About this site

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 It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.

2. Business and the white minority state

Historical roots

1. The National Party fought the 1948 general election on a programme proclaiming its intention to impose apartheid. However, apartheid was not immaculately conceived. It did not spring into being at the end of May 1948. Moreover, for many years after it came to power under Dr D F Malan, the National Party had only the broadest general idea of what it meant by apartheid. It was not until the Promotion of Bantu Self-Government Bill of 1959 that the NP first put forward the coherent theory of what came to be known as Grand Apartheid. Yet, for all of its lack of clarity over what its apartheid project would finally entail, the NP was always very clear that apartheid was an attempt to hold back and adapt to profound changes to South African economic and social life brought about by the rapid urbanisation of the Afrikaner and African populations.

2. This urbanisation was provoked by three huge economic transformations of the 50 year period from 1890-1940:

Ø. the development of large-scale deep-level mining in the 1890s;

Ø. the uneven emergence of capitalist agriculture in the three decades following the Anglo-Boer war; and

Ø. the industrialisation of the economy in the period 1920-1945.

3. After the creation of a unified South African state in 1910, successive governments put in place the system known as segregation. Collapsing the evolution of this policy over time, segregation can be seen to have rested on four fundamental sets of policies, each of which later stood at the core of the apartheid project. These were:

Ø. The unequal racial distribution of the land, and the dispossession of the African peasantry, as effected by the 1913 and 1936 Land Acts, and the institution of a system of "Native Reserves" (the embryos of the later bantustans);

Ø. Control over the urbanisation of Africans and the racial definition of urban space under the infamous "Stallard principle" according to which black South Africans were allowed into the cities only to "minister to the needs" of the white population and were to be expelled from the cities when they "ceased so to minister". This was an embryonic form of influx control implemented through an array of pass laws;

Ø. The disenfranchisement of the African, Coloured and Indian population and hence the effective exclusion of the vast majority of South Africans from citizenship in the land of their birth; and

Ø. The use of the armed might of the state to suppress any resistance to this system on the part of the oppressed and excluded.

4. From the 1905 report of the South African Native Affairs (Lagden) Commission right up until the end of World War II, a series of reports and commissions held up the basic thrust of this policy. Its aim was clear and always explicit: to create a land shortage in the Native Reserves so as to force evermore-rural African males into service on the mines, white agriculture and industry. These migrant workers were always seen to be single males, temporarily employed in the "white" areas at wages which mine owners, farmers and industrialists collectively described as "the country" could afford. African women and children were to remain in the Reserves, supposedly living off the land. The Pass laws were to be strictly applied to ensure that "surplus" or "idle" "natives" were promptly to be returned to the Reserves. In the words of Sir Godfrey Lagden:

. "A [black] man cannot go with his wife and children and his goods... on to the labour market. He must have a dumping ground. Every rabbit must have a warren where he can live and burrow and breed, and every native must have a warren too."

. This was the system which apartheid sought to preserve and modernise after 1948.

5. Thus, although apartheid was a policy adopted by an Afrikaner nationalist movement, its seeds were planted and nurtured equally by Afrikaans-speaking and English-speaking white South Africans. From the adoption of Cecil John Rhodes' Glen Grey Act by the Cape Parliament in 1894, through the 1913 and 1936 Land Acts, the Urban Areas Act and a host of other segregationist legislation, liberal English business interests were as avid proponents as were Afrikaners of the dispossession of the African peasantry and the institution of a system of cheap migrant labour.

6. This was clearly seen, for example, in the evidence given by the Chamber of Mines to the 1943 Witwatersrand Mine Natives' Wages Commission (the Landsdown Commission). The then exclusively English mining companies grouped in the Chamber of Mines vociferously opposed the demand from the African Mineworkers' Union (AMWU) for an effective abolition of the migrant labour system and the recognition of the right of African mineworkers to organise. The Chamber argued that any move from a migratory to a stable (urban) labour force would be "disastrous" and force the closure of most mines.

