South African Context
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 rest of the population. The white governments’ 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 rub out opposition to minority rule.
When the African National Congress was democratically elected to govern South Africa in 1994, the 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 and social – as well as political rights. 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 be paid for a long time yet – in the devastatingly skewed concentration of wealth, lost education, lost job experience and lack of economic opportunities for the country’s majority black population. South Africa still faces the Herculean challenges of building economic democracy to provide the ongoing foundations for 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 among the 10 largest 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 11 consecutive years of positive growth rates have bolstered its economy as a whole. Nonetheless, the degree of inequality of its income distribution is the third highest in the world, after Brazil and India. The disparities are evident in the concentration of its development around Cape Town, Port Elizabeth, Durban, and Pretoria-Johannesburg. Beyond these 4 economic centers, development is marginal and poverty still reigns despite government strategies to bridge the gap between its country's wealthy and poor residents.
In 1994, during his second inaugural address, President Thabo Mbeki vowed that “the struggle to eradicate poverty has been and will continue to be a central part of the national effort to build the new South Africa”. 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) have sparked significant opposition, other initiatives to speed the delivery of housing and basic services have been broadly welcomed.
South Africa’s growing economy continues to be a magnet for economic and political refugees from poorer neighboring countries such as the DRC, Mozambique, Zimbabwe, 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.