South Africa has robust and fast-growing foreign aid programs. However, the funding and implementation of these programs are fragmented across different government institutions and regional and international organizations. The lack of a central implementing institution or a reporting mechanism makes obtaining the complete picture of South Africa’s aid programs difficult.
One of the most visible aid programs is the African Renaissance and International Cooperation Fund (ARF). It is administered by the Department of International Relations and Cooperation and supports numerous projects in Africa in accordance with its stated objectives.
The African Renaissance and International Cooperation Fund Act, the law which governs the ARF, gives the executive body wide discretion to negotiate most assistance agreements and impose restrictions.
Funds for the ARF come from different sources including parliamentary appropriations, which is the primary source. Transparency and accountability in the way that the ARF is administered are insured through mandatory annual reports issued by the ARF and annual auditing by the Auditor General, an independent constitutional body.
A. Official Development Assistance Figures
The complete picture of development assistance figures in South Africa is difficult to obtain. This is mainly because development assistance in South Africa is highly fragmented and the country has yet to establish a system for collecting accurate and complete data.
Although data on assistance provided through the African Renaissance and International Cooperation Fund (ARF), one of South Africa’s foreign aid programs, is available, it does not give an accurate picture of all foreign aid programs in South Africa. ARF accounts for only a small percentage of the overall assistance that South Africa provides, with most of it coming from other government institutions that do not produce accurate and complete reports.
Assistance through the ARF has increased dramatically through the years since its inception in 2001. In 2003/04 ARF spending was limited to ZAR50 million (about US$7million). By 2007/08, the expenditure rose dramatically to US$36.4 million.
Only select figures on overall foreign aid expenditures by South Africa are available. Information extracted from the South African Treasury shows that in 2008/09, South Africa’s expenditure through regional and international organizations (the United Nations, the African Union, the Southern African Development Community (SADC), and others) amounted to US$19.6 million. Expenditure on humanitarian assistance on the same year was US$2.9 million. South Africa has also contributed US$7 million to the India-Brazil-South Africa (IBSA) Poverty Alleviation Fund since its establishment in 2004.
Information on foreign aid expenditure patterns shows that foreign aid assistance that South Africa provides emphasizes education and peacekeeping programs. Expenditures made by the South African Department of Education in 2004 accounted for 36% of the overall aid that South Africa provided that year. Expenditure on peacekeeping in the same year, which was over ZAR500 million (about US$70.5 million), was the second largest.
B. Private Contribution Figures
It has not been possible to locate private contribution figures. A search of the Law Library’s holdings on South Africa as well as online searches yielded no results.
C. Snapshot of Foreign Aid Activity
South Africa’s strong and growing commitment to foreign aid and development assistance puts it on par with prominent emerging donor nations like China, Brazil, and India. Its foreign aid programs are currently scattered across numerous institutions, including
- the African Renaissance and International Cooperation Fund (ARF);
- programs at the national, provincial, and local government levels;
- the India-Brazil-South Africa (IBSA) Poverty Alleviation Fund;
- multilateral programs through concessional lending institutions such as the African Development Bank (AFDB) and the World Bank; and
- Southern African Customs Union (SACU) Agreements on Revenue Sharing.
The ARF was established in 2001, although aid programs were channeled through a similar fund long before that. The ARF accounts for a small percentage of the overall foreign aid that South Africa provides. However, it remains the most visible and transparent of all aid programs in South Africa.
The majority of foreign aid programs in South Africa are carried out by government institutions at the national, provincial, and local levels. These programs take many forms. Some examples include the capacity-building training programs offered by the Department of Agriculture and the Reserve Bank to members of counterpart institutions in different African countries, subsidies provided to foreign students to study in South Africa, the South African military’s peacekeeping missions, and South African Police Services members’ participation in various nations as observers in conflict areas or in monitoring elections.
The IBSA Poverty Alleviation Fund is yet another program through which South Africa provides foreign assistance. Established in 2004 by India, Brazil, and South Africa, its function is to “identify replicable and scalable projects that can be disseminated to interested developing countries as examples of best practices in the fight against poverty and hunger.” Each member contributes US$1 million annually.
South Africa also provides assistance through the SACU. The SACU is a customs union between South Africa, Botswana, Namibia, Lesotho, and Swaziland. Customs, excise, and other trade-related duties levied are credited into a common revenue pool and the funds from this pool are then paid to a development fund, with the remainder distributed among members according to a revenue-sharing formula adopted under the 2002 SACU Agreement. This is one of the ways in which South Africa provides assistance to members of the SACU.
