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This book traces the economic debates in the ANC from the Freedom Charter, to Morogoro, to the RDP and to the present.

It shows that the shift to macro-economic stabilisation in the transition to democracy in 1994 was due to international pressure and how it changed the trajectory of ANC policies.

The government became frozen in the pursuit of cautious economic policies in the interests of fiscal prudence.

The commitment to development lost momentum, compensated partially by the provision of modest social services and social grants.

The book traces the revolt against economic orthodoxy at the ANC Polokwane conference which was pressed forward at the Tripartite Economic Summit in 2008. The book analyses the economic challenges that will face the new government in 2009 with original insights into what should be done to address the economic crisis. It sets out a framework for alternative development programmes based on a change of mindset about the centrality of development planning in a pro-people developmental state.

The analysis is based on 15 years work in parliament and in economic committees of the ANC which provided unequalled access to vast documentation and discussions with the top policy makers of the ANC and government.

The contents include extensive examination of the international conditions at the transition in 1994, the creation of the RDP, the switch to Gear, the distortions of BEE, the dual economy, the lessons from Africa and the reasons why  the productive sectors of the economy have stalled. There is a postscript on the decisions of the Tripartite Economic Summit in which the proposed changes to government policies are assessed.

Prof Ben Turok is a member of parliament in South Africa and visiting professor at the University of KwaZulu-Natal. He is a veteran of the ANC, Editor of New Agenda, and founder of the Institute for African Alternatives in the UK and Africa. He has published many books on development economics and politics in Africa.

NEW AGENDA (S A)

ISBN:  978-0-620-42565-0

Enquiries; Germaine, Tel: 021 403 2593/ 073 9559 473, Fax: 021 461 9390, Email bturok@anc.org.za , PRICE: R150

Bank: Standard Bank

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CONTENTS

Introduction                                                                                          p11

Ch 1     ANC Economic Policy in the Struggle Years                             p18

Ch 2     The Political Context of the Transition 1990-1994                     p33

Ch 3     The International Context of the Transition                                 p49

Ch 4     Reconstruction and Development Programme                p75

Ch 5     The Switch to Gear                                                                   p111

Ch 6     Black Economic Empowerment (BEE)                          p139

Ch 7     The Dual Economy                                                                   p179

Ch 8     The ANC and Africa                                                                p211

Ch 9     Stalled in Orthodoxy                                                                 p245

Postscript                                                                                             p271

Acronyms                                                                                             p274

Index                                                                                                    p277

INTRODUCTION:
Unequal partnerships within a marriage can work if there is mutual attraction and good understanding. Between countries more is required. When colonial rule introduced European languages and culture into Africa, this did not establish the basis for equal relations between their countries. Relations between unequal countries can only be meaningful and sustainable where it is based on mutual benefit. (more…)

1.    Since there is a great deal of concern about the relations between Europe and Africa, we have a valuable window of opportunity to enhance the work of Parliaments in Europe and Africa. Much of the concern is about “good governance” in Africa, but the role of Parliaments is generally omitted in the relevant documentation. We need to assert strongly that good performance by Parliaments is an essential element of good governance.

2.    Before probing these issues more deeply, I wish to refer to three commonly agreed principles, but which seem to escape us when we discuss EU –Africa relations.

3.    First, we learnt in the anti-apartheid struggle in Europe that we must be ready to distinguish between positions taken by governments and the sentiments of their people. Margaret Thatcher labeled Nelson Mandela a terrorist, but a large section of the British people did not agree with her and supported the Anti-Apartheid Movement. I believe that the bulk of the European public wish to assist the people of Africa, as the Poland delegate confirmed, even if their governments are reluctant to do so.

4.    There are many instances where government to government relations are not friendly. But this does not preclude friendship between their peoples. This is because there are people of goodwill everywhere.

5.    Countries which have largely unequal economies, such as between Europe and Africa can nevertheless have mutually beneficial relations. This principle is being negated by the current wave of Economic Partnership Agreements which are being forced upon many African countries. It would be far better if we were to explore mutual benefit, as will be indicated below.

