2 CHAPTER 1


acceleration of further investments in human and physical capital in the long run (Lucas 1988). The experiences in Asian economies show that human capital is one of many critical factors that can enhance economic growth with equity (World Bank 1993).


This monograph describes challenges and possibilities in the formation of human capital in South Africa. The country experienced apartheid until the mid-1990s. Given the difficulty in directly redistributing assets and wealth from the historically advantaged minority to the majority, the broad formation of human capital in the population—especially access to quality education among the majority Africans—appears to be able to provide more opportuni- ties to the majority of Africans and to have the potential to improve equity in the country.1


Why Human Capital Is Important in South Africa This monograph highlights the issues surrounding human capital formation in South Africa. Apartheid resulted in segregation and discrimination against the majority African population in almost all aspects of social life, such as education, employment, and residence. As part of apartheid, Africans were deprived of both physical and human assets, being forced to live on infertile land or in urban townships, and of the rights of citizenship and political par- ticipation, particularly the right to vote.2


Since 1994 the South African government has promised to implement policies to help the majority of Africans to gain lost opportunities. However, since the redistribution of assets from the minority whites to the majority Africans has been politically challenging, the country has also taken more gradual measures to improve equity, without adversely affecting its economic performance. In the area of public education, the government of South Africa formally terminated school segregation laws, but realities for African learners did not improve greatly (see Chapters 2 and 3). The government introduced the South African School Act (Republic of South Africa 1996a, 1996b) and the Norms and Standards for School Funding (Republic of South Africa 1998) to provide guid- ance in implementing a nonsegregated education system. Under apartheid, segregated schools were governed by racially separate government agencies according to their classification both by population groups (white, colored,


1 This process could create inequalities among Africans during the transition period, when more high-quality schools are introduced to the African population. However, given the current gap in the quality of schools available to the races, especially whites and Africans, the above-


mentioned change is expected to narrow the gap in earnings in the labor market. 2 Even before apartheid, Africans had been in an inferior situation for years. However, system- atic legal structures that segregated and discriminated against Africans were enforced under apartheid.


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