Proposal for a COUNCIL REGULATION (EC) ON DEVELOPMENT COOPERATION WITH SOUTH AFRICA
Date: 1995-05-10
Institutions: European Commission
Subjects: South Africa, aid system, cooperation policy, development aid, financial cooperation, technical cooperation

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

Brussels,  10.05.1995 
COM(95)  174  final 

95/0110  (SYN) 

Proposal  for a 

COUNCIL  REGULATION (EC) 

ON DEVELOPMENT  COOPERATION 

WITH  SOUTH AFRICA 

(presented  by the Commission) 

EXPLANATORY  MEMORANDUM 

I 

The  policy  of the  Community  towards  South  Africa  has  seen  a dual  approach  : positive 
measures, as the Special Programme for assisting the victims of apartheid was called, and 
negative measures, in the form of economic sanctions imposed on the previous regime. The 
European  Union  has  therefore  been  supporting  the  transition  of  South  Africa  towards 
democracy from  1986 to 1994 through Budget Line B7-5070 (Special Programme on South 
Africa).  Over  700  projects  have  been  financed  for  about  450  million  ecus  and  the 
Community  is  now  a  leading  donor  in  South  Africa.  Moreover,  the  election  process  in 
South  Africa  has  benefited  from  Community's  financial  support  for  different  activities. 
With  the  success  of  the  first  democratic  elections  and  the  subsequent  formation  of  the 
Government  of National  Unity, we are currently  in a period  of transition. 

The  development cooperation between the Community and South Africa  is evolving  from 
a  situation  where  the  objective  was  the  assistance  to  the  victims  of  apartheid  through 
several  projects  implemented by NGOs towards a set up where the objective  is to support 
the policies of the Government of National Unity through a limited number of programmes, 
implemented by the Government of National  Unity, NGOs and private sector. The role of 
interlocutor  of the  Community  in the development  policy  dialogue, which  was played  in 
the past by NGOs, now belongs to the Government  of National  Unity. 

The  European  Parliament  has  been  playing  a  key  role  in  assuring  the  continuation  of 
Community  support to a peaceful  transition  in  South  Africa. 

The present policy concerning our relationship with South Africa is spelled out in the April 
1994 General Affairs  Council Declaration.  It identifies three stages: (i) a set of immediate 
unilateral  measures;  (ii) the  negotiation  of  a  simplified  bilateral  agreement  and  (iii)  the 
negotiation  of a comprehensive and long term relationship. 

The  first  two  elements  are  now  in  place  with  the  adoption  of  a  series  of  immediate 
measures  during  1994, and the  signature in October  1994 of the Cooperation  Agreement 
between the European  Community  and  South  Africa. 

3 

We  are now at the third  and most important stage.  This is to build a comprehensive  and 
long term relationship with South Africa.  In this connection, the South African  Government 
has already  asked the Council and the ACP/EU Joint Assembly  "... to open  negotiations 
with  a  view  to  establishing  the  closest  possible  association  with  the  Lomé  Convention. 
South Africa  asks also that negotiations should  cover  a possible agreement with  the EU 
on  specific  elements that  might more appropriately  be  accommodated  outside the Lomé 
Convention,  to the benefit  of the existing Lomé  members and  South Africa  itself  ..." 

Draft  negotiating  directives  for  the  establishment  of  the  framework  for  a  long  term 
relationship between the Community and South Africa have recently been presented by the 
Commission  to the Council  and are under discussion.  It is essential,  therefore,  that  the 
negotiating directives and the draft  Council Regulation are fully  coordinated.  This could 
imply,  at a future  stage, some amendments to the draft  Council  Regulation. 

In  the  meantime,  pending  the  conclusion  of  a  long  tefm  agreement,  the  Community's 
support to the Government's Programme for Reconstruction and Development will continue. 

Part of this is the creation of a legal framework,  to which end the present draft  regulation 
is  proposed  for  the  implementation  of  development  cooperation  through  the  European 
Programme for Reconstruction  and Development  in South  Africa. 

