Communication from the Commission to the Council and the European Parliament - Towards an EU-South Africa Strategic Partnership
Date: 2006-06-28
Institutions: European Commission
Subjects: European Union, South Africa, cooperation policy, economic cooperation, political cooperation

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 28.6.2006 
COM(2006) 347 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
AND THE EUROPEAN PARLIAMENT 

Towards an EU-South Africa Strategic Partnership 

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COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
AND THE EUROPEAN PARLIAMENT 

Towards an EU-South Africa Strategic Partnership 

INTRODUCTION 

South  Africa  is  a  country  transformed  from  the  nation  that  emerged  from  apartheid  twelve 
years  ago.  It  has  emerged  from  the  trauma  of  apartheid  to  build  a  democratic,  tolerant  and 
multiracial  society.  It  has  achieved  financial  and  economic  stability  enabling  the  country  to 
further develop economic growth to the benefit of all its people. It has emerged as a leading 
nation and a peace broker in the region and on the African continent. It has authority not just 
in Africa but in global multilateral institutions.  

An enlarged EU has developed a new approach to North-South cooperation by adopting three 
key  policy  papers  on  the  Millennium  Development  Goals,  the  European  Consensus  on 
Development and the EU Strategy for Africa. It is strengthening its foreign action and seeks 
to foster stability, security and prosperity worldwide. 

South Africa therefore is a natural partner to Europe on the African continent and on a global 
level. Building on shared values and mutual interests as well as profound cultural links, the 
EU and South Africa have developed a multifaceted, comprehensive partnership based on the 
“Trade,  Development  and  Cooperation  Agreement”  (TDCA)  between  South  Africa,  the 
European Community and its Member States.  

Today,  however,  relations  between  South  Africa  and  the  EU  require  more  coherence,  clear 
objectives,  and  a  shared  forward-looking  political  vision  with  a  view  to  strengthening  joint 
political  action.  The  partnership  needs  to  clearly  spell  out  what  both  sides  can  expect  from 
one another on the domestic, regional, continental and global fronts, and do justice to South 
Africa’s and the EU’s unique positions in the new, globalised world.  

The  purpose  of  this  Communication  on  a  Strategic  Partnership  with  South  Africa  is 
therefore to propose a comprehensive, coherent and coordinated long-term framework 
for  political  cooperation  with  the  Republic  of  South  Africa,  one  which  is  mindful  of 
South Africa’s traumatic past, of its role as an anchor country in the region and of its 
unique position on the continent and on the global scene. 

1. 

THE POST-APARTHEID SOUTH AFRICA 

Twelve  years  after  the  end  of  apartheid,  which  had  a  profound  impact  on  all  aspects  of 
society,  South  Africa  is  still  struggling  with  its  recent  traumatic  past,  yet  has  achieved 
remarkable progress. 

Domestically,  since  1994  the  government  has  set  out  to  dismantle  the  social  relations  of 
apartheid and create a democratic society based on equity, non-racialism, respect of the rights 
of religious, cultural, linguistic and indigenous communities. New  policies and  programmes 
have  been  put  in  place  to  improve  the  quality  of  life  of  the  vast  majority  of  the  people, 

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including the provision of basic social services and positive discrimination through the policy 
of Black Economic Empowerment (BEE). 

Achievements to date include: 

•  a constitutional multi-party political system, 
•  a functioning parliamentary democracy, 
•  a prevailing sense of constitutionalism and of the rule of law, 
•  mechanisms for accountability, transparency and information in public administration, 
•  an independent judiciary. 

Economically  speaking,  the  country’s  most  striking  feature  is  the  dual  economy  inherited 
from apartheid, based on racial divides, with close to half of the population living below the 
poverty line.  

Since the end of apartheid, the country has done well in bringing about internal and external 
macroeconomic stability. Public expenditure has remained at an overall sustainable level, with 
a budget deficit of less than 3% of GDP. However, the growth of the formal economy needs 
to develop further to enable decisive economic “take-off” and job creation and integration of 
the  “informal”  economy.  The  outlook  for  the  coming  years  is  more  positive,  and  the 
government’s  new  ASGISA  policy  (Accelerated  and  shared  growth  initiative  for  South 
Africa)  is  aimed  at  combating  poverty  and  reducing  inequality  by  promoting  economic 
growth and employment.  

The major social challenge facing the country is undoubtedly the wide social and economic 
disparities that affect the whole of society. This is further illustrated by two dramatic issues 
that stand out because of their potential harmful effect on society as a whole:  

•  the alarmingly high prevalence of HIV/AIDS with the estimated number of people infected 
nearing  6  million.  This  represents  an  estimated  adult  prevalence  rate  of  21.5%.  The 
medium-  to  long-term  consequences  of  the  pandemic  will  be  very  high  social  and 
economic costs following a reduction in the total population, reduced life expectancy and 
the  loss  of  economically  active  people,  coupled  with  a  drastic  increase  in  the  number  of 
orphans1; 

•  the level of both ordinary and organised crime and violence affecting in particular women 
and  children,  linked  to  international  trafficking  of  human  beings  in  the  Southern  African 
region. 

South  Africa  is  facing  important  environmental  challenges.  Access  to  agricultural  and 
drinking water, soil erosion and desertification, waste management and pollution, all have an 
impact  on  food  security,  long-term  welfare  and  economic  development  of  the  poorest, 
especially of the rural population. In addition, climate change is likely to exacerbate many of 
these  environmental  concerns  and  bring  new  challenges.  South  Africa  needs  to  tackle  the 
increase  in  greenhouse  gas  emissions  from  the  transport  sector  and  in  particular  from  the 
energy sector, where electricity generation is based primarily on coal and likely to remain so. 

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It is estimated that there will be about 1.5 million children orphaned by HIV/AIDS by 2010. 

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In  the  Southern  African  region,  South  Africa  with  Botswana,  Lesotho,  Namibia  and 
Swaziland  forms  the  Southern  African  Customs  Union  (SACU).  Since  1994,  it  has  been  a 
member  of  the  Southern  African  Development  Community  (SADC),  the  regional  economic 
community of Southern Africa, comprising 14 countries. South Africa plays a key role in the 
region. It contributes 50% of the GDP of sub-Saharan Africa, and close to 75% of the GDP of 
the  SADC.  South  African  investment  in  the  rest  of  Southern  Africa  represents  49%  of  the 
region’s FDI, and 80% of trade in Southern Africa is with South Africa. Most of this consists 
of  South  African  exports  to  the  rest  of  the  region.  In  addition,  South  Africa’s  business 
expansion into the region is gaining momentum, and there is a long history of regional labour 
migration  to  the  country.  Furthermore,  South  Africa’s  capacity  in  science  and  technology 
represents a significant resource for the region in general. 

On  the  continental  scene,  South  Africa  is  the  key  representative  of  the  emerging  South.  It 
plays a crucial role within the African Union and is one of the initiators and driving forces of 
NEPAD.  In  the  area  of  peace  and  security,  it  has  played  a  constructive  role  on  the  African 
continent as a mediator and peace-keeper, for example in Rwanda, the Democratic Republic 
of  Congo,  Burundi,  Liberia,  Sudan  and  Côte  d’Ivoire.  It  continues  its  efforts  to  bring  the 
Zimbabwe crisis closer to a solution.  

On  the  global  level,  South  Africa  is  one  of  the  leading  members  of  the  Non-Aligned 
Movement. It is a member of the WTO and the Commonwealth of Nations and plays a very 
active role in these organisations. In the Doha talks, as a member of the G20 and the Cairns 
Group,  South  Africa  seeks  to  foster  common  approaches  with  other  developing  countries 
through strategic alliances and coalitions in order to strengthen the development dimension in 
the  WTO  negotiations  and  to  promote  greater  integration  of  developing  counties  into  the 
multilateral trading system. South Africa also plays an important role in the reform of the UN. 
In  addition,  it  has  recently  joined  Brazil,  Russia,  India  and  China  in  the  group  of  emerging 
donor countries (BRICS) and is likely to develop its role as a donor on the African continent. 
Finally,  South  Africa  is  also  adopting  a  higher  profile  in  the  discussions  on  further 
multilateral action on climate change. 

2. 

EU-SOUTH AFRICA RELATIONS 

South Africa and the EU share political, social and ethical values such as democracy, human 
rights, respect of the rule of law and good governance, tolerance, equality, a commitment to 
fight poverty and social exclusion and the promotion of sustainable development.  

They agree on the basic economic principles of the social market economy, free trade and an 
equitable international economic order.  

They  are  both  actively  committed  to  an  agenda  of  peace  and  stability,  governance, 
democratisation  and  combating  poverty  throughout  the  African  continent.  They  both 
believe in multilateral solutions to international conflicts and have an interest in making sure 
that the voices of developing and emerging countries are heard on the international scene.  

