Background

South Africa has made remarkable progress since a democratic system of governance replaced Apartheid 13 years ago.  New opportunities are reaching millions of South Africans in health, education, business and improved services (including water, housing and electricity).  However serious problems still remain: the official unemployment rate stands at 26%; poverty affects nearly half the population; and the country has one of the most unequal income distributions in the world. 

Sustainable Employment

The employment generation program mirrors the South African Government’s strategy for job creation, focusing on creating employment and income for historically disadvantaged persons through the development of small, medium, and micro enterprises (SMMEs) in the, manufacturing, services and agricultural sectors.  The program is based on a business linkages model which builds commercial trade ties between historically disadvantaged SMMEs and larger, more established businesses in South Africa, the Southern Africa region and the U.S.  In addition to facilitating these market linkages, the program provides targeted technical assistance to participating SMMEs to help them meet the requirements of the global market. 

Strengthen economic growth and analysis

The economic capacity building program focuses on improving the capacity of historically disadvantaged South Africans to formulate, analyze and implement sound economic policy.  Toward that objective, the program has supported 140 black South Africans to study in the U.S. at the Masters or PhD levels, or in South African universities at the Bachelors and Masters levels.

The program currently focuses on the analysis, development and implementation of policies that reduce poverty and unemployment, as well as improve the transparency of government decision-making through public discussion of policy options. Towards this goal USAID supports activities such as:

• Facilitating significant change to legislation, policies and systems for credit regulation
• Designed and managed the first substantive study of trade and poverty in South Africa , and provided inputs into the first National Income Dynamics Survey
• Advising National Treasury on existing and new industrial policy initiatives 
• Measuring the cost and impact of regulation and crime on small business
• The evaluation of most major social welfare programs
• Investigating the impact of HIV/AIDS on nurses, children and the economy 

 Future of the U.S. Government Assistance

As of 2007 when USAID/South Africa’s new Operational Plan comes into effect, the economic growth program will focus on three areas in support of historically disadvantaged small businesses: 

• Support to financial institutions, business, and regulators to strengthen the capacity of the financial sector to extend affordable products to small and medium enterprise development.
• Strengthening the competitiveness of historically disadvantaged businesses in the manufacturing, services and agriculture/agribusiness sectors within the mainstream economy through training on sound financial and business management practices and trade regulations;  technical assistance on product development, grades and standards; and support for improved marketing and supply chain development.
• Developing the workforce skills needed for small businesses to be competitive participants in the marketplace.