South Africa's economy has historically been dependent on the mining and commercial agriculture sectors. Following large scale retrenchments and job losses in the late 1980s it was recognised that South Africa's economy would continue to decline or stagnate if it did not diversify. There was also a realisation that the focus on promoting and growing large scale businesses would have little effect in reversing the economic marginalisation of the black population. The post-apartheid South African government therefore adopted various responses to this. On the one hand it has focused on diversifying and growing jobs within the formal economy by promoting the growth sectors, such as manufacturing, tourism, and information and communications technology. While these efforts have had some results, this on its own has had little impact on unemployment which remains high, at nearly 30%.

On the other hand, efforts to create, support and grow a black business sector have been adopted in South Africa through various Black Economic Empowerment (BEE) and small and micro business development initiatives. BEE initiatives have been criticised as having benefited a few, while small and micro business development initiatives have not had the impact required in reducing unemployment and in strengthening entrepreneurship in South Africa.

The successful elections in Lesotho in early 2002 have catalysed a new enthusiasm for development in this country, whose economy is directly linked to that of South Africa. National and local government in Lesotho are keen to promote opportunities for income generation, particularly in the agricultural and tourism sectors. These can be particularly important for returning miners, either through retrenchment, retirement or chronic illness.

CARE's economic empowerment programme has developed out of its international experience in Small Economic Activity Development (SEAD) programmes and its household livelihood security framework. At a local level, studies in both Lesotho and South Africa have identified some of the key issues that underpin programming directions for the Economic Empowerment Programme:

• Micro-enterprise development services tend to be supply rather than demand-driven — providing standardised services that do not necessarily address the specific constraints and opportunities of a given locality. This results in the proliferation of the same low margin, highly competitive and unsustainable enterprises and saturated markets.
• Limited awareness of marketing opportunities in NGOs and CBOs involved in micro-enterprise development. Access to local level market information is also limited for rural and peri-urban economies.
• The need to identify viable business opportunities for micro-enterprises.

1. Supporting and identifying market opportunities and increasing access

   Many NGOs and CBOs in poorer communities in South Africa and Lesotho aim to assist their clients to set up income generation and micro-enterprise development projects or businesses. However in many cases these organisations lack the capacity and tools (methodology, systems etc) to collect and analyse economic and market related data at the community and household level. This in turn limits these organisations' ability to assist their clients in identifying viable business and market opportunities. Various government departments, particularly in South Africa, are also involved in supporting micro-enterprises. Yet they face similarly constraints in collecting and analysing economic and market related data at the community and household level.
   
   CARE aims to develop the capacity of NGOs, CBOs and government departments to conduct community and household level economic and market analyses. CARE also develops and designs participatory tools which can be used by these organisations to assist their clients to identify viable business and market opportunities, to identify and build capacity required to pursue these opportunities and to build partnerships with organisations that can support them in developing viable micro-enterprises.
   
   

2. Building planning and implementation capacity for local economic development by both state and non-state actors

   CARE believes that strengthening local government's capacity to plan and implement local economic development strategies is an important aspect of supporting recent moves to strengthen and further democratise local and district level government in South Africa and Lesotho. In South Africa particularly, there has been a strong drive towards developing participatory planning methodologies at the local level. Through this strategic direction CARE aims to develop assessment, planning and monitoring methodologies to increase the capacity of local structures to plan and implement local economic development. CARE will use tools and experience gained through its LEAP programme in two provinces in South Africa, and other experience gained internationally, in building capacity at the local and district level. CARE is interested in partnering with local level state and non-state actors in testing the broader use of the LEAP (see below) tools and other methodologies.
   
   

3. Promoting and strengthening savings based initiatives

   Promoting savings based initiatives as a springboard for poor people to access credit or as an economic safety net for various "shocks" (e.g. chronic illness or death of a bread winner) is an important aspect of CARE's work in economic empowerment. CARE has played a role in supporting and promoting village banking in South Africa, and has been involved in developing policy related to rural (micro) banking policy development in Lesotho. CARE South Africa-Lesotho is also currently exploring the piloting of a savings and credit model developed by CARE Niger in Lesotho as a cross programme initiative with the HIV/ AIDS theme.

• CARE's activities and initiatives: