while also expanding their influence in various international jurisdictions. Global fora such as the G20 and the BRICS (Brazil, Russia, India, China, and South Africa) grouping have assumed prominence as a result of the growing influence of Southern powers within a changing global landscape. There is also growing literature on a shift in global power—from a largely unipolar world order to a multipolar world order (Mthembu 2018). This shift creates various points of contestation, including in the international development cooperation landscape, where coordination and responsibilities remain contested areas.

Within the broader rise of Southern powers, an area of increasing importance is their growing roles as sources of development cooperation. Although some researchers have labelled them as new development partners, they are actually not new to development cooperation, as many of them possess programmes that have been in existence for decades, even though the scale of those programmes has expanded more rapidly in recent years. However, as the roles they play have increased, so too have a lot of questions arisen. These range from disagreements on what constitutes development cooperation from Southern powers to how they disburse their development cooperation, why they have expanded their development cooperation, and why they use varying strategies while adhering to similar principles regarding development cooperation. South Africa is itself not immune to these questions (Mthembu 2018).

Despite an abundance of normative-based analyses on development cooperation, there remains a gap in systematic analysis based on comprehensive empirical evidence. This often leads to contestation within and among countries as they debate the contested responsibilities to fulfilling the Sustainable Development Goals (SDGs). As stated in the introductory chapter, state actors and non-state actors must find ways to work together to address the twin challenges of coordination and contested responsibilities in order to eradicate poverty and achieve the SDGs. Development cooperation in this handbook is thus seen as an example of contested multilateralism and contested global governance. This chapter must be located within this broader conceptual framework.

This chapter assesses empirically what insights can be learnt from South Africa’s African Renaissance and International Cooperation Fund (ARF) and whether the budget allocations and disbursements over a period of 12 years show a Southern power allocating a growing amount of resources in line with its rhetoric or one that is increasingly learning to live within its means under tough economic times. If allocations and disbursements have consistently grown, one can conclude that the country’s financial contributions on the African continent have increased in line with its policy of promoting the African agenda; however, if the disbursements are shrinking, then it is arguable that South Africa’s development cooperation architecture is still working out its own capabilities while learning to live within its means. Both scenarios have an impact on the manner in which scholars can interpret South Africa’s development diplomacy, especially in the context of the SDGs. However, although the findings may open a small window into South Africa’s broader international development activities, they only apply to the ARF, which—although it is among the country’s most visible tool for disbursing its development cooperation—still accounts for less than 5 per cent of the country’s overall activities.

As South Africa looks to consolidate its role as a development partner, it thus remains an open question whether the country can maintain a strong presence on the African continent when it also faces significant challenges at home. With the economy struggling to reach pre-global financial-crisis growth levels and the government increasingly under pressure to cut expenditure at home, one has to wonder whether these cutbacks are translating into a reduction of its role as a development partner on the African continent. With the eagerly awaited South African Development Partnership Agency (SADPA) in mind, this chapter examines data from the ARF covering the years 2003 to 2015. It shows empirically that, despite increasing allocations and disbursements in the initial years following its inception, the global financial crisis, domestic challenges, and uncertainly over the operationalisation of SADPA have taken their toll on the ARF’s activities. Given the centrality of the African continent to South Africa’s foreign policy priorities, it is important to keep in mind the limited capability of the country for engagement beyond the continent in the area of development cooperation.

The summary of the foreign policy review panel, published in 2019 and led by former Deputy Minister of Foreign Affairs, Aziz Pahad, and ongoing processes to improve the training of the country’s diplomatic corps through the Foreign Service Bill provide opportunities for the country to navigate a contested landscape, both domestically and internationally. The chapter seeks to contribute to the ongoing discussions and processes in South Africa on positioning the country’s development cooperation and architecture in line with its regional and global aspirations. It also makes clear that an inability to operationalise SADPA will lead to mixed messages and irregular allocations and disbursements of the country’s development cooperation resources.