The  Trade  Development  and  Cooperation  Agreement  (TDCA)  is  the  legal  basis  for  overall 
relations  between  South  Africa  and  the  EU.  It  covers  political  dialogue,  trade,  development 
cooperation,  economic  cooperation  as  well  as  cooperation  in  a  whole  range  of  other  areas. 
South  Africa  is  also  a  party  to  the  Cotonou  Agreement,  but  has  no  access  to  its  financial 
instruments or preferential trade regime.  

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2.1. 

Political dialogue 

Political  dialogue  has  been  ongoing  ever  since  the  end  of  the  apartheid  regime,  through 
informal talks at Head of Mission level in Pretoria and through visits by politicians and senior 
officials in both directions.  

Structured  and  formal  political  dialogue  as  mentioned  in  Article  4  of  the  TDCA  has  been 
launched in the margins of the “Cooperation Council”, the joint body that oversees EU-South 
Africa relations in their entirety. Since 2004, the Cooperation Council has met at ministerial 
level followed by a ‘troika’ meeting on political issues. 

The two partners consider political dialogue as an essential component of their partnership. It 
offers  an  opportunity  for  exchanging  views  on  a  broad  range  of  domestic,  regional, 
continental  and  global  issues,  including  HIV/AIDS,  Zimbabwe,  NEPAD  and  the  African 
Union,  peace-keeping  operations  in  Africa  and  the  African  Peace  Facility,  the  European 
Union’s  enlargement,  developments  within  the  United  Nations,  the  Middle  East  peace 
process, and international terrorism. 

2.2. 

Trade 

The EU is South Africa’s main economic trade partner, accounting for approximately 32% of 
its  exports  and  41%  of  its  imports.  South  Africa  is  also  the  EU’s  largest  trade  partner  in 
Africa. The EU’s exports to South Africa have risen by an average of 9.5% annually since the 
entry into force of the TDCA. 

The trade provisions of the TDCA have been in effect since the year 2000, and cover about 
90%  of  bilateral  trade  between  the  two  partners.  They  have  had  a  positive  effect  on  trade 
relations  between  the  two  partners  and  are  the  basis  for  the  Free  Trade  Area  (FTA)  to  be 
completed by 2012. The introduction of the FTA is asymmetrical in that the EU is opening its 
market faster and to more products than South Africa.  

2.3. 

Development cooperation 

The EU is by far the most important donor: the Commission and the Member States together 
provide  about  70%  of  total  donor  funds,  which  amount  to  about  1.3%  of  the  government 
budget and 0.3% of GDP. 

Development cooperation in the shape of the “European Programme for Reconstruction and 
Development”  (EPRD)  amounts  to  nearly  €130  million  a  year  and  is  financed  from  the 
Community  budget.  It  focuses  primarily  on  the  promotion  of  economic  activity  and  growth 
and  on  social  services.  In  the  latter  field,  substantial  support  has  gone  to  the  provision  of 
water  and  sanitation,  to  education  and  to  capacity  building  in  the  health  sector  as  a 
contribution to the fight against HIV/AIDS in the country. 

The European Investment Bank also has a Memorandum of Understanding with South Africa 
and provides loans under Community guarantees for an average amount of €120 million per 
annum.  

Evaluations have concluded that EU-South Africa development cooperation is relevant to the 
policies,  strategies  and  development  priorities  of  South  Africa.  However,  programme-wide 
efficiency could be improved by focusing on fewer interventions.  

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2.4. 

Cooperation in other areas 

South Africa has a separate Science and Technology Agreement with Europe. Its performance 
in  the  Framework  Programmes  for  Research  and  Technological  Development  is  improving 
steadily,  with  successful  participation  by  South  African  research  organisations  in  several  of 
the  thematic  priorities  of  the  Sixth  Framework  Programme.  South  African  research 
institutions  have  largely  facilitated  international  scientific  cooperation  (INCO)  between 
European and Sub-Saharan African researches.  

The European Community and South Africa have also signed separate Agreements on Trade 
in Wine and Spirits.  

Other areas — mostly limited and ad hoc — where cooperation with Europe has developed 
include  sanitary  and  phyto-sanitary  (SPS)  measures  and  food  safety,  customs,  wine  and 
spirits, etc. In the field of Information Society, dialogue is ongoing in order to identify areas 
of cooperation at the policy and regulatory levels. 

In  education,  South  African  universities  participate  in  several  international  partnerships 
funded  under  the  Erasmus  Mundus  programme.  A  small  number  of  South  African  students 
have  received  grants  to  study  for  master’s  degrees  in  Europe.  Fellowships  have  also  been 
awarded under the Marie Curie Actions of the Sixth Research Framework Programme. 

3. 

TOWARDS AN EU-SOUTH AFRICA STRATEGIC PARTNERSHIP 

Meeting  in  the  Joint  Cooperation  Council,  South  Africa,  the  European  Commission  and  the 
Member States have acknowledged that recent changes in EU–South Africa relations call for 
a more coherent strategic framework. They adopted “Joint Conclusions” at the 23 November 
2004 meeting and a “Joint Report” in November 2005, and agreed that “new steps need to be 
taken to ensure that South Africa–EU relations develop into a truly strategic partnership that 
(…)  would  do  justice  to  the  role  of  South  Africa  as  an  anchor  on  the  continent  and  a  key 
player on the international scene”.  

The proposed Strategic Partnership seeks to implement this process  

•  by bringing the Member States, the Community and South Africa together in a single 
and  coherent  framework,  with  clearly  and  jointly  defined  objectives,  covering  all 
areas of cooperation and associating all stakeholders; 

•  by  moving  from  political  dialogue  to  strategic  political  cooperation  and  shared 

objectives on regional, African and global issues; 

•  by  enhancing  existing  cooperation,  developing  stronger  and  sustainable  economic 
cooperation,  fully  implementing  the  TDCA  provisions  on  trade-related  areas  and 
extending cooperation to the social, cultural and environmental fields. 

In  addition,  the  Strategic  Partnership  must  build  on  the  “MDG  Package”,  “The  European 
Consensus  on  Development”  and  the  “EU  Strategy  for  Africa”  by  putting  at  the  heart  of 
political dialogue the progress towards attaining the MDGs along with governance issues and 
peace and security at both domestic and international level.  

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3.1. 

Bilateral relations – a new strategic approach to cooperation 

3.1.1.  Political cooperation 

The  most  important  element  of  the  proposed  Strategic  Partnership  consists  in  moving  from 
mere political dialogue to active political cooperation. The South Africa–EU Partnership must 
become a meeting place for building bridges between two consensus-seeking representatives 
of the North and the South. Its main purpose must be to enable the two parties to actively seek 
common ground on issues of mutual interest, support each other’s political agendas and take 
joint political action at regional, African or global level. 

As  indicated  in  Article  4  of  the  TDCA,  political  dialogue  must  cover  all  aspects  of  the 
partnership: domestic, regional, continental and international issues. The same must apply to 
active  political  cooperation,  which  is  therefore  an  element  that  cuts  across  all  levels  of 
cooperation: bilateral, regional, continental and global. 

3.1.2.  Promoting trade 

Trade relations can be developed not only by considering further reciprocal liberalisation of 
trade  in  goods  and  by  creating  larger  markets,  but  also  by  including  trade  in  services  and 
WTO-plus commitments in several new regulatory areas.  

The free-trade agreement foreseen in TDCA must be developed to include the harmonisation 
of trade regimes and new commitments on matters such as services, government procurement 
and investment. 

Both  parties  must  also  seek  to  develop  cooperation  in  several  trade-related  areas:  customs 
cooperation,  rules  of  origin,  the  fight  against  fraud  and  irregularities  in  customs  and  related 
matters,  competition  policy,  intellectual  property  rights,  consumer  protection,  food  safety, 
sanitary  and  phyto-sanitary  measures,  technical  barriers  to  trade,  and  standards  and  norms, 
both from a domestic application and an export promotion point of view. Air transport plays 
an important role in economic development, regional integration and the promotion of trade. 
The EU and South Africa need to create a sound legal framework for further development of 
air services and technical cooperation in this sector. 

Finally,  some  of  the  trade  provisions  -  e.g.  concerning  safeguards  and  dispute  settlement  - 
may need to be reviewed in the light of future relations between the TDCA and the Southern 
African EPA process. 

3.1.3.  Towards an innovative economic, social and environmental partnership  

The TDCA provisions on economic and other cooperation open up a wide area of potentially 
fruitful  cooperation  that  could  benefit  both  parties.  One  particular  area  where  this  form  of 
cooperation  could  be  beneficial  to  South  Africa  and  complementary  to  development 
cooperation is regional policy and social cohesion. South Africa has shown a keen interest in 
Europe’s experience in implementing regional policy and in operating the Structural Funds. It 
considers that these policies could be a model for South Africa’s efforts to deal with the wide 
social and economic disparities between the provinces and regions of the country. The EU is 
ready to share its experience in the field of regional policy and social cohesion in order to help 
meeting the challenge of South Africa’s imbalances and disparities.  