The fragmented nature of the South African aid programs is likely to change soon when the ARF is phased out. A plan to replace the ARF with another fund, the South African Development Partnership Fund, is being developed. This fund will be administered by an independent agency, the South African Development Partnership Agency (SADPA). One of the key changes that the establishment of the new fund is expected to bring about is the coordination of all foreign aid programs in South Africa.
II. Legal Framework
A. Regulation of ODAs
The discussion that follows focuses on the ARF regulatory framework, mainly because it is the most visible program for foreign assistance. As mentioned above, the ARF was established in 2001 through the African Renaissance and International Cooperation Fund Act to replace a similar program that had existed since 1968. Although an effort to replace the ARF is in the works, it remains in operation today.
One key change brought about with the establishment of the ARF was an emphasis on a multilaterally oriented approach to foreign aid, a stark difference from its predecessor, the Economic Cooperation and Promotion Loan Fund. Although the law controlling the preceding fund did not expressly so state, its legislative history shows that its implementation was geared towards providing foreign assistance on a bilateral basis. This was in part because South Africa, due to its apartheid policies, was denied membership to most intergovernmental organizations through which it could advance multilateral assistance programs. With the establishment of the ARF the multilateral approach to foreign aid and development assistance became central.
Another notable change to the South African foreign aid programs as the result of the establishment of the ARF in 2001 came in the form of streamlining the objectives of the fund. The stated objectives of the ARF are relatively well defined to enable the efficient disbursement of resources earmarked for assistance and allow for greater South African participation in problem solving. The objectives of the previous program were general in that they were limited to the “promotion of economic cooperation between the Republic and other countries by granting loans and other financial assistance in respect of development projects in such countries.” The stated objectives of the ARF are much more targeted both geographically and in terms of issues addressed, and include
- cooperation between South Africa and other countries, particularly African countries;
- the promotion of democracy and good governance;
- the prevention and resolution of conflict;
- socioeconomic development and integration;
- humanitarian assistance; and
- human resources development.
This allows the South African government to get involved in identifying and funding specific programs proactively. As shown in ARF’s 2009–2010 Annual Report, South Africa has utilized the ARF to fund a wide range of programs in different African countries in line with the above objectives, including its participation in the 2010 general elections in Sudan, economic revitalization projects in Zimbabwe, implementation of a medical project in Sierra Leone, and a museum project in Guinea.
2. Implementing Agencies
The ARF is under the Department of International Relations and Cooperation (the Department), which until May 2009 was known as the Department of Foreign Affairs. Specifically, the fund is under the direct control of the Director-General of the Department, subject to the direction of the Minister.
The disbursement of money from the ARF appears to be a role shared between the Department of International Relations and Cooperation and the Department of Finance. This is evident both in the decision making procedure carved out for the Minister of the Department as well as through the staffing of an Advisory Committee, a body that plays a large role in the process of the disbursement of funds. Most disbursements from the fund are made by agreements between the fund and the relevant recipient party on the recommendations of an Advisory Committee to the Minister who acts in consultation with the Minister of Finance. The Advisory Committee consists of the Director-General or his/her representative and three additional representatives of the Department appointed by the Minister, as well as two representatives of the Department of Finance.
There does not appear to be a centralized implementation organization comparable to the United States Agency for International Development or the French Development Agency in South Africa. Implementation, much like the aid programs themselves, appears to be fragmented. This is evident in recent projects that were funded through the ARF. For instance, the implementation of a capacity-building training project in the Democratic Republic of the Congo (DRC) in 2008/09 was made through the Public Administration, Leadership and Management Academy (PALAMA), while the South African Departments of Public Works, International Relations and Cooperation and Defense as well as the Freedom Parks Trust participated in a project to upgrade a leadership school in Uganda the same year.
Aid provided by other South African institutions is implemented by those institutions. For instance the South African Police Services (SAPS) has provided assistance to African countries in different roles including observers in Darfur and election monitoring in the Democratic Republic of the Congo. For these projects/missions, SAPS would also act as the implementing body.