Proposal  for a 

; 

COUNCIL  REGIfLATION  (ECV 

ON DEVELOPMENT COOPERATION 
WITH SOUTH AFRICA 

THE COUNCIL OF THE EUROPEAN UNION, 

having regard to the Treaty establishing the European Community, and in particular Article 
130w thereof, 

having regard to the proposal from the Commission, 

in cooperation  with the European Parliament,1 

whereas  Community  policy  in  the past  towards  South  Africa  took  the  form  of  punitive 
measures involving  a trade embargo and  economic  sanctions against the government  that 
bore  responsibility  for  a  policy  of  apartheid,  and  also  of  positive  measures  to  help  the 
victims of apartheid  under the special  programme  of assistance channelled  via NGOs; 

whereas  since  the  elections  of  April  1994  and  the  establishment  of  a  democratic 
government  the Community  has turned towards  a strategy of  support for  the policies and 
reforms  undertaken  by the  South African  authorities; 

whereas  in  its  declaration  of  25  May  1993  the  Council  expressed  its  support  for  the 
establishment  of democratic institutions; 

whereas  in  the  conclusions  adopted  on  19  April  1994  on  future  relations  between  the 
Community and South Africa the Council confirmed its support for stepping up cooperation 
with South Africa by focusing Community assistance on areas of activity likely to improve 
the living  conditions  of the people, and  especially  the poorest  sections of the  population; 

whereas the aim of the Agreement on cooperation between the European Union and South 
Africa  signed in Pretoria in October  1994 is to promote harmonious and sustainable social 
and economic development and constitutes the first stage in the establishment of long-term 
cooperation  with  South  Africa  for  which  a  proposal  for  negotiating  directives  was 
submitted  by the Commission  to the Council  on 31 March  1995 2; 

whereas the budgetary authority has decided in the framework  of the 1986 budget, to create 
a budget line to support development  actions in this country; 

1  Opinion delivered on (O.J. n* ... of 
2  SEC (95) 486 final 

) and Decision of (O.J. n'  ... of 

) 

whereas  the  arrangements  for  administering  the  financial  resources  set  aside  by  the 
Community  for  implementing  such cooperation  should be laid down; 

HAS ADOPTED THIS REGULATION: 

Article 1 

The  Community  shall  implement financial and  technical  cooperation  with  South  Africa 
under  a European  Programme for  Reconstruction  and Development  in  South  Africa,  the 
aim  of  which  shall  be  to  contribute to  South  Africa's  sustainable  economic  and  social 
development  and to consolidate the foundations  laid for  a democratic  society. 

Within  this  context the Community  shall  support  operations ïo  help the poorest  sections 
of the population  in  South  Africa. 

Article 2 

In  operations  carried  out  under  this  Regulation  priority  shall  be  given  to  the  following: 
education and training; health; urban and rural development; support and cooperation with 
the  private  sector,  and  in  particular  for  small  and  medium-sized  enterprises;  institution 
building and the organization of local communities; democratization and the protection of 
human rights. 

Article  3 

Cooperation  agents eligible to receive financial assistance under this Regulation  shall  be 
national, provincial and local authorities and public bodies, non-governmental organizations 
and  local  communities,  regional  and  international  organizations,  institutions  and  private 
operators. 

Article 4 

1.  The  means that  may  be deployed under the  operations  referred  to in  Article  1 shall 
include studies, technical assistance, training or other services, supplies and works, and also 
evaluation  and monitoring  audits and missions. 

2.  Community  financing  may  cover  capital  expenditure,  excluding the purchase  of real 
estate,  together  with  running  costs,  either  in  foreign  exchange  or  in  local  currency,  in 
accordance with requirements as implementation  proceeds. 

6" 

3.  Systematic efforts  shall be made to obtain a contribution, notably of a financial  nature, 
from  the agents or partners who will be the ultimate beneficiaries  of an operation (national 
authorities, local communities, companies or others), within the limits of their capacity and 
according to the nature  of each  operation. 

4.  Opportunities  will  be  sought  for  cofinancing,  particularly  with  the  Member  States. 
Necessary  measures will be taken to emphasise the Community  character  of aid provided 
under this Regulation. 

