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Country report of South Africa on the situation of children in residential care in anticipation of the Second International Conference on Children and Residential Care: New Strategies for a New Millennium, to be held in Stockholm 12 – 15 May 2003. South Africa is characterised by high levels of poverty (‘poor’ is defined as the poorest 40% of households. In South Africa 7 of every 10 children live in poverty and children in rural areas (70%) are more likely to live in poverty than those in urban areas. The HIV/AIDS pandemic has had a significant impact on family and community life in South Africa. The rate of infection has increased in prevalence from 22.4% in 1998 to 24.5% in 2000. The obvious result of the continued escalation of the HIV/AIDS pandemic is the negative impact that it has on children. It is projected that by year 2005 there will be one million orphans in South Africa and two million orphans by 20106. These are conservative projections.