7. In contesting the AMWU's claim concerning the injurious effects on the health of its members of the concrete bunks on which African miners were housed in compounds, the Chief Medical Officer of the Chamber, Dr Archie Gemmell, argued that such rigours were beneficial to the physique of "the Native". In its 1947 evidence to the Fagan Commission, the Chambers' Gold Producers' Committee advanced the following pious argument:

. "Any change from the migratory labour system to stabilised urban communities would have a catastrophic effect on the Natives themselves... " (who) would be the first to oppose it.

8. This long-running theme that the "white baas" knew what was best for what it described as "tribal natives" was repeated by the Gold Producers' Committee's statement of total opposition to granting trade union rights to African miners. Arguing that as "tribal natives", African miners were "not yet sufficiently advanced for trade unionism, nor do they themselves want it", the Gold Producers' Committee expressed the fear that unionised African miners would fall easy prey to alien interests often acting from political motives. In fact, ever since the opening of the Goldfields at the end of the 19th Century, African miners had been prey to such interests and such motives - the often foreign-born, and until the end of WWII, often foreign-owned mining interests - represented by the Chamber of Mines.

Afrikaner business, the National Party and Apartheid

COSATU fights for a living wage while President P W Botha earns R 135 000 per annum

9. One of the major well-springs of the "gesuiwerde" brand of Afrikaner nationalism fostered by both the Afrikaner Broederbond (AB) and the then Dr D F Malan's National Party after 1934, was the fact that Afrikaans-speaking whites were excluded from the centres of power and influence in the South African urban economy. By the beginning of World War II, Afrikaner undertakings accounted for only 5% of the total turnover in the urban economy (and only 1% in the mining sector and 3% in manufacturing). By the end of the war, of the 117 undertakings with a capitalisation of more than £1 million, only one (Sanlam) was considered an Afrikaner company. Despite a significant increase in Afrikaner-owned commerce during the war, by the time the NP took power in 1948, Afrikaner undertakings still only accounted for 1% of mining turnover, 6% of manufacturing, and 6% of finance.

10. The development of Afrikaner business was the object of the October 1939 Ekonomiese Volkskongres (EVK) organised and run by the Afrikaner Broederbond. The EVK chairman declared the aim as:

. "No longer to tolerate the destruction of the Afrikaner volk in an attempt to adapt to a foreign capitalist system, but to mobilise the volk to capture this foreign system and adapt it to our national character."

. Future NP Minister of Finance, Dr E Donges declared that the aim of the economic movement was "to increase by ten-fold the number of Afrikaner employers in commerce and industry". He was echoed by the later architect of apartheid, Dr H F Verwoerd, who argued that the taking possession of "state power" was the best weapon available in the "great struggle" to achieve the Afrikaners' "legitimate" place in commerce and industry - that of an employer of labour.

11. The Broederbond and Sanlam jointly sponsored the Afrikaner economic movement of the 1940s. The Broederbond set out to mobilise the savings of Afrikaner farmers and workers for nascent Afrikaner business. It presided over the creation of and controlled the three organisation which stood at the core of the organised Afrikaner economic movement, the Reddingsdaadbond (RDB, whose Hoofleier was the former AB chairman and future NP Minister of Finance and State President, Dr N Diederichs); the Ekonomiese Instituut of the FAK; and the Afrikaanse Handelsinstituut. Sanlam, on the other hand, designed the overall accumulation strategy adopted by the EVK and controlled the most important creation of the EVK, a new investment corporation known as Federale Volksbeleggings.

12. All of the leaders of the Afrikaner economic movement were prominent members of the Broederbond. Many were key players in the NP and not a few would end up in the NP Cabinet. All were active supporters and promoters of the concept and practices of apartheid. In the language of the time, just as the Nederduitse Gereformeerde Kerk (NGK) was known as "the National Party at prayer", the Afrikaner economic movement was known as "the National Party in business".

