FACTBOX: Key issues in South Africa

(Reuters) - Kgalema Motlanthe, the deputy leader of ruling ANC, will be appointed South Africa's caretaker leader following the resignation of Thabo Mbeki, party sources said on Monday.

Following are some of the main issues facing South Africa.

LEADERSHIP

The ANC'S removal of Mbeki exposed deep divisions in the party and raised questions about its future. Party leader Jacob Zuma is expected to become president in an election in 2009. Foreign investors hope he does not bow to pressure from his left-leaning allies in trade unions and the Communist party to steer away from pro-business policies.

ECONOMY

South Africa has enjoyed its longest period of economic expansion over the past nine years, with annual growth averaging 5 percent over the past four years. But growth is expected to slow in 2008 because of cooling consumer demand on higher interest rates, slower world growth and electricity shortages.

Inflation has surged to record levels, driven largely by rising international food and fuel costs, but is likely to ease in 2009. This would enable a new government to begin cutting interest rates from current 5-year highs.

CRIME

South Africa has some of the highest rates of murder and rape in the world. Opposition groups and the media have accused the government of failing to curb crime. The government has said it will boost spending on the criminal justice system to combat crime and to try to make the streets safe before the country hosts the 2010 soccer World Cup.

AIDS

Some 5.5 million people (or about 12 percent of a population of 47 million) have HIV. There are 500,000 new infections every year, including 100,000 children, and each year 400,000 people die from the virus, UNICEF has said. South African officials, including Mbeki, have infuriated AIDS activists by questioning accepted science around the virus.

ENERGY

South Africa, which relies on coal for the lion's share of its power generation, is in the grip of an electricity supply crunch, the result of years of underspending by the government on generation capacity.

The power shortage in Africa's biggest economy led to nationwide power cuts in January. This affected large aluminium smelters and forced gold and platinum mines to shut down operations for five days, pushing the precious metal prices to records and undermining South Africa's economic outlook.

Mines, a cornerstone of the economy, have since then seen production fall after operating with reduced power supplies since state-owned utility Eskom asked users to cut demand by 10 percent each. Eskom generates about 95 percent of South Africa's electricity and has rationed power to big users since the crisis.

South Africa's National Treasury has budgeted 60 billion rand over the next three years to help Eskom pay for its 343-billion rand, five-year expansion program. Eskom plans to raise the rest from government, capital markets and development financiers, such as the World Bank.

POVERTY

Millions of black South Africans still live in grim townships lacking basic services. A government report in July said economic equalities remain after the fall of apartheid although fewer people are still caught in grinding poverty.

The Presidency's Development Indicators 2008 report said the standard of living for a large number of people had improved between 2000 and 2007, with incomes improving across all sectors. But the fruits of economic expansion were not enjoyed by all South Africans, the report said.

BLACK EMPOWERMENT

The government has said it is committed to Black Economic Empowerment (BEE), an affirmative-action program aimed at bringing blacks into the mainstream economy, which is still dominated by whites 14 years after the end of apartheid. Critics say it has made a small minority of black businessmen rich rather than helping poor blacks.

LAND

Disproportionate ownership of land by the white minority has made land reform a leading issue. Mbeki's government vowed to put a third of all arable land in black hands by 2014, but more than 90 percent is still owned by the white minority.

(Reporting by Michael Georgy, James Macharia and Gordon Bell; Editing by Timothy Heritage)