RDP versus World Bank
International Viewpoint #257 June 1994
DOSSIER
THE Reconstruction and Devlopment Programme is set to become a pre-occupation for the South African Left. It is a programme with its own unique conradictions. On the one hand it is suffused with neo-liberal premises, and on the other, it has an important radical component. It is the latter which must be pushed to its limits. PATRICK BOND
A S South Africa's warm
summer breezes swirled through Johannesburg's financial district last December, local critics of the Bretton Woods institutions shivered with fear. The reason was simple: the first act of South Africa's interim multi-party government — the Transitional Executive Council (TEC) — was an application for an US$850 million IMF loan, purportedly for drought relief but in reality aimed at servicing the apartheid foreign commercial bank debt, which was renegotiated on dreadfully onerous terms two months before.
The terms of the IMF deal, which were secret until leaked to the press in late March, include the rapid removal of import surcharges (potentially catastrophic for many local industries), a reduction in the government deficit/GDP ratio from 6.85 percent to around 6 percent, alongside the demand for a reduction not only in public sector pay (by about 6 percent), but also a reduction in pay across the board.
It was not long, however, before a backlash emerged. Earlier this year the ANC issued its governmental document, the Reconstruction and Development 16
### ECONOMY
Programme (RDP), which had been drawn-up with the support of CoSATU ANC-orientated social movements, and NGOs. The document's guiding principles appeared to stymie the World Bank's ambitious loan-selling operation in the infrastructure, health, education and various other fields (see box 1).
Box 1
"THE RDP must use foreign debt financing only for those elements of the programme that can potentially increase our capacity for earning foreign exchange. Relationships with international financial institutions such as the World Bank and International
Monetary Fund must be conducted in such a way as to protect the integrity of domestic policy formulation and promote the interests of the South
African population and the economy.
Above all, we must pursue policies that enhance national self-sufficiency and enable us to reduce dependence on international financial institutions."
### Innovative
The documents innovative principle led Oxford University historian, RW Johnson, to natter (in the London Times) that IMF economists believe the ANC is "living in fairyland" for attempting to finance the ambitious RDP from domestic resources. Johnson, a sophisticated red-baiter, attributes substantial blame for the "no foreign loans" clause to Ben Turok of the Institute for African Alternatives — "the ANC's most extreme opponent of the World Bank and the IMF, who is to be the economic supremo of the Johannesburg region " — as well as to "the strength of the South African Communist Party (SACP) within the ANC and the tendency of many in the ANC to see the (World) Bank and IMF as
Nevertheless, the financing principle of the RDP did win praise in other quarters. Business Day labelled it "wise", and Finance Week asked: "Well now, is the view that IMF (and other) foreign borrowing should essentially only be used where it helps to create self-financing export-based, or genuinely internationally competitive import replacement capacity in any way 'fairyland'? Absolutely not. the reverse in fact." Finance Week quoted Nedbank economist Edward Osborn: "What has to be eschewed is borrowing abroad for borrowing's sake, especially with a likely continuing decline in the value of the rand."
More rigidly orthodox mouthpieces such as the Economist (5 February) or South Africa's ambassador to the USA, Harry Schwarz, remain insistent that the ANC take foreign loans. As Schwarz intoned: "I disagree that, by taking IMF and World Bank facilities, African countries have lost their sovereignty... Until now, certainly in respect of the US$850 million loan from the IMF, it cannot be said that there has been any endeavour to encroach upon sovereignty."
In reality, the IMF was cited, accurately, as having put intense pressure on the ANc to re-appoint the sado-monetarist Reserve Bank governor, Chris Stals. Nationalisation of industry was nixed by the IMF, according to the pragmatic new ANC Labour Minister, Tito Mboweni. And "economic populism" as a general philosophy is out of the question because, says leading ANC tax specialist, Denis Davis, "significant international [influence] had been brought to bear through the IMF and World Bank." Even Nelson Mandela periodically cites the Bretton Woods institutions as potential funders, as a means of assuaging a nervous business audience.