The African Renaissance and International Cooperation Fund Act does not expressly impose any restrictions on eligibility to receive assistance from the ARF. However, this does not preclude the executive body (i.e., the Minister of International Relations and Cooperation) from imposing restrictions, as he/she enjoys unfettered powers to negotiate the terms of assistance agreements so long as they are within the stated objectives of the ARF. Yet, South Africa in practice appears reluctant to attach strings to the assistance that it provides. A recent financial assistance agreement negotiated with Swaziland in which South Africa agreed to provide a conditional guarantee for loans to the Central Bank of Swaziland in the amount of ZAR2.4 billion (US$350 million) from the South African Reserve Bank is a good example of this reluctance. In the negotiation process South Africa was able to convince Swaziland to agree to implement some reform measures, including
- confidence building measures to be undertaken by the Government of the Kingdom of Swaziland,
- fiscal and related technical reforms required by the IMF to be implemented by the Government of the Kingdom of Swaziland,
- capacity building support to be provided by South Africa, and
- cooperation in multilateral engagements.
However, there do not appear to be strict enforcement mechanisms to ensure that Swaziland adheres to the agreed terms and follows through on its promise to introduce reforms. This is illustrated by a statement issued by the South African government on the loan agreement, which calls for a host of reforms to be introduced but at the same time is soft on ensuring strict implementation through, among other things, continued monitoring and assessment schedules. The South African government’s unwillingness to impose strict restrictions also appears evident from the schedule it established for releasing the loan funds in three installments in August 2011, October 2011, and February 2012—a time frame too short for implementing any reform and a sign that South Africa does not intend to strictly implement the terms of the agreement.
This has incensed rights groups in both Swaziland as well as South Africa, who maintain that the loan should have been made contingent on tangible political and economic reforms.
4. Discretionary Aid
It appears that all of the aid provided by South Africa can be characterized as discretionary and that aid provided through the ARF can be geared towards any project. The only requirement is that the assistance should fit the broadly stated objectives of the ARF. Other institutions, which account for the majority of the overall aid that South Africa provides, appear to enjoy even more flexibility in identifying and funding projects.
The African Renaissance and International Co-operation Fund Act includes several oversight mechanisms put in place to ensure the fund’s transparency and accountability. The Director General of the Department of International Relations and Cooperation, who runs the ARF and is also a member of the Advisory Committee that makes recommendations to the Minister of International Relations and Cooperation on disbursement, is the accounting officer of the fund and is required to keep records of the fund’s finances and issue annual reports. The ARF is also subject to accountability and transparency requirements set forth under the Public Finance Management Act. In addition, it is subject to annual auditing by the Auditor-General, an independent constitutional body directly accountable to the National Assembly.
6. Policy Considerations
South Africa’s policy considerations have evolved over the years. The Economic Cooperation and Promotion Loan Fund, which was phased out in 2001, was geared towards winning allies in the international arena at the time that the country was facing increasing isolation mainly due to its apartheid policy. At the time, South Africa also had a policy of not providing assistance through international organizations in which it was denied membership. With the democratization of South Africa in the 1990s it no longer had the need to continue these policies.
Certain policy considerations appear evident in South Africa’s current assistance programs. For instance, a look at the preamble to the African Renaissance and International Cooperation Fund Act reveals geography and issue-based policy considerations; the Act places emphasis on cooperation with African countries including through promotion of democracy and conflict resolution, as well as economic development and integration. South Africa’s assistance disbursement patterns show a preference towards neighboring countries, particularly member states of the South African Development Community (SADC). Disbursement patterns also show that South Africa’s aid policy favors education and peacekeeping assistance.
B. Regulation of Private Contributions
Income tax law incentivizes charitable donations by allowing deductions. A person who makes a “bona fide” donation to any approved public benefit organization during the year of assessment is eligible for up to a 10% deduction from his/her taxable income.
III. Foreign Aid Appropriations Process
The resources allocated to the ARF have more than one source. The primary source of funding is parliamentary appropriations. For instance, in 2009/10, ZAR631.4 (about US$87.4 million) was appropriated from Parliament, while only ZAR34 million (about US$4.7 million) came from other sources.
The national appropriations process requires the passage of an appropriations law (“money bill”) by Parliament. Before the start of every financial year, the Minister of Finance is required to submit an annual budget to the National Assembly. Once the annual budget proposal is introduced before the National Assembly, each Department submits to Parliament “measureable objectives for each main division within the Department’s vote.” Enacting an appropriations bill into law requires the adoption of the bill by both houses of Parliament, the National Assembly and the National Council of Provinces, and presidential assent.