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Due to the economic importance of South Africa in the region and internationally, it will also 
be important to develop a reinforced exchange on economic co-operation including a regular 
economic dialogue and exchanges in the field of macro economic and finance. 

Concerning  cooperation  in  science  and  technology,  the  potential  exists  to  strengthen  EU-
South Africa cooperation in the framework  of  existing  agreements. In addition,  every  effort 
should be made to promote the practical and industrial application of scientific exchanges so 
as to ensure an immediate impact on economic growth and employment.  

A  provisional  list  of  promising  new  areas  for  cooperation  is  in  Annex  1  and  needs  to  be 
further developed. 

3.1.4.  Development cooperation – a new Country Strategy for 2007-2013 

South Africa is a middle income country (MIC) that generates substantial budget resources of 
its  own  and  Europe’s  development  aid,  though  significant,  is  small  in  comparison  to  the 
country’s budget. Yet development money has provided the resources for sector-wide budget 
support programmes, best practice initiatives, capacity building and international exposure. In 
addition,  and  as  stated  in  the  European  Consensus  on  Development  Policy,  “many  lower 
MICs (…) are confronted with striking inequalities and weak governance, which threaten the 
sustainability  of  their  own  development  process.  Many  MICs  have  an  important  role  in 
political, security and trade issues, producing and protecting global public goods and acting as 
regional anchors”. 

The 2007-2013 development cooperation programme needs to take this into account, examine 
South Africa’s need for ODA and focus on the added value of Europe’s contribution. It must 
ensure the protection of the natural resource base and be environmentally sustainable. It needs 
to  be  fully  in  line  with  South  Africa’s  economic  and  social  policies  and  respond  to  its 
priorities,  in  particular  by  addressing  the  bottlenecks  in  social  service  delivery  and  taking 
account  of  the  “developmental”,  more  interventionist  economic  policy  of  the  South  African 
government,  which  focuses  on  economic  growth,  employment  and  addressing  the  wide 
income disparities and inequalities.  

3.2. 

South Africa as a regional anchor 

Representing  close  to  75  %  of  the  total  GNP  of  the  SADC  region,  South  Africa  is  the 
political,  economic,  financial,  human-resources  and  trade  hub  of  the  region.  The  role  it 
decides to play will be of crucial importance for the implementation of the SADC’s Regional 
Indicative Strategic Development Plan and indeed for regional integration in Southern Africa. 
SADC remains the major engine for regional political cooperation and the “natural” alliance 
in the region, while SACU plays an important role with respect to trade. 

The  EU  Strategy  for  Africa  considers  Regional  Economic  Communities  as  prime  building 
blocks for EU-Africa relations. In the case of the Southern African region, the EU and South 
Africa,  as  strategic  partners,  must  engage  in  more  intense  and  substantive  dialogue  and 
political cooperation on the complex regional context and its political challenges. They must 
define more clearly their respective roles in the region, taking into account the emergence of 
new economic powers. 

A  major  dimension  of  cooperation  at  regional  level  is  security  and  peace-keeping.  South 
Africa  and  the  EU  must  work  with  SADC  to  further  the  Strategic  Indicative  Plan  for  the 

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Organ on Politics, Defence and Security Cooperation (SIPO), the Early Warning System and 
the SADC peace-keeping capacity. 

The EC-SADC EPA negotiations will have to address questions raised by the coexistence of 
the TDCA and the future EPA, bearing in mind that the EPA objectives are to develop a more 
predictable and rules-based regional market for goods and services, with a view to fostering 
regional  integration,  to  harmonise  trade  rules  within  the  region  and  vis-à-vis  the  EC  and  to 
create a simple trading framework between the countries in Southern Africa and with the EC. 
This may require further adjustments to the TDCA. 

3.3. 

South Africa as a key player on the Continent 

South Africa is a key player on the continental scene. It is one of the driving forces behind the 
African  Union  and  NEPAD.  Through  its  commitment  to  the  African  Peer  Review 
Mechanism,  it  promotes  good  governance  on  the  continent.  The  country  is  also  a  striking 
example of the transformation of an unjust political regime into an open, democratic society 
that  promotes  tolerance  and  reconciliation.  It  is  also  an  increasingly  important  investor  in 
Africa, both in financial terms and in terms of the transfer of know-how and best practices. 
Finally,  South  Africa  is  active  in  conflict  prevention,  mediation  and  conflict  resolution  in 
several African countries and strongly supports the AU efforts in this field.  

Political  and  diplomatic  cooperation  on  African  issues  must  become  an  area  of  stronger 
entente between South Africa and the EU. Cooperation should not be limited to financing the 
AU  and  funding  peace-keeping  missions,  but  should  become  an  element  of  a  strengthened 
partnership.  The  EU  must  explore  ways  with  South  Africa  to  define  a  common  African 
agenda and to support each other’s objectives in Africa.  

Such  an  entente  does  not  diminish  existing  EU  relations  with  other  African  countries,  nor 
does it affect cooperation with the African Union and the Regional Economic Communities. 
On the contrary, it is intended to bring the Africa strategy down to national level with a view 
to involving other countries in stronger links with the EU. 

3.4. 

International cooperation on global issues 

South  Africa  occupies  a  unique  position  on  the  international  scene.  On  many  occasions,  it 
speaks on behalf of the emerging and the developing world. Its authority in international fora 
is remarkable and surpasses its economic weight. Although South Africa and the EU do not 
always  take  the  same  positions  on  international  issues,  they  agree  on  many.  Like  Europe, 
South Africa is committed to countering the proliferation of weapons of mass destruction, to 
the recognition of the jurisdiction of the International Criminal Court, to the abolition of the 
death penalty and to combating terrorism. Both share a strong belief in the multilateral system 
of collective security of the United Nations and in the prime responsibility of the UN Security 
Council  for  the  maintenance  of  international  peace  and  security.  Both  also  share  a  strong 
commitment to tackling the causes and impacts of climate change and have confirmed their 
interest in deepening their dialogue on these and other environmental concerns. 

These issues are on the agenda of political talks between the EU and South Africa, but must 
also lead to concrete action. The EU must seek joint positions and effective cooperation with 
South Africa in all of these areas and defend mutual interests at international level. 

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Similarly,  the  EU  must  seek  to  launch  mutually  beneficial  cooperation  on  the  environment, 
energy  security  and  sustainable  use  of  energy  resources,  migration,  the  fight  against  the 
international  drugs  trade,  money  laundering,  tax  fraud  and  avoidance,  corruption,  maritime 
and  aviation  security,  trafficking  in  human  beings,  in  particular  children,  small  arms  and 
organised crime. 

Finally, both partners favour a stronger representation of developing and emerging countries 
in  international  organisations.  To  that  end,  they  need  to  promote  stronger  political 
coordination,  cooperation  in  the  IFIs  and  international  fora,  including  UN  bodies,  and  joint 
action.  

4. 

CONCLUSIONS 

South Africa and the EU share much common ground as bridge-builders between North and 
South, between West and East, between civilisations, peoples and religions. Europe believes it 
can perform this function better in a partnership with South Africa. However, such a strategic 
partnership is not built overnight; it is the result of a dynamic development. The EU is ready 
to  engage  in  this  dynamic  process,  primarily  through  in-depth  and  uninhibited  political 
dialogue and cooperation with South Africa at all levels. 

The  current  organisation  of  political  dialogue  is  based  on  exchanges  with  the  EU  Heads  of 
Mission in Pretoria, regular visits by Ministers and senior officials in both directions and the 
annual  Cooperation  Council.  In  addition,  exchanges  between  the  European  Parliament  and 
South  African  Parliament  are  held  through  the  EP  Delegation  for  South  Africa,  and  South 
Africa  is  an  active  participant  in  the  ACP-EU  Joint  Parliamentary  Assembly.  This 
institutional setup has been considered satisfactory in the past, but needs to be reviewed in the 
light of the strategic nature of the EU-South Africa partnership.  

The  Commission  invites  the  Council,  the  European  Parliament  and  the  European  Economic 
and  Social  Committee  to  endorse  the  main  thrust  of  this  Communication.  On  the  basis  of 
these  broad  principles,  the  Commission  will  draft  an  action  plan  for  implementing  the 
Communication, which will be submitted to the Joint EU-South Africa Cooperation Council 
later this year and should lead to a Joint Declaration by the partners. 

Depending on the discussion in the Council, the European Parliament and the Economic and 
Social Committee as well as on the South African views, such an action plan could focus on  

•  strengthened political dialogue, leading to common political positions and joint action, 

•  active joint involvement in regional and global issues, 

•  implementation  of  a 

jointly  drafted  Country  Strategy  Paper 

in 

line  with 

this 

Communication, 

•  revision and full implementation of the TDCA according to the above priorities. 

