multinationals: doing business with apartheid
Note: Space doesn't allow a full treatment here of anti-apartheid activities in those Western industrialized countries which have been South Africa's most faithful economic backers. Thus, the activities described below should be seen as representative of a much wider effort. Attention has been centred on groups in the United Kingdom and the United States since those nations account for nearly 80 per cent of total foreign investment in South Africa.
The development of the South African economy since World War II is one of capitalism's great success stories. A frontier society in 1945, South Africa today boasts the most highly industrialized, technologically sophisticated economy on the African continent. With the world's fastest rate of economic growth (after Japan), the country attracted more foreign investment in the first two decades after World War II than in all the years preceding the war. By 1974, overseas investment in South Africa totalled R 12.8 bn. (1 South African Rand = US$ 1.40) and offered a rate of return on investment of 22 per cent, twice the world average.
Spectacular economic growth and the steadfast support of overseas investors have encouraged white South Africans to turn a deaf ear to external criticism of their country's apartheid system. As the South African Broadcasting Corporation remarked in January 1978: "...that is why South Africa has learned to treat with due disregard the sound and fury of the activists... Talk is cheap but money buys the whiskey". The table below gives an idea of who has been buying the drinks for the Pretoria crowd lately.
Foreign investment in South Africa, by country (1976 figures for 3 top investors)
| Country | No. of companies | Total investment | % of overall |
| UK | 699 | US$7.72bn. | c. 69% |
| USA | 539 | US$1.70bn | c.17% |
| West Germany(*) | 135 | US$0.29 bn | unknown |
(*) West German figures are for private investment only; one source puts total West German investment in South Africa as high as US$ 1.5 bn.
However, foreign investment has done more to shore up apartheid than simply offer psychological reinforcement. To begin with. South Africa's development programme and the high standard of living it has produced (for whites) are heavily dependent on overseas capital and technology. A fourth of total capital investment in South African enterprise is foreign; multinational banks hold some 60 per cent of the total assets of the country's 20 leading banks. As well, overseas finance (including the United States government's Export-Import Bank) provides credits to enable South Africa to buy abroad what it cannot produce at home. US banks alone are said to have some US$ 3 bn. tied up in loans to South Africa, many of them for use in covering the nation's chronic trade deficits.
More importantly perhaps, transnational investors are contributing to South Africa's desperate campaign for economic self-sufficiency, in anticipation of the day when sanctions will be imposed upon the country (as in neighboring Rhodesia in 1965). The most obvious example is energy. Some 90 per cent of South Africa's oil needs are met by imports, at an annual cost of US$ 1.5 bn. Several foreign oil companies, including British Petroleum, US-based Caltex and Mobil, and French Total, are engaged in oil exploration off the South African and Namibian coasts. Other overseas firms are engaged in developing alternative sources of energy. Britain's Rio Tinto Zinc is the leader in South African uranium ore mining and processing, while West Germany's Lurgi Company is pushing ahead with the gasification of South Africa's huge coal reserves. And, the French Framatome-Spie. Batignolles-Alsthom consortium began work last year on South Africa's first nuclear power complex.
South Africa's white minority also depends on foreign help to keep the apartheid structure working. IBM computers have "modernised" the country's infamous Pass Law system. State-owned British Leyland and US-based General Motors supply vehicles to the South African armed forces and police. The French aircraft industry builds the Alouette helicopters and Mirage fighters that hunt out guerrillas in Namibia. Most dangerous of all, however, a combination of US, French and German technology may be enabling the South African government to build atomic weapons. Some 1,200 South African nuclear researchers and engineers have been trained at the Federal Republic's atomic facility at Karlsruhe. The German STEAG combine (in which the Bonn government has a stake) and US companies have helped South Africa to produce enriched uranium, a first step towards the making of an atomic bomb.
The vital link between foreign capital and white minority rule in South Africa has been a major target of anti-apartheid forces for years. The UN General Assembly has repeatedly condemned the foreign companies and banks "which continue to exploit the racially oppressed people of South Africa and thereby are accomplices to the crimes of the apartheid regime" (Resolution of 9 November, 1976). However, the UN has had little success in convincing member governments to stop corporate collaboration with the white supremacists. The British Labour government is a good example.
The United Kingdom accounts for about 60 per cent of total foreign investment in South Africa. Thus, any serious effort to discourage multinational company operations there must start in London. So far, however. United Kingdom governments have not been very co-operative. In addition to joining the US and France in vetoing UN Security Council proposals for economic sanctions against South Africa, Whitehall has turned a blind eye to increased investments there by state-owned British Leyland, British Petroleum and British Steel.
In the absence of government resolve, British action against investors' support for apartheid has been led by citizens: groups and trades unions. Since 1959, for example, the British Anti-Apartheid Movement (AAM) has worked for "capital disengagement as part of a total policy of disengaging British support from the South African regime and redirecting it towards the forces of liberation". In the 1970s, AAM's coalition of Labour Party militants, trade unionists and students has exposed and protested against the South African operations of UK-based firms like British Leyland, Rio Tinto Zinc, British Petroleum, Royal Dutch/ Shell (an Anglo-Dutch combine) and Barclay's Bank. AAM has used a variety of tactics in its campaigns: working within the Labour Party to force government action against firms which collaborate with South Africa; urging stockholders to protest company investments in South Africa; encouraging British workers to "black" goods destined for South Africa.
