Background

South Africa has made remarkable progress since democracy replaced apartheid ten years ago.  New opportunities in education, health, business, and improved services such as water, housing and power are now reaching millions of South Africans for the first time.  Serious gaps however, still pose challenges to the nation’s democratic structures.

Today, more than 60% of South Africans live in cities, having moved from rural communities seeking off-farm employment opportunities and services perceived to be better in urban areas.   Many cities however, lack adequate affordable housing and the capacity to effectively provide and manage basic services to the growing number of urban poor.  Also, rural immigrants often do not have the necessary skills to find sustainable employment in urban areas.  Thus, an overwhelming number of historically disadvantaged South Africans in urban areas still do not have houses, clean water, sanitary facilities, electricity, and significantly jobs.  The responsibility for facilitating access to shelter and basic services over the past ten years has been transferred from the national government to local authorities.  Many local communities do not yet have the infrastructure to offer these services and the capacity of local officials need to be developed so they can effectively administer public services. 

Local authorities in marginal communities struggle with backlogs and lack of trained personnel.  The problems are made worse by their limited capacity to raise municipal resources and financing from banks or other government departments.  The numbers of people living in poverty in city areas have grown steadily during South Africa’s first decade of democracy.  The majority of poor families in South Africa now live in urban areas, making it important to build the economies of city centers to meet the irreversible demand for housing, basic services and jobs.      

Estimates call for three million new houses in the next 10 years, with $7 billion for urban infrastructure to bring housing and services to minimum acceptable standards for most of the historically disadvantaged population. 

Supporting urban environmental policy

USAID helps South Africa’s government develop policies to strengthen the economic growth potential of urban centers and expedite the delivery of affordable shelter and services in disadvantaged communities. 

Facilitating finance to upgrade communities

USAID provides partial loan guaranties to private lending institutions to help poorer families access funds for housing.  Local authorities can also get loans to upgrade the basic facilities for their communities.  These partial loan guaranties have benefited more than 500,000 households (many headed by women).

USAID also provides financial backing to private lenders in specialized markets through the Development Credit Authority program, by minimizing their risk on projects that provide infrastructure and housing loans to previously disadvantaged communities.

USAID provides technical support to a number of non-governmental organizations helping disadvantaged communities to build houses, create sustainable communities and get city services.

Increasing the economic viability of urban centers

USAID works with South Africa’s cities to help attract investment and create jobs.  USAID helps officials learn to manage, generate the funds for, and deliver basic services, including water, sanitation, solid waste, power and housing.  USAID is contributing to and using knowledge from international “best practices” in these sectors, as well as sharing applicable solutions arising from the African experience. 

Improving the management of urban centers

USAID is working with the South African government to build a program to better address global climate challenges faced by urban areas . 

USAID helps South Africa implement an innovative program to transfer responsibility for providing water from government to the private sector in a rural area serving more than one million people.  In cases where utility management poses a difficulty for municipalities, this new transfer system is seen as a key model that can be used across many parts of the country and continent under the New Partnership for Africa’s Development. 

Cross-sectoral Programs:  USAID supports a special insurance policy developed to protect homeowners with AIDS from losing their houses because they can’t make their mortgage payments.