SOUTH AFRICA

	FY 1998 Actual	FY 1999 Estimate	FY 2000 Request
Development Assistance	$53,500,000	$34,206,000	---
Development Fund for Africa	---	---	$38,750,000
Child Survival and Disease	$16,600,000	$12,800,000	$8,650,000

Introduction.

Ensuring 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 resolved through negotiation and compromise. This is underscored by the crucial role South Africa plays in the political stability of southern and central Africa. South Africa's relatively large economy has the potential to be a significant market for U.S. exports.

Given South Africa's strategic and economic importance in 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. The U.S.-South Africa Binational Commission, U.S. economic assistance and U.S. private investment are important vehicles for accomplishing this goal. Since the first democratic election was held in 1994, the United States has become the largest single investor in South Africa.

The Development Challenge.

South Africa is an anomaly, having a highly visible first world infrastructure that co-exists with extreme poverty comparable to the rest of Africa. Income inequality is the second highest in the world, and there are huge disparities in education and health status along racial lines. About 50% of households lack adequate housing, while 45% lack clean water and sanitation. One third of the South African population is functionally illiterate, and less than half of black students successfully complete primary school. Mortality of children under five is more than twice that of countries with comparable per capita incomes. South Africa has the world's fastest growing HIV/AIDS epidemic, with over three million people already HIV-infected and an estimated 1,500 new cases daily. Economic growth has been slower than anticipated. Black unemployment exceeds 40%, and crime is escalating. South Africa's debt, almost all of which is domestic, constitutes 54% of the Gross Domestic Product.

The principal development challenge is overcoming the vestiges of apartheid that, for decades, deliberately denied basic rights, opportunities and resources to the majority population. Rising unemployment, with attendant increases in crime and weaknesses in social service delivery, are widespread concerns of the entire population and threaten the authority and credibility of the new democratic government. Failure to address these needs in a sustained manner could jeopardize the considerable progress South Africa already has made in deepening democratic values and in advancing on its chosen path of equitable economic development. Reducing unemployment will require strong economic growth balanced with practical, decentralized initiatives to increase black participation in the economy. The Government of the Republic of South Africa (RSA) is committed to liberal economic reform, but the growing pressure to create jobs could derail these reforms and reduce the government's credibility.

USAID works in partnership with the RSA, South African NGOs, and private sector financial institutions to support South Africa's development objectives. USAID's approach is to assist government departments with policy formulation and, more recently, implementation, and to support NGOs and private sector entities to expand delivery of services to the historically disadvantaged population. As part of this strategy, USAID has invested substantial resources to build capacity in the public, private and non-profit sectors. The USAID program has achieved notable impact in facilitating policy formulation, including providing analysis for legislation that forms the building blocks of the transformed system of governance prescribed by the South African Constitution. USAID has successfully leveraged significant private sector resources for housing and business development and equipped many South Africans with the skills needed to participate effectively in the country's transformation.

Other Donors.

The United States is the third largest donor to the Republic of South Africa. Other major donors are the European Union, with programs in democracy and governance, education, economic policy, health and the private sector; the United Kingdom, which assists in democracy and local governance, education, health and economic policy; and Germany, with democracy and governance, adult basic education, economic policy and housing programs. Japan and the United Nations Development Program also have large programs in South Africa, providing assistance in urban development, policy formulation and health.

FY 2000 Program.

Working collaboratively with the RSA and civil society, USAID will support the following programs:

USAID will continue to support South Africa's efforts to strengthen and consolidate democracy through increased access to an improved justice system and through strengthening local governance and the sustainability of civil society and community-based organizations. In response to the threat posed by rising crime, new programs are under development to increase the capacity of the justice system to address crime. USAID also will support conflict mitigation programs and provide technical assistance to the Independent Electoral Commission to conduct local government elections in 2000.

The FY 2000 program will continue to assist the RSA to implement dynamic change in primary, adult and higher education. This will contribute to increased numbers of blacks completing primary education; increased numbers of Historically Disadvantaged Institutions offering accredited programs; and increased numbers of blacks graduating from such programs. Given the high levels of unemployment, a new program will be implemented in workforce development.

