SOUTH AFRICA Background and Possibilities for Danish Transitional Assistance By Finn Tarp Institute of Economics University of Copenhagen for Danida December 1992 Danida Views expressed in this study do not necessarily correspond to those of the Ministry of Foreign Affairs. Danida, December 1992 SOUTH AFRICA Background and Possibilities for Danish Transitional Assistance By Finn Tarp Institute of Economics University of Copenhagen for Danida December 1992 Danida TABLE OF CONTENTS page Preface v Acknowledgements vii List of Abbreviations viii I. GENERAL COUNTRY BACKGROUND 1 1.1 Geography, Natural Resources and Land Use 1 1.2 Government, Constitution and Regional Administration 3 1.3 Infrastructure and Urban Centres 5 1.4 Population and Society 6 II. POLITICAL SETTING 9 2.1 Historical Background 9 2.2 Apartheid 10 2.3 Armed Struggle and International Sanctions 11 2.4 Toward a Negotiated Settlement 13 2.5 Constitutional Issues and Human Rights 17 2.6 Violence 19 2.7 Prospects for the Future 21 III. ECONOMIC AND SOCIAL SITUATION 23 3.1 Macroeconomic Features 23 3.2 Socio-economic Characteristics 25 3.3 Sectoral Characteristics 28 3.4 Regional Dimensions 31 3.5 Summing-up 32 IV. DEVELOPMENT CONTEXT AND POLICY CONCERNS 34 4.1 Introduction 34 4.2 Major Actors 34 4.3 Policy Frameworks 42 4.4 Major Development Issues 48 3 4.5 Conclusion and Outlook 54 V. INTERNATIONAL RELATIONS AND FOREIGN AID 58 5.1 Global Political Relations 58 5.2 Regional Dimensions 59 5.3 Foreign Aid 61 5.4 Experiences Gained and Absorptive Capacity 64 5.5 Prospects for the Future 66 VI. FRAMEWORK FOR DANISH TRANSITIONAL ASSISTANCE 68 6.1 Danish Trade and Aid in the Past 68 6.2 Perspectives for Danish Assistance 73 6.3 General Strategy 75 6.4 Objectives, Priorities and Time Horizon 77 6.5 Activities Proposed 78 6.6 Implementation and Phasing 88 VII. CONCLUSION 95 List of References Appendix 1: Maps of South Africa Appendix 2: Statistical Tables 4 PREFACE I visited South Africa for the first time in the late 1970s, and the terrifying symbolic messages of racial superiority embedded in the Voortrekker Monument outside Pretoria put me in a state of mental uproar. Subsequent confrontation with the divided towns of Johannesburg, Durban and East London and the shattering rural poverty in Transvaal, Natal and the Orange Free State provided additional thought provoking evidence of the harsh realities of life for the majority of people in South Africa. Years of travel and work in the frontline states furnished the expression `South Africa's destructive engagement in the region' with real meaning. Close friends and estimated colleagues have died due to aggressive acts by the apartheid regime. And millions of anonymous people in southern Africa continue in a state of human suffering. Thus, it was with a sigh of deep relief I received the news in February 1990 that Nelson Mandela had finally been released from the Pollsmoore prison after 27 years imprisonment. The `free Mandela' song, which I had first listened to at a Dollar Brand concert in Maputo a few years earlier, was played more than once in those early days of 1990 in a spirit of great expectations for the future. Hopes for a quick transition to democracy were high. They were, indeed, unrealistically high, and the less than three years, which have passed since then, have turned out tumultuous for South Africa. Thus, it has been no easy task to keep up with developments from my present base at the University of Copenhagen, which I joined four years ago. Nevertheless, I remained convinced of the need to look beyond apartheid and infuse research and public debate on the future of South Africa; and it was with this objective that a range of Danish development institutions, including the Centre for African Studies (CAS), to which I am attached, arranged an international conference on South Africa in February 1991. The conference also aspired at strengthening contacts between research institutes and aid organizations in Denmark and their counterparts in South Africa. Follow-up in this regard took place in late 1991 where I joined the group of six Scandinavian researchers, including Tom Østergård, then at the Centre for Development Research (CDR), who visited South Africa. On both of the above occasions it became clear that South Africa is at a cross-roads, and all involved have gradually become more realistic about the difficult political path that lies ahead. No quick handing-over of the reigns of power to the mass democratic movement has taken place, and while the forms of struggle have started to take other forms, they remain intense. Violence has also intensified, and the gunning down of a person just a meter away from me in the Hillbrow area of Johannesburg in October 1991 was a choking personal experience in this regard. It has also become