This chapter relied on the use of primary and secondary literature to assess the current state of research on the topic while identifying gaps. This meant making use of official legislation related to South Africa’s foreign and development policy and participating in stakeholder meetings and round-table discussions involving foreign policy practitioners from the Department of International Relations and Cooperation, South Africa (DIRCO) in Pretoria and the Parliamentary Committee on International Relations and Cooperation in Cape Town. These engagements, which often involve participation from scholars and researchers engaged in the topic of South Africa’s foreign policy, assist in locating the research of this chapter within its broader context while incorporating the most relevant and contemporary aspects related to South Africa’s role as a development partner.

The empirical data used to answer the main research question relied on the use of annual reports published by the ARF, which show total budget allocation and expenditure, and to which country and project funds were channelled. This allows for assessing whether spending has been on an upward trajectory or whether less funding has been allocated in previous years, especially with the onset of the global financial crisis as well as challenges in the South African economy.

The strength of the methodology is that it offers an accurate profile of one of the most important institutions in South Africa’s international development architecture. However, an important weakness stems from the reality that the ARF is only responsible for a limited amount of South Africa’s overall allocation and disbursement of development cooperation. This allows for a limited generalisation that is applicable to the ARF but not to South Africa’s overall development cooperation architecture, which involves many different line ministries. Despite this limitation, it makes an important empirical contribution towards understanding an institution that may subsequently be replaced by SADPA once it is operational.

South Africa’s role as a development partner sits within the broader context of its foreign policy, especially in relation to what it refers to as the African agenda. Adebajo et al. (2007, p. 17) begin their analysis of South Africa’s role in Africa in the post-apartheid era by asking the following questions:

Can a country that has brutalized and exploited its own people, and those of surrounding countries, go on to become a credible champion of human rights, democracy and sustainable development on the African continent, even after a remarkable political transformation? To what extent has South Africa been liberated to play a leading role in Africa, and to what extent is it still crippled not only by the past, but by the widely varying priorities of its 47 million people? How have these dynamics played out in the years since the “rainbow” nation stepped out of its own shadow in 1994?

In a similar sentiment, an article in South Africa’s Financial Mail (SA tops Africa’s investors’ list 2007) posed the following question: “Will the nations of Africa be able to look back and say that the SA [South African] companies played a critical role in the recovery? Or will they be regarded as exploitative neo-colonialists?” Grobbelaar (2005) states that, during the transition from pariah to legitimate player, South Africa has asserted its presence in Africa through corporate and parastatal investments, which have generated trade. In doing so, South Africa has become central to the flow of capital, goods, and people on the continent. He states that outside of the mining and energy sectors, South Africa’s businesses have emerged as the leading investors on the continent and are involved in a number of sectors, including retail, property, construction, manufacturing, tourism, transport, telecommunications, and financial services.

Between 1994 and 2000, South African foreign direct investment into the Southern African Development Community (SADC) region amounted to $5.4 billion, which was more than the combined British and American foreign direct investment in the sub-region (SA tops Africa’s investors’ list 2007), whereas Business Day estimated that South African companies invested an average of $435 million a year in SADC countries between 1994 and 2003 (Stoddard 2005).

Since 1910, when the current nation-state of South Africa was established as a Union, the country’s then white rulers did not see themselves and the country as a part of the rest of Africa. The government in Pretoria saw the continent and especially its immediate neighbours as places for exploitation and destabilisation, areas where cheap labour could be sought for the purpose of work in mines, farms, and industry for a pittance: essentially making the continent an extension of its domestic policy (Adebajo et al. 2007, p. 18). It was during the apartheid era that the white minority regime’s “marauding military bombed Mozambique, Angola, Lesotho, Botswana, Zambia and Zimbabwe in a campaign of awesome destructiveness that eventually resulted in a million deaths and an estimated $60 billion in damages between 1980 and 1988” (Adebajo et al. 2007, p. 9).