13. Sanlam was founded in 1918 on the slogan "Uit die volk gebore om die volk to dien". It was formed and run till his death in 1953 by WA Hofmeyer, the man who in 1915 had founded Nasionale Pers, Die Burger, and the Cape National Party and who had invited Dr D F Malan to leave his pulpit to edit Die Burger and lead the Cape National Party. A long list of NP leaders and Cabinet Ministers served on the board of Sanlam and the myriad of companies it controlled, including the official organ of the Cape NP, Die Burger.

14. The Broederbond formed the Volkskas bank in 1934. The Broederbond chairman became chairman of the bank's board. The Bond secretary was the secretary of Volkskas and vacancies on the Volkskas board were filled by the Broederbond's executive council. Later, NP Cabinet Minister and founder of the Herstigte Nasionale Party, Dr Albert Hertzog, was one of the original and long-serving members of the Volkskas board.

15. The Rembrandt Group grew out of the Voorbrand Tobacco company formed in 1940 by former AB chairman and Hoofleier of the Reddingdaadbond, Dr N Diederichs, future NP Cabinet Minister Dr A J Stals, and the 23 year-old former editor of the pro-German student newspaper, Wapenskou, Anton Rupert. These three then formed Rembrandt in 1947, together with the Secretary of the Broederbond, IM Lombard, and a vociferous racist proponent of "total apartheid", D W R Hertzog.

16. Apart from the intimate and ongoing personal connections between Afrikaner business leaders, the Afrikaner Broederbond and the National Party, Afrikaner business also played a central role in the elaboration of both the overall thrust and the specific content of apartheid policy. This is seen at many levels. During the war years, the Afrikaner economic movement was obsessed with the position of Indian traders as competitors for emerging Afrikaner commerce. Volkshandel, the official journal of the Afrikaanse Handelsinstituut, consistently monitored the issuing of trading licences to Indians, reporting with dismay in its May 1944 edition that 66 369 licences had been issued from 1940-1943.

17. Calling on the Afrikaner volk "to drive all alien exploiters out of our business life", the official journal of the RDB summed up the Afrikaner economic movement's view of "The Indian" as "an unwelcome alien in our portals, not only from a moral and religious point of view he has enriched himself at the expense of his white clients, he has attempted to squeeze his European competitor out of the business world through illegitimate trading methods but has, moreover, insolently challenged and defamed the country in which he trades as a guest... The continued existence of the white race is at stake." The RDB sponsored a boycott campaign of Indian traders, explicitly designed to persuade Afrikaners that they should support Afrikaner undertakings.

18. These issues were taken up by the National Party. Its 1944 "Social and Economic Manifesto" declared that under apartheid "non-whites" would only be issued trading licences in non-white areas. The NP's 1948 Sauer Commission laid down the principles of post-1948 apartheid policy. Echoing the pleas of Afrikaner business, the Sauer Commission stated the National Party's view that "The Indians are an alien, foreign element which can never be assimilated, and must therefore be treated as an immigrant community." While NP policy remained the "repatriation" of Indians, the Sauer Commission announced that, in the interim, they would be removed to separate "group areas" and would not be allowed to own property, to trade, or to live in white areas. This pressure from Afrikaner business culminated in the notorious Group Areas Act of 1950.

19. If Afrikaner business played a central role in the development of apartheid policy towards South Africans of Indian extraction, its lobbying was likewise crucial to the adoption of the labour and other racial practices at the core of apartheid. The growing concentration of industry and rising labour costs during World War II were seen as a direct threat to the infant Afrikaner industrial undertakings. Long before the NP came to power in 1948, the entire Afrikaner economic movement was mobilised to demand state intervention to turn back rising labour costs and sustain a "cheap labour policy". Professor T E W Schumann informed the July 1943 RDB congress that the question of "native policy" was the central issue of future industrial policy.

20. By 1946 the Afrikaanse Handelsinstituut was pressuring the United Party government to allow industries outside of the major cities to pay African workers wages below those fixed by Wage Board determinations, as this would restrict the flow of Africans to the cities, providing "profitable" employment, such a cheap labour policy was "in the interests of the country, of our manufacturing industry, and its employees".

