Throughout history, South Africa has been considered a high-risk nation because of its weak infrastructure in the labor sector. There is no minimum wage, unemployment has reached as high as 38%, and there is low productivity in the factories. These factors, as well as extremely high rates of inflation, led to negative gross domestic product growth from 1988 to 1992. The low points in this period included a sharp decrease in living conditions in the lower class areas, which in turn led to several violent uprising throughout the country.
In order to combat this recession, President Nelson Mandela made several reform-based decisions starting in 1994 to improve infrastructures nationwide. Mandela dedicated $135 million to improve schools, and another $14 million to create a free health care system. The unique aspect of this reform system was that it was internally financed instead of being reliant on outside forces. It was funded by increasing trade, taking donations from the large private sector, and decreasing military expenditures. Additionally a 5% tax was imposed on all households that earned above 50,000 rands, the official currency. Finally, the business community added to the cause by offering free job training, temporary housing, and education to those in need.
The conditions in South Africa have been constantly improving since 1994, and their contributions to the world market in terms of exports have also increased. At the same time, however, they weren't forced into huge debts to foreign countries that usually run at very high rates of interest. Instead, South Africa is proof that internal reforms can take place, and the area of the country to attack is class structures. In many examples of development, these strategies only work to drive the upper class higher and the lower class lower. But by working to redistribute income and close the gap, the government was in turn bringing the country together.
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