Other sources of funding for the ARF include
- money that was part of the Economic Cooperation and Promotion Loan Fund that had not been spent at the time the ARF was established in 2001,
- any amount received as payment for loans made from the ARF,
- interest on loans or investments made from the ARF, and
- any other source.
Private donations fall under the “any other source” category of sources of funds that replenish the ARF’s coffers.
V. Other Types of ‘Aid’
No information on other types of aid, such as aid through religious ministries or remittances, was located.
Prepared by Hanibal Goitom
Foreign Law Specialist
 Wolfe Braude et al., Emerging Donors in International Development Assistance: The South Africa Case 13 (South African Inst. of Int’l Affairs, Jan. 2008), available at http://web.idrc.ca/uploads/user-S/12441475471Case_of_South_Africa.pdf.
 Id. at 5.
 Id. at 13.
 Kimberly Smith et al., Beyond the DAC: The Welcome Role of Other Providers of Development Co-operation 5 (OECD Development Cooperation Directorate Issues Brief, May 2010), http://www.oecd.org/ dataoecd/58/24/45361474.pdf.
 See IBSA Fund, IBSA (Jan. 13, 2010), http://www.ibsa-trilateral.org/index.php?option=com_content& view=article&id= 29&Itemid=79.
 Braude et al., supra note 1, at 15.
 Department of International Relations & Co-operation, Establishment of South Africa Development Partnership Agency (SADPA) 11 (Presentation to the NCOP Select Committee on Trade and International Relations, Aug. 3, 2011), available at http://www.pmg.org.za/files/docs/110803sadpa-edit.pdf.
 African Renaissance and International Co-operation Fund Act No. 51 of 2000, 425 Republic of South Africa Government Gazette No. 21798 (Nov. 24, 2000), http://www.info.gov.za/view/DownloadFile Action?id=68220 (official source).
 Braude et al., supra note 1, at 17, 18.
 IBSA, supra note 7.
 South African Development Partnership Agency (Sadpa) Establishment Meeting: Summary, Parliamentary Monitoring Group (Aug. 3, 2011), http://www.pmg.org.za/report/20110803-department-international-relations-co-operation-legislation-establish.
 The 1968 Fund was established through the Economic Cooperation and Promotion Loan Fund Act No. 68 of 1968, Statutes of the Republic of South Africa 603–05 (1968) (official source), and was amended twice through the Economic Cooperation and Promotion Loan Fund Amendment Act No. 29 of 1986 & Economic Co-operation Promotion Loan Fund Amendment Act No. 16 of 1998. 395 Republic Of South Africa Government Gazette No. 18928 (May 27, 1998), http://www.info.gov.za/view/DownloadFileAction?id=91577 (official source). The 1968 Fund was initially started by the apartheid regime in South Africa for two purposes: (1) With the program, the government hoped to win friends in the international arena and their votes in the intergovernmental organizations, particularly the friendship and votes of African countries including Lesotho, Gabon, and Ivory Coast with which South Africa enjoyed close ties, Braude et al., supra note 1, at 5; and (2) The program was also intended to provide assistance to the segregated black areas that South Africa carved out as autonomous regions during their brief stint as independent states, including the former Republics of Transkei, Bophuthatswana, Venda, and Ciskei, the assistance to which ended in 1994 after these regions rejoined South Africa. Id.; see also Economic Co-operation Promotion Loan Fund Amendment Act No. 16 of 1998.
 See University of the Witwatersrand, The School of Law, Annual Survey of South African Law 1968 at 58 (1969).
 Establishment of the African Renaissance and International Co-Operation Fund, Department of International Relations and Cooperation, http://www.dfa.gov.za/foreign/Multilateral/profiles/arfund.htm (last visited Aug. 16, 2011).
 Economic Cooperation and Promotion Loan Fund Act § 3, as amended, http://www.info.gov.za/ view/DownloadFileAction?id=91577.
 African Renaissance and International Cooperation Fund Act § 4, http://www.info.gov.za/ view/DownloadFileAction?id=68220.
 Department of International Relations and Cooperation, African Renaissance and International Co-operation Annual Report 2009–2010 at 5, http://www.dfa.gov.za/department/report_2009-2010/annualreportarf2009-2010.pdf.
