COLUMN ONE : They're Set to Wheel and Deal : With sanctions ending, South African business executives envision a trade bonanza in black Africa. But many are learning why the Europeans and Americans cleared out.


Andrew Maggs described it later as "something out of an Oliver Stone movie." Maggs, a consultant promoting South African businesses abroad, had taken 14 white Johannesburg businessmen to Lagos, Nigeria, for deal-making, preliminary to the expected lifting of anti-apartheid sanctions by the Nigerian government later this year.

After three days of meetings in their hotel, the South Africans decided to see the town. They drove straight into the worst riots in Lagos in decades.

Maggs and a colleague were surrounded on a freeway by a crowd that started to rock their car. "There was one guy on the roof, another threw himself on the windshield," he recalled.

He ordered the driver to gun the car out of there; they went careening the wrong way up an off-ramp, being passed by armored personnel carriers taking troops to the fray.

David Bromley, an executive of AECI, the Southern Hemisphere's largest explosives manufacturer, was forced out of his car and took refuge in the labyrinth of alleys of a shantytown, where he crouched for an hour as riot police fired live ammunition into surging crowds. He returned to the hotel ashen-faced and reported: "I've just had a near-death experience."

Lagos can have that effect on people. But this was not supposed to happen to South Africans. With decades of trade sanctions being lifted openly--and often covertly--by countries all over Africa, South Africans are eyeing the vast territory to their north as an unprecedented trade opportunity. They come with all the inflated self-confidence born of surviving in a highly regulated, heavily monopolistic domestic market--but also with a vision of themselves as black Africa's friends and saviors.

"We're Africans ourselves," Paul Runge, an executive of the government-run South Africa Foreign Trade Organization, said in a typical comment. "Europeans have been taking other Africans to the cleaners for years. Along we come and we represent South-South cooperation and Africans sorting out our own affairs."

But many white South Africans are just now getting their first taste of the fraud, corruption, civil unrest and political instability that over the last 15 years have driven many European and American businesses clear out of the African market.

Many people who previously had done business only with South Africa's traditional African trading partners--the usually more sedate nations of Zimbabwe, Botswana, Zambia and Malawi--have found their first experiences in Zaire and Nigeria intimidating.

"In Kinshasa (the Zairian capital), I've had clients tell me they don't care how much business there is, they can do business elsewhere," Runge said.

Gordon Utian, deputy chief executive of Johannesburg-based Premier Group, a leading food and consumer products conglomerate with years of experience in African trade, observed that "Africa's getting so bad that you really need a missionary zeal to get involved."

Premier's calling recently has been severely tested: Last September, rioters in Zaire sacked its retail outlets in Lubumbashi and Kinshasa ("We lost everything down to the fixtures," Utian said).

Looters in Malawi stole $500,000 in goods from its stores in a matter of days last May. Premier's expansion plans in both Malawi and Zaire are now on hold, Utian said with the air of someone just short of washing his hands of the whole affair.

"The time it will take to sort Africa out is lengthening, not getting shorter," he said. "Two years ago, we were looking at expanding a lot quicker than we've been able to achieve. Our time horizons have gone way out."

For all that, the value of official South African exports to the rest of Africa has jumped by more than 20% in each of the last two years. The largest South African trade exhibition ever outside the country was held at the end of June--in Kenya. The South African trade office in Maputo, the Mozambique capital, is bigger than most foreign embassies there.

The South Africa Foreign Trade Organization now puts the value of South Africa's exports to the rest of the continent at nearly $1.5 billion, which accounts for more than 70% of all officially recorded South African exports. "Hidden trade," or exports into markets still nominally closed by anti-apartheid sanctions, is probably about the same, the group reports.

But efforts to expand exports further are destined to run into tougher obstacles than politics. One is black Africa's lack of money. Africa is bankrupt and largely devoid of foreign currency. That means problems of payment come even before civil unrest and political instability as the South African businessman's chief worries.

