INTRODUCTION
The political process to define terms of engagement between donor and recipient countries around development assistance, in general, and anti-corruption initiatives, in particular, is a tricky subject.
In recent years, legitimate questions have been raised about the effectiveness of development assistance with regard to the way it is provided, received and utilised. Leading critics argue that the idea of aid is ill-conceived and entails a pouring of resources into the bottomless pit of a ‘third world’ where there appear to be few returns except ingratitude, abuse and misuse of aid with no accountability.1
The prevalence of corruption in development assistance has largely prompted this disillusionment. Not only does corruption reduce the effectiveness of aid-funded development projects in poverty alleviation, but it also weakens public support for development assistance in donor countries. As such, it is timely for bilateral donors to examine these issues critically.
In response to rising concern about aid effectiveness at a time of financial stringency and public criticism at the international level, there is an increased resolve to combat corruption.2 Donor responses to corruption have included:
What are the terms of engagement between donors and recipient countries? How has a particular recipient country, in this instance South Africa, developed a set of guidelines to engage confidently with donors around development assistance?
The terms of engagement for bilateral donors with recipient countries such as South Africa are largely dictated by the country’s development assistance framework. In many instances, South Africa is an exceptional case and care should be taken in transposing this experience uncritically. However, using the fight against corruption as a case study, there are some key principles underlying the terms of engagement of development assistance.
DEVELOPMENT PROFILE AND POLICY
While South Africa appears to be a relatively prosperous, middle-income country with US $3 000 gross domestic product (GDP) per capita, boasting a modern financial and industrial sector, excellent infrastructure and the most diversified and advanced economy in Africa, this picture is wholly misleading. South Africa is, in fact, a very unequal society. Decades of legal discrimination have led to a situation where racial and class differences generally coincide. This is most starkly represented in the life expectancy of whites, who score 75 years compared to blacks’ 50 years. The overall development index (ODI) of South Africa is 0.650: whites score 0.878 and blacks 0.462, with a poverty share of 95%. White South Africa would rank 24th compared to black South Africa’s 123rd position out of 180 countries.
Following the 1994 elections and in order to redress the imbalances created by apartheid, the South African government adopted the five-year Reconstruction and Development Programme (RDP) as its primary development strategy. The major goals were to:
With a growing realisation that the growth needed to attain development goals could not be driven purely by public expenditure, the Growth, Employment and Redistribution Strategy (GEAR) was introduced in 1996. The redistribution of wealth and resources would instead have to be fuelled by market-led economic growth.
One of the core elements of the GEAR strategy is a renewed focus on budget reform to strengthen the redistributive thrust of government expenditure. To give effect to this, government introduced a three-year rolling expenditure plan known as the Medium Term Expenditure Framework (MTEF). Its intention is to assess how reconstruction and development can be addressed by means of the budget and the reprioritisation of expenditure and also to ensure greater alignment of official development assistance (ODA)4 to strategic interventions in certain key areas. These include education, health, welfare and social security, infrastructure investment, the integrated justice sector (police, justice and correctional services) and personnel expenditure.
The nature and extent of bilateral development assistance to South Africa make the country relatively unique on the continent, contrary to the situation prevailing in many other developing countries. ODA in South Africa amounts to between 1% and 1.5% of the annual budget compared with 75% of the budget of its neighbour Mozambique. Development assistance is made available in a variety of forms, broadly classified as grants (actual funds), technical co-operation (expertise) and financial co-operation (loans and credit guarantees, among others). In South Africa, there is general acceptance of the need to align ODA-funded projects and programmes to development priorities and interventions and to integrate ODA into the normal functioning of government. The idea of donor-supported projects managed in a stand-alone or isolated manner is strongly opposed.
DEVELOPMENT ASSISTANCE FRAMEWORK
Development assistance to South Africa before 1994 (the date of the first democratic elections) provides an interesting case study on how bilateral donors, which traditionally interact and are often more comfortable with government-to-government arrangements, played a different role.