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LIST OF ANNEXES 

ANNEX 1 -  BROAD  LINES  OF  A  JOINT  ACTION  PLAN  TO  IMPLEMENT  THE 
COMMUNICATON 

ANNEX 2 -  THE  POLITICAL,  ECONOMIC,  SOCIAL  AND  ENVIRONMENTAL 
SITUATION IN SOUTH AFRICA 

ANNEX 3 -  ABBREVIATIONS 

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ANNEX 1 

BROAD LINES OF A JOINT ACTION PLAN TO IMPLEMENT THE  
EU–SOUTH AFRICA STRATEGIC PARTNERSHIP 

On the basis of the outcome of the discussions in the Council, the European Parliament and 
the  European  Economic  and  Social  Committee,  the  Commission  intends  to  draw  up  a  draft 
Action  Plan  for  the  implementation  of  the  Communication  on  a  strategic  partnership  with 
South Africa. The draft Action Plan will be then be submitted to the Joint EU-South Africa 
Cooperation Council, which is expected to meet towards the end of the year. It is hoped that 
the partners will then adopt a Joint Declaration endorsing the Action Plan. 

Such an action plan needs to be further developed but could focus on  

•  Strengthened political dialogue, leading to common positions and joint political action, 

•  Active joint involvement in regional and global issues, 

•  Implementation  of  a 

jointly  drafted  Country  Strategy  Paper 

in 

line  with 

this 

Communication, 

•  Revision and full implementation of the TDCA according to the above priorities. 

1. 

Political strategy and cooperation 

As indicated in the Communication, stronger political dialogue, leading to common political 
positions on subjects of mutual interest and to joint political action where appropriate, forms 
the  very  backbone  of  the  Strategic  Partnership.  This  dialogue  should  be  frank,  open  and 
uninhibited and exclude none of the domestic, regional, continental and global issues.  

Possible themes for enhanced political and economic cooperation that could be included in the 
action plan are: 

Domestic South African and European issues 

•  Economic and financial policy and Foreign Direct Investment 

•  HIV/AIDS 

•  Health and food security 

•  Crime 

•  Countering racism and xenophobia 

•  Land reform 

•  Governance, democracy and human rights 

•  Employment, economic growth, redistribution of wealth 

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•  EU enlargement, neighbourhood policy 

•  Decent work, including employment,  social safety mechanisms, social dialogue, rights at 

work, gender mainstreaming 

•  Social inclusion and cohesion 

•  … 

Regional issues 

•  Social cohesion; regional integration 

•  See below, point 2 

African matters 

•  EU–AU relations 

•  The EU–Africa summit 

•  The African Union 

•  Peace-keeping and mediation on the African continent 

•  The African Peace Facility 

•  APRM 

•  NEPAD 

•  … 

International and global issues 

•  The MDGs 

•  Countering the proliferation of weapons of mass destruction 

•  Recognition of the jurisdiction of the International Criminal Court 

•  Abolition of the death penalty 

•  Combating terrorism 

•  Global environmental issues, including climate change 

•  Migration 

•  Energy security and sustainable use of energy resources 

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•  The fight against the international drugs trade, money laundering, tax fraud and avoidance, 

corruption and organised crime 

•  Trafficking in human beings, in particular children 

•  ILO 

•  Ratification, implementation and enforcement of core labour standards 

•  Social dimension of globalisation 

•  Small arms and light weapons 

•  WTO and the DDA 

•  The reform and role of the United Nations 

•  Multilateralism and representations in International Financial Institutions 

•  The Middle East peace process 

•  Iraq 

•  Iran and nuclear non-proliferation 

•  … 

2. 

Joint involvement in regional issues 

Because  of  their  topicality  and  particular  interest,  regional  issues  merit  a  special  place  in 
political  dialogue  and  in  joint  action,  trade  cooperation,  economic  cooperation  and 
development  cooperation.  Indeed,  the  regional  context  in  Southern  Africa  is  particularly 
complex and requires a sustained  cooperative effort from all parties, including South Africa 
and Europe. The challenges the region is facing are manifold. 

AIDS is hitting Southern Africa harder than any other region in the world. The impact of the 
pandemic on society, on the health infrastructure and services, on human resources and on the 
economy of the region as a whole will be hugely destructive over the coming years.  

Politically  speaking,  the  SADC  region  will  have  to  come  to  terms  with  important  shifts  in 
power patterns as new regional powers are likely to emerge. In addition, it will have to find a 
solution to the political stalemate in the Zimbabwe crisis. 

A major short-term challenge to the region is untangling the knot of regional cooperation and 
integration.  Implementing  the  SADC  Regional  Indicative  Strategic  Development  Plan, 
agreeing  on  the  right  recipe  for  EPA  negotiations,  clarifying  the  relationship  between  the 
SADC, SACU and the TDCA are issues to be dealt with urgently. 

As  the  prime  mover  in  the  region,  South  Africa  needs  to  assume  its  leading  role  in  these 
matters and must be able to count on Europe’s support. 

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3. 

Country Strategy Paper 2007-2013 

At the moment, the Commission, nine Member States, and the South African authorities are 
jointly drafting a new 2007-2013 Country Strategy Paper. Care will be taken to ensure that the 
drafting  and  approval  of  this  CSP  runs  parallel  to  the  discussion  and  adoption  of  the 
Communication  and  its  subsequent  Action  Plan  and  that  the  CSP  truly  translates  the  broad 
political lines set out by the Communication. 

The  subsequent  implementation  of  the  CSP  along  these  lines  will  form  part  of  the  Action 
Plan. 

4. 

TDCA review 

In  recent  months,  the  review  of  the  TDCA  has  led  to  informal  contacts  between  the 
Commission and South Africa and has enabled the two sides to  

•  tentatively identify those provisions that may need amending (revision); 

•  suggest priorities for those provisions that have not been implemented yet. 

As  regards  the  provisions  that  have  not  been  implemented  yet,  there  seems  to  be  a  strong 
interest  in  deepening  cooperation  in  the  following  areas:  trade  and  trade-related  areas, 
intellectual property rights, customs, competition policy, regional policy, sanitary and phyto-
sanitary measures, technical barriers to trade, maritime and air transport and security, energy, 
information  and  communication  technologies,  mining,  tourism,  consumer  policy,  social  and 
employment policy, science and technology, education and training.  

Among the promising areas of cooperation that can be developed, are 

•  The environment, with particular emphasis on Climate Change 

•  Economic co-operation 

•  Information  society,  where  promising  opportunities  have  been  identified  in  research  and 
education, but also at the policy and regulatory levels as well as on activities related to the 
World Summit on the Information Society follow-up 

•  Education  and  training,  including  student,  teacher  and  academic  exchanges  and  a  “South 

Africa” window in the Erasmus Mundus programme 

•  Industrial, maritime and air transport including safety and security aspects, mining, energy 
in particular in promoting energy efficiency policy and technologies as well as clean coal 
technologies,  and  the  environment,  where  there  is  a  clear  interest  in  exchanging  the  rich 
experiences of both 

•  Justice,  where  exchanges  of  information  and  cooperation  on  extradition  could  be 

developed 

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•  Employment and social protection; gender equality and the promotion of women's rights, 
labour  law  and  dialogue  between  social  partners,  with  a  view  to  promoting  productive 
employment and decent work for all2 

•  Youth, exchange of approaches, experience and best practice 

•  Enhanced  cultural  cooperation,  which  would  offer  both  sides  an  opportunity  to  promote, 
strengthen  and  exchange  their  rich  cultural  diversity,  taking  into  account  the  recently 
adopted UNESCO Convention on the protection and promotion of the diversity of cultural 
expressions 

•  Cooperation in press and information, to improve mutual understanding and visibility 

The Action Plan should contain concrete steps for implementing cooperation in these fields. 

5. 

Institutional architecture 

The  Action  Plan  should  also  include  proposals  for  institutional  arrangements  for  political 
dialogue at various levels, in accordance with the ambitions of the Communication. 

2 

COM(2006)  249:  Promoting  decent  work  for  all  -  The  EU  contribution  to  the  implementation  of  the 
decent work agenda in the world. 

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ANNEX 2 

THE POLITICAL, ECONOMIC, SOCIAL AND ENVIRONMENTAL SITUATION IN 
SOUTH AFRICA 

South  Africa’s  current  social  and  economic  situation  has  been  shaped  by  fifty  years  of 
apartheid.  

Black,  Asian  and  “coloured”  South  Africans  were  forced  off  the  land,  out  of  agricultural 
markets, and increasingly into wage labour as migrants within South Africa’s growing mining 
and  manufacturing  industries.  Black  South  Africans  were  forced  into  overcrowded,  arid 
“homelands”,  which  were  economically  unsustainable  and  dependent  on  agricultural 
“exports” from white South Africa.  