The fight against British banks' support for the Pretoria government has been led by the End Loans to South Africa (ELTSA) group and the AAM. In 1976 and 1977, ELTSA sponsored shareholder resolutions asking the Midland Bank, a leading lender to South Africa, to suspend its credits to that country. Working closely with the UK Methodist Church, a major stockholder in Midland, ELTSA was instrumental in convincing the bank to announce in March 1978 that, henceforth, its loans to South Africa would be limited to financing trade with Britain. ELTSA has now turned its attention to two other big lenders to South Africa, Hill Samuel and Standard Bank.
The US is the second ranking foreign investor in South African industry, with a 1977 stake of US$ 1.7 bn. (around 17 per cent of total overseas investment). However, US holdings are more important to the South African economy than their comparative size would seem to suggest. US capital has gone increasingly into the high technology sectors of South African enterprise, e.g., motor cars (Chrysler, Ford, General Motors), computers (IBM, Burroughs), electronics (ITT), petroleum and petrochemicals (Caltex, Mobil) and ore processing (Union Carbide). As well, US banks are now the biggest lenders to South Africa, with outstanding credits of nearly US$ 3 bn., as we have seen.
Like the British Labour government, successive US administrations have done little to discourage multinational investment in South Africa. Rather, they have actually recommended its increase, on the grounds that US firms, through higher wages and more enlightened industrial relations, contribute to the advancement of black workers, and the liberalization of South African society. This view used to be shared by some anti-apartheid groups in the US (and the UK) but it has not stood the test of time. Two hard facts militate against it: in 1970-74, years of exceptionally heavy foreign investment in South Africa, unemployment in the country rose by 475,000 persons; the real wages of black workers have actually declined in recent years and the gap between white and black employees' wages has increased, from 17.5:1 to over 20:1.
The most consistent US opponent of transnational collusion with apartheid has been the Interfaith Center for Corporate Responsibility (ICCR) of the New York-based National Council of Churches. Since 1972, the ICCR has evolved from a position of urging US-based multinationals to act as "agents of change" in South Africa to calls for immediate US corporate withdrawal from the country. During 1972-77, the organization brought stockholder challenges to 35 major US firms with subsidiaries in South Africa and/or Namibia. In addition, it sponsored shareholder resolutions to all the top US lenders to South Africa - Bank of America, First National City Bank (or Citibank), Chase Manhattan Bank, Morgan Guaranty Trust, Manufacturers' Hanover Trust - calling upon them to terminate activities there.
While it is hard to determine how much effect these protests have had on US corporate decision making, as opposed to, for example, economic considerations (the current global recession, falling rates of return on investment in South Africa), it is nonetheless true that some key US firms and banks have recently scaled down their operations in South Africa. Chase Manhattan and Citibank have announced that they will make no new loans to Pretoria. Ford and general Motors have frozen their investments in South Africa and ITT is said to be trying to sell its holdings there to local investors.
At international level, the Geneva-based World Council of Churches (WCC) has been a leader of opposition to economic collaboration with the apartheid system. In 1969, the WCC set up a Programme to Combat Racism, which has monitored transnational investment in South Africa and provided support for liberation movements in Africa and to anti-apartheid groups in various industrialized countries. In 1972, the WCC decided to sever its links to banks having dealings with the white supremacist states of Southern Africa and launched an international campaign against the multinational European-American Bank Corporation, whose members had loaned US$ 210 m. to South Africa in 1970-74.
The WCC urged affiliated national churches to pressurise members of the consortium in their respective countries to stop credits to South Africa and actively backed those who responded. Thus, WCC action played a role in successful campaigns against the Amsterdam-Rotterdam Bank and the Algemene Bank Nederland in the Netherlands, and Midland Bank in the UK, and helped the ICCR in its action with respect to various major lenders in the US.
With their governments largely responsive to business interests and the UN rendered ineffective, organizations like those described here have acted as the conscience of the industrialized countries with respect to transnational backing for apartheid. Their efforts have on some occasions, it appears, provided the extra push needed to convince certain foreign investors to end relations with South Africa. It is to be hoped that they will not relax their guard. For there should be no illusions as to the ultimate intentions of investors who have supported the racist regime in Pretoria in the past and, who, in some cases, now appear to be wavering.
When the Pretoria government can assure a stable market for its cars. Ford will review its current freeze on new investment in South Africa. And, when and if black protest has been driven off the front pages of the newspapers, multinational bankers will find South Africa attractive again. The injustice of white minority rule concerns them only to the extent that it may threaten the security of markets in which they have a stake. Efforts to contain the transnationals must be redoubled if a transfer of power from the white minority to the black majority is to be achieved in South Africa.
For further information, contact:
Anti-Apartheid Movement
89 Charlotte Street
LONDON W1P 2DQ
United Kingdom
End Loans to South Africa (ELTSA)
Interfaith Center for Corporate Responsibility (ICCR)
475 Riverside Drive
New York, N.Y. 10027
USA
Programme to Combat Racism
World Council of Churches
P.O. Box 66
150 rte. de Ferney
1211 GENEVA 20
Switzerland
For further reading, these useful publications can be obtained free of charge from: United Nations Centre against Apartheid, Department of Political & Security Council Affairs, United Nations, New York, N.Y. 10017, USA.
Activities of transnational corporations and their collaboration with the regime in South Africa, Notes & Documents (N & D), No. 21/77, July 1977.
International Confederation of Free Trade Unions, Investments in apartheid: list of companies with investments and interests in South Africa, N & D, No. 14/78, June 1978
British Anti-Apartheid Movement, Apartheid economy and the role of foreign investment, N & D, Conf. 9, November 1977
Ann Seidman and Neva Makgetla, Activities of transnational corporations in South Africa, N & D, No. 9/78, May 1978.