Accepting goodwill should not make us subservient

Recently the South African media reported that Professor Richard Feacham, the Executive Director of the Global Fund to fight AIDS, Tuberculosis and Malaria, had threatened to stop funding the relevant programmes in our country. It was reported that Professor Feacham made this statement because our government was creating undue delays in disbursing grant money sent to us by the Global Fund.

Not surprisingly, this provoked somewhat of a hue and cry from those in our country who have chosen to make the AIDS issue a political campaign matter. Obviously they thought that they had found a credible stick with which to beat our government.

All this arose from a meeting held in London convened by British MPs. Professor Feacham is reported to have said the following at this meeting:

"Our money at the moment is stuck in Pretoria, and we are seriously unhappy about that. We're in almost daily contact with officials in the ministry of finance and the ministry of health about the need to move that money quickly to KwaZulu Natal, to Western Cape, to Soul City, to LoveLife, to allow them to do rapidly the work that desperately needs to be done.

"If we can't move the money, we will take it away and sign agreements directly with the recipients like LoveLife, and send the cheques directly to them. It's intolerable that the money gets stuck in Pretoria, and if Pretoria can't move it for any reason, then we will simply withdraw it and establish direct relationships with the people actually doing the work."

On 25 May, the Minister of Health issued a statement challenging Professor Feacham's comments. She said:

"The Department of Health takes issue with suggestions by Dr Richard Feacham, executive director of the Global Fund to Fight AIDS, TB and Malaria, that the South African Government is delaying the disbursement of funds to recipients of Global Fund moneys. Every dollar received by Treasury and the Department of Health on behalf of South African recipients of Global Fund grants has been passed on to the organisations in question. Steps have been taken to secure the second disbursement from the Fund. The only 'delays' in this process are (due to) South Africa's adherence to key principles of the Fund - namely, good financial management and the monitoring of performance. Further transfers of money - in accordance with the grants made in rounds two and three - depends not on the actions of the South African government but on the Fund's own agents in this country."

The statement went further to say:

"The Minister of Health, Dr Manto Tshabalala-Msimang, has written to Dr Feacham expressing her 'surprise and disbelief' at his recent statements. · She has pointed out that they met several times in Geneva last week during the World Health Assembly and that he had at no point attempted to raise the question of under-utilisation of Global Fund Grants. · The Minister has further outlined all measures taken to ensure utilisation of Global Fund moneys and she has expressed the view that time scales to date have been reasonable and justified."

The simple fact is that the funds referred to by Professor Feacham were transferred from the Global Fund to our Treasury on December 19, 2003. By February 2004, all the intended recipients approved by the Global Fund had received their grants.

Accordingly, there was no truth whatsoever to the allegation made by Professor Feacham a number of months later, that "our money at the moment is stuck in Pretoria". There was not even one cent of such money in Pretoria!

The rules laid down by the Global Fund require that before a new disbursement is made to any recipient, an assessment should be made of the utilisation of the previous disbursement. The need to implement this rule arose in the case of LoveLife, which applied for a second disbursement a mere two months after it had received its first tranche.

As required by the Global Fund, the South African National AIDS Council (SANAC), which serves as the country coordinating mechanism for Global Fund applications, proceeded to review the utilisation of the first disbursement.

A complicating factor in this regard is that LoveLife also receives funding directly from our government: however the report submitted by LoveLife did not indicate clearly which activities had been funded by the Global Fund and which by our government. It is expected that SANAC will complete its assessment by the end of May 2004.

Reports from the other recipients of Global Fund grants will evidently be received by SANAC shortly.

On completion by SANAC of the assessment of all these reports, applications for further disbursements will then be made. It is only after this that our government will receive additional money from the Global Fund.

Perhaps we should also explain that since it became operational, the Global Fund has had Three Rounds of applications for funds. The money that Professor Feacham falsely claimed was stuck in Pretoria was the first disbursement of a portion of the sums granted in the First Round. The further disbursements will come from this First Round money.

No funds have been received from the Second and Third Round awards. With regard to these, the Department of Health is still awaiting the inspection by the local agent of the Global Fund, the accounting firm KPMG, which inspection is required by the Global Fund for the transfer of any money.

In the letter from the Minister of Health to Professor Feacham that was referred to earlier, the Minister says:

"May I remind you that when the Global Fund was established, one of the principles that underpinned the work of the Global Fund was respect for the autonomy and sovereignty of countries."

In a note to the Minister of Health, arising from the Minister's public response to Professor Feacham, the latter writes:

"I thought I would send you a note to reassure you that it has certainly not been our intention to criticise the South African Government on the issue of disbursements to sub-recipients.

"In response to questions from reporters in London last week, it appears that my statements about the possible change of Principal Recipients - an issue which has already for some time been discussed with the South African Government - has been linked to answers to questions on delays of disbursements in a way that gave an impression that the South African Government was to blame for late disbursements to LoveLife and other sub-recipients and that the Global Fund was 'threatening' to withdraw money from South African programs. As to the latter claim, of course nothing is further from the truth.

