Business Day, 20 November 2002, Donors rethink SA aid strategies

SA IS hardly the country most in need of foreign aid. While its distribution of income and assets are among the most unequal in the world, government has far more scope than its counterparts in most other developing nations for financing its own initiatives.

Yet SA continues to receive foreign aid amounting to about 2% of total government spending. For most donor nations, doling out such aid is a prerequisite to having a broader influence on the political and economic landscape of SA and the region.

But many aid agencies in SA have a constant battle justifying their presence. To do so they need to show their bosses and legislatures back home that they can influence government and society.

That is one reason more aid agencies are turning away from bricks-and-mortar projects to support capacity-building efforts in SA.

In practice, this means that fewer schools and community centres will be built with donor money. And though no one is saying so, it will also mean less funding from abroad for nongovernmental organisations.

Government could well favour reduced support for NGOs because of concerns that some are unduly influenced by other governments.

Donors have agreed with government that no more than the "indicative" level of 25% of a donor's funding should go to these groups.

The UK aid agency, the Department for International Development, highlights the new donor approach in its Southern Africa: Strategy paper, which was recently made public.

One consequence of this new approach will be a gradual cutback in the number of projects supported by the British agency, from more than 100 to about 40, most of them in SA.

The agency is less and less willing to support standalone projects directly involved in service delivery, such as schools or clinics.

They, along with other donors, would far prefer to give support to government departments to improve management and policy to give delivery a boost. Sam Sharpe, who heads the British aid agency's operations in southern Africa, says that if international development and service delivery goals are to be met, it will have to be led by governments. But that, he says, should not detract from "a strong role for civil society".

The British agency argues that compelling reasons to stay in the country include SA's role in the region and the New Partnership for Africa's Development, the threat of HIV/AIDS, and the high unemployment rate.

Other major donor governments conduct similar reviews. The European Union, the largest of all the donors, plans to "review" its aid relationship with SA in 2006.

Michael Lake, the EU's ambassador in Pretoria, says that depending on the outcome of this review and which way the winds are blowing in Brussels, the decision may be taken to pull out of SA or scale back aid.

In 2010, the US government will review "the nature of the relationship" with SA, says SA director of the US Agency for International Development Dirk Dijkerman. He says there is support in the US for the agency's continued presence in SA.

The British, EU and US agencies all use similar language to describe their plans. The British aid agency is stressing improving poverty reduction, and strengthening governance.

The EU says one of its new thrusts will be to help government build capacity.

Some NGOs are wary about the new British strategy particularly its emphasis, rather than its fundamental principles.

Save the Children Fund-UK and Oxfam say the paper gives in sufficient prominence to HIV/AIDS. Kurt Grussling, director of Oxfam for southern Africa, says this calls for massive new investments in public health systems and making anti-retrovirals widely available on the continent.

The national treasury takes the view that donor support allows a degree of experimentation and innovation in government spending that would not normally be possible.