Given the institutionalised racism in the country, “South Africa’s apartheid governments saw themselves culturally and politically as very much a part of the West, with the country having been part of the ‘white dominions’, with Australia, Canada and New Zealand” (Adebajo et al. 2007, p. 18). Such attitudes were echoed through the words of one of the chief architects of the apartheid system, Hendrik Verwoerd, when he said: “[w]e look upon ourselves as indispensable to the white world […] we are the link. We are white, but we are in Africa. We link them both, and that lays on us a special duty” (Barber and Barret 1990, p. 6).

It is therefore hardly surprising that much of post-apartheid foreign policy-making in South Africa has sought to affirm the country’s identity as an African state. With so many people from the continent and the African diaspora having withstood much hardship and sacrifice for the liberation of South Africa from the tyranny of apartheid, it would be essential for the now legitimate government to demonstrate gratitude to its neighbours and seek to play a constructive role within Africa.

When the African National Congress (ANC) came into power in 1994, new policies were put in place based on the previous assertions of President Nelson Mandela (1993, p. 87) that democracy, human rights, and the interests of the African continent were to be the cornerstone of the new government’s foreign policy. In the post-apartheid era, South Africa has thus sought to position itself as a peacemaker within Africa, in stark contrast to the destructiveness of the apartheid regime. Under President Thabo Mbeki, a key theme of South Africa’s foreign policy became the promotion of the “African Renaissance”, which sought to address the cultural, political, social, and economic renewal of a continent recovering from centuries of foreign domination. At the launch of the African Renaissance Institute in Pretoria, President Mbeki (1999, p. 2) made the following comments:

The question has been posed repeatedly as to what we mean when we speak of an African Renaissance. As all of us know, the word “renaissance” means rebirth, renewal, springing up anew. Therefore, when we speak of an African Renaissance, we speak of the rebirth and renewal of our continent. This idea is not new to the struggles of the peoples of our continent for genuine emancipation. It has been propagated before by other activists for liberation, drawn from many countries. But it has been suggested that when this perspective was advanced in earlier periods, the conditions did not exist for its realisation. Accordingly, what is new about it today is that the conditions exist for the process to be enhanced, throughout the continent, leading to the transformation of the idea from a dream dreamt by visionaries to a practical programme of action for revolutionaries.

The history and evolution of the South African state and its role on the African continent have thus had an important impact in shaping contemporary policy. The stated centrality of the African continent to the country’s foreign policy is thus a theme that permeates across the different post-1994 administrations, even if each has shaped it in their own manner. Although the Jacob Zuma administration paid close attention to strengthening relations with Southern powers, it also sought to project South Africa’s foreign policy as being centred on the African continent’s revival within an evolving global political and economic order characterised by multi-polarity. This has also meant that, as South Africa continues to strengthen its relations with Southern powers in global politics, it must consolidate its role as a development partner on the African continent, especially in the context of a changing global development landscape and the SDGs. The ARF and the long-awaited SADPA present an important avenue for the country to consolidate its role as a development partner in South-South and triangular cooperation.

South Africa’s development cooperation programme can be traced to largely ineffectual attempts by the apartheid regime to gain support in a few African countries such as Lesotho, Gabon, Ivory Coast, Equatorial Guinea, and Comoros, while support was also sought from Paraguay. The apartheid regime thus sought to overcome diplomatic isolation and buy votes at the United Nations. However, as the political context changed, the Development Assistance Programme, situated within the Department of Foreign Affairs, was wound down, and at the end of 2000 it was replaced by the African Renaissance and International Cooperation Fund (Sidiropoulos 2012, p. 220).

