Certain exact results in supersymmetric gauge theories are generated by non-perturbative effects different from instantons. In supersymmetric QCD with N colours and N_F fundamental flavours we examine the Affleck-Dine-Seiberg (ADS) superpotential using controlled semi-classical analysis. We show how for N_F< N − 1 the ADS superpotential arises from monopole contributions to the path integral of the supersymmetric gauge theory compactified on ³ × S¹. These are the monopole effects leading to gaugino condensation and confinement of the low-energy SU(N−N_F) supersymmetric gauge theory.