South Africa Asks for More US Aid

THE South African government is demanding that President Clinton rethink the amount of aid the United States is making available to President Nelson Mandela's administration.

South Africa's Trade and Industry Minister Trevor Manuel says the US pledge of $600 million should be increased. ''We're trying to draw the US into restructuring a package that would be to our overall advantage,'' he said in a recent interview in his Pretoria office. ''Unless, in the short term at least, sufficient is done to stabilize the economy in South Africa, the democracy that we've acquired is going to find itself in ongoing difficulties.''

While President Mandela welcomed the US aid package when it was unveiled in May, during a meeting with reporters in Cape Town on Nov. 18, he dismissed the US aid as ''peanuts.''

Though more than one-third of the $600 million is committed to specific projects, and an additional $80 million is pledged to support a variety of development programs, government officials in Pretoria say the US aid effort is inadequately targeted compared with British, French, and Japanese aid packages.

These government officials argue that too great a proportion of the US funds are being spent on bureaucratic arrangements in the US, leaving insufficient guarantees that the money will actually make a difference to grass-roots projects in South Africa.

''If that was $600 million coming straight into South Africa to be utilized fairly directly in terms of targeted programs it would have made a substantial difference,'' Mr. Manuel says.

Western analysts in Johannesburg say the government's objections to the Clinton aid package are symbolic of a wider disappointment in the amount of US private investment entering South Africa. Though more US businesses are reentering in the aftermath of the apartheid era, US business activity remains below its mid-1980s level.

The American Chamber of Commerce in Johannesburg now reports a membership of 259 companies, compared with more than 300 members before large-scale divestment from South Africa began in 1984.

Though 63 companies have returned since April 1994, William Mallory, the Chamber's president-elect, says South Africa still suffers from an image problem in the US. ''There's still a fear of civil unrest,'' he says. ''The ongoing conflicts in Angola and Mozambique have caused hesitancy.''

Many companies are also adopting a wait-and-see approach to South Africa following the experiences of several US firms that have reentered the market.

After a nine-year absence, PepsiCo Inc., the soft-drink company based in Purchase, N.Y., returned to South Africa in October, producing Pepsi Cola and other products at a bottling plant in Germiston, a suburb of Johannesburg. But PepsiCo's $100 million investment faces vast challenges securing a significant market share.

That's because the Coca-Cola Company based in Atlanta, PepsiCo's main rival, has secured 90 percent of South Africa's soda market in the intervening years.

Khehla Mthembu, chairman of New Age Beverages, the company formed to produce and market Pepsi in South Africa, remains optimistic. ''This is a groundbreaking initiative'' he says. ''It's not just an investment but an affirmative step by black people saying: 'We are going to pull ourselves up by our bootstraps and make it work.' ''

But succeeding in South Africa also means overcoming uncertainty about the country's economy. Foreign-exchange controls and a dual exchange-rate system remain in effect. Both policies were introduced during the apartheid era to prevent capital flight and to protect the country's siege-like economy.

The new Government of National Unity says it will scrap the ''financial rand,'' the exchange rate used to govern foreign financial transactions. But, so far, officials refuse to commit themselves to a time frame.

In addition, unease remains about the politicization of the country's work force and the power of labor unions in South Africa. Recent industrial disputes, including a strike in August by 19,000 South African truck drivers, did little to soothe the concerns of potential investors.

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