6.    While it is understandable that the New Member States of the E U should be assisting their immediate neighbours and mainly looking at Africa from the point of view of expanding their own interests, there is a need for them to take a much wider view and design their policies in the context of building a better world order from which all can benefit.

7.    They should also avoid adopting the postures of many in Western Europe which now almost universally talk about a “partnership” with Africa, while the relationship remains basically paternalistic. The way ODA is disbursed actually builds an undesirable dependency relationship, reminiscent of ugly former decades.

8.    The time has come therefore to focus on a better mode of implementation.

9.    As a priority we need to establish far better mutual understanding between the Parliaments of Europe and Africa.

10.    It needs to be understood that good governance cannot be imposed from outside. When the documents of Europe and the international institutions insist on the priority of good governance as a condition of ODA, they largely engage in wishful thinking. Political differences and systems instability or even malfunction, can only be remedied by internal processes. Outside influence may help, but the actual remedies have to come internally.

11.    It is far better to base better Europe-Africa relations on examining economic complementarities than by focusing on ODA alone. For instance many new membership states have substantial skills, technological know-how, and extensive experience in good agriculture. They should explore how these may be transferred to African countries, since these would build Africa’s economic capacity far better than ODA designated for poverty relief.

12.    Above all, ODA should be directed to building economic capacity. Recently Cadbury promised to invest $87 m over the next decade to support high quality sustainable cocoa output around the world. Ghana which is Cadbury’s biggest supplier will receive 70% of these funds to increase yields and produce top quality beans. But, while welcoming this investment Ghana’s President said, “Come and process the beans here in Ghana, so we know the partnership is not limited to the farmer alone.” (Africa Business, March 2008)

13.    The same could be said of coffee in Kenya, tea in Tanzania, cotton in Mali, and so on. ODA should focus on processing so Africa enhances its industrial capacity. Complementarities could be built by a division of labour with Europe taking one part of the value chain and Africa another to the benefit of both. (Ben Turok, Can Unequal Partnerships be Mutually Beneficial? New Agenda,   2002)

14.    Europe’s insistence on peace and security in Africa is also often presented wrongly. Peace and Security is generally a function of good leadership, as the experience of the ANC shows. To achieve reconciliation requires much wisdom and good judgment, and simplistic demands for the resolution of conflicts are not always helpful.

15.    Europe’s pressures at the WTO and in the EPA’s is misguided as it is based entirely on self-interest. Africa requires market access. It must also protect its own markets from the abuse of international codes by European subsidies. The fact is that both Europe and the UN built their economies behind protective walls, but now they wish to have free trade. This is sheer hypocracy.

16.    Another demand of Africa is the elimination of corruption. This is good but Europe must be more vigilant about the corrupters who come from Europe. Corruption flourishes where the moral fibre of a country is damaged and this is now a universal phenomenon.

17.    I now turn to the functioning of ODA. Because of heightened international attention, it provides an excellent base for global discourse on bilateral relations.

18.    ODA is a transfer of money from one group of taxpayers to the people of another country. The Treasury of the donor country is the intermediary with the Treasury of the recipient country. But this does not mean that the money is the property of the respective Treasuries, they are merely conduits.

19.    Properly speaking, the representatives of the donor people, the Parliament, should decide the principles guiding the funding, while the Parliament of the recipient country should decide on the national priorities.

20.    This becomes even more important where the money is in the form of budget support, because budgets are the business of Parliament.

21.    Yet, in practice, it is the government development Agencies in the donor countries which make the decisions, with only minimal reference to the donor Parliament.

22.    Equally, in the recipient country, the Treasury receives the money and decides how it should be allocated.

23.    We therefore urge that all ODA should be scrutinized fully by the donor Parliaments, as well as the recipient Parliaments.

24.    The problem is that African Parliaments do not have the human resources to do this; it is therefore proposed that every ODA grant should include a small portion designated for funding experts for the recipient Parliament for monitoring purposes.

25.    Finally, we propose regular interaction between donor and recipient Parliamentary delegations to learn from each other.

