South African Businesses Launch Plans to Aid Blacks
THE South African business community has embarked on a series of initiatives in recent weeks to address the disparities created by apartheid. While the plans fall short of meeting all the demands of anti-apartheid groups, they appear to have prepared the ground for dialogue after months of polarization.
``We welcome some of the initiatives, but there is a lot more to be done and we are continuing the dialogue,'' says Max Sisulu, head of the economics department of the African National Congress (ANC). ``There is much more of a debate going on now than there was six months ago.''
For the past nine months or so a jittery business community has been in a defensive mode over the ANC's previously stated intention to nationalize mines, banks, and monopoly industries.
But the new moves by business seem to signal a qualitative change in its assessment of the ANC's motives. Businessmen have proposed a restructuring of the South African economy and the release of billions of rands for the upgrading of black housing, education, and health care.
For its part, the ANC has been moving toward more moderate economic policies. A recent 18-page draft of its economic program published last month included the word nationalization only once - in relation to newly-privatized state corporations that the ANC has vowed will return to public ownership.
Each successive draft has accorded a greater role to the private sector, but the state remains a major player in directing and regulating a mixed economy. The latest draft of the ANC's economic policy calls ``for a program of growth through redistribution.''
Raymond Parsons, director general of the South African Chamber of Business, estimates that a program to eliminate the inequalities of apartheid would cost $20 billion over 10 years.
The government announced earlier this year that it had set aside $800 million for improving social services. The fund, known as the Independent Development Trust, is now managed by Jan Steyn, a retired judge. Mr. Steyn says he will augment the fund to $4 billion with help from the private sector. Much of the fund has been earmarked for black education, housing, and health services.
The $50 billion life insurance industry announced last month that it was considering investing between 5 percent and 10 percent of its cash flow in ``socially desirable'' investments in order to reduce economic inequality.
Life insurance companies, which invest billions of dollars in the stock market each year, have been under pressure from government, organized labor, and anti-apartheid groups to do more to stimulate the economy and benefit the poor. The industry is investigating a plan that would create a government housing stock tradeable on the capital markets. Life insurance industry officials have said that they would only accept investments that yielded market-related returns.
Earlier this month the Afrikaner mining giant General Mining Corporation said it may dismantle the conglomerate into its five main parts. The ANC characterized the move as a ``serious and interesting response'' to its own proposals.
Last week Anglo American Corporation chairman Julian Ogilvie Thompson, a staunch opponent of nationalization, raised the prospect of ``joint ventures'' between Anglo and a future government that includes the ANC. ``It's a question of what the overall [share] of the government is,'' said Ogilvie Thompson in a television interview in London.
Investec Bank, a major investment bank, announced last Thursday a joint scheme with a group of black businessmen, including the ANC. The plan would create a new retirement investment trust aimed at economically empowering black workers by giving them more direct control of the assets in which their retirement funds were invested.
Last week the government approved a joint plan devised by Old Mutual, the nation's largest life insurance company, and the Urban Foundation, a business-funded group that promotes black urbanization. Members of pension and retirement funds would be able to use contributions as backing for a home loan valued up to $18,000. In South Africa's black townships, this amount can buy a new family home on a small plot.
The government also approved a plan last week for a ``salary-linked'' home loan devised by Bob Tucker, managing director of the SA Permanent Building Society. The proposal caters to the lower end of the housing market by underwriting lending institutions' exposure.
Both plans would allow the $70 billion retirement funds to release money for development without sacrificing market-related returns. Mr. Tucker says business needs to adjust its philosophy to take a 50-year view of society.
``We cannot further proceed on the basis that the only issue of any real importance is profit maximization,'' he says. ``The real issue is how to fundamentally restructure our businesses.''