Ten years after apartheid ended, South Africa still faces the challenges of reducing inequality and enhancing growth performance. The policies implemented so far have had somewhat limited results. In terms of growth, South Africa, grew by 2.2 per cent in 2001, from 3.4 per cent in 2000, mainly on account of a contraction in overseas demand that lowered export prices and volumes. However, the sharp depreciation of the exchange rate at the end of 2001 mitigated the slowdown of the economy, and growth is expected to be about 2.7 per cent in 2002 and 3 per cent in 2003, supported by buoyant exports, domestic demand and higher public investments. The positive expectations are, however, precarious as uncertainty and lack of confidence in the economy remain, fuelled by the political instability in neighbouring Zimbabwe, the delay in the privatization process, the high level of crime, and the handling of HIV/AIDS. These are among the main factors that determined the sharp depreciation of the rand in the second half of 2001 (when it depreciated by 34 per cent against the US dollar)…