S. Africa fears more pullouts and lost jobs after Barclays retreat
For South Africa, the ``disinvestment'' news has gone from bad to worse. This week's decision by Barclays Bank to sell its South African holdings - the first major British company to take such action - has sparked concern here that other British companies, and other world banking giants, may follow suit.
The economy is not in danger: South Africa exports more than half the Western world's gold requirement as well as large quantities of other strategically important minerals. But growth targets and jobs - white and black - could suffer.
``Psychologically, the effect [of the Barclays retreat] has been major,'' says economist Sampie Terrblanche of Stellenbosch University. He sees the move as much more worrisome than the recent exit of a number of United States firms.
``It is important to note that Barclays is a British company,'' he explains. ``Our relations, politically and economically, with Britain are much closer than with the United States.'' Britain is by far South Africa's top foreign trading partner. Some 40 percent of foreign investment in South Africa is British.
An index of the depth of concern here over Barclays' move is the absence of public comment on at least one aspect of the decision: Anglo-American Corporation, the South African mining concern that is the nation's richest private company, has further expanded its economic dominance by purchasing a 22.5 percent share in the newly organized local bank that will replace Barclays. Two other firms in which Anglo has interest purchased another 32.5 percent.
``Ordinarily,'' says Professor Terreblanche, ``you would expect public criticism of the possibility of an increase in the already oligopolistic nature of our economy. But given the circumstances, no one is really in a position to criticize this.'' A Johannesburg economist says: ``It seems the only thing worse than getting taken over by Anglo these days, is not getting taken over by Anglo.''
The Anglo-American deal seems sure to minimize any direct economic damage from Barclays' pullout. The bank already reduced its share in the South African subsidiary to roughly 40 percent in recent years. But some analysts fear that it will be only the first of many bank retreats.
An official involved in negotiations with Western banks to reschedule South Africa's debt says privately that the US participants have long made it clear that they are anxious to pull out. Barclays' decision, however, seems to have come as a surprise.
Moreover, Barclays' announcement came amid a recent series of departures by other foreign companies. America's Eastman Kodak jolted local confidence by becoming one of the few US ``disinvestors'' to announce that it will also bar other companies' sale of its products here. An irate South African phoned the Monitor to say, ``I want to complain to Americans! This is unfair to people who have bought Kodak products here!''
The government has lashed out at departing companies, and at a US Congress that has barred new American investment - as cynics indulging in political hypocrisy. The brunt of disinvestment, say officials, will fall on blacks apt to lose their jobs in any economic slowdown.
Economists, who agree that one likely effect will be escalated unemployment, fear that the disinvestment trend may be irreversible. Even before Barclays' announcement, the economy was straining under a major crisis of international business and banking confidence. This began in earnest some 18 months ago, when top US lenders refused to roll over South African debt repayments. Though a repayment compromise has been negotiated, there have been almost no major Western investments or loans this year.
This report was filed under South Africa's emergency regulations, which prohibit reporters from being ``within sight'' of any unrest, any ``restricted gathering,'' or any ``police actions''; from reporting on arrests made under the emergency regulations; and from relaying information deemed subversive.