Through supporting and engaging key civil society actors over many years, the donor community played an important role in bringing down one of the most pernicious systems of racial oppression. Donor support channelled millions of dollars, guilders, or krone (often secretly — sometimes with negative consequences for accountability) to organisations opposed to apartheid. These contributions played a key role in ensuring that basic services were delivered to people on the ground whose right to citizenship was denied. This is not dissimilar to the role played by non-governmental organisations (NGOs) in Palestine.
While aid was almost exclusively channelled into the NGO sector for anti-apartheid activities prior to 1994, foreign assistance was increasingly diverted to the South African government after 1994. Before 1994, the donor community appeared much more focused than is currently the case, actively gathering with a common agenda to fight apartheid. In the period since 1994, the South African government requested donors to allow it to lead the process, which meant that donors largely relinquished co-ordination.
Within this context, the need arose for co-ordinating mechanisms within the South African government . During 1994, an International Development Co-ordinating Committee (IDCC), chaired by the Department of Finance, was established to act as the principal channel of communication and co-ordination between the government and the donor community. In the absence of an established management framework, it was decided that ODA should be utilised primarily for the purposes of implementing the RDP. The RDP Fund, established in terms of Act no 7 of 1994, provides a central account into which donor funds for government projects are paid and from which transfer payments are made to implementing agencies responsible for the financial management of donor-supported projects.
With the closure of the RDP office and the integration of the RDP into departmental budgets, the function of overall ODA management and co-ordination was transferred to the Chief Directorate: International Development Co-operation (IDC) in the Department of Finance. All national departments have been urged to register their intention to solicit ODA with the IDC, as well as to submit quarterly reports on the status of their discussions with the donor community. Bilateral donors have also been urged to channel their activities via the IDC.
Various initiatives have been undertaken to formulate regulations and disseminate knowledge about such regulations among line departments. Most recently, a comprehensive document, entitled Draft policy framework and procedural guidelines for the management of official development assistance: Draft two, January 2000, has been prepared. The main aim of the report is:
"to ensure that all role-players involved in the management of ODA have a clear understanding of how it should be managed in order to achieve optimal impact. This is to satisfy the interests of the South African Government as well as its partners in the international donor community."
Essentially, a case is being made for a strong co-ordinating centre. In addition, key processes on both the part of donors and implementing agencies for ODA are spelt out in great detail. The proposed guideline document provides the ‘formal’ terms of engagement for bilateral donors around development assistance to South Africa in general, and can point to the process for engaging with the government around anti-corruption initiatives.
A number of reasons why the current ad hoc and somewhat decentralised approach to soliciting ODA is not advisable have been identified. Besides the fact that virtually all donors require a single point of entry to the South African government, such an approach is believed to:
A report commissioned by the United Nations office in South Africa in 1998 on the donor community confirms the need for a formalised approach to ODA. Problems noted in the report include:
The above problems have led to a circumvention of official routes by donors and recipients, delays in concluding and implementing funding agreements, organisational overlap and confusion over lines of authority, accountability and responsibility, actual fragmentation and duplication of projects.
The responsibility and accountability for the implementation of ODA-supported projects and programmes are vested in the South African implementing agencies: the line departments, provincial and local authorities. The absence of a central decisionmaking body, which determines the allocation of ODA, means that any one of these implementing agencies can legally approach — as many provinces actively do — the donor community directly to solicit ODA. Most sectors have established a relationship with the donor community and may feel that the development of such a centralised framework is superfluous. However, such a framework is an essential instrument in the coherent management of ODA at sectoral level, particularly in the context of the RDP Fund Amendment Act. The Act stipulates that heads of departments and provinces are accountable for ODA. This will hopefully have the effect of encouraging responsible management of donor funds.
It has been argued that decentralisation and local ownership are key driving forces behind the new development agenda. How the South African proposal towards centralising ODA challenges this thinking is something to consider. However, the main impetus is that of the responsible co-ordination of donor funds towards the realisation of common development objectives rather than any sinister trend towards centralisation.
