Other Expenditures on the Homelands

Homeland governments are not the only agencies involved in heavy expenditures affecting the lives of homeland citizens, nor are they in a position to control many aspects of developmental policy. The Bantu Trust, set up in 1936, is generally responsible for land acquisition and consolidation for a homeland as well as for a number of social services. The Bantu Investment Corporation was established in 1959 by the Bantu Trust to promote investment, especially by Africans, in the homelands. The Xhosa Development Corporation performs the same functions in the Ciskei and the Transkei. A separate development corporation for the Tswana is now being created. The Zulu and other groups are expected to obtain their own investment institutions in the near future. The Bantu Mining Corporation is responsible for overseeing the activities of white mining firms in the homelands and for developing African mining operations. Table 6.7 sets out estimates of expenditures for the homeland governments, the Bantu Trust, and the development corporations. These core expenditures amounted to over R221 million in fiscal 1972/73 and rose to R418 million in fiscal 1974/75. The homeland governments have accounted for about 60 percent of current expenditures, but the Bantu Trust has spent large sums on land planning, housing, and infrastructure. Prior to fiscal 1975/76, substantial Bantu Trust funds were also spent on social services, including payments to the Department of Health for clinical and medical services. The decline in the trust's spending in fiscal 1975/76 apparently reflects, at least in part, the transfer of these activities to the homelands.

The expenditures of the three development corporations have grown proportionately more rapidly than those of the homelands and of the trust, their share of the total having risen from 8 to 18 percent since fiscal 1972/73.

Most of the corporations' activities are aimed at creating income and jobs, and their rising share of the totals shows a shift in emphasis in the bureaucracy from routine governmental activity toward growth-inducing activities. But these organizations are not black-controlled and development decision-making has not on balance gravitated toward the homelands to the same degree as has the performance of routine administrative tasks. The Board of Directors of the new Tswana Development Corporation is, however, equally divided between homeland-appointed black and Republic-named white members, including officials of the Bantu Investment Corporation. This change resolves a controversy over the management of development banks and may bring together homeland governments, private economic interests, and the Investment Corporation.

To these expenditures in the homelands must be added part of the budget of the Department of Bantu Education. In fiscal 1972/73, R28 million was spent on African education in the Republic and in fiscal 1973/74, over R35 million, an increase of one-quarter.^[32] Most funds were spent upon urban and rural black schools and their supporting systems, but some financed the homeland universities, and part covered examination, inspection, and advisory services in the homelands. The department spent in the neighborhood of R60 million in fiscal 1974/75, and, if one-fifth of this total can be assigned to the homelands, then about R10 million could be added to the core spending of the agencies listed in table 6.7. This would raise spending in fiscal 1974/75 to R430 million. In fiscal 1975/76, the Department of Bantu Education spent R10.4 million in the homelands, but this figure may not include general overhead expenses. Health absorbed R50.6 million, explicitly apart from the Bantu Trust accounts.^[33] Added to the core disbursements, these amounts yield a comprehensive sum of R591 million.

Adding the relevant expenditures directly affecting the homelands made by other departments of the Republic, the fiscal 1974/75 total could be as high as R450 to 460 million, and that of fiscal 1975/76 could be in the range of R610 to 620 million.^[34] If allowance is made, however, for expenditures connected with policies such as "black spot" removals that are of no clear benefit to Africans, the figure would be smaller, although how much smaller depends upon judgments on the merits of aspects of the homeland development program. Whether one uses the core spending figures, the overall totals, or some corrected interpretation of both, it is plain that spending in and on the homelands has climbed steeply since the late 1960s. The data are too fragmentary and not comparable enough, and the time span is too short,

[32] Survey of Race Relations, 1974, 342.

[33] BENBO, personal communication (xeroxed document), 19 March 1976.

[34] An incomplete estimate of R13 million for South African departmental spending in the homelands is given in Survey of Race Relations, 1975, 125.

to allow computation of meaningful growth rates or to permit projections. Homeland government spending rose by over 168 percent from fiscal 1972/73 to fiscal 1975/76; the corporations' disbursements rose by 403 percent. Total core spending rose by 27 percent, 49 percent, and 27 percent in the three year-to-year intervals between fiscal 1972/73 and fiscal 1975/76, implying an average compound growth rate of about one-third. At the same time, South Africa's cost of living rose by about 10 to 12 percent per year. Using this figure as a rough guide, the real value of these funds grew by only about 20 to 22 percent per year. African population growth of 3.5 percent would reduce this growth to about 18 percent on a per capita basis. Real increases in teachers' salaries or the pay of homeland civil servants, or the transfer of new functions to the homelands, would further shrink the available incremental funds. Nonetheless, even with these allowances, it is obvious that the trend of spending on the homelands is strongly upwards.

The homeland governments have not issued debt instruments or received foreign loans. Under the Second Bantu Laws Amendment Act of 1974, the minister of Bantu administration and development is empowered to guarantee the interest and principal of homeland debts. The question of foreign aid has been explicitly raised by Chiefs Mangope and Buthelezi following overseas trips to the United States and Europe. The South African government has approved the idea of external aid in principle, but still insists that it must enter the homelands through the Republic's channels. It is difficult to imagine exactly how external assistance would fit into existing financial practices and the developmental projects proposed by the white agencies. Aid grants from outside could lead to a reduction in the effort of the Republic by an equivalent amount. If foreign sources are able to transfer funds to the homelands, the preferred form would be grants, since the simple and inelastic tax systems of the homelands are unlikely to provide a basis for the interest payments and principal amortization required by loans. Mangope and Buthelezi may fare better by cultivating their own tax resources and affecting the Republic's allocative process rather than by pursuing the chimera of foreign grants. By campaigning for external funds, however, black leaders may induce the Republic to raise its own levels of expenditures for the homelands.