“Bantu” education systems were designed to meet the need for largely unskilled labour. The 
apartheid  regime  imposed  limitations  on  company  ownership  by  black  people  and  the 
business activities that they could engage in, mainly involving the retail supply of food and 
fuel. The resulting shortage of managerial and specialist skills, compounded by limited access 
to  savings  and  credit  institutions,  is  recognised  today  as  a  key  constraint  on  growth  in  the 
small business and informal sector, as demonstrated by the relatively low proportion of small 
and medium-sized enterprises in South Africa.  

In  contrast,  the  largely  white-owned  formal  sector  became  highly  concentrated  and  capital-
intensive.  During  apartheid,  it  grew  on  capital-related  subsidies  and  import  substitution  in 
response to sanctions. The result was that, by 1990, six conglomerates centred around mining 
and finance controlled companies with 80% of the market capitalisation on the Johannesburg 
stock exchange. 

Twelve  years  after  the  apartheid  regime  was  replaced  by  a  democratic  government,  South 
Africa remains deeply marked by its historical heritage. Remarkable achievements have been 
made in reconciling the masters and victims of apartheid, but the “rainbow nation” propagated 
by Nelson Mandela is still far away. Economic disparity prevails. Large firms in the formal 
economy have been able to build on the dominant position secured during apartheid to take 
advantage of the new opportunities in post-apartheid South Africa. This contrasts starkly with 
the  previously  neglected  subsistence  and  informal  economies,  in  which  many  of  the  black 
majority of the population still live in dire poverty3. While the Government is committed to 
narrowing  the  enormous  gap  between  rich  and  poor  through  a  set  of  comprehensive  policy 
measures  such  as  employment  generation,  Black  Economic  Empowerment,  skills 
development and social grants, a fundamental turn-around has not yet been achieved, leaving 
the country with the risk of growing discontent among the poor, with corresponding possible 
threats to its internal political stability. 

3 

These  contrasting  situations  conform  roughly  to  what  President  Mbeki  has  termed  the  “first”  and 
“second” economies. The second economy is “characterised by underdevelopment, contributes little to 
GDP, contains a big percentage of our population, incorporates the poorest of our rural and urban poor, 
is  structurally  disconnected  from  both  the  first  and  the  global  economy  and  is  incapable  of  self-
generated growth and development”. 

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1. 

Political situation 

Since  1994,  in  line  with  the  Reconstruction  and  Development  Programme  (RDP),  the 
government  of  South  Africa  has  set  out  to  dismantle  the  social  relations  of  apartheid  and 
create a democratic society based on equity, non-racialism and non-sexism. New policies and 
programmes  have  been  put  in  place  to  substantially  improve  the  quality  of  life  of  the  vast 
majority of the people. 

The RDP, the core of all post-1994 policies, has as its objectives: 

–  Meeting basic needs 

–  Building the economy 

–  Democratising the state and society 

–  Developing human resources 

–  Nation building 

Although  much  remains  to  be  done  in  order  to  consolidate  the  foundations  of  its  young 
democracy, in which human rights and fundamental freedoms are respected, South Africa has 
made  great  efforts  towards  institutionalising  democracy,  and  the  country  has  experienced  a 
stable political environment. Achievements to date include: 

–  A multi-party political system 

–  A functioning parliamentary democracy  

–  The entrenchment of constitutionalism and the rule of law 

–  An independent judiciary 

–  Mechanisms for accountability, transparency and information in public administration 

The  first  general  and  free  national  and  provincial  elections  in  April  1994  put  an  end  to 
apartheid  and  brought  Nelson  Mandela,  leader  of  the  African  National  Congress  (ANC),  to 
power as President of a Government of National Unity. The second and third elections held in 
June  1999  and  April  2004  confirmed  the  mandate  for  the  ANC,  with  Thabo  Mbeki  as 
President.  In  2004,  the  ANC,  which  regularly  gains  the  majority  of  black  votes,  received  a 
little over a two-thirds majority. Since 2004, it has also been running all nine provinces. The 
ANC  is  in  an  alliance  with  the  Congress  of  South  African  Trade  Unions  and  the  South 
African Communist Party, with which it established common lists for the elections. The main 
official  opposition  in  Parliament  is  formed  by  the  Democratic  Alliance.  The  New  National 
Party, led in 1994 by ex-President De Klerk, decided to disband in 2005 and to integrate with 
the ANC. The share of Mangosuthu Buthelezi’s Inkatha Freedom Party (based in KwaZulu-
Natal)  has  been  continuously  shrinking  (to  7%  at  national  level  in  2004).  There  are  other 
smaller parties such as the Pan African Congress, Independent Democrats and Freedom Front, 
which have an active but small role in the debate on domestic and foreign policy issues. 

During apartheid, civil society played a prominent role in taking pro-active action against the 
government to bring about political change. Since 1994, civil society has continued to make a 

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vital  and  important  impact  on  South  African  society  by  advocating  proper  and  effective 
governance  and  by  championing  issues  such  as  poverty,  gender  parity  and  the  efficacy  of 
service  delivery,  engaging  the  government  on  tangible  reforms.  However,  it  has  been 
weakened by the loss of the donor funding that it received during apartheid, and the loss of 
many of its members to government, the civil service and the private sector. Thus, while new 
partnerships between civil society organisations and the government have gradually emerged, 
especially  for  service  delivery  in  some  social  sectors,  there  is  undoubtedly  scope  for 
strengthening the advocacy and campaigning role of civil society. 

In  spite  of  intense  efforts  to  further  the  peace  and  reconciliation  process  following  the 
apartheid era, both public authorities and civil society are conscious of the need to address the 
issues of exclusion and non-integration, which are still prevalent in all layers of South African 
society.  In  this  context,  the  approval  of  the  Black  Economic  Empowerment  (BEE)  Charter 
and,  more  specifically,  the  implementation  of  the  Broad  Based  Black  Economic 
Empowerment  Act of 2003 are important steps towards economic inclusion  and  equity for 
the black majority of the population. However, black empowerment at the workplace is slow 
and much remains to be done to implement a “broad based” black economic empowerment. 

South Africa plays a key role in the Southern African region. It contributes 50% of the GDP 
of sub-Saharan Africa, and close to 75% of the GDP of the SADC. South African investment 
in  the  rest  of  Southern  Africa  represents  49%  of  the  region’s  FDI,  and  80%  of  trade  in 
Southern  Africa  is  with  South  Africa.  Most  of  this  consists  of  South  African  exports  to  the 
rest  of  the  region.  In  addition,  South  Africa’s  business  expansion  into  the  region  is  gaining 
momentum,  and  there  is  a  long  history  of  regional  labour  migration  to  the  country. 
Furthermore,  South  Africa’s  capacity  in  science  and  technology  represents  a  significant 
resource  for  the  region  in  general.  While  its  economic  dominance  translates  into  significant 
political influence, South Africa’s diplomacy is based on consultation, consent and consensus. 
However, South Africa’s policy of “quiet diplomacy” vis-à-vis Zimbabwe has not yet had the 
desired results. 

South Africa plays an active role at international and pan-African level, also as a mediator 
between the developed and the developing world. South Africa plays a crucial role within the 
African  Union,  NEPAD,  the  Non-Aligned  Movement,  the  WTO  and  the  Commonwealth  of 
Nations. It has been the international venue for high-profile global conferences, including the 
World  Summit  on  Sustainable  Development.  South  Africa  has  concluded  or  is  negotiating 
numerous multilateral and bilateral agreements within the WTO framework, notably with the 
EU,  MERCOSUR,  the  USA  and  EFTA.  In  the  area  of  peace  and  security  as  well,  South 
Africa has been playing a very active and constructive role on the African continent. Here, it 
has  been  involved  in  addressing  crises  and  brokering  conflict  resolution  in  Rwanda,  the 
Democratic Republic of Congo, Burundi, Liberia, Sudan and Côte d’Ivoire. 

2. 

Economic situation 

Economic  growth  in  the  first  10  years  after  the  end  of  the  apartheid  regime  averaged  only 
2.9%  per  annum,  but  increased  to  4.5%  in  2004  and  has  been  estimated  at  5.0%  in  2005. 
South Africa’s economy has moved from being dominated by mining (share in 2005 only 7%) 
and  agriculture  (in  2005  only  3%)  to  a  situation  where  manufacturing  (2005:  20%)  and 
services (2005: 70%) contribute the main shares of GDP.  