"In further interviews over the weekend, I have made corrective statements to any misunderstanding that ensued from the original interview. I would like to apologise for any irritation and pressure on you caused by the misunderstanding of my comments."

These comments should lay to rest the fake controversy about non-existent delays on the part of our government with regard to the disbursement of Global Fund grants. Further, they underline the importance of what the Minister of Health also wrote to Professor Feacham, that:

"It is always important to establish the facts before statements are made, otherwise we run the risk of issuing statements that are inaccurate, distorted and misinformed, and consequently damaging."

In this regard, we must also point out that the Minister of Health has also written to LoveLife and said:

"I write to express my deepest and utter dismay and shock on the recent statements made by Prof Richard Feacham, of which I am sure you are well aware, on the status of Global Fund grants to South Africa.

"I am not only shocked but also deeply disturbed by LoveLife's irresponsible action in this regard. I say so because it is very clear to both LoveLife and us that Dr Feacham's statements are inaccurate, distorted and misinformed, and it is my considered view that he could not have been provided with the relevant information by anybody but LoveLife.

"It is indeed regrettable to mention that despite the continued working relationship between us and LoveLife, where opportunities always arise for LoveLife to communicate with us on any issues of interest, LoveLife in this particular instance disregarded and disrespected such cordial platform, but chose to go to the Global Fund with such misleading information.

"I must further point out that it is clear to us that this kind of misleading by LoveLife presents critical lessons to us such as that organisations like LoveLife will from time to time use media sensationalism to achieve narrow selfish objectives, which consequently lead to our Government being undermined, as it is in this case."

When we responded to the National Assembly debate on the State of the Nation Address, we cited the example of a US-based rating agency, which markets a political "country risk assessment" of South Africa, based on blatant falsehoods and a frame of mind that "everything in Africa is bad", a racist stereotype to which the CEO of Anglogold, Mr Bobby Godsell, drew attention.

Some time ago, a prestigious global business-consulting firm informed us that the risk assessments of this particular rating agency were used by global fund managers, among others, to decide in which countries to invest. The blatant and hostile disinformation peddled by the rating agency could not but communicate the firm message that these fund managers would be ill advised to invest any money in our country.

Whatever the reason, the view has gained currency that the issue of HIV and AIDS in our country is an even bigger problem than the poverty and the inherited racial imbalances that continue to affect millions of our people. It has therefore been suggested that, more than anything else, our people will succeed or perish solely to the extent that we reduce and contain the incidence of HIV and AIDS.

Accordingly, the statements attributed to Professor Feacham could not but confirm to people who did not know the truth, that our government was wilfully and deliberately engaged in a process that could only lead to the further worsening of the incidence of HIV and AIDS, with the predicted consequences.

The words attributed to Professor Feacham, which indicate that he and the Global Fund are very keen to ensure that various agencies in our country "do rapidly the work that desperately needs to be done", whereas our government is not, reflect the dramatic presentations that always accompany references to HIV and AIDS in our country.

Our country faces many challenges whose resolution requires large resources, among other things. We deeply appreciate the assistance extended to us by many governments and non-governmental organisations to enlarge our capacity to respond to these challenges.

In his comments, Professor Feacham referred to the Global Fund grants voted for South Africa as "our money", to emphasise the relationship between a benefactor and a recipient of benefaction. In the comments he has since denied, he emphasised the power of the benefactor to do in our country as it pleases, and our helplessness to do anything in this regard, because of our poverty.

It is true that we are poor and need the support of people of goodwill. It is however also true that we would betray those who sacrificed for our liberation, and corrupt our freedom, if we succumbed to the expectation of some of those more richly endowed than ourselves, that our poverty should condemn us to perpetual subservience. This we will not do.

Economy

Government aims to encourage increased levels of investment

Government aims to foster economic growth and increase job creation by among other things increasing the levels of investment in the economy, reducing the cost of business, and unlocking the potential of priority economic sectors.

Briefing the media in Parliament this week, trade and industry minister Mandisi Mpahlwa said government needed to make interventions in both the 'first' and 'second' economies to realise the country's economic objectives. The 'first' economy is competitive, globally integrated with a well-developed capacity to export high value-added exports and services. The 'second' economy, by contrast, consists of large numbers of the unemployed and people without the skills, resources or opportunities to participate in the first economy.

One of the most important gains of the ANC-led government in the first decade of freedom has been the achievement of macroeconomic stability, effectively responding to the precarious situation the economy was in during the dying years of apartheid. This achievement has allowed government to reprioritise public spending, reduce inflation and the budget deficit, and achieve average economic growth rates of 2,8 percent since 1994.

Government will continue to maintain this stability, while making use of the space this has created to focus more directly on what are described as microeconomic reforms, which include initiatives to reduce the costs of doing business and promote specific industries and economic sectors. These initiatives are aimed at encouraging investment, economic growth and job creation.

