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| >> AFR Regional Overview >> South Africa Overview | |||||||||
IntroductionEnsuring South Africa's successful transition to a pluralistic, market-oriented and economically sustainable democracy is fundamental to U.S. national interests of supporting democratic societies, pursuing U.S. economic prosperity, and reducing the need for humanitarian assistance in sub-Saharan Africa. South Africa is the most outstanding example in the world today of how severe political, racial and ethnic differences may be reconciled through negotiation and compromise. South Africa also plays a crucial role in the political stability of southern and central Africa. Its relatively large economy has the potential to be a significant market for U.S. exports and already functions as an engine of growth for other southern African economies. Given South Africa's strategic and economic importance in sub-Saharan Africa, USAID's goal is to help ensure that South Africa successfully completes the transformation from a statist, apartheid regime to a democratic, multi-racial society with an open, market-based economy. U.S. economic assistance and private investment are important vehicles for accomplishing this goal. Since the first democratic election in 1994, the United States has been the largest source of foreign direct investment in South Africa (a cumulative amount of $3.8 billion). The Development ChallengeSouth Africa's principal development challenges are to: achieve and maintain a level of economic growth that will generate higher levels of productive employment for its people; reduce the growing HIV/AIDS infection rate and provide care and treatment for millions already infected; control and reduce the spiraling crime rate; and increase access to quality education, primary health care, housing, and justice services. South Africa's geographically limited but highly visible first world infrastructure coexists among widespread, poverty comparable to the rest of Africa. Income inequality is among the highest in the world; education and health status are glaringly different among racial groups. About 50% of households lack adequate sanitation. The infant mortality rate is 47 per 1,000 among indigenous South Africans. In addition, South Africa has one of the most severe HIV/AIDS epidemics in the world, with infection spreading rapidly and a large population at risk. The number of HIV-infected people has doubled from approximately two million in 1996 to over four million in 2001. In 2000, an estimated 15% to 20% of the adult population was HIV positive with an estimated 1,700 new infections daily. It is estimated that by 2005, 5.6 million South Africans will be HIV positive, and at least two million children will be orphaned as a result of AIDS. Despite South Africa's adherence to prudent monetary and fiscal policies, economic growth has been slower than anticipated. The economy grew at 3% in 2000 and is projected to grow at 3.5% per annum over the next three years. This projected economic growth rate is insufficient to significantly reduce unemployment, currently estimated at 25%. Further, South Africa faces a serious skill shortage, as the technical skills required are not yet being produced in sufficient quantities by the educational system. In addition, the country continues to experience a substantial emigration of skilled professionals and an influx of unskilled. While crime rates are among the highest in the world, particularly for violence against women, prosecution and conviction rates are among the lowest. The high level of crime is a disincentive for much-needed foreign investment. USAID works in partnership with the Government of South Africa, U.S. and South African non-governmental organizations, and private sector financial institutions to support South Africa's development priorities. In FY 2000, USAID's programs helped improve delivery of health, education, and housing services. As a result of USAID's work in the Eastern Cape, more than 80% of the health facilities now provide basic primary health care services five days per week. USAID's programs in FY 2000 significantly increased the supply of housing, water, sanitation and other environmental services for approximately 600,000 low income households. USAID's support to small, micro and medium enterprises and agribusiness programs contributed to the creation of 4,000 new employment opportunities and facilitated the generation of over $50 million in business transactions between small and large companies. In democracy and governance programs, USAID's programs are helping to strengthen the criminal justice system, providing support to municipal government and improving dialogue and cooperation between civil society and the government. USAID helped improve the regulatory environment for small businesses, increase government outsourcing to the private sector, advance the privatization agenda, and lower import duties on all goods from southern Africa, which helped to foster a more open trading environment in the region. Other DonorsUSAID is the second largest donor and largest bilateral donor to the Republic of South Africa. Other major donors are: (1) the European Union, with programs in democracy and governance, education, economic policy, and health and the private sector; (2) the United Kingdom, which assists in democracy and local governance, education, health and economic policy; and (3) Germany, with democracy and governance, adult basic education, economic policy and housing programs. Japan and the United Nations Development Program also have large programs, providing assistance in urban development, policy formulation and health. FY 2002 ProgramThe USAID program will continue to support South Africa's efforts to strengthen and consolidate democracy, with special emphasis on strengthening the criminal justice system, democratic and effective local governance, and improving cooperation between civil society and the government. USAID's education program will address unemployment through programs in workforce development and further secondary education. The program also will continue to support implementation of key educational reforms at the district and school-level, including developing new curricula and improved teacher training. The health program will continue to emphasize HIV/AIDS prevention and mitigation strategies with the Government of South Africa, non-governmental organizations, and other implementing partners. The program will also continue to focus on primary health care delivery, with an increased focus on capacity building and implementation in four provinces. The USAID economic growth program will improve the capacity of historically disadvantaged persons in key government and non-government organizations to develop, evaluate, and implement economic policies. Enhanced economic policy-making capacity will benefit all South Africans by providing a catalyst to increased economic growth and employment and more equitable distribution of economic opportunities. Increasing productive employment is one of South Africa's greatest challenges. USAID's programs aim to alleviate this constraint by promoting the growth of small, medium and micro-enterprises in urban areas and by promoting the growth of small-scale agribusiness in rural areas. These programs will help to identify markets for small businesses through domestic and international linkages, develop improved business and entrepreneurial skills, and determine and facilitate potential loan and equity capital sources. USAID's housing and municipal infrastructure programs will continue to improve South Africa's policies and programs relating to the delivery of housing and environmentally sound municipal services. Local government officials and staff will be supported in public urban management and the delivery of essential services to the historically disadvantaged population. Development Credit Authority will be used to increase access to credit for low income households, housing builders and developers and municipal environmental service providers. Activity Data Sheets
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