Developmental State Construction and Strategic Regionalism: The Continental Reach of South Africa's Development Finance Institutions
| Author | Dimpho Motsamai,Mzukisi Qobo |
| DOI | http://doi.org/10.1111/1758-5899.12162 |
| Published date | 01 September 2014 |
| Date | 01 September 2014 |
Developmental State Construction and
Strategic Regionalism: The Continental
Reach of South Africa’s Development
Finance Institutions
Mzukisi Qobo
University of Pretoria
Dimpho Motsamai
Institute for Security Studies, Pretoria
Abstract
South African development finance institutions (DFIs) have extensive portfolios of projects they finance, with a remit
that reaches beyond the domestic scene. Indeed, these DFIs are a product of history and have evolved to correspond
to the country’s postapartheid dispensation. In the past, South African DFIs were used to reinforce the political ideology
of apartheid and its policy of separate development. Postapartheid DFI mandates have however changed significantly.
They are not just instruments of the state’s developmental agenda at the domestic level, but those also active in the
region. We characterise this interlinkage of domestic developmentalism and regional orientation as strategic regional-
ism. The major focus of this article is to survey the role of South African DFIs in the African continent while also criti-
cally reviewing their relationship with the state’s developmental paradigm and regional strategy.
Policy Implications
•Unforeseen fiscal challenges within South Africa might make it unsustainable in the medium to long term for gov-
ernment to capitalise the Development Bank of Southern Africa (DBSA). If it is to be a credible agency that has a
wider reach in the continent, DBSA will need to be fully self-sufficient. This may mean it deepens partnerships with
external sources, including tapping into sovereign wealth funds and other nontraditional financiers.
•There seems to be a degree of uncertainty about the future strategic direction of the Industrial Development Cor-
poration (IDC). The government ministry under which the IDC falls is seen as highly controlling yet it lacks sectoral
depth and possesses limited expertise on external economic relations. Better conceptual clarity is required as to
how government positions the IDC as an effective DFI both domestically and regionally.
•South Africa’s DFIs may generate negative perceptions in the region for historical reasons, in particular the legacy
of apartheid, as well as resentment towards an economic powerhouse that is seen as increasing its dominance in
the region. Because they do not have ownership of the DBSA, other countries in the region may even view it
purely as a South African DFI rather than a regional (Southern African) vehicle for growth and development.
•There is a need for better clarity regarding the areas of impact that DFIs are expected to prioritise. There is, on the
one hand, a push by the government to make them instruments for accelerating large-scale infrastructure develop-
ment within South Africa by supporting the work of state-owned enterprises (SOEs) and to direct the DFIs’
resources towards supporting industrial policy objectives. On the other hand, they are expected to be pivots that
transform the African continent structurally. The opaque mandates may render them less agile in competing with
external players such as China and India that are closing in on Africa’s infrastructure space. Lack of sharp clarity on
mandates, policy coherence from the government and better coordination between South African DFIs, SOEs and
relevant government departments could create a competitive disadvantage for South Africa’s DFIs in the continent
relative to external actors.
Global Policy (2014) 5:3 doi: 10.1111/1758-5899.12162 ©2014 University of Durham and John Wiley & Sons, Ltd.
Global Policy Volume 5 . Issue 3 . September 2014 353
Special Section Article
To continue reading
Request your trial