U.S. Firms Expected to Be Cautious Investors

American corporations are rethinking the South African market in the wake of Friday’s call by the African National Congress to lift economic sanctions, but most are not expected to make new investments until the South African political situation is more stable.

“Companies will want the new government to establish a pro-business policy and put an end to the violence in South Africa,” said Daniel O’Flaherty, executive director of the Washington-based U.S.-South Africa Business Council, a group that represents the interests of 30 American firms with South African operations.

Many firms will also wait until the South African economy--hobbled by sanctions and mired in a recession for the last five years--improves, O’Flaherty said.

Still, the call for an end to sanctions by ANC President Nelson Mandela was encouraging to trade consultants such as Reginald Cook, president of Cook International, based in Long Beach. Cook, who has been laying the groundwork for ventures in South Africa for three years, is now prepared to seek investors for a capital fund that would acquire and expand existing South African companies.

“This is the green light we’ve been waiting for,” Cook said. “We knew potential investors--pension funds and insurance companies--would not make a commitment until the ANC called for an end to sanctions.”

Computer producers and manufacturers of consumer products such as cosmetics, clothing, footwear and prepared foods will probably be among the first U.S. companies to do business in post-sanctions South Africa, according to the Washington-based Investor Responsibility Research Center, a nonprofit organization that conducts research on investment issues for pension funds.

“Most companies will wait and see if there will be peaceful transition to majority rule in South Africa before investing,” said Jennifer Davis, executive director of the Africa Fund, a New York-based human rights group. “There’s always a possibility that the negotiations for a new government could be derailed.”

Throughout the 1980s, anti-apartheid activists campaigned against the U.S. corporate presence in South Africa. And American corporate involvement declined dramatically.

In 1981, more than 300 U.S. firms maintained South African assets valued at roughly $3 billion. Today, more than 100 U.S. firms remaining in South Africa have investments valued at roughly $1 billion.