To further consolidate South Africa’s role as a source of development cooperation, participants of the governing ANC’s policy conference in June 2007 endorsed the creation of a SADPA, which would be tasked with controlling and coordinating the country’s outward-bound development cooperation (Braude et al., 2008, p. 9). Sidiropoulos (2012, pp. 218, 226) further notes that, in her budget speech of April 2010, South Africa’s Minister of International Relations and Cooperation, Maite Nkoana-Mashabane, announced that the department would present a bill to parliament to establish SADPA:

The ARF is the most visibly structured component of South Africa’s development cooperation. Regulated by the African Renaissance and International Cooperation Fund Act of 2000, its aim is to enhance cooperation between South Africa and other countries, in particular in Africa, through the promotion of democracy and good governance, socio-economic development and integration, humanitarian assistance and human resource development, and the prevention and resolution of conflict. […] The Fund utilizes both concessionary loans and grants, although the latter makes up the bulk of its operations.

Some of the activities that the ARF has been involved in over the years include the following (National Treasury 2009, p. 15):

Other examples of the broad nature of the ARF’s focus in Africa include the funding of cultural activities such as the preservation of ancient manuscripts in Timbuktu in Mali, and the writing off of almost ZAR 44 million in long-term loans made to mainly African countries in previous decades (ARF 2004/5, 2005/6).

Despite the establishment of the ARF, a majority of South Africa’s development cooperation programmes are still conducted through a range of government departments, parastatal bodies, government agencies, and other statutory bodies outside of DIRCO; it is thus quite a decentralised system. In fact, although the ARF forms the most visibly structured part of South Africa’s development cooperation architecture, it only comprises a small percentage of the total amount of South Africa’s development cooperation, estimated at between 3.3 per cent and 3.8 per cent (Braude et al. 2008, p. 5).

The departments that are involved in the majority of activities include Defence, Education, the South African Police Service, Trade and Industry, Justice and Constitutional Development, Arts and Culture, Public Service and Administration, Public Enterprises, Science and Technology, and Agriculture. Some of the activities that these departments have been involved in include the following (Sidiropoulos 2012, pp. 230–231):

Langeni (2011) further states that since 2005, the South African government, acting through the University of South Africa, has trained more than a thousand South Sudanese officials on diplomacy, public service administration, public financial management, and disciplines such as legal affairs.

Indirectly forming part of South Africa’s development cooperation architecture are the two development finance institutions: the Development Bank of Southern Africa (DBSA) and the Industrial Development Corporation, which both have units charged with supporting the objectives of the New Partnership for Africa’s Development (NEPAD). They are indirect players because most of the development financing provided by them is at competitive market-related rates instead of explicit concessional loans or grants. These institutions play a critical role as sources of finance, especially in various infrastructure development projects (World Bank 2008). Between 2006 and 2009, the DBSA funded projects worth ZAR 60 billion, focussing on sectors such as energy, telecommunications, mining, transport, water, manufacturing, and health. This was facilitated through an extension of its mandate in 1997, allowing it to expand and fund projects in the SADC (Development Bank of Southern Africa [DBSA] 2006‐2009).

In January 2011, the DBSA concluded a loan agreement of $262 million with the Zambian National Road Fund Agency for the rehabilitation of five priority roads. This would open economic trade routes between Angola, Botswana, the DRC, and Namibia. In 2011, the DBSA’s annual Africa investment approvals were expected to exceed $1 billion, with transport infrastructure expected to absorb the bulk of the financing (DBSA 2011).

Like the DBSA, the Industrial Development Corporation also had its mandate extended in 2001 “for the benefit of the Southern African region specifically and the rest of Africa generally” (Industrial Development Amendment Act 2001). This expansion is in line with South Africa’s foreign policy of supporting NEPAD.

Some of the programmes that have been funded include the following (Sidiropoulos 2012, p. 232):

Development cooperation and development finance from Southern powers have thus increasingly played a crucial role as part of the overall flow of goods and services among developing countries, and its significance has grown more important as they have expanded their development cooperation programmes. Unlike the official development assistance provided by members of the Organisation for Economic Co-operation and Development’s Development Assistance Committee, Southern powers such as South Africa state that they promote “win-win” relations, showing clearly that the act of disbursing development cooperation is not seen as a one-way action on the part of the donor, or as an act of charity, but as an effort to promote mutual benefits.