5. 
In order to reinforce  coherence and complementarity  between the actions financed  by 
the  Community  and  those financed  by  the Member  States, with  the  aim  of  guaranteeing 
optimal  efficiency  of the totality  of these actions, the Commission will take all necessary 
coordination  measures, notably : 

a) 

the  establishment  of  a system  for  the systematic  exchange  of information  on  actions 
financed  by the Community  and the Member  States; 

b)  on the spot coordination  of these actions by means of regular meetings and  exchange 
of information  between the representatives of the Commission  and Member  States in 
the beneficiary  country. 

Article 5 

Financial  support under this Regulation  shall  take the form  of grants. 

Article 6 

The  operations  referred  to  in  Article  2  shall  be  carried  out  where  possible  under 
multiannual  indicative programme based  on specific  objectives. 

Article 7 

1.  The Commission shall be responsible for appraising, taking decisions on and managing 
operations  conducted  under  this Regulation,  in  accordance  with  the budgetary  and  other 
procedures in force, notably those laid down in the Financial Regulation  applicable to the 
general  budget of the European  Communities. 

2. 
.Decisions concerning  any  operation  financed  under this Regulation  at a cost  of  over 
ECU 2 million, or any adjustment  of such an operation  involving an increase of over 20% 
of  the amount  initially  agreed,  shall  be  adopted  by  means of the procedure  stipulated  in 
Article 8. 

^ 

3.  Alt financing agreements or contracts concluded under this Regulation shall provide 
for on-the-spot  checks by the Commission and the Court of Auditors in accordance with 
the usual arrangements established by the Commission pursuant to the rules in force,  in 
particular those laid down in the Financial Regulation applicable to the general budget of 
the European Communities. 

4.  Where  operations  involve financing agreements  between  the  Community  and  the 
• i recipient country,  such agreements shall  stipulate that taxes, duties and charges1 shall not 

be borne by the Community. 

5.  Participation in invitations to tender and contracts shall be open on equal terms to all 
natural and legal  persons of the Member  States and the recipient  country.  Participation 
may be extended to include other developing countries. 

6.  Supplies  shall  originate in  the Member  States or the  recipient  country,  or in  other 
developing countries.  In duly substantiated exceptional cases they may originate in other 
countries. 

Article 8 

1.  The Commission shall be assisted by a committee to be known as the "South Africa 
Committee",  consisting  of  representatives  of  the  Member  States  and  chaired  by  the 
representative of the Commission. 

2.  The Commission representative shall present to the Committee a draft of measures to 
be adopted.  The Committee shall deliver its opinion on the draft, within a time limit which 
the chairman may lay down according to the urgency of the matter.  The opinion shall be 
delivered by the majority stipulated in Article 148(2) of the Treaty in the case of decisions 
which the Council is required to adopt on a proposal from the Commission.  The votes of 
the representatives  of the Member  States within the Committee shall  be weighted  in the 
manner set out in that Article.  The chairman shall not vote. 

The  Commission  shall  adopt  measures  which  apply  immediately.  However,  if  these 
measures  are  not  in  accordance  with  the  opinion  of  the  Committee,  they  shall  be 
communicated by the Commission to the Council forthwith.  In that event the Commission 
may defer application of the measures which it has adopted for a period of not more than 
one month from the date of such communication. 

The Council, acting by a qualified majority, may take a different decision within the  time 
limit referred to in the previous paragraph. 

s 

Article 9 

After  each  financial  year  the  Commission  shall  present  a report  to  Parliament  and  the 
Council  summarizing  operations  financed  and  evaluating  the  implementation  of  this 
Regulation  during the year. 

The  summary  shall  contain  information  concerning  the  agents  with  which  contracts  in 
implementation  of this Regulation  were concluded. 

The  report  shall  also  include  a  summary  description  of  external  evaluations  carried  out, 
where appropriate,  in respect  of specific  operations. 

Article  10 

This Regulation  shall  enter into force on the third day following  that of its publication in 
the Official  Journal  of the European Communities. 

This  Regulation  shall  be  binding  in  its  entirety  and  directly  applicable  in  all  Member 
States. 

Done at Brussels, 

For the Council 
The President 

3 

Financial  Sheet 

I. 