All predictable enough. After all, while the RDP could be described as broadly social-democratic it is also suffused with neo-liberal premises. The Programme's fiscal policy (strict limits on government spending), monetary policy (relatively tight control of interest rates and money supply by an indepen dent central bank), and trade policy (export-led manufacturing growth) are all acceptable to the likes of the IMF. In the most important areas of economic management, it is clear that conservative principles prevailed in the drafting of the RDP.
But anti-World Bank sentiment is alive and well, as reflected in the April comment by the new ANC Minister ofTrade and Industry, Trevor Manuel, that there was not likely to be any borro-
International Viewpoint #257 June 1994 wing from the World bank for at least the first two years of ANC rule.
Thus, whatever influence Washington may have had in toning down the rhetoric of the 1955 Freedom Charter —
"the banks and the monopoly industry shall be transferred to the ownership of the people as a whole" - the broader
ANC lett is satistied with the RDP. In no small part this reflects its origins in
COSATU which was, until quite recently, led by Jay Naidoo, now an ANc Minister (without portfolio) with primary responsibility for the RDP and its implementation, particularly its left-wing objectives (see box 2).
Box 2 RDP objectives
• Strong commitment to basic needs, goals, and mechanisms (such as electricity and clean water for all, housing as a right, massive land reform, women's reproductive rights, affordable health care, full education...)
• Suggestions for "decommodifying"
goods such as housing by rejecting the individual ownership model and market rules, in favour of "social housing" and a socialised subsidy
• A tough environmental critique
• Several substantive interventions in corporate ownership and financial markets, and;
• The promise that organisations of civil society will be empowered to take control over relevant aspects of the programme rather than leaving it all to a potentially corrupt, lethargic bureaucracy which by virtue of last year's compromise constitutional settlement will retain strong residues of apartheid administration at least until 1999. O
Warning
The RDP also includes the warning that Southern African countries "were pressured into implementing [IMF and World Bank] programmes with adverse effects on employment and standards of living. It is essential that we combine to develop effective strategies for all Southern African countries." Taken together, this is as powerful an anti-imperialist sentiment from an official source as you will find in 1994.
Moreover, at the grass-roots level the RDP is winning support, as communities are encouraged (with capacity-building funds from government) to begin assessing their own needs and solutions. In the Johannesburg area, Ben Turok, responsible for the co-ordination of the RDP in the province, has the support of the local Metalworkers union (NUMSA) organiser, Langa Zita, and urban community leader Mzwanle Mayekiso, both outspoken critics of World Bank policies.
In April, the World Bank's first resident official, Isaac Sam, ventured into the cauldron of South African politics. At about the same time, the Bank's president, Lewis Preston, announced to a Development Committee meeting that "the Bank has dealt transparently and impartially across political boundaries and has placed great emphasis on South African participation in its work."
### Popular protest
However, Sam faced problems early on, as the Bank quickly limited its urban staff to non-township visits, due to the danger of violence and crime. The danger of direct popular protest against both the Bank and the IMF also appeared on the horizon, as the "South-South-North Network" — a coalition founded by more than a dozen Southern African and Brazilian popular education and research groups. catalysed by the "Toronto Committee for Links between Southern Africa and Canada" - prepared to contribute to the fiftieth anniversary pressure.1
An indication of the conflict ahead could be found in a commentary by Business Day's leading finance writer: "The ANc wants to create an almost utotruction and Development Programme. keeping its promises to the IMF and its own commitment to 'macro-economic balance'. The RDP and the TEC statement of policies to the IMF are arguably the two most important clues on future economic policy... The IMF has subsequently argued a drop in real wages will go some way towards solving South Africa's unemployment problem. This view is absent from the RDP, which 'makes a decisive break with the exploitative cheap labour policies of apartheid'." 1. The "Bretton Woods agreement", which set-up the World Bank and IMF, was signed fifty years ago this year.
Perhaps South Africa's new policymakers are beginning to get the message that this also requires making a decisive break with the exploitative cheap labour policies of the IMF and World Bank. But whether they ultimately agree, or not, depends to a large extent upon whether popular pressure can be mobilised over the next months and years.*
...at the grass roots level, the
RDP is winning support, as communities are encouraged to begin assessing their own needs and solutions 17