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USAID Information:
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South Africa
The Development Challenge: South Africa has made considerable progress since the fall of apartheid in 1994. Major transformations of the judicial, educational, health and governance systems have been launched. Two sets of free and fair national and local elections have been held. The South African government is committed to economic freedom and has invested heavily in its people. Public expenditures in education and health in particular have increased, and comprise more than 10% of the country's Gross National Product. Two million low-cost houses were constructed between 1996 and 2000, and 85% of all households have access to clean water.
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Despite these achievements, South Africa continues to face rising gaps in services and opportunities for its historically disadvantaged population. The official unemployment rate is now 31%, and is even higher among black South Africans (37%). South Africa also has one of the largest income disparities in the world, with over 50% of the total population, mostly black South Africans, living below the poverty line. Two-thirds of total income is concentrated in 20% of the population, leaving the poorest 20% with only 2% of total income. Women earn 55% less than men. The infant mortality rate is 61 per 1,000 live births, and life expectancy at birth is estimated at 52 years.
To date, economic growth has been insufficient to lower South Africa's rising unemployment and poverty rates. Real Gross Domestic Product growth in 2003 was lower than expected at 2%, compared to 3% in 2002. Export growth also declined in 2003, primarily due to a stronger currency and a weak global economy. Privatization of state-owned enterprises is continuing at a slow but steady pace, and is expected to boost investment and reduce South Africa's debt burden, currently estimated at $24 billion. Real capital spending by private businesses in South Africa is relatively high and growing.
HIV/AIDS is a major challenge to South Africa's continuing growth. South Africa has more people living with HIV/AIDS than any other country in the world. Adult HIV prevalence is estimated at 20%, with a rate of 26.5% reported among pregnant women. There are an estimated 660,000 HIV/AIDS orphans in South Africa today. It is estimated that 23% of the skilled and 32% of the unskilled workforce will be infected by 2005 and that, without treatment, five to seven million people will die from the disease by 2010.
South Africa has one of the highest murder rates and lowest conviction rates in the world. These factors have conspired to undermine investment and public confidence in a democratic government. Rapid influx of people into urban areas, including immigrants, has compounded the crime problem. The public perception of corruption has increased given recent allegations of fraud and bribery in government. The next national elections are scheduled to take place in April 2004, with local elections to follow in 2005. Although support for political parties is strongly divided along racial lines, the 2004 elections are expected to be democratic and relatively peaceful. Provision of goods and services is one of the key election issues.
South Africa remains critical to U.S. foreign policy interests. The country plays a key economic and political role in Africa bilaterally and regionally as an active member of the African Union and the New Partnership for Africa's Development, among others. South Africa has been actively engaged in efforts to peacefully resolve conflicts in Angola, the Democratic Republic of Congo, Mozambique, Rwanda, Burundi and, most recently, Zimbabwe. South Africa is also committed to U.S. counter-terrorism efforts, working to address issues such as money-laundering. South Africa remains by far the most important U.S. trading partner in sub-Saharan Africa, excluding Nigeria, a major oil exporter.
The USAID Program: USAID provides strategic assistance in six areas: health and HIV/AIDS, education, urban environment, employment generation, economic policy development, and democracy and governance. These objectives support national efforts to reduce disparities between historically privileged and disadvantaged groups and help build the capacity of local governments to deliver services. USAID uses partnerships with the private sector and non-governmental organizations to help achieve these objectives. South Africa is a focus country under the President's Emergency Plan for AIDS Relief (PEPFAR). All proposed HIV/AIDS activities are being integrated into PEPFAR and are subject to the approval of the U.S. Global AIDS Coordinator. Additional funding from the Global HIV/AIDS Initiative account is anticipated for both FY 2004 and FY 2005. A new regional HIV/AIDS strategy supporting 10 countries, including five PEPFAR countries, is expected to be finalized by the end of FY 2004 and will be fully implemented in FY 2005. This program will be managed by USAID/South Africa.
USAID programs will also support South Africa's efforts to increase access to quality education and training for historically disadvantaged groups. In addition, USAID will support policies conducive to sustainable urban management, as well as improved access to energy-efficient housing and basic municipal services through public-private partnerships. These activities meet U.S. Government priorities in clean energy, climate change, and water. USAID programs will foster the growth and development of small and emerging urban and rural businesses by providing linkages and market opportunities that did not exist or were constrained under apartheid. FY 2004 funds will also be used to provide capacity building and training to entrepreneurs from historically disadvantaged groups, facilitate market-based land transactions, and enhance rural finance. Furthermore, USAID programs will support South Africa's efforts to address high rates of crime and perceptions of corruption through such programs as the Anti Corruption Initiative. All FY 2004 and FY 2005 funds will support ongoing programs as described in the following Data Sheets.
Other Program Elements: Twenty centrally and regionally funded activities complement the bilateral program. USAID/Washington awarded eight partnerships with U.S. universities to assist South African universities in the areas of governance, education, workforce development, health and HIV/AIDS, and enterprise development. USAID/Washington-funded activities in HIV/AIDS, as part of PEPFAR, include a grant to a South African university to assist eight government ministries in Africa to develop strategic plans addressing the impact of HIV/AIDS on education systems; two research activities to reduce the transmission of HIV/AIDS and deliver comprehensive primary health care services; a grant to an association of African mayors to address HIV/AIDS at the community level; and support for the regional HIV/AIDS program, which provides prevention services at cross-border sites as well as support to non-presence countries. USAID/Washington supports a program that helps agribusinesses produce and market natural products, as well as a regional public-private alliance that will focus on urban youth employment initially in South Africa, Rwanda, Malawi and Mozambique. USAID's Southern Africa regional program includes a business linkages program, jointly funded with the bilateral South Africa program, that fosters trade among small, domestic enterprises and helps initiate regional trade opportunities. USAID's regional program also funds a Heartwater vaccine and parasite control initiative through a public-private partnership located in South Africa. The regional office also supports economic policy development activities in South Africa and has contributed funds to South Africa's port concessioning program. USAID/Washington provides assistance to a South African non-governmental organization to build capacity and develop structures and systems of conflict resolution.
Other Donors: Donor coordination remains strong. The United States is the largest bilateral donor and second largest overall donor in South Africa. The European Union (EU) is the largest donor in health, education, criminal justice reform and community water projects. Other major bilateral donors and their principal areas of focus, in rank order of resources, include the United Kingdom (health, private sector development, democracy and governance, labor and criminal justice); Germany (democracy and governance, education, health and economic policy); and Sweden (democracy, governance, labor, and poverty alleviation). The USG is working closely with several bilateral governments, as well as the EU and the United Nations (UN), on HIV/AIDS research and poverty alleviation. The 13 UN agencies in South Africa focus on HIV/AIDS, rural development, and regional integration. The European Commission will soon launch a major initiative in local government in South Africa.
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