 Department of International Relations and Cooperation, African Renaissance and International Co-operation Annual Report 2006–2007 at 6, http://www.dfa.gov.za/department/report_2006-2007/arf%20report.pdf.
 African Renaissance and International Cooperation Fund Act § 2, http://www.info.gov.za/ view/DownloadFileAction?id=68220.
 Id. § 5.
 Department of International Relations and Cooperation, African Renaissance Fund Annual Report 2008–2009 at 2–3, http://www.dfa.gov.za/department/report_2008-2009/annualreportarffinal08-09.pdf.
 Braude et al., supra note 1, at 17.
 Smith et al., supra note 4, at 5.
 See Department of International Relations and Cooperation, Media Statement on an Agreement to Provide Financial Assistance to the Government of the Kingdom of Swaziland (Aug. 3, 2011), http://www.dfa.gov.za/docs/2011/swaz0803.html.
 African Renaissance and International Cooperation Fund Act § 5, http://www.info.gov.za/ view/DownloadFileAction?id=68220. Under this law, all loans or other financial assistance, except those involving the promotion of democracy and good governance or the prevention or resolution of conflict, are required by law to be based on an agreement between South Africa and the recipient party. Id.
 Department of International Relations and Cooperation, Media Statement on an Agreement to Provide Financial Assistance to the Government of the Kingdom of Swaziland (Aug. 3, 2011), http://www.dfa.gov.za/ docs/2011/swaz0803.html.
 Delia Robertson, Activists Condemn South Africa Loan to Swaziland, Voice of America (Aug. 4, 2011), http://www.voanews.com/english/news/africa/southern/Swaziland-Activists-Criticize-South-African-Bailout-126771148.html.
 African Renaissance and International Cooperation Fund Act § 6, http://www.info.gov.za/ view/DownloadFileAction?id=68220.
 Public Finance Management Act No. 1 of 1999, §§ 46–57, as amended through 2009, 405 Republic Of South Africa Government Gazette No. 19814, http://www.treasury.gov.za/legislation/PFMA/act.pdf (official source).
 Id; Constitution of the Republic of South Africa [S. Afr. Const.] §§ 181, 188, http://www.info.gov.za/ documents/constitution/1996/96cons9.htm (last visited Aug. 17, 2011).
 Braude et al., supra note 1, at 5.
 University of the Witwatersrand, supra note 19.
 African Renaissance and International Co-operation Fund Act, Preamble.
 Braude et al., supra note 1, at 3.
 Id. at 15.
 The Income Tax Act 58 of 1962 § 30, 15 & 16 Statutes Of The Republic Of South Africa (last updated 2007), http://www.sars.gov.za/lnb/mylnb.asp?/jilc/kilc/alrg/ulrg/vlrg/72k0a#4ae. A Public Benefit Organization is defined as
- (a) which is— (i) a non-profit company as defined in §1 of the Companies Act, 2008 (Act No. 71 of 2008), or a trust or an association of persons that has been incorporated, formed or established in the Republic; or (ii) any branch within the Republic of any company, association or trust incorporated, formed or established in any country other than the Republic that is exempt from tax on income in that other country;
- (b) of which the sole or principal object is carrying on one or more public benefit activities, where—(i) all such activities are carried on in a non-profit manner and with an altruistic or philanthropic intent; (ii) no such activity is intended to directly or indirectly promote the economic self-interest of any fiduciary or employee of the organization, otherwise than by way of reasonable remuneration payable to that fiduciary or employee; and
- (c) where each such activity carried on by that organization is for the benefit of, or is widely accessible to, the general public at large, including any sector thereof (other than small and exclusive groups). (Id.)
 African Renaissance and International Cooperation Fund Act § 2, http://www.info.gov.za/ view/DownloadFileAction?id=68220.
 African Renaissance and International Co-operation Annual Report 2009–2010, supra note 24, at 5.
 Public Finance Management Act § 26.
 Id. Votes are the main segments into which the appropriations act is divided. Id. § 1.
 S. Afr. Const. § 77, http://www.info.gov.za/ documents/constitution/1996/96cons9.htm (last visited Aug. 17, 2011).
 African Renaissance and International Cooperation Fund Act § 2, http://www.info.gov.za/ view/DownloadFileAction?id=68220.
Last Updated: 06/09/2015