With development cooperation from “Southern” development partners growing as an instrument of promoting South-South cooperation, South Africa will be looking to ensure that its development cooperation can achieve positive impacts within Africa. Another challenge includes sustaining its development cooperation in times of economic difficulty at home and abroad. Using data from annual reports, Table 26.1 shows just how much has been allocated to the ARF between 2003 and 2015, while also showing the expenditure on development projects in that same time period. This allows for highlighting empirically the financing trends over a period of 12 years.

The table shows that in the 12 years under scrutiny in this chapter, a total of just over ZAR 4 billion was allocated to the ARF from DIRCO, while a total of just over ZAR 3 billion was utilised for a myriad of development projects throughout that time period. The highest allocations made were in the years 2008/9 and 2009/10, which saw totals of approximately ZAR 699 million and ZAR 631 million, respectively, whereas the highest level of expenditure from the ARF was in the year 2012/13, with just over ZAR 1 billion disbursed for various projects. When one excludes 2012/13, which varies quite a lot in comparison with other years, it was the year 2008/9 that witnessed the next highest level of expenditure at ZAR 476 million. This correlates with the period that also witnessed the highest allocation of funds.

What is of interest here is that between the years 2003/4 and 2008/9, allocations into the fund only grew, before starting with a gradual decline in allocations the following year up until 2015. With regard to the expenditure from the fund, what is of interest is that only during the years 2003/4, 2006/7, 2007/8, and 2012/13 did the fund spend more than what was allocated to it. The rest of the financial years is characterised by under spending on what has been allocated. Figures 26.1 and 26.2 reveal the allocation and expenditure trends from the ARF, showing the peaks and troughs on the respective graphs in order to better highlight what happened in that period of time.

Figure 26.1 highlights that although the allocation of funds to the ARF from DIRCO witnessed an upward trend from 2003/4 to 2008/9, it is generally a downward trend from thereon, even though there is a slight recovery between 2010/11 and 2012/13. The allocations have just not recovered to anywhere near their peak levels, and the downward trend thus persists. This raises important questions to the research community and shows that, during the period under scrutiny, its peak coincided with the beginning of the global financial crisis, and that spending has just not recovered from that initial period, which saw an upward trend in the early years of the fund. One could certainly interpret this downward trend as South Africa cutting down on its development activities when it comes to the most distinct component of its development cooperation architecture and could have been motivated by several domestic and international factors.

However, although this interpretation does have some merit—given South Africa’s domestic challenges and a general cutback in expenditure within the government—one should also be aware that, prior to the setting up of the long-proposed SADPA, the activities of the ARF will have to be wound down; this was, in fact, alluded to in the 2014/15 annual report (ARF 2014/15, p. 23) of the fund, which states:

Slow disbursement of funds relates to the scale on which projects are funded or recommended. The department has commenced with the transitional arrangements for the establishment of the South African Development Partnership Agency (SADPA) through the enactment of the Partnership for Development Fund. The surplus retained will be transferred to SADPA.

Besides this, one must also be aware of the limitations of the generalisation that one can draw about South Africa’s allocation patters as a whole, given the reality that ARF allocations do not even account for 5 per cent of South Africa’s overall spending on development cooperation. To have a more conclusive picture, one would thus have to have data from many different government departments involved in South Africa’s development cooperation. This would indeed go beyond the focus and scope of the current chapter. However, focussing on a small yet important component of South Africa’s development cooperation architecture does allow us to draw concrete conclusions about the ARF, especially when one takes into account the imminent creation and operationalisation of SADPA.

Figure 26.2 shows that expenditure has been rather erratic in nature, with no consistent patterns. This seems to be more related to the management side of the fund rather than the availability of funds, since there are many years where the fund was not able to spend all of the money it was allocated. However, the 2012/13 financial year is something of an anomaly, as total expenditure shot up to just over ZAR 1 billion shortly after reaching a low of ZAR 4 million in 2010/11.

