S. Africa's White Business Leaders Gird for `Populist' Policies by ANC

SOUTH Africa's business community, which holds the key to financing economic growth and development in the post-apartheid era, is preparing to resist populist economic policies from a new government led by the African National Congress (ANC).

``I have no doubt that the economic policies of an ANC government are going to be driven by populist sentiment in the trade unions and other militant organs of the organization,'' says an executive from a major industrial conglomerate who would speak only on condition of anonymity.

``But,'' he warns, ``they will not find the business community a pushover.''

As the countdown proceeds to the country's first all-race elections on April 27, an anxious mood is rising among members of South Africa's economic establishment. The business community has acknowledged the wrongs of the apartheid era but has yet to find a formula for financing the awesome development backlog created by the imbalances of the past.

The ANC's recently published Reconstruction and Development Programme would require an estimated $30 billion over 10 years to fund its development plans.

The focus of debate between the business community and representatives of the black community revolves around how such vast sums - needed for housing, electrification, health care, and education - will be raised.

Affirmative action, once a taboo subject in business circles here, has become a buzzword; almost every large and mid-sized corporation is working on ``black empowerment'' programs that include the sale of units to black investors.

But business is still overwhelmingly a white affair at management and executive levels. Only about 40 black South Africans hold seats on the boards of the country's 100 leading companies. There are only three black firms - two insurance companies and a brewery - that rank among industry leaders and they have been set up in the past three years, mainly as a result of empowerment initiatives financed by large white-run corporations.

ACCESS to capital for black business people is still regarded as high risk by mainstream financial institutions and, therefore, remains restricted.

Joint ventures between black South African business people and US banks and businesses have offered some new opportunities for black empowerment. But representatives of the South African business community in countries like Germany and Britain - two of the country's biggest trade partners - are concerned about the negative image of the country and the caution of potential investors.

``Investors fear there will be a populist government which will embark on a [consumer-oriented] spending spree,'' says Rudolf Gruber of the South Africa Foundation, a business group in Bonn.

The ANC has endorsed the principle that development should be driven by economic growth and that a climate conducive to foreign investment is vital to drive that growth.

But ANC officials continue to stress the need for extensive state intervention to correct the apartheid legacy in the economy and to redistribute unused land and state land in order to compensate blacks for the massive taking of land during the colonial era.

Its Reconstruction and Development Programmme has drawn muted criticism from business leaders who prefer at this stage to sit tight and wait to see what an ANC-led government will do.

``It is the mindset that underlies the whole document that is cause for real concern,'' says the executive from the conglomerate. ``The assumption is that all economic ills can be addressed through central control. It smacks of discredited command-style economics that led to the collapse of Eastern Europe.''

The country's captains of industry say it is not the first time they have had to face a hostile government. The rise to power of the ruling National Party in 1948 was accompanied by threats of nationalization of lucrative gold and diamond mines and state intervention. ``We took them on an won,'' a mining executive says. ``I don't see why we can't to do the same again.''

Business executives concede that they are vulnerable to ANC charges of monopolistic tendencies and a failure to advance blacks in their companies. They anticipate antitrust legislation and strong pressure for affirmative action.

``We anticipate - and are prepared for - a degree of discomfort like slightly higher taxes, taxes on dividends, a land levy, and even a wealth or reconstruction tax as long as these are within tolerable parameters,'' says the conglomerate's executive. ``But if an ANC government starts tinkering with fundamental free market principles or impinges on the viability of business, they will find they are in for a tough fight.''

You've read  of  free articles. Subscribe to continue.
QR Code to S. Africa's White Business Leaders Gird for `Populist' Policies by ANC
Read this article in
QR Code to Subscription page
Start your subscription today