South African Context

Overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of fundamental human rights…

Yet in this new century millions of people remain imprisoned, enslaved and in chains. Massive poverty and inequality are terrible scourges of our times - times in which the world also boasts breathtaking advances in science, technology, industry and wealth accumulation.

While poverty persists, there is no true freedom.

Like slavery and apartheid, poverty is not natural. It is people who have made poverty and tolerated poverty, and it is people who will overcome it.

Nelson Mandela,
Johannesburg, November 1, 2006

Until 1994 South Africa was ruled by the white minority governments imposed during more than three and a half centuries of first colonial, then apartheid rule. Activists fought for most of the last century before they succeeded in their struggle to abolish apartheid and extend democracy to the country’s entire population. The apartheid government’s grand social engineering schemes separated the races and forced resettlement of hundreds of thousands of people. They poisoned and bombed opponents, occupied Namibia illegally, and waged undeclared wars in neighboring countries to eliminate the opposition to white minority rule.

When the African National Congress was democratically elected to govern South Africa, apartheid leaders conceded political power, and participated in a peaceful transition characterized by the new government’s commitment to reconciliation. In 1996, the legislature approved a new constitution that upholds economic, social and political rights to all its citizens. These include the right of all South Africa’s people to access to food, water, housing, education, and employment.

Economic power, however, did not change hands in 1994. As a result, the cost of the years of conflict will continue to be paid for a long time yet. Social disparity persists as an ongoing challenge caused by the legacy of the devastatingly skewed concentration of wealth, inferior education, limited job experience and lack of economic opportunities for the country’s majority black population. South Africa still faces the Herculean challenges of building the economic democracy required to anchor its new political dispensation.

South Africa has the resources to address its challenges. As the continent's largest economy, South Africa accounts for an estimated 30 percent of the gross domestic product of the African continent, and produces and consumes more of its energy than any other nation. South Africa is considered a middle-income country with abundant natural resources, well-developed financial, legal, communications, energy, and transport sectors, a stock exchange that ranks 17th in the world, and a modern infrastructure supporting an efficient distribution of goods to major urban centers throughout the region. The nation's per capita gross domestic product (GDP), corrected for purchasing power parity, is one of the 50 highest in the world. Its 17 consecutive years of positive growth rates have bolstered its economy as a whole.

South Africa followed the world’s leading financial institutions and economies into a recession at the end of 2008.  The downturn produced the country’s first recession in 17 years, and exacerbated its deeply rooted inequity.

The income gap between rich and poor remains wider than any other nation.
The disparities are evident in the concentration of its development around Cape Town, Port Elizabeth, Durban, and Pretoria-Johannesburg. Beyond these economic centers, development is marginal and poverty still reigns despite government strategies to bridge the divide between its country's wealthy and poor residents.

While some of the government’s strategies to promote economic growth and attract foreign investment (such as relaxing labor laws, accelerating the pace of privatization and cutting government spending) sparked significant opposition, other initiatives to speed the delivery of housing and basic services were broadly welcomed.

President Zuma’s administration has taken a strong stand on upholding the economic and social rights outlined in South Africa’s constitution. He has supported spending to shore up social safety nets and improve the delivery of basic services.  These remain strategic priorities, despite the international economic downturn.

South Africa’s economy continues to be a magnet for economic and political refugees from neighboring countries such as Zimbabwe, Mozambique, the DRC and Malawi, who swell the ranks of South Africa’s own informal sector. South Africa’s leaders recognize that the economies of the region are closely connected, and that South Africa’s success and stability can only be guaranteed along with those of its neighbors. While bilateral agreements and the New Partnership for African Development establish official frameworks for collaboration, non-governmental organizations in the region are also beginning to pursue strategies to learn from and assist each other. One such initiative is the conference on alternative development finance in Southern Africa that the Thembani International Guarantee Fund and Shared Interest convened in August 2006.