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There is some incredible diving in South Africa, and apart from the flights which are still very expensive once you are there you can have an incredible vacation for very little money.
I am from SA so I can recommend a few places.
Sodwana Bay is one of SA's top dive sites, it is on the East coast near the border with Mozambique. Depending on what sort of accomodation you want you can easily get 1 week accommodation, 3 dives a day and all meals included from anything from $300 to $1000. The $300 would be spending the nights in tents, but those that dont want to rough it could rent a wooden cottage or even a 4 room house for $1000 or less. As for the diving Sodwana is incredible, it is normally quite busy though as its one of SA's top sites.
Further down the coast is Aliwal Shoal, again there is a range of accomodations here but again $500 or so should be more than enough for a weeks accommodation and at least 2 dives a day. The diving at Aliwal is incredible, some great wrecks (The Produce is still one of my fave dives) and depending on the time of year some awesome shark encounters. The ragged tooth sharks are there en mass around June/July each year for breeding.
Another great site in the area is Protea Banks, for advamced divers only as it is deep and there are lots of sharks around (tigers, zambezis and if you lucky a great white)
So give SA a consideration, you can fall into the tourist traps which cost a fortune, or do it with a little less luxury for a great price. You will get to meet some great people and will leave with wonderful memories.
If anyone has any questions feel free to ask, I can put you into contact with charters/dive shops/resorts there
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