S. Africa Hopes Investment Will Return as Fast as It Left

NELSON MANDELA'S call for the lifting of remaining economic sanctions against South Africa has focused worldwide investor attention and raised hopes here of financing post-apartheid reconstruction.

``It's too early to draw any conclusions,'' a local investment broker says. ``But the reaction has been surprisingly positive.''

The first tangible benefit from the lifting of sanctions was rapid progress toward securing a $850 million drought-related loan from the International Monetary Fund this week. Prior to the lifting of US financial sanctions, the US was obliged by law to block the granting of IMF and World Bank loans to South Africa.

The decision by the Organization of African Unity Wednesday to lift all economic sanctions on South Africa has paved the way for the UN Security Council to lift sanctions next week.

The 50-nation Commonwealth (of former British colonies) lifted sanctions this week and the 12-nation European Community (EC) announced Wednesday that it would drop all remaining sanctions against South Africa as soon as a multiracial commission, which is to oversee the government until the first democratic ballot in April, is operational.

The bill providing for the commission was passed by Parliament last week but its enactment awaits the adoption of an interim constitution - scheduled to take place by the end of October.

Speaking at the IMF annual meeting in Washington on Wednesday, South African Finance Minister Derek Keys appealed to the world financial community to return with the same zeal that marked its exodus from the country during the sanctions era.

Mr. Keys said that consensus reached between the various parties in South Africa boded well for a sound economic policy but he warned that black expectations would have to be reconciled with the country's economic capacity.

Minneapolis-based Pillsbury announced Tuesday a joint venture with Foodcorp, a South African company, to make and sell Pillsbury products throughout southern Africa. The firms have been negotiating for two years.

The government's announcement of a final agreement on the repayment of $5 billion in foreign debt - caught in a standstill since 1985 - promises better terms and easier access to foreign capital.

Tapping foreign loans and investment is considered vital if South Africa is to eliminate development backlogs of the apartheid era in housing, education, social welfare, and health care.

While economists and investment brokers are concerned about such factors as political instability, violence, low productivity, and high labor costs, they have been pleased by the response to Mr. Mandela's call.

``There remains a residual mistrust of the African National Congress among many captains of industry,'' the investment broker says. ``But one is increasingly hearing the view that the potential rewards outweigh the risks.''

In the past week a spate of investment conferences on South Africa in New York and Washington have been oversubscribed. The conference Institutional Investment in Post-Apartheid South Africa is to be opened by Mandela in Washington today.

``We are hoping that we can persuade those who disinvested'' to bring in institutional investment, says Herman Nickel, a former US ambassador to South Africa who is organizing the conference. A housing bond developed by the South African life insurance industry is one of several investments on the conference agenda.

``Even the smallest investment by US institutions would release substantial funds for investment in South Africa terms,'' the Johannesburg broker says.