21. In preparation for the NP's Sauer Commission on racial policy, the RDB journal, Inspan, published an influential series of articles in 1947 entitled "The Racial Question in Our Country". This organ of the Afrikaner economic movement made it clear that the racial question was above all a labour question. South Africa's economic development "has been built on, and is dependent upon, the cheap labour-power of the native." Citing the 1946 strike of African mineworkers, Inspan argued that "it is well known that the natives are busy organising themselves to improve their position and through collective action to force their demands on white employers". The existing system of segregation led Africans to think that they would eventually win full equality through great pressure and agitation. Blacks had "to be brought to the realisation that such equality was totally and utterly unthinkable".

22. These issues were taken up in similar vein in the RDB's denunciation of the 1948 report of the Fagan commission, which had recognised the inevitability of African urbanisation and recommended a gradual move away from segregationist policies. The National Party took up these themes. After the 1943 election, it appointed a committee of Nationalist MPs to draw up the party's economic programme "in consultation with economic leaders". Published in March 1944, this "Economic Plan for South Africa" reads like a manifesto of the Afrikaanse Handelsinstituut. Although calling for apartheid in employment and the protection of "the position and civilisation of the white race", this 1944 NP economic programme was remarkably thin on content. The NP was only at the very beginning stages of the elaboration of the apartheid idea. The Sauer Commission was only appointed in late 1947 to draw up a detailed programme of apartheid. It was named after its chairman and later NP cabinet minister, the wine farmer Paul Sauer, who was to become a director of Old Mutual and founder of the Kanonkop vintage of wines.

23. The economic movement made strong representation to the Sauer Commission, with the RDB naming its own investigation into "A Labour Policy", headed by its Hoofleier and Rembrandt director Dr N Diederichs, and to be laid before the Sauer Commission. Section K of this economic movement enquiry was headed "The white and the non-white worker". Its six subheadings left no doubt as to the content of these recommendations:

. "the meaning of non-white competition with white workers; the necessity for apartheid in industry; separate trade organisations; separate wage determinations; reserving certain occupations for whites; separate residential areas; job training for non-whites."

24. The eventual recommendations of the Sauer Commission laid the blueprint for what was to follow, and neatly encapsulated the demands of Afrikaner business for a system of cheap, available labour as needed in each sector of the economy. The movement of Africans would be regulated to maintain racial segregation; the existing system of controls would be centralised; a national labour bureaux system would be established together with a single national Pass Book.

25. Rejecting the Fagan Commission's recommendation to ease influx control, the Sauer Commission unequivocally stated that:

. "Natives in the urban areas should be regarded as migratory citizens not entitled to political and social right equal to those of whites. The process of detribalisation should be arrested. The entire migration of natives into and from the cities should be controlled by the state, which will enlist the Cupertino of municipal bodies. Migration into and from the Reserves shall likewise be strictly controlled. Surplus [i.e. unemployed] natives should be returned to their original habitat in the country areas [i.e. white farms] or the Reserves. Natives from the country areas shall be admitted to the urban areas or towns only as temporary employees obliged to return to their homes after the expiry of their employment... A national system of labour regulation and labour control will be established with a central labour bureau and an effective network throughout the country to allow supply and demand to operate as flexibly as possible and to eliminate the large-scale wastage of labour. A proper survey of the labour force and labour requirements will have to be made in order effectively to divert labour into the various channels of agricultural, industrial, mining, and urban employment."

26. This was, in effect, the programme of Afrikaner business, one endorsed by the Handelsinstituut. The AHI underlined this point in its congratulations to the newly elected NP government in mid-1948. Arguing that no one should be deluded that apartheid meant total segregation, the Handelsinstituut insisted that apartheid was about the better usage of "non-white" labour. It urged the new government to focus on the practical tasks of improving the system of influx control, developing the native reserves, and segregating public places and residential areas.