26.    This will enhance democratic practices in both, and build good governance across Europe and Africa.

1.    In recent years several European governments have moved from “development assistance” to “partnership” in describing Official Development Assistance (ODA)
This change followed a considerable discussion about the relationship between Africa and Europe, and the intentions behind ODA.   The most favourable justification of ODA is that the provision of assistance for poor countries and their peoples is a noble act in the interest not only of the recipients but also of a better world. Poverty and underdevelopment is now recognised as a “global bad” and the responsibility of all.

2.    In part, the change of language reflects the insistence from Africa that Africans must determine their own development agenda, especially in Nepad. Europe wishes to show that this sentiment of Africa is respected.

3.    The problem is that ODA is a one-way flow which nothing can disguise. The donor is inevitably in the driving seat and the recipient is necessarily a subordinate. Donors inevitably demand accountability from the recipient on how the funds are used. They also insist that the funds are spent in the pursuit of good governance and genuine development.

4.    The donor government is also circumscribed by public opinion in the donor country and the donor government is accountable to its public, including its Parliament.

5.    The recipient government is also accountable, not only to the donor government, but also to its Parliament and public.

6.    In practice, the accountability function is often cursory. The Executive in the donor country takes a decision, it is conveyed in broad terms to their Parliament, and an official development agency works out the detailed projects in discussion with Ministers and officials in the recipient country.

7.    The cabinet in the recipient country is generally  fully informed of the broad parameters of the ODA, especially if it is a substantial part of the budget, either as direct budget support or for projects.

8.    The recipient government will convey the broad outlines of the ODA to its Parliament, but details are rarely supplied. This is especially the case where funds are provided off-budget, going directly to NGO,s or even state institutions.

9.    A major problem arises with respect to auditing in the recipient country. Where ODA is on budget, it is the responsibility of the state auditor general to scrutinise the expenditure. He will then report to parliament, but only in general terms.

10.    Where ODA is off-budget, it is the responsibility of the donor country to scrutinise the expenditure, and this is usually done by the local embassy, using private auditors. The result may leave a lot to be desired.

11.    In either case, the recipient country Parliament is largely in the dark, but especially in the off-budget case. And, since funds a very scarce for NGO’s, there is a great deal of manoeuvering by NGO’s to get access to these funds.

12.    In part this has also led some governments to complain that donor governments manipulate NGO’s  to act as advocacy groups in order to pressure the government on various issues, especially on good governance issues.

13.    The most relevant point for this paper however, is that the elected representatives of the people, the Parliamentarians, are generally cut out of the system with only vague ideas about ODA.

14.    This is the case in both donor and recipient countries, though there are major differences across the board. These generalisations have to be qualified by the fact that in many donor countries the detailed information is available somewhere, but it is not to hand in a form that the average interested Parliamentarian can access with little effort. In recipient countries it is often not available at all.

15.    It is conceded by some governments, donor and recipient, that information about ODA may be sensitive and therefore should not be too readily available. Assume that donor A is financing much of the budget of recipient B, this could be embarassing for both.

16.    Even where ODA is not so extensive, but is clearly supplied with a political motive, or with the expectation that it will bring a direct economic benefit to the donor country or its business community, this information is sensitive.

17.    We might ask, if, in the interests of transparency and accountability,  far more detailed information were supplied to both donor and recipient Parliaments, could busy Parliamentarians use this information ? The answer is probably, with difficulty. But a determined Parliamentarian would seek academic or other help. In fact, there are many NGO’s with suitable capacity, which would be very keen to have sight of this information, sometimes in their own interests.

18.    Notwithstanding many difficulties,it is the case, that  relations between donor governments and recipient countries on ODA, are fundamentally political issues. The way ODA is provided to a recipient country could skew the whole economic programme of that country. This is a matter of great importance. Equally the motives that drive a particular form of funding by a donor country might well be rejected by its own Parliament.

19.    The irresistible conclusion is that ODA is primarily a political matter, requiring scrutiny by the representatives of the people, namely the Parliament.

20.    Furthermore, if we are to give substance to the notion of “partnership” the Parliamentarians of both donor and recipient countries have to be engaged so that ODA can be provided on the basis of principles acceptable to both, thereby creating the basis for good people-to-people relations. It may even be found that through broad dialogue, ODA can form the basis of a mutually beneficial relationship between the two countries, which will make it even more fruitful and sustainable.