BUDGET  LINE: B7-5O70 

2.  TITLE  OF BUDGET  LINE:  European Programme for Reconstruction and  Development 

in  South  Africa 

v. 

LEGAL  BASE: 

IVorx>sal  for  a CounciJ  Regulation  in  preparation 

4 

DESCRIFIION  OF  BUDGET  LINE 

4.1  General  Objectives 

this  budget  line  is  designated  to  finance  the  programmes  aimed  towards  improving  thé 
situation  of  the  most  disadvantaged  groups  of  the  South  African  society.  This  follows  from 
the priorities defined  by the European  Parliament  in their  Resolution  dated  15th of  December 
1993  regarding  development  perspectives  in  South  Africa  and  Southern  Africa  (OJ  C  20, 
24.01  1994,  p/f20)  and  also  considering  the  Council  Decision  regarding  the  aid  for  South 
Africa  in  accordance  with the  Interim  Agreement  (OJ  L  341,  30.12.1994,  p.  61). 

In  the  relations  between  the  European  Commission  and  South  Africa,  there  has  been  an 
evolution  from.the  past,  through  the  present,  to the  future. 

a)  The  "past"  has  seen  a  dual  approach  towards  South  Africa:  positive  measures,  as  the 
Special  Programme  for  assisting  the  victims  of  apartheid  was  called,  and  negative 
measures,  in  the  form  of  economic  sanctions  imposed  on  the  previous  regime.  The 
European  Union  has  therefore  been  supporting  the  transition  of  South  Africa  towards 
democracy  from  1986  to  1994  through  Budget  Line  B  7-5070  (Special  Programme  on 
South  Africa).  Over  700  projects  have  been  financed  for  about  450  M ECU  and  the 
Commission  is now a leading  Donor  in South Africa.  The election  process in South  Africa 
has  benefited  from  EU  financial  support  for  different  activities:  election observers,  voter 
education  and  the  financing  of  the electoral  campaigns of  all  registered  parties.  With  the 
success of the  first  democratic  elections,  held  in April, this support  already  belongs  to the 
"past". 

b)  At  "present" a transition  is taking  place. The new Government  is defining  its policies  and 
the  whole  of  South  Africa  is  involved  in  this  exercise.  In  particular,  the  transition, in 
development  cooperation  between  the  EU  and  SA  concerns  the  following  aspects: 

