Items filtered by date: December 2010

REPORT: Doing Business in Post Conflict and Fragile States
Dianna Games
Development Bank of Southern Africa, 2011

IT WAS at a conference on agriculture in Vietnam last year that I heard about SA’s involvement in a food project in Guinea. I attempted to find SA’s high commissioner in Hanoi at the event to ask him: why Guinea? Surely we had more pressing priorities closer to home or in countries more strategic to SA? But it turned out he had not made it to the event.

However, a quick check on the website of the Department of International Relations and Co-operation shows the South African taxpayer is contributing R172m to support the project — a transfer of skills and technology by Vietnam to a rice-growing project in the West African country.

The money includes R5m for the construction of a museum in Kindia, a small military base two hours’ drive from Guinea’s capital, Conakry. Then president visited the base in 2006 because of its historical significance. “The first members of the revolutionary political parties that went into exile in the early 1960s received rudimentary training at the camp,” the department says.

This brought to mind another pet political project of the Mbeki era: the construction of a library in Timbuktu to house valuable manuscripts — R20m was budgeted for this but it eventually cost nearly three times that.

 SA spent another R29m to rescue the African Cup of Nations tournament in Mali in 2002 on the grounds that its success would assist SA’s 2006 bid for the Fifa World Cup.

All this money comes out of what is known as the African Renaissance and International Co-operation Fund, a “slush” fund for pet political projects, relationship-building and loans to friendly states, established in 2000 to promote economic co-operation between SA and other countries.

 Spending decisions appear to be random. For example, the fund committed R14m for a regional gem institute in Madagascar (now on hold because of that country’s political turmoil), nearly R12m for SA to host a pan-African women’s conference, and R30m on upliftment projects in Western Sahara, which is fighting for self- determination from Morocco — a cause that has strong backing from SA.

Listed among expenditure items is a whopping R10m to cover the costs of SA’s representatives on the Southern African Development Community monitoring team for Zimbabwe’s 2008 elections and R3,5m for the monitoring of the one-man runoff after the poll.

A department evaluation report on the funding says: “Zimbabwe elections successfully held on 29 March 2008″. It would be interesting to see how much SA’s support of that disastrous election has since cost it in general. It emerged earlier this year that more than R770m of the fund’s R1,2bn in disbursements since 2004 went to countries with human rights abuse records, including Zimbabwe and Guinea.

There are what sound like some laudable projects being funded amid the flimflam of political expedience, including election support for the Democratic Republic of Congo, Lesotho dam projects, the Burundian peace process, post-conflict reconstruction in the Seychelles and Liberia, and local government capacity building in Africa.

The fund was in the news last week, when President announced it would give R100m to Cuba to encourage that country to source goods from SA.

While this may benefit businesses in SA in the short term, there is no sign that it will be a good long-term investment. Notwithstanding Cuba’s symbolic importance to Africa, its economy is in trouble and — as Zuma said — its trade with SA is marginal, having dropped from R82m in 2008 to just R1m this year.

Cuba’s R1bn debt to SA, now written off, is further evidence of the communist state’s economic problems.

 The fund, despite being largely funded by the South African taxpayer, appears to be a politically expedient vehicle with a vague mandate and kneejerk spending priorities made by a handful of unnamed people. It needs a more targeted mandate to leverage more tangible benefits for SA.

The fund could be more usefully employed as the underpinning of an economic strategy focused on countries closer to home with the aim of increasing regional trade and strengthening intra-African business engagement — an investment that may provide real benefits for SA’s own future growth.