USAID will continue to focus on primary health care delivery and will expand its emphasis on HIV/AIDS prevention and mitigation. A new HIV/AIDS strategy will assist the RSA and NGOs to improve public awareness and prevention measures. USAID will continue to provide support to the RSA, NGOs, universities, and the private sector to improve South Africa's capacity to develop, analyze, and implement economic policy options and to provide advanced economics training for people with potential to become the leaders and policy makers in the South African economy in years to come.

Increased involvement in business, trade and investment by the majority population is key to invigorating the economy and creating badly needed jobs. USAID will continue to support microenterprise and small business development while creating linkages between disadvantaged South African firms and U.S. firms. A broadening of these programs to reach rural areas and incorporate agriculture is under discussion.

USAID continues to address the most visible and one of the most destructive legacies of apartheid, the lack of sanitary and serviced housing for millions of citizens. Some funds also will be utilized to assist in the development and implementation of activities to address issues related to Global Climate Change.

SOUTH AFRICA

FY 2000 PROGRAM SUMMARY (in Thousands of Dollars)

USAID Mission Director, Wm. Stacy Rhodes

USAID Strategic and Special Objectives	Economic Growth & Agriculture	Population & Health	Environment	Democracy	Human Capacity Development	Humanitarian Assistance	TOTALS
S.O. 1. Dem. Insts. Strength. thru Civ Soc Partic - DFA	700	---	---	14,550	----	----	15,250
S.O. 2. Transformed Educ. Based on Equity of Access, Qual - DFA - CS	200 ---	--- ---	--- ---	--- ---	5,500 4,750	--- ---	5,700 4,750
S.O. 3. Incr Use of Essntl Prim Hlth Care, HIV/AIDS Serv & Prev/ Mitigatn Prac. - DFA - CS	200 ---	1,200 3,900	--- ---	--- ---	--- ---	--- ---	1,400 3,900
S.O. 4. Impr. Cap. of Key Govt and Non-Govt Ent. to Form, Eval, Impl Econ Pol. - DFA	3,700	---	---	---	---	---	3,700
S.O. 5. Incr. Access to Fin. Mkts - DFA	6,900	---	---	---	---	---	6,900
S.O. 6. Incr. Access to Envir. Sust. Hsng, Urban Svcs for Hist. Disadv. Pop. - DFA	200	---	5,600	---	---	---	5,800
Totals: - DFA - CS	11,900 ---	1,200 3,900	5,600 ---	14,550 ---	5,500 4,750	--- ---	38,750 8,650

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ACTIVITY DATA SHEET

PROGRAM: SOUTH AFRICA
TITLE AND NUMBER: Democratic Institutions Strengthened, 674-S001
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $15,250,000 DFA
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: 2005

Summary: In 1994, South Africans elected a democratic government, ending the long era of apartheid. Since then, a new constitution has been ratified, provincial and local governments formed, and new laws and policies put in place to strengthen and consolidate democracy. USAID’s democracy and governance program supports the efforts of South Africans to strengthen linkages between citizens and government institutions, with special emphasis on the rule of law, local government, and civil society sustainability. USAID assistance in rule of law reflects South Africa's priority of expanding access to justice, which was highly limited during the apartheid era. USAID assistance in local government strengthens cooperative governance among the three tiers of government (national, provincial, and local), with special emphasis on strengthening linkages between government and citizens at the local level to increase the responsiveness and effectiveness of local government. USAID assistance to civil society aims primarily at helping South African civil society organizations become institutionally and financially more sustainable. In light of declining donor resources for NGOs, the program will support sustainability based on local resources, particularly through partnerships with government.

Key Results: The key results of this program are: increased access to an improved justice system; strengthened local governance; and sustainable civil society and community-based organizations. USAID investments in these areas contribute to long-term democratic consolidation in South Africa. The ultimate beneficiaries of improved governance and democratic processes are South African citizens, in particular, members of the historically disadvantaged majority population. Intermediate beneficiaries are national, provincial and local governments, parliamentarians and civil society organizations.

Performance and Prospects: Key accomplishments of the program in FY 1998 include: (1) issuance of the report of South Africa's historic Truth and Reconciliation Commission, whose work in addressing human rights violations committed during apartheid is making a major contribution to South Africa's democratic transition; (2) increased rights awareness throughout the country, assisted by USAID-financed civic education programs; (3) continued decline in political violence in KwaZulu-Natal as a result of conflict resolution programs; (4) a high degree of civil society participation in preparation of key pieces of legislation, including local government and crime bills; and (5) further definition of the tax and policy environment for effective and democratic local governance.