! PAST 

I FUTURE 

~~~] 

7o 

I 

NAME 

Special  Programme 

OBJECTIVE 

assistance  to  the  victims  of 
apartheid 

INTERLOCUTOR 

NGOs 

IMPLEMENTING 
AGENTS 

NGOs 

PA'ITERN 

several  projects 

AREAS/SECTORS 

education,  rural  and  community 
development,  health,  good 
governance  and  democratization 
and  microenterprises 

European  Programme on 
Reconstuction  and  Development 

more  "classical"  development 
programmes  coherent  with 
Government  policies 

Government  of  National  Unity 
(GNU) 

Government  of  National  Unity, 
NGOs  and  Private  Sector 

a .limited  number  of  programmes 
coherent  with  GNU  policies 

areas/sectors resulting  from  the 
ongoing  discussions  with 
government 

The  EPRD  is  therefore  a  continuation  of  the  Special  Programme  on  South  Africa,  originally 
proposed  by  the  European  Parliament  in  1985  and  confirmed  on  several  occasions  by  the 
European  Council.  The  modifications  with  respect  to  the  past  years  reflect  the  democratic 
evolution  of  South  Africa  after  the  elections  in  April  1994.  The  Government  is  already 
playing  its  role  both  as  the  interlocutor  to  the  Commission  in  the  policy  dialogue  and  in 
project  implementation.  The  traditional  partners'  role  is  thus  becoming  one  of  implementing 
agents. 

4.2.  Period  covered  by  the  action  and  foreseen  modalities  for  its  renewal. 

Budget  Line  B7-5070  is  a  renewable  annual  action.  The duration  of  the  projects  implemented 
in  its  framework  depends  on  their  features  and  it  is  normally  between  one  and  three  years. 

5. 

CLASSIFICATION  OF  EXPENDITURE/INCOME 

5.1 

I)N()  (Dépense  Non  Obligatoire,  Non-obligatory  expenditures/credits) 

5.2  CI)  (Crédit  Dissocié,  Dissociated  expenditures/credits) 

6. 

TYPE  OF  EXPENDITURES/INCOME 

The  funding  of  programmes  and  projects  by  the  Community  out  of  this  budget  line  has  often 
reached  up  to  100%  but  with  more  and  more  financing  being  channeled  through  (iovernment 
services  and  the  progressive  involvment  of  the  Private  Sector,  the  share  of  the  Commission 
Budget  contribution  on  a  "per  programme"  basis  is  likely  to  decrease. 

-7 n 

Administrative  expenditures  necessary,  to  execute  the  programmes  and  projects  are  also 
covered  as  well  as  costs  for  project  preparation  and  evaluation. 

7. 

FINANCIAL  INCIDENCE 

7. I  Calculation 

It is estimated 
Each month the Commission Services receive several applications for  funding 
that  per  month  an  average  of  50  to  60  applications  were  directed  to  the  PCO  before  its 
closure.  These  applications  constitute  the  first  step  toward  the  financing  dossier  which  is 
submitted  to  Member  States  and  then  to  the  Commission  for  formal  approval.  In  general 
terms,  the  requests  for  financial  assistance  go  beyond  the  available  resources  every  year. 

In  1994. out of the budgeted amount  of  110 MECU,  102.5 MECU  were committed  by the end 
of  the  year, as  7.5  MECU  were  reallocated  for  emergency  aid  to  Bosnia.  Due  to  the  fact  that 
projects  totalling  136.5  MECU  were  approved,  the balance  of  34  MECU  shall  be  committed 
in  1995. 

The  financial  allocation  for  1995 has  been  increased  to  125  MECU,  in  order  to  reaffirm  the 
support  of  the  European  Union  to  the  peaceful  transition  taking  place  in  South  Africa  and  to 
assist  the  new  Government  in  the  implementation  of  major  policy  reforms. 

In  current  FiCU  an  equal  amount  is envisaged  for  1996 and  the  following  years. 

7.2  Sectoral  breakdown  of  expenditure 

It  is  likely  that  for  the  next  one  or  two years education  and  professional  training  will  remain 
the  most  important  sectors  for  EU  assistance  to  South  Africa,  closely  followed  by  health. 
These  sectors  are,  according  to  the  "Governments  White  Paper  on  Reconstruction  and 
Development"  of  very  high  priority.  Local elections are scheduled  before  the end of  1995 and 
a  request  for  financial  assistance  to  the  Commission  might  be  forthcoming. 

faking  into account  the Commission recent  involvment in some sectors, in  1996 the aid  could 
be  targeted  mainly  to  the  following  areas: education  and training  (52%),  health  (21%).  good 
governance  and  démocratisation  (9%),  community  development  (7%),  as  well  as  to  the 
tnfrastructural (3%), social and  humanitarian sector.  This breakdown  is provisional, due to the 
fact  that  the  talks  between  the  Commission and  the  South  African  Government  have  not  yet 
quantified  the share of the  financial  allocation of  Budget  Line  B7-5070 to be allocated  to each 
sector. 

Je 

8.  DISPOSITIONS  AGAINST  FRAUD 

All  accounts  of  the  traditional  partners, the  NGOs through  which  most  of the  funds  have  been 
