POSSIBLE NEGATIVE SIDE EFFECTS OF AID TO SOUTH AFRICA'S NEIGHBOURS

Abstract

Economic integration in southern Africa IT IS CONVENTIONAL WISDOM that the economies of the SADCC ( Southern Africa Development Coordination Conference) states (Angola, Botswarla, Lesotho, Malawi, Mozambique, Swaziland, Tanzania, Zambia, Zimbabwe), with the exceptions of Angola and Tanzania, are heavily integrated with the economy of South Africa. This is the result of the historical evolution of the subcontinent and of deliberate policyon the part of successive Pretoria governments to maintain this situation (from which South Africa benefits). SADCC was founded, and has consequently been opposed by South Africa, precisely with the reduction of this dependence and integration as one of its major aims. South African destabilization, on the other hand, via support for Renamo and Unita and disruption by them of transport routes through Mozambique and Angola, has served to perpetuate this dependence by forcing the trade of the land-locked SAI)CC states (and of Zaire) to take place via South African railways and ports. This in turn benefits South Africa economically in a variety of ways. 1 In some cases, the level of economic integration between SADCC states and South Africa, and the degree of trade between them, has other economic effects, of which one of the more disturbing concerns the effects of foreign aid. For Botswana, Lesotho, and Swaziland, which are in a Customs Union with South Africa (the Southern African Customs Union, SACU)2 it is inevitable that aid disbursements will have some positive effects on the economy of South Africa. The extent to which this will occur varies with the nature of the aid, the structure of the recipient economy, and the procedures and policies of the aid agencies concerned. In the case of Lesotho, one source has estimated that perhaps more than 80 cents of every dollar of aid in fact stimulated the South African economy3. The major mechanism by which this result comes about is donors permitting aid funds to be spent on local or 'third country' procurement. In general, advocates of aid favour such 'untying', because it normally permits