In recent years, macro-economic stability has been achieved. As a result, the government has 
had  room  to  increase  its  expenditure.  Fiscal  policy  has  become  more  expansionary,  while 

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keeping within prudent limits. Since 2000, the budget deficit has remained between 1.4 and 
2.3% of GDP. For 2005, the deficit has been estimated at 0.5%. Overall, public debt amounts 
to  30.5%  of  GDP  and  public  expenditure  remains  at  an  affordable  and  sustainable  level  of 
27% of GDP. 

The  achievement  of  macro-economic  stability  is  also  due  to  the  strict  monetary  policy 
applied since the late 1990s, resulting in a reduced inflation rate of 3.9% in 2005, well within 
the South African Reserve Bank’s 3-6% target range. Since the middle of 2003, the Reserve 
Bank has been in a position to reduce interest rates, cutting the repo rate from 13.5% to 7%, 
which  has  also  stimulated  domestic  demand  and  economic  growth.  In  April  2005,  when 
deciding  on  a  further  lowering  of  the  interest  rate,  the  Reserve  Bank  slightly  changed  its 
position: for the first time it took into consideration not only the level of inflation but also the 
impact of exchange rate fluctuations on the export sectors and thus on unemployment. 

As  regards  external  stability,  following  the  depreciation  of  the  rand  in  early  2001,  the 
currency has strengthened considerably since the middle of 2002. This has had a dampening 
effect on the exports of the mining and manufacturing sectors and therefore implications for 
economic growth as well. Increased domestic demand resulting from a growing economy and 
lower  interest  rates,  combined  with  lower  prices  for  foreign  products,  has  led  to  increased 
imports. As a consequence, the current account surplus enjoyed until 2002 became a deficit of 
about 4% of GDP in 2005. This reversal took place mainly vis-à-vis the EU, South Africa’s 
major  trading  partner.  While  South  Africa  had  enjoyed  a  trade  surplus  with  the  EU  since 
1998,  this  turned  into  a  slight  deficit  in  2004.  So  far,  the  current  account  deficit  has  been 
easily financed by significant portfolio inflows. Inflows of foreign direct investment continue 
to  grow,  though  levels  remain  low  and  volatile,  below  $1bn  per  year  or  3.2%  of  GDP.  To 
counter  the  rand’s  volatility,  the  Reserve  Bank  is  in  the  process  of  increasing  its  foreign 
reserves to US $22 billion (23 weeks of imports) by February 2006. 

However, this bright side of the economic medal also has a very prominent dark side. South 
Africa is a dual economy with high inequality in economic and social living standards, based 
on racial lines and on an urban/rural divide. The modern sector, built up under apartheid, has 
been best placed to take advantage of trade liberalisation and macroeconomic stability. Much 
of  this  comprises  large,  capital-intensive  firms.  Smaller  firms  and  those  in  the  informal 
economy  have  done  less  well.  Many  black,  Asian  and  coloured  South  Africans  live  a 
precarious  existence  in  the  “second  economy”,  moving  between  unemployment,  working  in 
the  informal  sector  (often  as  “hawkers”)  and  low-paid  jobs  in  the  formal  sector.  Often  they 
have to travel great distances to formal jobs because of the apartheid policy of locating their 
communities  away  from  the  centres  of  formal  employment.  The  “second  economy”  is  also 
home  to  millions  of  the  poor,  mostly  black,  marginalised  and  unskilled,  who  engage  in 
informal activities mainly for sheer survival. 

While the country has an advanced physical infrastructure as well as sophisticated financial, 
IT  and  telecommunication  networks  similar  to  those  of  the  developed  world4,  it  also  faces 
extreme  deprivation  and  exclusion  and  a  level  of  poverty  that  compares  to  most  least-
developed  countries.  The  Gini  coefficient  of  0.58  illustrates  this  significant  social  and 

4 

Infrastructure,  however,  is  reaching  its  capacity  limits  mainly  in  power  supply,  ports  and  railway 
transport systems, creating the need for big investment programmes (outside ODA). 

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economic divide in South Africa. This affects mainly the black population: almost 50% of the 
black population live below the national poverty line, against only 2% of whites5. 

The  steady  though  modest  economic  growth  and  a  stable  internal  and  external  macro-
economic  situation  have  not  brought  down  unemployment,  the  key  economic  and  social 
problem of the country. 

Slow economic growth, a result of low investment and saving rates (16% and 15% of GDP, 
respectively), coupled with the continued ability of capital-intensive firms to benefit from the 
base  built  up  under  apartheid,  has  curtailed  the  demand  for  labour.  The  opening  up  of  the 
economy  has  reduced  the  importance  of  sectors  such  as  mining  and  clothes  and  textiles  in 
favour  of  growth  in  sectors  such  as  wholesale  and  retail  trade,  services,  construction  and 
communications. Jobs are being created, but not fast enough to incorporate the number of new 
entrants  into  the  labour  market.  The  apartheid  legacy  has  left  South  Africa  with  structural 
obstacles to employment, with people living far from sources of employment growth, workers 
lacking  skills,  potential  entrepreneurs  lacking  both  collateral  and  access  to  financial  and 
business services and a highly concentrated business structure. A workforce that is increasing 
faster  (by  35%  between  1995  and  2002)  than  the  number  of  employment  opportunities  (by 
only  12%  during  the  same  period)  has  also  contributed  to  unemployment.  Presently, 
unemployment stands at between 26% and 41% of the workforce, depending on whether or 
not  “discouraged”  workers  are  included6.  Of  the  unemployed,  a  large  majority  are  young 
people7. There are proportionately more women unemployed then men and unemployment is 
geographically skewed, with the highest levels found in the provinces of Limpopo, KwaZulu 
Natal and the Free State.  

Linked  to  the  issue  of  unemployment  is  the  problem  of  missing  relevant  skills  among  the 
labour  force.  Qualified  employees  are  not  only  lacking  in  comparison  to  the  needs  of  a 
growing  economy  and  social  system,  but  are  also  emigrating  in  large  numbers,  attracted  by 
perceived better financial and living conditions abroad. In contrast, the growing numbers of 
unskilled young people entering the labour market do not meet the requirements of employers 
in either the social or economic sectors. On the other hand, there is a long history of regional 
labour migration to  South Africa,  which continues  to  act  as  a  magnet  for  migrants  of  many 
kinds.  These  include  skilled  professionals,  unskilled  job  seekers,  illegal  migrants,  refugees, 
and  cross-border  traders;  with  human  trafficking  on  the  rise.  While  South  Africa  has 
‘exported’ skills to the developed world, it has also contributed to the drain on skills in other 
parts of the region and the continent8. In total, however, the skills gap is considered a major 
impediment to economic growth. 

One  way  of  boosting  the  development  of  the  second  economy  and  employment  is  the 
promotion  of  small,  micro  and  medium-sized  enterprises  (SMMEs)9.  However,  the 

5 

6 

7 
8 

9 

The black population grew by 7.5 million people, or 25%, between 1994 and 2004 (coloureds by 0.6 
million or 19%, Indians by 0.1 million or 12%, whites by 0.1 million or 2%). 
Employment statistics vary according to sources and can only indicate orders of magnitude and major 
trends, if any. Stats SA has since recently used only the lower figure. 
Currently more than two thirds of South Africans aged between 18 and 35 are unemployed. 
This explains the long delays in the finalisation of a protocol on the free movement of people within the 
SADC. 
Official statistics estimate that around one quarter of the whole workforce is employed in the informal 
sector (particularly in agriculture, construction and the wholesale and retail trade). SMMEs contribute 
30% to GDP and account for 50-60% of formal employment.  

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anticipated employment boom in this sector has remained below expectations. Employment in 
the  informal  sector  fell  by  17%  between  September  2000  and  March  200510.  This  could 
possibly  be  attributed  to  a  regulatory  environment  biased  against  SMMEs,  and  certainly  to 
difficulties  in  gaining  access  to  finance.  There is  an  ongoing  debate  on  whether  to  shift  the 
focus  away  from  promoting  grassroots  SMMEs  towards  establishing  downstream  and 
upstream  links  with  larger  (first  economy)  companies  to  integrate  the  SMMEs  (second 
economy)  into  the  development  value-chain  of  the  economy  as  a  whole.  This  debate 
illustrates  the  need  for  a  coherent  strategy  on  how  to  develop  the  second  economy  and  a 
comprehensive  employment  growth  policy.  Additional  research  and  political  discussion  are 
required for more informed decision-making in this area. 

Both  the  first  and  second  economies  have  considerable  adverse  environmental  impacts. 
South  Africa  is  currently  among  the  world’s  top  20  greenhouse  gas  polluters,  with  an 
expected increase in emissions of 30% over the coming ten years11. There is ample room for 
energy-saving  and  climate-friendly  technologies.  Systematic  and  thorough  environmental 
impact assessments are often not available due to the lack of capacity. 

3. 