Afrikaner undertakings

27. Once in power in 1948, the NP fostered the interests of the Afrikaner, the new urban Afrikaner middle class and "its" economic movement by what a former Broederbond insider and leading Afrikaner economist has termed a sustained policy of "Afrikaner favouritism". Numerous segregationist measures eased the deep fear of the Afrikaner middle class of competition from and contact with a black petty bourgeoisie. The 1950 Group Areas Act was used to drive Indian traders out of the cities, to be replaced in many cases by emerging Afrikaner merchants. The Broederbond-supervised Afrikanerisation of the civil service also vastly improved both the job opportunities and career prospects of part of this bureaucratic bourgeoisie. The fourfold growth in the number of whites employed by the state during the first 30 years of NP rule significantly enhanced the position and status of an important section of the Afrikaner population.

28. NP rule provided the Afrikaanse Handelsinstituut "with privileged personal access to government and, presumably, some leverage in shaping the economic aspects of apartheid". The policy of "Afrikaner favouritism" also included direct assistance to private Afrikaner companies. Interlocking directorships with state corporations gave many Afrikaner undertakings a crucial inside edge. Government and local authority accounts were switched to Afrikaner finance companies and plum government contracts were awarded to Afrikaner firms. The allocation of fishing quotas and mining concessions promoted the development particularly of Federale Volksbeleggings (Federated Volks Investments) the "official" Afrikaner Investment Corporation set up at the 1939 Broederbond-organised Ekonomiese Volkskongres. A prominent Afrikaner economist has described these measures as "the redress of imbalances". In short, various forms of state support to Afrikaner capital after 1948 ensured its integration on favourable terms into emerging corporate capitalism.

29. In many ways this class force was the major beneficiary of NP rule. In his message to the "Coming of Age" congress of the Afrikaanse Handelsinstituut in 1963, prime minister Verwoerd stated that the Afrikaner share of the financial sector had grown from 6% in 1948/9 to 13% by 1961/2, while Afrikaners now controlled 9% of industrial production (compared to 6% in 1948/9) and 28% of commerce (25% in 1948/9). The founder and retiring chairman of the Handelsinstituut, Dr J G van der Merwe ascribed such "progress" to the fact that Afrikaners were "in position to give leadership and lay down policy".

30. Yet the benefits of the NP government's policy of Afrikaner favouritism were spread unevenly, even within this newly consolidated class of Afrikaner financial, industrial and commercial capitalists. Table I shows that while Afrikaner entrepreneurs increased their share of the private holdings in many branches of the South African urban economy between 1948-49 and 1963-64, the greatest leaps forward for Afrikaner capitalists occurred in finance, mining, liquor and catering, and manufacturing and construction.

Table 1

Afrikaner percentage ownership in the private sectors of the South African economy, 1938-1975


1938 - 1939

1948 - 1949

1954 - 1955

1963 - 1964


Agriculture, forestry, fishing












Manufacturing & construction






Trade & Commerce












Liquor & Catering






























Aggregate excluding agriculture






Source: D. O'Meara, Forty Lost Years: The apartheid state and the politics of the National Party 1948-1994. Randburg/Athens (Ohio): Ravan/Ohio University Press, 1996, p.139

+ = estimates.

31. The rapid growth of the share of Afrikaner entrepreneurs in private manufacturing after 1948 is explained by four major factors. The profusion of state corporations and parastatals under NP rule placed Afrikaners in positions of control in key manufacturing sectors. Secondly, government contracts and subsidies benefited particularly the Sanlam industrial investment subsidiary, Federale Volksbeleggings. Thirdly, the three major Afrikaner financial groups, Sanlam, Old Mutual and Volkskas, began to diversify their holdings, moving into manufacturing in the 1950s. And finally, Sanlam and Old Mutual seized upon the drop in share prices and flight of foreign capital following Sharpeville in 1960 in particular, as a golden opportunity to increase their shareholdings in a wide range of manufacturing and other companies.