The preparation of the annual Development Co-operation Report (DCR) by the United Nations Development Programme (UNDP) is currently under way in South Africa. The review for 2000 examines the best way in which to align ODA to have the greatest impact. Results of the impact of development assistance to South Africa between 1994 and 1999, particularly in the democracy and governance cluster, will provide further guidelines on how development assistance can be optimally utilised in the realisation of its objectives, including anti-corruption projects.
TERMS OF ENGAGEMENT FOR DONORS: GUIDELINES AND PRINCIPLES
Chapter three of the Development Co-operation Report — General Policy Objectives for ODA — essentially sets out the terms of engagement with donors from the South African government perspective. The bottom line is that ODA should "be managed within the context of South African policy and legislation as its overall strategic framework." This is done within the confines of "the restrictions imposed by each of the donor governments." Also, ODA cannot be managed in isolation or used for the purpose of funding ‘wish lists’ that would not be viewed as core development priorities by the government. The government has to avoid an ad hoc approach in seeking ODA simply because the budget is inadequate or because a donor is interested in providing support.
This strategic approach is essentially aimed to address the situation where:
"the process of committing countries providing ODA to some form of agreement has not been co-ordinated and standardised but has been driven by the agenda of donor countries wishing to have agreements signed when dignitaries visit SA or vice versa."5
General policy objectives for ODA put forward in the document are to:
The principle that ODA interventions must be aligned to South Africa’s reconstruction and development priorities to the fullest extent possible underlies each one of these general policy objectives. It is quite clear that South Africa is setting the agenda by laying down the ground rules with regard to ODA. The practical processes set out in the document are fairly standard, including donor pledges, overall programme support, project identification, project assessment, decisionmaking over project support, monitoring and evaluation.
NGO'S AND DEVELOPMENT ASSISTANCE
With the change in government in 1994, many bilateral donors have understandably redirected the majority of their funds to the state to assist in achieving the development and reconstruction goals of the RDP. This has had devastating consequences for some civil society organisations — a discussion outside the scope of this article.
The government is essentially aware that a proportion of all development assistance is being channelled to civil society. However, since government is not accountable for the utilisation of resources which are dealt with directly between the donor community and recipients, they fall outside of the formal bilateral development co-operation framework.
According to the draft policy framework document:
"while the government actively encourages overseas development aid to South Africa it does not interfere with the relationships between foreign donors and local NGOs. This is because government views the overriding procedural objective of the granting of aid to be the simplification of the process, not the ownership of the project. Despite requests for the inclusion of NGOs (from some donors) within the Department of Finance’s realm of management, the Department of Finance remains adamant that it has no intention of allocating, controlling or accounting for donor resources to the NGO sector."
Donor assistance to post-apartheid South Africa is necessarily of a transitional nature, bound as it is to the objective of the consolidation of democracy. Among donors, different sets of considerations seem to inform the tripartite relationship between donors, the South African government and NGOs. Strategies devised with a view to consolidate democracy tend to emphasise either the importance of building long-term capacity within the state, or alternatively bolstering a vibrant and pluralistic civil society. The decision to support either the state and/or civil society may be informed by donor perceptions of the strength or weakness of the state vis-à-vis civil society.
Currently, while there is significant assistance for government activities (and for NGOs performing government-related services), the proportion of assistance given to other NGOs remains large. Support for civil society is still built into certain bilateral agreements (for example, the Danish government, as well as the European Union (EU) ensures that 25% of their funding goes to civil society organisations). This will increasingly become a pertinent factor as the donor community considers South Africa to be moving out of its transition phase towards consolidation — the stage where development initiatives may incline to refocus on civil society.
The attraction of NGOs as development partners lies in their financial accessibility to donors. In the past, the direct targeting of NGOs made circumvention of complicated state tender procedures possible. For this same reason, government departments would enter into alliances with NGOs. However, with the amendment to the RDP Fund Act, which gives priority to the provisions of the technical assistance agreement, South African tender procedures have to be followed only if no procurement provisions appear in the agreement.