A 1994 bilateral agreement with the Ministry of Justice continues to support increased access to legal services for the majority population. A new bilateral agreement with the Ministry of Constitutional Development and Provincial Affairs builds local government capacity. Special assistance is being provided to the Independent Electoral Commission for South Africa's 1999 election. USAID also competitively awarded grants to South African NGOs and U.S. PVOs which carry out a range of democracy and governance activities in the three programmatic areas described above. Support for South African NGO programs in human rights promotion and conflict resolution continues, with a special focus on KwaZulu-Natal Province, during the run-up to the 1999 elections. Assistance to civil society sustainability will begin in 1999.

Possible Adjustments to Plans: USAID also is consulting with government counterparts on additional assistance in the areas of criminal justice and anti-corruption, because of the growing salience of these issues in South Africa. It is anticipated that by 2000 new assistance activities may begin in strengthening the capacity of the criminal justice system and in providing support to the RSA's various anti-corruption initiatives.

Other Donor Programs: At the national level, the European Union, Sweden, the Netherlands, the United Kingdom, Canada, the United Nations, Australia, and Germany are providing democracy and governance assistance. Many of the same donors are working at the provincial level to strengthen the capacity of government and local community support organizations. Through USAID's rule of law program with the Ministry of Justice, the South African Government is providing significant resources to expand legal access and to coordinate assistance from several other donors with complementary objectives. Throughout the process of developing and implementing this strategic objective, USAID has carried out extensive consultations with government representatives, local NGOs, U.S. PVOs and other donors.

Principal Contractors, Grantees Or Agencies: The democracy program is implemented by South African governmental organizations, a wide range of South African NGOs, and U.S. PVOs. Government partners include the Ministries of Justice and Constitutional Development. Other South African partners include the Institute for a Democratic South Africa, the Institute for Multiparty Democracy, the South African Institute of Race Relations, the National Institute for Public Interest Law and Human Rights, Lawyers for Human Rights, the Center for Human Rights, the Black Lawyers Association, and the African Center for the Cooperative Resolution of Disputes. Principal U.S. partners include the International Republican Institute, the National Democratic Institute for International Affairs, the American Center for International Labor Solidarity, the Joint Center for Political and Economic Studies, and the U.S. PVO PACT. USAID’s assistance to local NGOs is supported by a grants management contract with Creative Associates International, Inc.

Selected Performance Measures:

	Baseline	FY 2000	Target (2002)
Percent of bills passed by parliament with civil society input	13 (1996)	25	37
No. of politically related deaths in KwaZulu Natal	2,087 (1994)	700	400
No. of human rights cases received by Human Rights Commission that are processed	2,093 (1997)	2,786	3,371

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ACTIVITY DATA SHEET

PROGRAM: SOUTH AFRICA
TITLE AND NUMBER: Transformed Education System Based on Equity of Access and Quality, 674-SO02
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $5,700,000 DFA; $4,750,000 CS
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: 2005

Summary: The purpose of USAID’s education program is to assist South Africa's transformation of its educational system so that it provides quality education to more than eight million South African children. Education is arguably the most important sector for South Africa’s transition to a sustainable, non-racial democracy. Yet, across the education system--from pre-school to university--the quality of education received by the majority of black South Africans is still far inferior to that received by white South Africans. For example, student-to-teacher ratios are significantly higher in black schools and teachers in black schools generally have fewer qualifications than their counterparts in predominantly white schools. In terms of infrastructure, over 57% of black schools are without telephones and electricity, while nearly all white schools have these amenities.

Key Results: To address these inequities at the primary education level, USAID is supporting activities in the four neediest provinces, targeting teacher training, curriculum assessment, and capacity building for district and provincial education managers. USAID’s program is designed to contribute to the percentage of blacks successfully completing primary education in the four provinces. USAID also is supporting RSA efforts to establish a further education system to provide out-of-school youth with opportunities to obtain skills and credentials. The main result is an increase in the number of institutions offering accredited programs within the RSA's new Further Education and Training Framework. This will create greater educational opportunities for young adults who did not receive an adequate education during the apartheid years. To enable a broader segment of the South African population to effectively participate in the economy, USAID is supporting the development and piloting of Adult Basic Education Programs, as well as Workforce Development Programs. The objective of USAID’s support for adult education is the development and delivery of curriculum frameworks and assessment systems. Finally, in the area of higher education, USAID is supporting the strengthening of 15 historically disadvantaged universities (HDIs) with staff training, linkage grants to U.S. universities, and capacity building grants. The majority of black South Africans still pursue their higher education at these institutions. USAID’s program is contributing to an increase in the number of blacks graduating from HDIs.

