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This resource is hosted by the Nelson Mandela Foundation, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.

From 2 April 1986, Financial Times, Anthony Robinson, "Trade Sanctions & Disinvestment Intensified"

The international campaign to use trade sanctions and disinvestment as a means of expressing moral disapproval of apartheid and force the Government into reforming its ways and embark on real power-sharing with blacks reached a new pitch of intensity over the last year.

In the process it shook white self-confidence severely, intensified the determination of the business sector to seek a new role as mid-wife of reform and sparked off a fierce internal debate - not least among blacks.

The argument that blacks have already suffered so much under apartheid that they are prepared to face the risk of losing their jobs and suffer further hardship if disinvestment will speed the abolition of an oppressive system, is shared widely among supporters of the African National Congress, the United Democratic Front and a substantial sector of the black trade union movement.

Others, notably Chief Buthelezi, the Chief Minister of Kwazulu, see foreign companies and their adherence to the various Sullivan or EEC codes of conduct as powerful instruments of reform at the work place and argue that more rather than less foreign investment is required to achieve the kind of economic growth needed to finance real reform.

More heat, than light, has been generated by the disinvestment campaign. But the latest Reserve Bank Bulletin gives a clear indication of just how much capital has flowed out of the country.

According to the Bulletin more than R 10 bn left the country last year. This swallowed up the entire R 7 bn surplus on the current account of the balance of payments and another R 3 bn from reserves, putting unprecedented pressure on the rand and creating a severe liquidity crisis.

The figure would have been even greater had the authorities not closed the Johannesburg Stock Exchange for a week at the end of last August, and only re-opened it after imposing a unilateral capital repayment moratorium on Dollars 14 bn on the total Dollars 24 bn foreign debt and reintroducing the two-tier rand system.

The fact that since then the financial rand has shown a 20 to 30 per cent discount against the commercial rand is convincing proof that foreign owners remain net sellers of South African stocks and shares - despite the penalty they have to pay through the dual rand system for their disinvestment.

In total, the monetary authorities expect to repay just over Dollars 2 bn this year, Dollars 500 m to the banks and another Dollars 1.6 bn of the original Dollars 10.3 bn worth of debt excluded from the standstill.

Both debt repayment and disinvestment are the product of the impact of public opinion in the home country on banking institutions, pension and investment fund managers, boards of directors and shareholders.

The net effect is also the same. Both oblige the South African Government to run the economy at a slower rate of economic growth in order to generate a payments surplus to finance both the capital outflow and debt repayment.

Financial disinvestment, including forced debt repayment, has undoubtedly had a more instantaneous and dramatic effect - on the rand and on perceptions - than the slower process of physical disinvestment.

But, over the last 18 months or so, the list of foreign companies who have either sold their physical plant and assets in South Africa or diluted their shareholding has lengthened.

Much attention has focussed on US companies, which like the US banks, have been most exposed to the impact of domestic anti-South African, anti-apartheid sentiment, although American investment is little more than 10 per cent of the estimated Dollars 25 bn of total foreign investment in the country.

US banks, spearheaded by Chase Manhattan, led the rush for the South African exit last July by refusing to roll over their loans.

When all is said and done, the Governments failure to manage the economy better appears to have done as much to dissuade foreign investment as the lack of a long-term political perspective caused by the slow pace of reform and accumulating black anger and frustration.

South Africa with its natural resources, relatively skilled labour force, sophisticated capital market and infrastructure remains the most powerful economy in Africa. But its vulnerability to the disinvestment campaign indicates the urgent need for political change which re-creates the conditions for foreign investment to flow back in.

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