channeled  in the  past.(Kagiso  Trust,  SACBCand  SACC), are  audited  annually.  The  financial 
correctness  is  guaranteed  by  annual  audit  statements  of  all  concerned  accounts.  Furthermore 
in  each  contract  provisions  are  drawn  up  to  safeguard  the  interests  of  the  EU  in  accordance 
with  the  Financial  Regulation  of  13th  March  1990  applicable  to  the  General  Budget  of  the 
European  Communities. 

9. 

ELEMENTS  FOR  ANALYSING  COSTS-EFFICIENCY 

9.1  Special  quantifiable  objectives 

The  programme  for  19%  will  be  designed  in  close  cooperation  with  the  Government.  It  is 
envisaged  to  move  from  a  project-oriented  to  a  programme-oriented  approach.  This  will 
decrease  the number of actions per year and  facilitate  the administration  and closer monitoring 
of their  progress. 

Wherever  possible  ami  appropriate  the  Commission  will  continue  to  insist  on  a  contribution 
of  the  targeted  group  or  institution. 

Measures  shall  entail  the  financing  of 

the 

the 

to  accelerate 

the  Government 

implementation  of 

projects  which  allow 
Reconstruction  and  Development  Programme  (RDP); 
development  programmes  for  the  local  communities  executed  by  Kagiso  Trust,  the  trade 
unions  and  the  Southern  African  Catholic  Bishops  Conference  (SACBC)  and  the  South 
African  Council  of  Churches  (SACC); 
programmes designed  to  improve the  housing conditions and  related  projects  in the poorest 
regions  of  the  country; 
programmes  to  improve  training  and  education  in  rural  areas  and  urban  regions  less 
advanced; 
support-programmes  in  the  sector  of  professional  training,  including  teachers  training  and 
student  scholarships  (around  8.000  per  year); 
programmes  and  projects  in  the  health  sector  in  rural  areas  and  urban  regions  less 
advanced; 
investments,  including  risk  capital,  micro-enterprises  support  and  employment  creation 
programmes; 
development  of  sport  in  the  townships 

9.2 

Justification  of  the  measures 

After  the  democratic  elections  in  April  1994,  there  is a shift  in  EU-South  Africa  cooperation 
towards  a  wore  traditional  "development"  approach  and  involve  more  and  more  the  now 
democratically  mtù^ycx/sà  government  in  the  programme. 

The  hncweiai  support  given fcy the  Lufopcatï  limon  to  the  'new'  South  Africa  can  *cmforce 

democracy  and  provide  the  new  Government  with  additional  resources  for  carrying  out  the 
policy  reforms  which  should  result in improved  living conditions and  access to  tetter  services 
for  die  most  disadvantaged  communities. 

This shall  be done by  the Commission  with  Budget  Erne B7-5O70 in close collaboration  with 
the  Member  States  amf  their  bilateral  cooperation  programmes.  Donor  coordination  meeting 
take  place  on  a  regular  basis  in  South  Africa.  The  Commission  is  designated  as  the 
coordinating  donor  in  the  Health  Sector. 

Up  to  now,  Member  States  experts  have  been  consulted  on  every  project  financed  under 
Budget  Line  B7-5070:  a  preliminary  meeting  took  place  in  South  Africa  and  then  Member 
States  experts  met  with  Commission  representatives  in  Brussels.  The  opinion  of  Member 
States on  each  "train" of  projects  was the  basis on  which the  financing  decision  was  formally 
taken  by  the  Commission. 

In Art.  8 of the Council  Regulation a "South Africa  Committee" of  Member  States is  foreseen 
under  the  chairmanship  of  the  Commission 

9.3  Monitoring  and  evaluation  of  actions 

The whole  Programme shall  be evaluated  by an independent  external  body  in  1995. On a  time 
to  time  basis  specific  sectoral  programme  or  even  specific  projects  are  qualitatively  and 
quantitatively  evaluated. 

In  1994 and  early  1995,  the  following  evaluations  and  sector  studies  reports  were  produced 
with  funding  from  Budget  Line  B7-5070: 

-  KT-EU  Bursar}'  Programme 
-  Preparation  of  the  EU  Human  Rights  Programme 
-  Adult  Basic  Education  Project  -  Tort  Hare 
-  Microprojects  Programme  Evaluation 
-  Guide  for  project  preparation 

The  following  studies  will  be  completed  soon: 

-  Trade  Union  programme  preparation 
-  South  Africa  -  EU  trade  policy  study 
-  Small  Projects  Programmes  Evaluation 

The outcome  of  the evaluations  is  taken  into account  when  preparing  new  project  proposals 

There  are  provisions  in the  Council  Regulation  for  monitoring  the execution  of  Budget  Line 
B7-5070  and  for  evaluations  of  individual  actions  being carried  out. 

ISSN  0254-1475 

COM(95) 174  final 

DOCUMENTS 

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ISBN 92-77-88897-0 

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