Performance and Prospects: During 1998, the RSA made significant progress in reshaping South African education. Most noteworthy was the publishing of new Funding Norms and Standards for provinces to ensure that educational resources are allocated to schools with the greatest needs. The analytical work for the development of this formula was supported partially by USAID-funded technical assistance. Over the coming year, USAID will intensify its work at the provincial level to implement the funding norms, strengthen school management and governance, and train teachers, especially in math and science. With USAID support, the National Youth Commission is operating a Youth Information Service that provides young South Africans with information on health issues, employment, education and training. The information hotline currently is receiving an average of 30,000 calls per month.

In order to provide illiterate adults with access to applied literacy training, in 1998 USAID supported the successful development of curricula in the areas of small and micro-enterprise development and agriculture. These courses will be offered to teachers and adult learners in 1999. In higher education, USAID supported 15 HDIs in the development and implementation of five-year plans intended to strengthen student remedial programs that are critical to increased graduation rates of blacks. A comprehensive training program for 14 HDIs has been initiated to strengthen their financial management systems.

Possible Adjustments to Plans: No adjustments to this strategic objective are anticipated at this time.

Other Donor Programs: South Africa allocates more than 21% of the national budget to education. Major donors in the sector include the United Kingdom, Denmark, the European Union (EU) and Canada in basic education; the Ford Foundation, EU and Australia in tertiary education; the Netherlands in youth activities; and the EU, Sweden, and Germany in adult basic education.

Principal Contractors, Grantees or Agencies: USAID implements activities through the National Department of Education (DOE), Provincial DOEs, South African and U.S. universities, NGOs, and contractors. Principal U.S. contractors/grantees are: Abt Associates, Research Triangle Institute, the United Negro College Fund, Academy for Educational Development, International Foundation for Education and Self Help, Institute for International Education, Howard University, DevTech Systems, and the Children's Television Workshop.

Selected Performance Measures:

	Baseline	FY 2000	Target
Percent of schools implementing new curriculum 2005	0 (1997)	30	80 (2003)
Percent of higher education graduates who are black	11 (1996)	22	29 (2003)
Number of adult education centers utilizing new curriculum	0 (1997)	50	50 (2000)

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ACTIVITY DATA SHEET

PROGRAM: SOUTH AFRICA
TITLE AND NUMBER: Increased Use of Essential Primary Health Care and HIV/AIDS Services and Prevention and Mitigation Practices, 674-SO03
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $1,400,000 DFA; $3,900,000 CS
INITIAL OBLIGATION : FY 1995 ESTIMATED COMPLETION DATE: 2004

Summary: The two most serious constraints facing the RSA's health sector are the fragmented and inequitable distribution of health resources arising from apartheid-era policies and programs and the raging HIV/AIDS epidemic, which places South Africa as one of the most seriously affected countries in the world. USAID will assist the RSA in addressing these constraints by increasing the use of essential primary health care services and practices, focusing on the Eastern Cape province, and by increasing the use of HIV/AIDS prevention and mitigation services and practices. The primary beneficiaries of USAID assistance are historically disadvantaged populations, especially young children and women of reproductive age.

Key Results: The key results are: (1) Increased access to and quality of integrated primary health care services in the Eastern Cape Province; (2) Improved sustainability of the district health system in the Eastern Cape and adoption of lessons learned from Eastern Cape by other provinces and the national Department of Health; and (3) Increased access to and quality of services for HIV/AIDS, sexually transmitted diseases (STDs), tuberculosis (TB), and related reproductive health needs.

