The success of South Africa’s transformation is one of the highest U.S. foreign policy objectives in Africa.  The importance both countries attach to the U.S.–South Africa bilateral relationship is clearly illustrated by the Binational Commission (BNC) and the growing number of Cabinet-level associations. The U.S. Government (USG) and private sector already have a considerable investment in South Africa.  It is the goal of the USG, including USAID, to consolidate that investment in an enduring alliance.

Key Changes in the Country Context and USAID's Response

Sluggish Economic Growth and Rising Unemployment.  USAID’s strategy addresses unemployment in a variety of complementary ways.  The economic capacity program assists the Republic of South Africa to address relevant policy issues such as privatization, competition (anti-trust), the enabling environment for public-private partnerships, and making the tax code more investor-friendly.  Second, the new “market-driven employment” strategic objective (SO) targets job creation directly by promoting the growth of small and medium enterprises (SMEs) and rural agribusinesses.  In addition, new large-scale investments in urban infrastructure are encouraged and facilitated by the housing and urban services program, creating jobs in the construction and related industries.  The education program’s youth, adult, and higher education and skills development initiatives target one of the most important constraints to increased employment and foreign direct investment – a shortage of skilled labor.  Improvements in the quality of basic education lay the foundation for a better skills profile in the next generation

High Crime Rate. USAID is re-focusing its access to justice program on strengthening the criminal justice system in response to the escalation in crime and the poor performance of the criminal justice system to date.  Over the longer term, increased employment, a more equitable distribution of wealth and a better quality of life will reduce the likelihood that people will resort to crime.

High and Rising HIV Prevalence.  The health program is scaling up activities in HIV/AIDS information, education and communication, as well as supporting expanded diagnosis, management and care.  Furthermore, it will support programs to mitigate the impact of HIV/AIDS, particularly on orphans and other vulnerable children.  Aspects of the HIV/AIDS epidemic are also being addressed in other sectors - initiatives have started in education, economic policy and housing.  Other sectoral linkages will be identified and developed.

The Challenge of Service Delivery.  USAID is assisting the Republic of South Africa to improve public service delivery in a variety of ways.  A major element of the democracy and governance program is increasing local government’s ability to deliver services to its citizenry.  Closely linked to this is work at the municipal level in shelter, environmental management and urban services provision.  The education program supports efforts to engender greater community involvement, responsibility and accountability in schools and is helping government to implement an effective, market-driven workforce development program.  The health SO works intensively with the Eastern Cape province to improve primary health care and HIV/AIDS prevention and treatment capacity.  The economic policy capacity program has contributed to development of a system for responsibly transferring budgetary resources for social services to the provinces.

The shifts in USAID/South Africa’s strategy in response to the four challenges discussed above  are briefly summarized as follows:

• Democracy and governance: focusing of justice sector strengthening on the criminal justice system; an expanded effort to strengthen local government to deliver services and be accountable to its citizenry; and a refined focus on civil society-government partnerships;

• Education:  a heightened emphasis on skills development to match the needs of the economy in order to address unemployment and improve the quality of the workforce;

• Health:  a major expansion of HIV/AIDS prevention and mitigation efforts and more  attention to broader adoption of selected primary health care system innovations;

• Economic policy capacity:  a growing emphasis on building capacity in policy areas that are vital for greater economic growth and job creation;

• Market-driven employment:  a more holistic business development approach targeting small and medium enterprises (including rural agribusinesses) which have job creation potential;

• Housing and municipal services: an increased emphasis on new and innovative financing mechanisms and public-private partnerships to provide environmentally sound municipal infrastructure and services and to close the housing gap.

The strategy also supports regional integration efforts to share the benefits of South Africa's economic progress and support the objectives of the New Partnership for Africa's Development (NEPAD) through institutions such as the African Union (AU), as well as encouraging joint problem solving on regional issues such as food security, trade, and transport.  Unlike other countries, the South African government has the resources to help address many of its development challenges, though human and institutional capacity constraints often hinder implementation of public and private sector efforts to implement development programs.  Our role is to facilitate South Africa's response to its challenges through human capacity development to enable the most efficacious use of its resources.

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