S. Africa Moves to Lure Investors After Apartheid Vote

Touting its mandate from white voters to end apartheid and share power with South Africa’s black majority, the South African government moved quickly Wednesday to step up efforts to obtain private investment and financing from the United States.

But American corporations and banks--which retreated from South Africa amid the divestment pressure of the 1980s--are indicating that they will not make new direct investments in the white-ruled country without further progress toward stability and democracy.

South Africa’s whites voted 68.7% to 31.3% Tuesday to forge ahead with negotiations designed to end white-minority rule and give blacks voting rights for the first time in the country’s history. The margin of support for South African President F. W. de Klerk’s reforms was much higher than expected, delivering a jolt to those favoring the apartheid system of racial discrimination.

The referendum results buoyed South African officials in the United States and Europe who have been trying to drum up investor interest in South Africa and break down Western sanctions.

“There is no longer any need for sanctions,” Harry Schwarz, South Africa’s ambassador to the United States, said in an interview Wednesday. “The message is that white South Africa is prepared to move toward democracy. There is a clear prospect of political settlement. Stability will be restored, and there are obvious investment opportunities in South Africa.”

The U.S. government imposed sanctions against South Africa in 1986, prohibiting new investment. As a result, U.S. investment in South Africa fell to $750 million from $2.3 billion, as American firms sold or closed their operations.

President Bush lifted those sanctions last July, declaring that South Africa was making “irreversible” progress toward racial equality. However, about 140 state and local governments in the United States have maintained sanctions by, for example, prohibiting contracts with private firms that do business in South Africa.

South Africa wants those governments to lift their sanctions, Schwarz said.

However, U.S. backers of the African National Congress, which is taking part in negotiations aimed at establishing a more representative interim government, maintain their opposition to the lifting of state and local sanctions.

“We urge the American people to maintain state and local sanctions until there is a clear sense as to where South African reform is headed,” said Anne Griffin, director of legislative affairs for Trans-Africa, a Washington-based lobbying group.

Even if the remaining sanctions are lifted, many U.S. firms would be reluctant to make new investments in South Africa in the near future, said Jennifer Kibbe, an investment analyst at the Investor Responsibility Research Center, a Washington-based research organization.

“There would still be some political instability and the potential of additional violence,” Kibbe said. “Also, the South African economy is not in the best shape. For those reasons, many companies may want to put their limited investment funds elsewhere.”

Corporations in South Africa

U.S. corporate involvement in South Africa has dropped dramatically since the mid-1980s. Faced with anti-apartheid activism in the United States and economic uncertainty in South Africa, many U.S. firms sold or closed their operations in South Africa. More than 260 U.S. firms had direct investments, such as subsidiaries, in South Africa in 1986. Today, 106 U.S. firms have direct investments in that country.

Major U.S. Firms* That Have Divested Their South African Operations

General Motors Corp.

Ford Motor Co.

Allied-Signal Inc.

Coca-Cola Co.

General Electric Co.

IBM Corp.

Dow Chemical Co.

Mobil Corp.

Hewlett-Packard Co.

Procter & Gamble Co.

*These companies no longer have direct investments in South Africa, but they supply products or product parts and ingredients to independent firms in South Africa.

Top U.S. Employers* in South Africa

Company: Employees

Caltex Petroleum Corp.: 2,103

International Paper Co.: 1,772

Johnson & Johnson: 1,501

United Technologies Corp.: 939

Joy Technologies Inc.: 856

Company: Employees

Minn. Mining & Manufacturing: 825

Crown Cork & Seal Co. Inc.: 790

Dresser Industries Inc.: 757

Colgate-Palmolive Co.: 668

Warner-Lambert Co.: 617

*Companies with at least 50% ownership of a South African-based firm or subsidiary

Source: Investor Responsibility Research Center

* MAIN STORY, A1