PCDForum Column #30,  Release Date March 1, 1992

by David C. Korten

My recent visit to South Africa revealed more starkly than any experience in
my thirty year development career the threat posed by international aid to
authentic development. The easing of international sanctions there is attracting
aid agencies like vultures to a fresh carcass including a recent visit by World
Bank president Lewis Preston.

In many respects South Africa seems an unlikely candidate for international
aid. With a per capita GNP of nearly US$2,500 it ranks as an upper middle income
country. It grows enough food (if equally distributed) to provide each South
African 6,000 calories per day, produces 60 percent of the African continent’s
electricity, and has some of the world’s best medical facilities.

Yet some 50 percent of South Africans live below subsistence level. More
than a third of black children suffer severe malnutrition, and two-thirds of the
total population lack access to electricity. Hardly incidental to the interest
of lending institutions such as the World Bank, South Africa has emerged from an
extended period of international economic boycott with a still manageable
international debt and rich stores of exportable strategic mineral resources. In
bank parlance it is under-borrowed a condition the multilateral development
banks abhor as nature abhors a vacuum.

I had come to South Africa prepared to experience a country very different
from any I have known. Yet I left impressed with the extent to which it
replicates in microcosm the political and economic dynamics of the larger global
society. It is distinctive primarily in the blatant callousness of the
intentional social engineering by which a dualistic economic structure has been
imposed to systematically build the affluence of one racially defined social
class on the poverty of another.

Apartheid was imposed in South Africa in part by uprooting and separating
nearly all people of color (collectively referred to as blacks in contemporary
South Africa) from their homes, land, and most any other productive asset or
means of livelihood and relocating them in crowded barren homelands or in
isolated racially defined townships. Assetlessness and physical isolation were
then combined with preferential lending, zoning, and licensing restrictions to
assure that blacks were totally dependent on white controlled firms and
institutions for employment and could spend their earnings only in white
businesses. Even the pervasive informal sector activities of small shops,
sidewalk stalls, and street vendors characteristic of poor communities around
the world were nearly non-existent in the black communities I visited.

Public finance and facilities are similarly biased. Local political
boundaries include in white tax jurisdictions nearly all industries and
commercial establishments contributing to the tax base even the heavily
polluting industrial facilities invariably located in or adjacent to black
residential areas. Abundant public operating budgets provide for social
services, physical infrastructure, and subsidized housing in white areas,
assuring most whites a quality of life that may exceed the average standard
enjoyed by whites anywhere else in the world.

Not only are public service expenditures for black areas meager by
comparison, they are commonly funded under irregular "development"
budgets administered by specialized public "development" agencies such
as the Development Bank of Southern Africa and the Independent Development
Trust. In other words, whites receive public services as entitlements delivered
by tax-funded government agencies accountable to them, while blacks are
intermittently "developed" through the "charity" of outside
agencies over which they have no influence.

The white South African government, with the seeming concurrence of South
Africa’s black political leadership, is actively presenting South Africa to the
world as a poor Third World country dependent on international financing to
provide its economy with a "jump start" to alleviate the poverty of
its black population. The fact that South African poverty is largely and
intentionally structural and can be alleviated only through a reversal of the
processes that created political and economic apartheid is conveniently ignored.
Without a strong domestic commitment to structural reform, foreign assistance
will almost surely do what it has historically done elsewhere in the world
confirm and strengthen existing structures. This will leave South Africa’s
blacks dependent on international aid delivered through central government, the
white business community, and foreign funded NGOs even as loan funded aid
increases the country’s international debt and subjects it to the commonly
anti-poor policy dictates of the IMF and World Bank.

Few countries of the world are better endowed than South Africa with the
necessary financial, natural, and technical resources to provide a decent life
for all their people if its institutions were structured toward this end. A
substantial influx of foreign aid will only draw attention away from the
essential institutional reform agenda.

David Korten is a fellow of the People-Centered Development Forum, which prepared and distributed this

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