strikingly obvious that it will take many years - or better decades - to overcome the social and economic legacies of apartheid; and much continues for the time being in a state of complete flux in South Africa. A high degree of flexibility to changing circumstances is called for, and over-optimism is to be avoided. On the other hand, the multi- facetted process of thrashing out the elements of a workable consensus for the future has begun. And encouraging developments in the civil society of South Africa at national, regional and 5 local levels are taking place along with more worrisome events. Hence, it was with hesitation, as well as enthusiasm, that I in May 1992 accepted the responsibility for preparing the present study for the Ministry of Foreign Affairs. The overall objective is to suggest a broad framework for the planning of future Danish transitional assistance to South Africa; and my terms of reference specified that the analysis had to include a comprehensive, but nevertheless concise, overview of the complex socio-economic and political situation of South Africa, with particular reference to the perspectives for the future. It was also part of my task to try to come to grips more fully with the intricacies of the Danish involvement with the anti-apartheid struggle. This proved to be no easy responsibility. Denmark has for more than 25 years provided humanitarian and educational assistance to the victims of apartheid through the socalled apartheid appropriation. Channels of disbursement and implementation as well as legitimate vested interests have consequently developed. Furthermore, complex issues are involved in assessing to which extent past activities are likely to remain relevant and if so for how long. A recent South Africa review pointed out that it is seldom easy to reshape old designs. This is an apt characterization of the situation in South Africa in general, but it accounts for the reorientation of Danish assistance as well. Thus, I cannot - and do not - claim to have struck an optimal balance. It is my hope, however, that this report will be perceived as a constructive input into the process of establishing a sound basis for future planning. It may in this context be useful to keep in mind an assessment by Spectator of a book by Alan Paton entitled `Ah, But Your Land is Beautiful', which struck my eye recently. It was stated that: `The passion is there, as well as the bitterness and the power' This quote reflects the present situation of South Africa well, and one hopes that the passion and the power can be used in a productive manner to overcome the bitterness to the benefit of the South African people. They have, along with the people of the rest of the southern African region at large, suffered for much too long under the burden of an unjust political, social and economic system in need of thorough transformation. 6 ACKNOWLEDGEMENTS I am grateful for the confidence shown by the Ministry of Foreign Affairs (S.7) in inviting me to prepare this study. Particular thanks are due to Messrs. Torben Brylle and Carsten Nilaus Petersen, respectively Head and Deputy Head of Department, who contributed many helpful comments and suggestions along the way. The same accounts for other staff of S.7, including Erik Boel, Anne Ehrenreich, Tom Østergård and Birger Lehman Nielsen. A vote of thanks also goes to the Scandinavian Institute of African Studies (SIAS) for inviting me to participate in the Africa Days in Uppsala, Sweden from 19-21 May 1992. Taking part in the special seminar on `Southern Africa after Apartheid' organized by SIAS economist Bertil Odén helped clarifying ideas and deepen my perception of the regional dimensions of the ongoing changes in South Africa. In this context, I would, in addition, like to mention the meetings, arranged by Mr. Lars Olav Jansson, Head of Section in the Regional Secretariat for Southern Africa (RESA), at the Stockholm Headquarters of the Swedish International Development Agency (SIDA) in mid-June. They greatly facilitated my access to background information on the experiences of this organization in supporting the process toward change in Southern Africa, and helped shaping my ideas about the future role of foreign donors in South Africa. Likewise, in mid-June I participated in two Conferences on the `new South Africa' and `what is the role of Denmark in South Africa?', organized by respectively Danish Industry (DI) and a network of Danish non-governmental organizations (NGOs). This helped in broadening and up-dating my understanding of the diverse views and expectations in Denmark as far as the future South Africa is concerned. Almost one hundred representatives from a wide spectrum of institutions were met and interviewed during my three week visit to South Africa from 12 July to 2 August.