South African Development Finance Institutions and the 21st Century Economic Challenges Facing Developing Economies

Abstract

Global economic environment has changed dramatically in the 21st century and this change is deemed have affected emerging countries like South Africa negatively in terms of driving economic growth and developmental. One of the ways through which this growth and development is affected is the effects on capability of development finance institutions (DFIs) in providing funding towards deferent development initiatives. This has proven to be a greater challenge for developing countries like South Africa, where there is a greater need to advance development agenda. This thesis argues that it has become an old age knowledge that globalisation has come with radical change on international economic and political landscape, and that such change has not always yielded fruitful outcomes for emerging economies. The situation has also been aggravated by the slow pace with which emerging countries have been transforming their economies to be strong enough to withstand the implications that came with globalised economic systems. This research was therefore done in order to explore the implications of changing global economic landscape on the mandate of South African DFIs, with the hope of establish what constitute an optimal development finance model for emerging economies in the 21st century, given the implications of globalisation and changing economic system. The thesis was developed through in-depth interview conducted in two national DFIs, namely Industrial Development Corporation (IDC) and National Empowerment Fund (NEF). The interviews were undertaken with respondents who are involved in leadership and operational management in these institutions ranging from senior executives down to fund management. The research revealed structural issues in development finance landscape, with weak institutional governance and resourcing. It also revealed that the framework that had been adopted was old and not necessarily appealing to the 21st economic challenges facing emerging economies. Most of the findings evolved around the need for different mechanisms to govern global affairs, international trade policies that are prodevelopment, protect business activities for growth in emerging economies. It also made a call for proper leadership that can ensure collaboration in all development initiatives, including DFIs, proper political interventions, build Institutional Capacity and Promoting Research Report. MM (P&DM). Ogone Ntwae.335103 3 Good Governance for these institutions to sustain global economic challenges and support the country’s development imperatives.