In explaining the anomaly in expenditure during the 2012/13 financial year, the annual report (ARF 2012/13, p. 10) states that “the Fund was seized with requests for humanitarian assistance, which were unprecedented, due to the scale and magnitude of intervention required”. This subsequently led to large, irregular spending totals, as supply chain prescripts were not adhered to. It is further explained in the annual report that the irregular expenditure was partly caused by the absence of an emergency relief policy and strategy (ARF 2012/13, p. 10). The question thus remains whether the future SADPA will be a flexible fund, responding to policy-level demand.

The 2010/11 annual report also explains the reasons for having only spent ZAR 4 million. Although the advisory committee of the ARF had, in fact, recommended projects to the value of ZAR 141 million for approval by the Minister of International Relations and Cooperation and concurrence by the Minister of Finance, concurrence letters from the Minister of Finance had not yet come by the end of the financial year. In fact, this has been one of the key areas of deadlock in operationalising SADPA, with Treasury and DIRCO not reaching agreement for a prolonged period of time on the relative autonomy of the envisioned SADPA. This meant that in complying with “the principle of accrual accounting these projects ha[d] not been recognized as expenditure against the Fund” (ARF 2010/11, p. 6). It is quite striking that, since the anticipated conversion of the fund was already expected to be completed by the 2011/12 financial year, it is mentioned in every subsequent annual report as something that is imminent and important for the government. One can thus infer that this uncertainty and transition must also be having an impact on how much is being allocated and spent by the ARF, thus leading to declining allocation levels and consistent underspending on budgets. Domestic constraints have no doubt also led to this, as South Africa’s economic growth has not been able to recover to the levels that existed prior to the global financial crisis. This is no doubt putting a strain on the resources that are allocated to meeting South Africa’s development agenda on the African continent.

Chaturvedi et al. (2012, p. 5) opine that

[d]evelopment cooperation in the various forms it assumes among the new participants is clearly an instrument of foreign policy; indisputably it may be used as part of alliance building and as a tool for advancing a country’s “soft” power, hence its regional and global standing. These aspects of realpolitik may not appear in marketing brochures, but such nations are in the business of asserting their leadership credentials whether at the regional or international level.

The ARF is an example of this, as it has from the beginning formed an integral part of South Africa’s foreign policy centred around the African Renaissance. Indeed, Southern powers have consistently elevated the idea of “win-win” and mutually beneficial relations in South-South cooperation instead of the aid–recipient narrative that has increasingly come under criticism.

In the post-apartheid era, it was thus essential for the South African government to re-establish closer ties within Africa by using the state apparatus in a constructive manner while seeking to play a positive role, and thus essentially giving back to countries that had played critical roles in supporting the anti-apartheid movement. This continues to be important in establishing post-apartheid South Africa’s credentials as a peacemaker within the African continent.

The research undertaken for this chapter has showed that, although South Africa continues to be engaged on the continent, the amounts being committed to and disbursed by the ARF are not necessarily growing in line with its stated African agenda and have instead been declining since the onset of the global financial crisis. However, one must also take note of the reality that, although the ARF is certainly the most distinct part of South Africa’s development cooperation architecture, it is only responsible for less than 5 per cent of the country’s total commitments on the African continent. The chapter did not have such a wide scope and only interested itself with the ARF, in the hope that this would open a small window into South Africa’s development cooperation. It is quite evident that, until SADPA comes into operation, the ARF will not be in a position to project the idea of a Southern power punching above its weight due to this uncertainty, which will affect the level of resources that are committed to the fund and those disbursed from the fund to South Africa’s development partners. This is especially pertinent provided that the ARF will cease to exist once SADPA is operational.

One of the key tasks of the new portfolio committee on international relations will be to oversee the operationalisation of SADPA in order to position South Africa within a contested international development landscape where South-South and triangular cooperation play an increasing role as catalysts for achieving the SDGs. This process will have to address the domestic and international tensions related to contested responsibilities and coordination challenges. SADPA will thus have to address these questions as the country seeks to reposition itself despite serious constraints to its international development diplomacy.