Another response by donors has increasingly been to use NGOs to design and implement projects. This allows them to escape the control and inefficiencies of the state, mainly because such aid-funded projects are perceived to be not as vulnerable to the resource scarcities and corruption of the central administration. NGOs are generally cheaper, more effective and closer to the local population.6 Promoting the role of NGOs also makes sense in the context and spirit of enhancing greater public accountability as one of the best ways to balance state power.7
CORRUPTION ON THE NATIONAL POLICY AGENDA
Corruption as a domestic policy issue high on the agenda of government only recently came to the fore and needs to be placed in the context of the broader and more pressing objectives of reconstruction and development. In as far as corruption inhibits the Mbeki presidency’s realisation of its main objectives to deliver services and address the glaring inequalities among South Africans, corruption will remain a key policy issue. There is substantial literature available on the impact of corruption on poverty and development, and donors need to be aware that South Africa’s interest in confronting the issue is largely viewed through this lens.
While corruption is not a new phenomenon in South Africa, the ANC-led government has taken a number of high-profile initiatives to address it after dramatic media exposure of numerous corrupt officials and widespread malfeasance in key sectors, including the police, correctional services, housing and education. Besides being spurred on by local pressure, the government’s stated commitment towards greater openness, transparency and accountability comes against the backdrop of an international impetus towards promoting good governance, which necessarily includes controlling corruption.
In terms of nature and extent, no comprehensive diagnostic, integrity survey has been conducted in South Africa, although this is currently proposed under the UN Global Programme Against Corruption — for which donors will be approached shortly. A number of opinion polls and surveys dealing with both the perception and experience of corruption by citizens, however, have been undertaken in recent years:
MISUSE OF DONOR FUNDS
In South Africa, there have been some high profile examples of the misuse of donor funds within civil society and the state both before and after 1994.
Examples include Swedish support for Reverend Allan Boesak’s Foundation for Peace and Justice where money destined for the victims of apartheid found its way into Boesak’s personal account. An amount of R726 000 earmarked for the production of 12 video cassettes on voter education and democracy were instead spent on building a studio for his wife. Boesak was found guilty of the theft of R259 000 and fraud involving R1.3 million from the Foundation for Peace and Justice and sentenced to six years in prison. His case remains before the Supreme Court of Appeal.
The use of the term ‘struggle accounting’, devised by Boesak and others to stress that the secretive and corrupt nature of the apartheid regime made open and transparent bookkeeping of donor funds almost impossible during the struggle years, raises questions for donors. Can donors interact openly with civil society organisations in cases of severe oppression? What checks and balances can be put in place to prevent a situation similar to the Boesak case from arising? While regular audits, independent assessments and site visits, for example, may be routine for donors in democratic contexts, other means to account for donor funds may have to be devised in less conducive environments.
Another much publicised case of the misuse of donor funds is that of EU support to the Department of Health for the AIDS play, Sarafina Two. After an inquiry by the Office of the Public Protector, donor money was found to have been allocated through improper tender and awarding procedures with a litany of irregularities involved in the spending of R14.2 million on the play. When the furore erupted over the extravagance of the project, the EU stated that it had never been asked to approve funds for the play contrary to assertions made before parliament by the minister of Health. The EU ambassador to South Africa stressed categorically that there had been no prior authorisation and regarded the diversion of funds as a serious misuse of EU support. In this case, there was no evidence or implication of the abuse of official position or titles for personal gain, but a clear case of diversion of aid in a manner bordering on mismanagement and a lack of both transparency and public parliamentary accountability.8
The EU experience with the Department of Health has resulted in bureaucratic and regulatory consequences for organisations in South Africa, such as the Institute for Security Studies (ISS), which have received funds from the EU subsequent to Sarafina Two. Comprehensive accounting procedures are obviously necessary to regulate the use of donor funds, but stringency needs to be balanced with flexibility, particularly in relation to the policy work that organisations such as the ISS undertakes.