David Altman, organizer of Contact Kenya, the South African trade show held last month in Nairobi, said: "When we spoke to people about coming to Kenya to do business, their primary concern wasn't will there be a revolution, but will they get paid. They've shipped goods to Zimbabwe, Zambia and Mozambique and have to wait six to 12 months to get their money."

This is true even for businessmen who feel they have been through Africa's fiery furnace. Maggs, the leader of the Lagos delegation, said that about half of his charges were intimidated out of the market by the Nigerian riots.

That does not include AECI's Bromley, who spent the afternoon cowering in a shanty. "I have to accept riots as part and parcel of Africa in this day and age," he said. "But in doing business with Nigeria, I'd have to be absolutely certain that we were going to be paid."

Another problem is the prevalence of con men, especially in places like Nigeria. The most celebrated recent victim in this category is the South African government, which last year paid roughly $600,000 to a Nigerian businessman in a secret deal to print and publish a pro-South African periodical.

The businessman, identified by embarrassed South African leaders as Arthur Nzeribe, disappeared with the cash and never delivered the magazines. The Pretoria government contends that he cannot be found. But they must not be looking for him very hard: He is a leading candidate for president of Nigeria.

One more limiting factor is the continuing economic deterioration in South Africa's best nearby markets, including Zimbabwe, Zambia, Malawi and Mozambique. They all have been hit hard by drought this year. Zimbabwe's gross domestic product, for example, is expected to fall by as much as 30% this year because of the devastation of its crops.

Malawi, meantime, is likely to become even more unstable as political protests multiply in the twilight of the reign of its nonagenarian president-for-life, H. Kamuzu Banda, who has named no successor.

And Mozambique's 17-year civil war shows no signs of abating, diverting scarce financial and managerial resources. Although South African money and technology have helped renovate Maputo's port, cargo shipments from the harbor have dropped sharply--to 2.4 million tons last year from a peak of 3.1 million in 1989--because of Mozambican managerial incompetence and the deterioration of security in the region.

Another obstacle to growth is South African business practice. The country's apartheid-era isolation has created what must be the most monopolistic business environment in the capitalist world. Traders in Johannesburg say local pricing is so inflexible that European makers of steel and tires can sell their goods in most African countries cheaper, even including transportation, than they can be bought from South Africa.

But what South Africans do take north is an enthusiasm for African trade that far outstrips that of European and American companies, which have done more disinvesting than investing in Africa since the late 1970s.

With the end of the Cold War and the rising exasperation with Africa's corrupt and repressive regimes, Western governments are cutting back aid and trade credits; in earlier years, such assistance helped finance the shipment of goods into Africa. A perfect example is in Kenya, where cutbacks of aid to President Daniel Arap Moi's government have produced a major foreign-exchange shortage.

"South Africa fully intends to take advantage of the fact that businesses are pulling away from Kenya at the moment," said Altman. "Kenyans are feeling a bit lonely, with the Americans and the Nordic governments giving them such a hard time. It makes them feel good that South Africa is giving them all this attention."

Hiltzik, The Times' Nairobi correspondent, was recently on assignment in South Africa.

South Africa's Trade Targets

South Africans are eyeing the vast territory to their north as an unprecedented trade opportunity. Here are the 10 black African nations with the highest level of trade with South Africa:

South Africa South Africa Exports to: Imports From: Zimbabwe $381,942,897 $158,831,949 Zambia 177,823,626 2,367,473 Zaire 162,915,393 7,838,162 Mozambique 155,449,870 10,931,007 Malawi 136,082,427 29,183,598 Mauritius 108,352,767 5,136,259 Madagascar 18,536,290 484,310 Angola 17,824,321 21,391 Ivory Coast 17,506,914 15,882,409 Seychelles 16,317,292 109,741

1990 figures. South Africa exports include industrial goods, steel, autos. Imports include fruits and vegetables and timber. The heavy trade surplus reflects a lack of manufactured products to import from other African nations.

Source: South African Foreign Trade Assn.

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