Social situation 

A strong social network in support of those who cannot earn a living from the first or second 
economy  is  considered  as  the  third  pillar  of  South  Africa’s  socio-economic  system. 
Remarkable  efforts  have  been  made  to  provide  social  services  to  previously  disadvantaged 
communities.  Government  budgetary  expenditure  on  social  services  has 
increased 
dramatically over the last 10 years and now represents about 63% of the total budget. Since 
1994, close to 9 million people have been provided with a basic water supply: today, 85% of 
households  have  access  to  clean  water.  Over  1.5  million  houses  have  been  built  to  provide 
shelter to over 6 million people. At the beginning of the new millennium, 64% of households 
were living in formal houses. Over 500 000 houses were connected to the main electricity grid 
so that 70% of households were using electricity for lighting. As regards the health sector, the 
immunisation coverage of children against common infectious diseases has risen to 90% and 
the usage of antenatal clinics is as high as 95%. In the field of education, the gross enrolment 
rate  in  secondary  schools  increased  to  89%  in  2004  and  matriculation  pass  rates  improved 
from 49.3% in 1998 to 73.3% in 2003 and 70.7% in 2004.  

To  deepen  and  broaden  democracy,  local  governments  have  been  given  responsibility  for 
delivering  social  and  administrative  services  to  their  populations  -  health,  education, 
water/sanitation, infrastructures, environmental protection, etc. But during the initial stage of 
the  transfer  of  responsibilities,  local  governments  were  overwhelmed  with  the  task.  The 
underspending  by  provincial  departments  of  conditional  grants  earmarked  for  basic  services 
highlights  this  fact.  Poor  service  delivery  at  local  level  has  become  the  cause  for  riots  and 
unrest in the communities concerned. 

A  major  threat  to  stable  social  and  economic  development  with  higher  economic  growth  is 
coming  from  the  HIV/AIDS  pandemic.  The  estimated  number  of  HIV-infected  people  has 
grown  from  3.8  million  in  1999  to  5.2  million  in  2005.  This  represents  an  estimated  adult 
prevalence  rate  of  21.5%,  which  is  substantially  higher  among  the  black  than  the  white 

10 
11 

Stats SA: Labour Force Survey. 
In  addition,  the  so-called  “brown”  environment  issues  adversely  affect  the  lives  mainly  of  the  poor 
urban and peri-urban population. 

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population.  Currently  only  some  80 000  out  of  500 000  to  750 000  people  are  receiving 
antiretroviral  treatment12.  The  medium-  to  long-term  consequences  of  the  pandemic  will  be 
very high social and economic costs following a reduction in the total population, reduced life 
expectancy and the loss of economically active people, coupled with a drastic increase in the 
number of orphans13. 

South  African  crime  levels  are  among  the  highest  in  the  world.  Although  recent  statistics 
released  by  the  government  in  2004/2005  indicate  that  some  crime  rates  are  declining,  the 
high level of crime and violence has highly adverse effects on the lives and the well-being of 
all parts of the population. It also risks having adverse effects on domestic economic viability 
and  on  foreign  direct  investment  in  South  Africa.  White-collar  crime  in  the  form  of 
corruption has a damaging effect on development for the poor and on public confidence in 
government,  both  nationally  and  at  local  level.  The  issue  has  received  particular  attention 
from the government. 

Access to justice for vulnerable and indigent groups of the population remains an issue, partly 
due  to  the  difficult  accessibility  mainly  in  rural  areas  and  partly  due  to  an  overburdened 
system. The state’s response to crime has so far tended rather towards retribution, resulting in 
tougher laws and maximum sentencing, leading to the highest incarceration rate in Africa14, 
while restorative justice approaches still need to be explored. 

Under the apartheid regime, around 6 million people were forcibly moved from their land. As 
a result, land and land reform are unquestionably emotive issues. In 2000, the South African 
government  recommitted  itself  to  its  1994  RDP  target  of  transferring  30%  of  the  country’s 
agricultural  land,  around  24  million  ha,  to  previously  disadvantaged  communities  by  2014. 
The implementation of the land reform has, however, made only slow progress. Since 1994, 
black ownership of  land  has  increased by  only  3%  (2.3 million  ha) to  16%  at present  (12.8 
million ha). As regards land restitution, of a total of 79 000 claims originally lodged, 57 900 
have  been  settled  at  a  cost  of  R2.5  billion.  The  deadline  for  settling  claims  has  had  to  be 
extended  to  2007.  The  slow  progress  of  the  reform  has  increased  voices  of  discontent,  in 
particular from organisations such as the  Alliance of Land and Agrarian Reform (ALARM) 
composed  of  landless  people’s  organisations,  NGOs,  small  farmer  and  producer  groups  and 
the South African Communist party. It is in general recognised that faster progress is required 
in order to ensure social cohesion and political stability.  

4. 

Environment situation 

As  both  an  industrialised  and  a  developing  country,  South  Africa  faces  environmental 
challenges of both kinds. The causes and effects of climate change, air pollution resulting in 
acid rain, growth in water usage outpacing supply, pollution of rivers from agricultural runoff 
and  urban  discharge,  soil  erosion  and  desertification  are  among  the  major  problems  the 
country has to tackle.  

Emissions from vehicles (aeroplanes, ships, trains and road vehicles), contribute 44% of the 
total national nitric oxide emissions and 45% of the total national volatile organic compound 
emissions (VOC). This is particularly a problem in urban areas. 

12 
13 
14 

Government has allocated more than R3.4 bn for antiretroviral drugs up to end of 2007. 
It is estimated that there will be about 1.5 million children orphaned by HIV/AIDS by 2010. 
413 of every 100 000 inhabitants (2004), with 186 000 prisoners held in overcrowded detention houses. 

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The energy sector as a whole is the single largest source of carbon dioxide (CO2), one of the 
primary causes of climate change, and sulphur dioxide (SO2) emissions in South Africa. This 
is mainly due to the reliance on coal (75% of its primary energy) and oil or its products. A 
growing  energy  demand,  combined  with  a  continued  reliance  on  coal,  as  well  as  a  growing 
transport sector, will create increasing pressure on South Africa to tackle its greenhouse gas 
emissions to help address the causes from climate change. At the same time, South Africa's 
climatic sensitivity, with most crop agriculture taking place where it is only just climatically 
viable, will increase the need to adapt to the growing impacts of climate change. 

South Africa is an arid country with only 8.6% of the rainfall available as surface water. This 
is one of the lowest conversion ratios in the world. Similar to surface waters, South Africa's 
groundwater  resources  are  relatively  limited  compared  to  world  averages.  The  scarcity  of 
freshwater resources and highly variable hydrological conditions have led to every major river 
in  South  Africa  being  regulated  in  order  to  ensure  adequate  water  supply  for  development. 
South  Africa's  available  freshwater  resources  are  already  almost  fully-utilised  and  under 
stress.  At  the  projected  population  growth  and  economic  development  rates  and  with  the 
increasing  impacts  of  climate  change  it  is  unlikely  that  the  projected  demand  on  water 
resources in South Africa will be sustainable. Limits to both water supply and quality are thus 
likely to restrain the country's further socio-economic development. Many water resources are 
polluted  by  industrial  effluents,  domestic  and  commercial  sewage,  acid  mine  drainage, 
agricultural  runoff  and  litter.  To  augment  supplies,  South  Africa  is  looking  towards  water 
sources  in  other  southern  African  countries  (e.g.  Lesotho)  to  assist  in  providing  sufficient 
water for projected future demands. 

More  than  90%  of  South  Africa’s  land  surface  falls  within  a  desertification  risk  area.  The 
Department  of  Water  Affairs  and  Forestry  is  promoting,  via  its  National  Action  Plan,  the 
development of community forestry to reduce the pressure on natural woodlands which as the 
only source of energy for many poor suffer from rapid depletion. 

South  Africa's  coastal  and  marine  resources  are  under  considerable  threat  and  are  already 
severely  degraded  in  many  areas  due  to  over-harvesting  and  urban/industrial  development. 
Coastal areas in South Africa are mainly used for tourism, recreation and leisure, commercial 
and recreational fishing, agriculture and mining. Many South Africans are dependent on the 
coast for their subsistence. At present, it is estimated that about 12 million people live within 
60 km of the coast, which constitutes about 30% of the population. Thus coastal and marine 
resources play a major role in sustaining the economic and social development, and contribute 
to the employment and food security of local populations. The major land-based pollutants are 
wastewater from industries and sewerage as well as run off from agricultural lands and urban 
areas.  South  Africa  is  situated  on  one  of  the  major  global  oil  tanker  routes  which,  together 
with  its  notoriously  rough  sea  conditions,  make  it  highly  vulnerable  to  oil  spills.  This  is 
reflected in the relatively high number of shipping accidents, which have been recorded.  