TAKING A STAND
Both the Mandela and Mbeki presidencies have highlighted the importance of tackling the ‘moral crisis’ manifested by high levels of violent crime and widespread corruption. A number of anti-corruption conferences (supported by donors such as the UK Department for International Development (DFID), the EU, and USAID, among others) have taken place since 1999 and are an indication of the importance attached by the government to efforts to confront corruption in South Africa. Also, several new policing units and initiatives with a dedicated focus on fighting crime and corruption, have been established, for example, the Special Directorate for Public Sector Corruption within the Office of the National Director of Public Prosecutions.
Following the National Anti-Corruption Summit in April 1999 and the South African elections in June — which the ANC fought largely on a zero-tolerance anti-corruption ticket — Mbeki’s cabinet formally endorsed the Summit resolutions. The Public Service Commission was identified as the ‘flag carrier’ of the anti-corruption programme, and received a mandate to call together a meeting of relevant stakeholders (including business, labour and civil society representatives) to implement the most pressing Summit resolution, the establishment of a cross-sectoral task team. This task team has met several times and is in the process of drawing up the terms of reference for a National Anti-Corruption Council — similar to the National Aids Council — which will be responsible for broad strategic and policy advice on anti-corruption activities across all sectors in South Africa. Since there is currently no dedicated budget for this process, it is clear that donors will be approached for assistance and, indeed, a donor roundtable has already been convened by the Public Service Commission. Within the South African government’s policy framework, how should donors respond to these requests? For one, they will need to be persuaded of the existence of sufficient political will to tackle corruption in South Africa.
GAUGING POLITICAL WILL
Political will is the key ingredient of an effective anti-corruption effort. Without a clear indication that it exists, the government’s statements of reform in the civil service, the strengthening of transparency and accountability, and the reinvention of the relationship between government and the private sector, ring hollow and remain mere rhetoric. In South Africa, the political will to address the issue of corruption — at least in as far as talking about it publicly and identifying it as an issue of national concern — appears to be in place. However, how do donors gauge the credibility and seriousness of a government’s intention to fight corruption?
Some have suggested a review of environmental and situational factors when gauging a recipient country’s political will to tackle corruption. These factors include local ownership, leadership of local plans, the degree of analytical rigour evident in working out strategies, the application of tough and credible sanctions in a strategy, and the continuity of anti-corruption efforts.9
A recent publication by the UNDP identifies the principal challenge in relation to anti-corruption reforms as being the need to distinguish between reform approaches that are intentionally superficial and only designed to bolster the image of political leaders, and substantive efforts that are based on strategies to create change.10 In order to do this, several indicators that demonstrate genuine political will have to be developed. These indicators include:
In a sense, the South African government’s anti-corruption initiative has pre-empted donor concern with this issue. Any donor pressure around the promotion of good governance at this stage (for example, raising the issue of corruption formally at annual consultations) should therefore be viewed as supportive of South Africa’s internal anti-corruption policy process. One donor respondent to the United Nations Desk for Economic and Social Affairs (UNDESA) survey on ethics in the public service noted that:
"South Africa is different to other countries in that it is not donors steering government in a specific direction to tackle corruption and encourage good governance. Rather, South Africa is an example to other countries and leadership around fighting corruption is coming from within the country."11
However, several challenges remain to give credibility to the stated commitment to fight corruption. For one, there is very little analytical understanding among society of the nature and extent of corruption, as well as ways to address it. This is crucial, for a lack of understanding and information has been a major factor in the ineffectiveness of reforms internationally. A top UN official from Vienna on a visit to South Africa recently raised the concern that the anti-corruption strategy was being devised without comprehensive baseline information. This is clearly an area where donors will be approached to fund, for example, a national integrity survey. The challenge will be to ensure that established researchers in the field are included in such a project in order to collate existing, albeit limited and fragmented research activities on corruption, and to avoid duplication of efforts. On the basis of such survey information, priority areas for intervention can be mutually agreed upon.