Performance and Prospects: In 1998, key achievements of the primary health care program included the design and implementation of a health information system and clinical improvements in the diagnosis and treatment of various illnesses. USAID-funded improvements in data collection enabled for the first time the tracking of the health impact of specific programs. Ready access to condoms increased from 27% to 78% in just one year, and patients receiving complete tuberculosis treatment increased from 49% to 55% of all TB cases. USAID-supported activities in the Eastern Cape have been adopted by the National Department of Health as models for replication in the national health system, including the drug logistics system, the health information system, and private/public partnerships. Within the primary health care component, prevention of STDs and HIV/AIDS has taken on a much greater and more visible importance, given the seriousness of the epidemic in the Eastern Cape.

Possible Adjustments to Plans: No adjustments to this strategic objective are anticipated at this time.

Other Donor Programs: The government of RSA provides over 90% of all funds for the health sector. The United States is the third largest donor, after the European Union and the United Kingdom.

Principal Contractors, Grantees, or Agencies: Management Sciences for Health, a US non-profit institution, is the principal institutional contractor for the primary health care component. USAID also maintains a Participating Agency Services Agreement with the Centers for Disease Control, which will be expanded to include other agencies within the U.S. Department of Health and Human Services.

Selected Performance Measures:

	Baseline	FY 2000	Target (2003)
Immunization coverage, percentage of children under 12 months (Eastern Cape Province)	57 (1997)	77	80
Percentage of women obtaining prenatal consultation (Eastern Cape Province)	67 (1998)	75	92

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ACTIVITY DATA SHEET

PROGRAM: SOUTH AFRICA
TITLE AND NUMBER: Improved Capacity of Key Government and Non-Government Entities to Formulate, Evaluate and Implement Economic Policies, 674-SO04
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $3,700,000 DFA
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: 2005

Summary: During the apartheid era there were few opportunities for black South Africans to acquire advanced skills in economics, let alone participate in policy formulation. As a result, there is a dearth of historically disadvantaged individuals and institutions able to effectively participate in economic policy making. This USAID program improves the capacity of historically disadvantaged persons in key government and non-government organizations to develop, evaluate and implement economic policies. As a result, the current liberal macro-economic policies will continue to be supported by broader participation.

The direct beneficiaries of USAID activities in this sector are mid- and senior-level technicians in government, NGOs and universities who work on economic policy issues. The direct beneficiaries of the Mandela Economic Scholars Program and the university strengthening programs are the historically disadvantaged students in those programs. Ultimately, enhanced economic policy-making capacity will benefit all South Africans through improved economic policy development and implementation, which will increase employment and distribute incomes more equitably.

Key Results: Specific areas of USAID involvement are: (1) Human resource development in economics and policy analysis for key government entities through the Mandela Economics Scholars Program, which finances post-graduate economics training to improve the capacity of individuals who serve in government; (2) Strengthened capacity of government departments and "think tanks" to formulate economic policy reforms through the provision of technical assistance, training, and research support; and (3) Improved effectiveness of centers of economics training, primarily through support to the historically disadvantaged University of the Western Cape.

Performance and Prospects: Under the Mandela Economic Scholars Program, USAID sends 16 historically disadvantaged South Africans to the United States each year for advanced degrees in economics. Thirty-two are in the United States now; five have returned to South Africa to take up positions in government; and 16 more will begin school in 1999. USAID is assisting the Government to tailor its macro-economic policies to be more supportive of job creation. USAID also is working with the RSA on a range of economic issues, including revision of the tax code, devolution of program implementation from the central to provincial governments, and implementation of the Employment Equity Act. USAID is strengthening NGOs and universities to provide independent analysis of economic policy. Assistance to the University of the Western Cape's Department of Economics is strengthening training and research in economics, outreach to the community and other historically disadvantaged universities, and non-traditional educational programs. This work complements broader U.S. Government dialogue on economic policy. In the future, USAID will develop a scholarship program for historically disadvantaged students to pursue advanced degrees at South African universities. To support RSA devolution of policy implementation to the provincial government level, USAID will provide economic analysis skills to provincial personnel in selected areas.

Possible Adjustments to Plans: No adjustments to this strategic objective are anticipated at this time.

Other Donor Programs: USAID is the leading donor in the macro-economic policy capacity area. Other donors are Australia, Canada, the European Union, the Netherlands, the United Kingdom, Germany and Sweden. The World Bank assists in economics training, economics research and economic information generation and dissemination.

