Financial relations between the RSA and the independent and self‐governing states

Abstract

The essence of the recent dispute between RSA and Ciskei lies in the financial arrangements between the two countries and in this article financial relations in Southern Africa are thus analysed.

It becomes apparent that the independent and self‐governing states have a limited own revenue base and that financial transfers from the RSA Government play an important role. These transfers should, however, not totally be seen as grants, since a large part of them stem from spillover effects that actually obligates the RSA Government to compensate the countries concerned.

One of the main problems is the arbitrary provision of requited transfers (obligations) and unreauited transfers (grants) as aggregate amounts such as the statutory and additional amounts. More use should also be made of conditional or specific purpose transfers. The present financial arrangements are far from optimal and can easily lead to misunderstanding and confusion.

Notes

Manager: Research and Strategic Planning, Development Bank of Southern Africa. Dr S S Brand and Mr J M Pieterse are thanked for useful comments on the first draft of this article.