Sustainable anti-corruption reforms demand a participatory process involving all stakeholders. Such involvement also serves to promote ownership. The National Anti-Corruption Summit convened in parliament went some way towards addressing this. The broad representation on the cross-sectoral task team continues to reflect the commitment to inclusivity. The sustainable participation of sectors in such initiatives, however, will not only depend on government (with the support of donors) providing opportunities for cross-sectoral interaction. Civil society and private sector actors will also have to demonstrate continued political will by actively organising, consolidating and engaging their own structures in this process. For this, they will require both leadership and dedicated resources. Initiatives such as the South African Non-Governmental Coalition (SANGOCO’s) Code of Ethics, and Business South Africa’s (BSA) adoption of the SANCODE code of business ethics are two areas for continuing action.
Monitoring the current policy processes around corruption reform falls mainly upon civil society organisations as government’s ability to monitor itself, particularly around this issue, is often viewed with suspicion. The Public Service Commission is currently in the process of establishing a monitoring mechanism and is interacting with NGOs that are already involved in this area to devise a model. NGOs have to be empowered to play this role as do the media through improvements in the level of investigative journalism. While the importance of research is often undermined in favour of more tangible service delivery outcomes, it is encouraging that funders — such as the EU, AusAid, the Ford Foundation and the Open Society Foundation — are currently supporting anti-corruption and governance research initiatives undertaken by a number of independent civil society organisations.12
Finally, South Africa has a plethora of statutory agencies to fight corruption. There have been some moves to streamline the focus of these agencies to become more effective. Comparative expertise from donor countries on the nature and functioning of dedicated anti-corruption units elsewhere, as well as expertise in other areas such as legal instruments to fight corruption, are important entry points for donor countries to assist South African efforts.
ASSESSING FUNDING REQUESTS
Each of the Utstein partners (the Netherlands, Norway, Britain and Germany) is currently engaged in development assistance to South Africa. There are, however, very few projects that support anti-corruption initiatives directly. Within the democracy and governance cluster, a number of projects exist to promote public service reform. It can be expected that anti-corruption projects will become an explicit area of focus for donors as the national government defines this as a priority area for development assistance.
Donors are already confronting the questions raised above. In terms of the Agreed Minutes of the 1999 Annual Negotiations on Development Co-operation between South Africa and Germany (7-9 September 1999), the Public Service Commission requested the co-operation of the German Agency for Technical Cooperation (GTZ) for a particular project dealing with the following areas:
During March 1999, GTZ undertook a project appraisal mission in South Africa according to certain procedures (agreed upon by the Public Service Commission). The appraisal, conducted by two independent consultants, is based on interviews with representatives from the Public Service Commission, as well as other South African government institutions and NGOs. The appraisal will result in a report for GTZ where recommendations are formulated either to realise the project as it is proposed, to make some changes to the proposal, or not to launch the project.
In terms of measuring the effectiveness of proposed anti-corruption reforms or integrity strategies, the African experience suggests that sophisticated, well-timed and properly sequenced strategies will contribute to the governance agenda that economic and political liberalisation will seek to achieve. Donors that are approached to fund such initiatives should pay far more attention to questions of timing and sequencing, consistency in approach, the details of reform and its sustainability, and the encouragement of the exceptional political and managerial persistence necessary to promote and sustain reform in this area.13
CONCLUSION
Donor co-ordination in the field of anti-corruption activities is crucial. Donors need to understand the environment and context where they operate, as well as the key issues. While donors, such as Utstein partners, would like a common, coherent and a co-ordinated approach, using similar standards and criteria when assessing development assistance in the field of anti-corruption, a country-specific assessment is crucial for appropriate aid intervention. Institution-building within the state, as well as the strengthening of civil society are important.
Just as important as donor co-ordination is a recipient country’s ability to articulate its main objectives with regard to development assistance and fighting corruption. This is something the South African government is clearly doing. Similarly, civil society actors need to co-ordinate their activities in the field of anti-corruption initiatives.
Fighting corruption is directly linked to President Mbeki’s vision of an African Renaissance, which seeks to promote and strengthen systems to enhance better governance on the continent. However, such visions, if not given clear content, may become meaningless vehicles of political intent, devoid of concrete action. What is certain at the moment is that civil society organisations, as well as the international donor community will continue to engage the country’s president on his pledge to root out corruption.
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