Principal Contractors, Grantees or Agencies: The principal implementor of this program is a consortium led by Nathan Associates. The U.S. Treasury Department is assisting in devolving policy implementation to the provinces and analyzing tax policy; the U.S. Department of Labor is assisting in training health and safety inspectors, improving labor statistics and sharing U.S. experience with affirmative action programs.

Selected Performance Measures:

	Baseline (1996)	FY 2000	Target (2002)
Centers of excellence in economics established	0	1	1
Mandela Economics Scholars completing training in the United States	0	15	43
Economic policy units established or strengthened	0	12	12
Economic policy think tanks with plans for sustainability	0	6	6

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ACTIVITY DATA SHEET

PROGRAM: SOUTH AFRICA
TITLE AND NUMBER: Increased Access to Financial Markets for the Historically Disadvantaged Population, 674-SO05
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $6,900,000 DFA
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: 2001

Summary: South Africa's non-white population continues to be economically marginalized as a result of severely limited access to financial resources. South Africa's conservative, big business-oriented banks have little incentive to change their lending practices. The lack of credit and equity investment limits the potential creation and growth of small, medium and microenterprises, and aggravates the unacceptably high level of unemployment. Developing the small, medium and microenterprise (SMME) sector is key to addressing the unemployment crisis in South Africa. USAID's private sector strategy seeks to increase black Africans' access to financial markets, thereby ensuring the integration of blacks into all levels of the formal economy.

Key Results: The key results anticipated from USAID's program include the creation of a policy environment more supportive of the needs of emerging SMMEs, the development of new mechanisms by the financial sector to deliver services to the disadvantaged population, and the improved ability of SMMEs to respond to the requirements of the financial sector, hence increasing access of the previously disadvantaged to financial services.

Performance and Prospects: USAID has improved the quality and increased the quantity of financial services, technical assistance and training available to SMMEs. This includes the initiation of two microcredit programs, including a village banking program targeting the rural poor. During 1998, USAID's assistance in the microenterprise arena created over 25,000 jobs in South Africa. USAID is helping small and medium enterprises access non-traditional sources of capital, and after two years, has leveraged nearly $20 million in private sector financing for black-owned small and medium enterprises. The USAID-financed Southern Africa Enterprise Development Fund (SAEDF), a source of long-term risk capital to emerging enterprises in South Africa, has created more than 500 jobs. USAID's loan portfolio guaranty program has leveraged more than $15 million in loans to small and medium businesses from South Africa's private sector. Over a three-year period, USAID's Business Linkages for Underutilized Enterprises (BLUE) project helped secure more than $22 million in contract awards from South Africa's corporate and government sector to historically disadvantaged small and medium enterprises. The new South African International Business Linkage program will create long-term viable relationships between South African and U.S. firms, which will result in increased trade and investment and technology transfers between the two countries. Further, USAID is working with the RSA's Office of Public Enterprises to develop its public information and awareness campaign on privatization. This is complemented by assistance to potential historically disadvantaged bidders on privatization transactions, thereby enlarging the role of the private sector in the economy.

Possible Adjustments to Plans: No adjustments to this strategic objective are anticipated at this time.

Other Donor Programs: Principal donors in SMME development in South Africa are Denmark, the European Union, the United Kingdom, Norway and Sweden, as well as the World Bank and the International Finance Corporation.

Principal Contractors, Grantees or Agencies: The Department of Trade and Industry and Office for Public Enterprises are two key government counterparts; all USAID initiatives support the goals and objectives of these South African entities. Other contractors and grantees include SAEDF, Eccles Associates, Phoenix Venture Partners, Deloitte & Touche, World Education, Volunteers in Technical Assistance, the Corporate Council on Africa and Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Agriculture.

Selected Performance Measures:

Baseline	FY 2000	Target (2001)
Number of loans made to microenterprises through USAID-supported programs (cumulative)	8,100 (1994)	94,000	120,000
Value of loans and equity made available to small and medium enterprises through USAID-supported programs (cumulative)	$1.9M (1995)	$88M	$88M
Value of contracts obtained by SMMEs through USAID programs (cumulative)	$.33 M(1995)	$30 M	$35 M

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ACTIVITY DATA SHEET

PROGRAM: SOUTH AFRICA
TITLE AND NUMBER: Increased Access to Environmentally Sustainable Housing and Urban Services for the Historically Disadvantaged Population, 674-SO06
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $5,800,000 DFA
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: 2001

Summary: The lack of adequate shelter for the previously disadvantaged majority population is a highly visible and politically critical problem. Currently, an estimated eight million people, about 20% of the population, live in makeshift shacks in squatter settlements without basic services such as piped water, sanitation, electricity, paved roads and solid waste collection. A recent nationwide survey ranked housing among the top three concerns of the general population (following jobs and crime). USAID is committed to working with the government, the private financial sector and non-governmental organizations (NGOs) to develop and implement policies and programs that will effectively tackle this problem.