South Africa has one of the world's greatest diversity of plant and animal species contained 
within  one  country,  and  is  home  to  many  species  found  nowhere  else  in  the  world.  With 
increasing  demand  for  land  restitution  it  is  anticipated  that  there  will  be  increased  loss  of 
natural habitats and, with it, potential loss of biodiversity.  

South  Africa's  total  waste  stream  for  1998  was  estimated  at  538  million  tonnes  of  which 
industrial  and  mining  waste  amounts  to  about  470  million  tonnes  per  annum  (87%).  Non-
hazardous industrial waste amounts to approximately 16 million tonnes. 95% of urban waste 
is disposed of on landfill sites of which there are about 1,200 in South Africa. 

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South Africa has put in place a set of legislation and regulatory instruments to address these 
issues, which includes  

•  The  Environmental  Impact  Assessment  regulations  and  the  associated  schedule  of 
activities as well as the Guideline Document for the Implementation of the Environmental 
Impact Assessment regulations were adopted in 1997, 

•  The Development Facilitation Act, 1995, 

•  The National Environmental Management Act, 1998 (NEMA),  

•  National Water Act, 1998. 

In  addition  South  Africa  has  signed  or  adhered  to  several  international  environment 
conventions15. 

5. 

Medium Term Challenges 

Over  the  next  decade,  South  Africa  must  maintain  a  coherent  and  structured  approach  to 
tackling  poverty  by  integrating  it  into  sector  policies,  strategies,  project  activities  and 
budgetary  allocations.  The  vision  for  2014  is  to  reach  a  united,  non-racial,  non-sexist  and 
democratic  society.  The  consolidation  of  democracy  will  be  closely  linked  with  measures 
aimed at integrating all of society into a growing economy from which all people can benefit. 
Failure  to  reach  this  target  might  well  result  in  continued  unacceptably  high  levels  of 
economic and social poverty and inequality, which will adversely affect political stability, as 
occasional demonstrations and protests among the poor have already suggested. 

High unemployment, resulting in poverty, crime and, eventually, political instability, as well 
as  the  incessant  spread  of  the  HIV/AIDS  pandemic  are  the  current  main  challenges  facing 
South African society.  

One way of tackling unemployment is considered to be sustainable higher economic growth, 
in particular resulting from labour-intensive economic activities. Under this approach, the first 
economy  will  need  to  continue  to  play  the  dominant  economic  role,  but  with  the  focus  on 
supporting  and  strengthening  the  second  economy  to  enable  it  to  become  part  of  the 
mainstream economy of South Africa. In this context, skills development in all crucial areas 
is  high  on  the  priority  agenda.  This  approach  should  address  the  inequality  of  income 
distribution  too.  A  further  aim  is  to  limit  and,  if  possible,  reduce  the  dependence  of  a  large 
number of households on social grants. 

15

These include: 
UNFCCC - Framework Convention on Climate Change (1992, New York) (UN)  
Basel  Convention  on  the  Control  of  Transboundary  Movements  of  Hazardous  Wastes  and  their 
Disposal (1989, Basle) (UNEP) 
UNCBD - Convention on Biological Diversity (1992, Rio) (UN) 
UNCCD  -  United  Nations  Convention  to  Combat  Desertification  in  Countries  Experiencing  Serious 
Drought and/or Desertification, Particularly in Africa (1994, Paris) 
London  Convention  1972  Convention  on  the  Prevention  of  Marine  Pollution  by  Dumping  of  Wastes 
and Other Matter  
CITES - Convention on International Trade in Endangered Species of Wild Flora and Fauna) 1973  
RAMSAR - The Convention on Wetlands, Ramsar, Iran, 1971. 

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The  good  health  of  the  population  is  a  further  prerequisite  for  the  prosperous  social  and 
economic development of South Africa. Key challenges in the health sector therefore include 
the  expansion  of  access  to  the  primary  health-care  system.  This  concerns  in  particular 
maternal  and  child  health  and  infectious  diseases  (HIV/AIDS,  tuberculosis  and  other 
communicable  diseases),  which  need  to  be  addressed  in  order  to  reduce  mortality  and 
morbidity.  A  multi-faceted  approach  to  combating  the  HIV/AIDS  pandemic  needs  to  be 
placed high on the agenda, covering at least three areas: prevention, addressing health system 
constraints to scale up anti-retroviral treatment, and care for the increasing number of orphans 
and  vulnerable  children.  Tackling  these  infectious/communicable  diseases  will  also 
necessitate  further  EU-South  Africa  cooperation  and  partnership  in  the  field  of  the  clinical 
research for the development of new drugs and vaccines. 

The  fight  against  criminality  (including  corruption)  and  respect  for  the  rule  of  law  is  a 
huge challenge that requires major investment in human resources and equipment. This needs 
to  be  coupled  with  strengthening  of  the  capacity  of  law-enforcement  agencies  and  strong 
cooperative partnerships with communities and civil society organisations. Crime prevention 
and the introduction of a credible restorative justice approach need to complement the mainly 
retributive approach so far pursued. 

Social, political, economic and environmental stability can only be ensured in South Africa if 
the challenge of access to land and security of tenure is met. This has to be seen as part of a 
strategy to uplift the rural poor and give them access to the mainstream economy, while at the 
same  time  guaranteeing  the  constitutional  protection  of  property  rights.  This  process  must 
ensure that the beneficiaries of land restitution and redistribution are able to use the land in a 
productive  manner,  which  is  the  key  to  building  sustainability  into  the  process  of 
redistributing assets to previously disadvantaged communities. 

The protection of the environment and the sustainable use of natural resources also present 
a major challenge in the medium term. 

All  of  the  above  challenges  require  better  delivery  of  services  to  South  Africans.  This  has 
become  a  major  preoccupation  for  the  government.  In  order  to  be  able  to  meet  these 
challenges  and  to  deliver,  government  needs  to  continue  its  efforts  to  strengthen  its  own 
institutional  and  administrative  capacity  at  national,  provincial  and  local  level.  Capacity 
building efforts must consequently be considerably strengthened, in particular at local level. 

Participation  by  communities  and  civil  society  is  key  to  policy  implementation.  Public-
private  partnership  encourages  the  mobilisation  of  private  resources  for  development 
objectives.  Specific  mechanisms  to  ensure  participation  and  partnership  at  local  level  are 
crucial. 

In the light of South Africa’s current political and economic position and power as well as of 
its  enormous  additional  potential,  the  country  has  a  vital  political  role  to  play  at 
international level in advocating the interest of developing countries. At pan-African level, 
the  AU  and  NEPAD  are  faced  with  tremendous  challenges  in  establishing  functioning 
democracies  based  on  peace  and  security  and  with  the  capacity  for  the  sustainable 

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development  required  to  alleviate  poverty.  South  Africa  is  expected  to  be  continuously 
engaged in this important process16. 

16 

South Africa has already developed a range of instruments to this effect, such as the Renaissance Fund, 
DBSA, etc. 

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Abbreviations 

ACP 

AIDS 

ANC 

APRM 

ASF 

AU 

BEE 

ANNEX 3 

Africa, Caribbean, Pacific 

Acquired Immunodeficiency Syndrome 

African National Congress 

African Peer Review Mechanism 

African Standby Force  

African Union 

Black Economic Empowerment 

BRICS 

Brazil, Russia, India, China and South Africa 

CSP 

EC 

Country Strategy Paper 

European Community 

EDCTP 

European and Developing countries Clinical Trials Partnership 

EDF 

EP 

EPA 

EPRD 

ESDP 

EU 

FTA 

G8 

GDP 

GNI 

HIV 

ICT 

LDC 

European Development Fund 

European Parliament 

Economic Partnership Agreement 

European Programme for Reconstruction and Development 

European Security and Defence Policy 

European Union 

Free Trade Agreement 

Group of 8  

Gross Domestic Product 

Gross National Income 

Human Immunodeficiency Virus 

Information and Communications Technology 

Least Developed Countries 

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LIC 

MDGs 

MIC 

MIP 

Low Income Countries  

Millennium Development Goals 

Middle Income Countries 

Multi-annual Indicative Programme 

NEPAD 

New Partnership for Africa’s Development 

NGO 

ODA 

OECD 

PRSP 

REC 

RDP 

RIP 

RISDP 

SACU 

SADC 

SMEs 

SMMEs 

SWEEEP 

TDCA 

UN 

WTO 

Non-Governmental Organisation 

Official Development Assistance 

Organisation for Economic Cooperation and Development 

Poverty Reduction Strategy Process 

Regional Economic Community 

Reconstruction and Development Programme 

Regional Indicative Programme 

Regional Indicative Strategic Development Plan (SADC) 

Southern African Customs Union 

Southern African Development Community 

Small and Medium-Sized Enterprises 

Small, Micro and Medium-Sized Enterprises 

Sector Wide Enterprise, Employment and Equity Programme 

Trade, Development and Cooperation Agreement 

United Nations 

World Trade Organisation 

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