South Africa is the second largest economy in Sub-Saharan Africa and EU’s largest trading partner on the continent. Since the end of apartheid in 1994, South Africa has enjoyed macro-economic stability. However, its upper middle-income country status masks the many problems the country still faces in terms of poverty, inequality, unemployment, education, and health.
More than 1 in 2 South Africans live below the national poverty line (about 37€/month), around a third of the population is unemployed, inequalities remain high, and the legacy of apartheid is still very much felt in terms of distribution of wealth. South Africa’s educational system is does not operate properly and the country registers the world’s largest HIV/AIDS caseload.
South Africa also faces economic challenges, such as a slow growth rate and a manufacturing production in decline. Despite recent efforts to attract investment to support economic growth and job creation, the government’s reforms are insufficient to address unemployment, and improve service delivery and the business climate.
South Africa benefits from € 241 million EU development funding under the Development cooperation instrument (DCI). The country is however not eligible for support under the European Development Fund (EDF).
Our development cooperation in South Africa currently focuses on 3 priority sectors, as detailed in the multiannual indicative programme (MIP) for South Africa (2014-2020), and in line with South Africa’s national development plan for 2030:
- Employment creation is essential to contribute to the fight against high unemployment (27%), especially among young people (53%).
- Education, training, and innovation need to be developed to improve overall economic performance and ensure employability of people, sustainable growth, and competitiveness.
- Investing in building a capable and developmental State will help improve service delivery and social cohesion, by addressing bottlenecks in human and systems development.
The Trade, development, and cooperation agreement (TDCA) is the legal basis for overall relations between the EU and South Africa. Its trade rules have been superseded by the economic partnership agreement (EPA) between the EU and the Southern African Development Community (SADC), of which South Africa is a member.
The EU’s special relationship with South Africa was reinforced in 2007 with the establishment of a strategic partnership – one of the 10 strategic partnerships the EU has worldwide and the only one it has with an African country. The partnership’s purpose is to strengthen political dialogue and pursue strategic cooperation and shared objectives in specific sectors and on regional, African, and global issues.
Our current cooperation under the DCI (2014-2020) is being implemented mainly via budget support and a programme approach. Several successful programmes have already been implemented in areas such as gender equality and women empowerment, the EU-SADC EPA implementation process, education and employability, business support, capacity building, technical assistance etc.
South Africa also benefits from several thematic budget lines:
- Energy – South Africa benefits from technical assistance under the Sustainable energy for all (SE4ALL) and Switch Africa Green initiatives.
- Human rights – Under the European instrument for democracy and human rights (EIDHR), projects defending the rights of women, LGBTI people, people with disability, and prisoners have been implemented in South Africa, as well as projects to prevent election-related violence.
- Civil society organisations (CSOs) receive support to build their capacities.
- Public finance management – Funds were allocated to a regional public finance management programme under the EU’s pan-African programme.