Key Results: The key result sought is greater access to housing and urban services for the targeted population through increasing the funds available for low-income shelter and increasing number of households that obtain housing and services due to the intervention of USAID's public and private sector partners.

Performance and Prospects: USAID undertakes a number of shelter-related activities, each of which is geared to match the attributes and responsibilities of specific partners. The first is assistance to the public sector in developing appropriate housing and urban development policies. Last year, USAID assisted the Departments of Housing and Constitutional Development to take giant steps in the area of home builder registration (to ensure quality control in the construction industry) and in the creation of public-private partnerships for service delivery. The second set of activities are those linked to the Housing Guaranty (HG) program, under which USAID provides U.S. investors with guarantees on dollar loans made to South African private sector financial institutions. The dollar loans leverage up to three times their value in local currency loans for houses and urban services for low-income households. The program also makes grants to NGOs that provide shelter loans for low-income families. Through the HG program in FY 1998, participating South African banks reported having made available $115 million for houses and services benefiting over 291,700 low-income households.

The third type of activity, grants to NGOs, provides non-credit assistance to target communities. These USAID partners help the poorest of the poor set up savings programs, obtain consumer protection information, gain access to government grants, develop energy-efficient pilot houses, and undertake self-help construction programs that generate jobs and improve the size and quality of their houses. The fourth set of activities offers training programs to local authorities in administrative capacity and local environmental management, with an emphasis on the importance of community participation in development planning. Closely linked to the training is ongoing technical assistance to the Municipal Infrastructure Investment Unit, which works with local authorities to design and finance environmentally sound infrastructure projects and to establish a legal and regulatory framework for public-private partnerships providing urban environmental services. Finally, USAID supports local environmental management initiatives of the "Agenda 21" network involving three metropolitan areas. In cooperation with the Department of Environmental Affairs and Tourism (DEAT), USAID support for Agenda 21 initiatives will be expanded nationwide. USAID also provides DEAT with resources to implement global climate change activities.

Possible Adjustments to Plans: Because the HG program has achieved such high leveraging, USAID is requesting additional credit reserve (formerly HG) resources for housing and infrastructure development. These resources will be used in programs with non-traditional financial institutions that are willing to make loans to people who are not formally employed.

Other Donor Programs: USAID continues to be a leader in this sector. Other donors include the German development agencies that undertake discrete housing projects, and the British Development Agency, which works with local governments. Although the World Bank has not undertaken any major loan programs, it provides limited technical assistance for studies and analyses. USAID works closely with the World Bank and the South African government on the policy development aspects of its program.

Principal Contractors, Grantees or Agencies: USAID's major partners are the government departments of Housing; Constitutional Development (local government); Water Affairs and Forestry; and Environmental Affairs. USAID also works with three private financial institutions: First National Bank, NEDCOR and the Infrastructure Finance Corporation (INCA). NGOs are also major USAID partners; U.S.-based NGOs include the Cooperative Housing Foundation and International City/County Managers Association. Local NGOs include the Urban Sector Network (a coalition of ten shelter NGOs), People's Housing Partnership Trust, and Kwa-Zulu Natal Project Preparation Trust. USAID has two major long-term contracts: with the U.S. firm PADCO, which provides three advisors for a Municipal Infrastructure Investment Unit at the Development Bank of South Africa, and with the Research Triangle Institute, which is assisting with the development of a legal and regulatory framework for public-private partnerships for the delivery of basic urban services.

Selected Performance Measures:

	Baseline (1992)	FY 2000	Target (2001)
Total rand value of funds (including amounts leveraged) made available for shelter and urban services for the historically disadvantaged population due to USAID partner intervention	0	$500 million	$540 million
Total number of historically disadvantaged households with improved access to full or partial shelter units and urban services through USAID partner intervention	0	900,000	1,000,000

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