Increasing investment

While these increased levels of investment need to come from both the private and public sector, government is determined to ensure that the public sector makes optimum use of all the resources at its disposal in a sustainable manner.

All state-owned enterprises are developing plans for their investment in infrastructure and broader economic development. Government will also announce plans for the better utilisation of the Isibaya Fund of the Public Investment Commission (PIC). The PIC manages the investments of the Government Employees Pension Fund and over 100 other government funds.

In his State of the Nation address last week, President Thabo Mbeki set a deadline for the end of this year for the completion of discussions with social partners about the investment of up to five percent of funds held by investors in the real economy. This follows a decision of the Growth and Development Summit (GDS), held in June 2003, to encourage businesses, retirement funds, the life insurance industry, government, labour and community organisations to invest five percent of their investible income in "appropriate financial instruments".

Reducing business costs

Part of the microeconomic reform programme is to reduce the 'input' costs across the economy, which are those factors which affect the basic cost of doing business in South Africa. If these costs can be minimised, competiveness and affordability is improved, and investing in South Africa becomes more attractive both to domestic and foreign companies. At the same time, government wants to increase access to economic infrastructure and services.

Areas where government is taking steps to reduce input costs are in telecommunications, energy, water and transport. Each of these sectors will be expected to produce infrastructure investment plans and strategies by September. This will be accompanied by an announcement on how increased capital expenditure in these areas will be financed.

The National Treasury will soon submit a report to Cabinet on what can be done to ensure that prices of telecommunications, water, energy and transport services are affordable and accessible to the poor, and help to enhance the competitiveness of enterprises.

In the area of transport costs and access, a review of public transport is currently underway and work is being done to to develop a comprehensive strategy for the transportation of freight.

In his briefing to the media, transport minister Jeff Radebe pointed to problems in rail passenger transport, including under-investment in infrastructure, and said there was a need to review the current system of subsidising public transport.

He said a major impediment to greater trade and investment in the economy were the various bottlenecks in the transport system. "The rail system is unreliable, the road freight system is under enormous pressure, [and] our ports suffer from poor throughput," he said. He said a plan to address all these problems would be in place by November.

Other things which the President announced in the State of the Nation address were steps to speed up the restructuring of South African ports; the finalisation of decisions on the second national telecommunications operator; and the introduction of competition in the electricity sector.

Platforms for growth

Mpahlwa highlighted a number of areas in which improved investment by government and the private sector would create platforms for economic development and growth. Extensive work in the area of human resources development and addressing critical skills shortages in the economy would continue, he said.

Government is on track to meet the target set out in the GDS agreement of 80,000 learnerships, where young people can get in-service training and experience. Research has been completed into critical skills shortages, and the Sector Education and Training Authorities (SETAs) have been redirected to focus on these scarce skills. "Government is taking extensive and decisive measures to ensure the SETAs are more effective and more efficient," Mpahlwa said.

Bursaries to students studying science and related disciplines have been increased by R400 million, which covers an additional 105,000 students. Government is also going to be agressively marketing learnership opportunities to school leavers and graduates.

Government will be launching the micro-finance Apex Fund later in the year. This fund will provide small loans to micro-enterprises, with a focus on woman in rural areas. A new consumer credit law will be introduced in parliament early next year to improve the access of historically marginalised people to credit.

Unlocking potential

Government has identified a number of sectors of the economy that have "considerable potential" for increased output, exports and job creation, and is developing a number of initiatives to help unlock this potential. These sectors include agriculture and agro-processing, tourism, information and communication technology, cultural industries, minerals and metals, clothing and textiles, cars and auto components, and chemicals.

Government will get involved in the marketing and branding of these sectors to potential domestic and foreign investors, including informing them of available investment incentives. A new Enterprise Bill will be introduced in Parliament this year to streamline financial support to enterprises in both manufacturing and services sectors. More money would also be allocated to supporting sector development strategies, Mpahlwa said.

"Government will look to its social partners to play an important role in the development and implementation of sector strategies in terms of agreements concluded at last year's Growth and Development Summit," he said.

Challenges of the second economy

Among the targeted interventions which government will make in the 'second' economy relates to human resource development, with special focus on artisan and entepreneurial training. It will also improve the level of information available about what needs, skills and opportunities exist in the labour market.

The expanded public works programme (featured in ANC Today Vol 4 No 20) is another major initiative to create work and training opportunities mainly for unemployed people. This will take place alongside the acceleration of land and agricultural reforms.

"Enterprise development support and broad based black economic empowerment, including accelerating farmer support and a tourism enterprise programme, to increase participation of black people in these sectors is also a key task," Mpahlwa said. Government has set aside R1 billion to support small and medium enterprises this year, and new financial support measures are going to be launched by the National Empowerment Fund to promote black economic empowerment initiatives. Cabinet is also expected later this year to consider a report on whether current regulatory requirements may be impeding the development of small businesses, and proposals for addressing these.

More Information:

• Parliamentary Media Briefings, May 2004

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