32. A number of other aspects and consequences of this NP-fostered growth of Afrikaner capital should be noted here. The first were its trickle-down effects. Good Afrikaner entrepreneurs employed Afrikaner workers, Afrikaner clerks and Afrikaner managers. The corollary of the seizure by Afrikaners of a greater (though still minority) share of the white-owned urban economy was the growth of an urban Afrikaner managerial and middle class.

33. As the larger Afrikaner companies loosened their economic dependence on Afrikaner farmers and workers, so too did their interests become less tied to the economic well being of these social forces. Increasingly part of the once exclusively "English" club of big capital, many of the larger Afrikaner undertakings displayed a waning interest in the versions of Afrikaner nationalism which stressed the mythical unity of an increasingly polarised volk.

34. In sharp contrast with the resolute refusal of the late NP Hoofleier, J G Strijdom, to use even state postal and transport services for himself and his family, under the Vorster government, nationalist politicians began to receive important material benefits (mainly in the form of shares) for advancing the interests of this or that company. Thus, for example, in the storm over the allocation of fishing concessions in Namibia to a Sanlam subsidiary, one sixth of the 2 million share-issue by this Suid-Kunene (Suid Wes-Afrika) company went to prominent government officials and parliamentarians. Cabinet ministers and deputy ministers likewise acquired large holdings in companies the prices of whose products were fixed by the government. Prime minister Vorster received 1 000 shares in the newly established South African petroleum company, Trek Investments Limited in 1969. Seven other cabinet ministers each received 700 shares and two deputy ministers acquired 500 Trek shares. The government in which so many of Trek's shareholders sat then duly gave its approval to Trek involvement in the construction of a petrol refinery in Richards Bay. The growth of Afrikaner business was thus one of the main objectives of the NP government after 1948.

35. Afrikaner business remained extremely close to the NP right up till the very end of the Botha regime. Occasionally, this cooperation was outright and blatant. The most obvious example was the notorious case of Louis Luyt accepting some R32 million from the Vorster government to act as the NP's stalking horse in the setting up of a pro-NP English newspaper, The Citizen. Indeed, the two reporters who broke much of the story of "Muldergate" allege that R13 million of this money "disappeared" on route to The Citizen, and that government attempts "to recover the R13 million over more than a year failed as the money had been put into private enterprise in a bid to help an ailing company".

36. Afrikaner business was extremely close to the government during most of P W Botha's administration. It shared the enthusiasm of business as a whole for the reforms of Botha's so-called "Total Strategy".

37. Afrikaner business interests were in no way prepared to accept the granting of democratic rights to the disenfranchised. As Anton Rupert so eloquently summed up white racism:

. "After many African countries became free they got dictatorships like [Idi] Amin's. We have to find a solution that won't end giving us one man one vote."

38. This reluctance of Afrikaner business to distance itself from apartheid and the National Party was again evident in its reaction to the uprising of 1984-1986, as well as to the P W Botha's disastrous "Rubicon" speech of August 1985. Afrikaner business as a whole was more circumspect in its public expression of disappointment with the "Rubicon" paralysis. Most Afrikaner businessmen still enjoyed close personal and political ties with the regime. Many were heavily dependent on government contracts, and few had extensive links with foreign undertakings. Clearly not yet prepared to contemplate the release of Nelson Mandela, nor talks with the ANC, Afrikaner businessmen did not join in the "leave now" clamour of the Financial Mail. Indeed, the international outcry and bankers' sanctions following the Rubicon speech sparked something of a nationalist revival among Afrikaner business.

39. The AHI organ, Volkshandel, assumed a defensive, close-ranks-against-the-foreigners tone long thought laid to rest. Referring to the August 1985 Assocom/FCI/UF/NAFCOC joint statement calling for major change, the AHI bitingly declined to join "in any form of pressure on the government designed to achieve specific goals". Instead, it advised its members to have "faith in the government's ability to handle the situation". In May 1986, the outgoing AHI president stressed the AHI's "unconditional support" for Botha's "reform measures". Opening the AHI congress, former AHI President and Chairman of Federale Volksbeleggings, C J F ("Kerneels") Human, anticipated the strategy to come with a denunciation of "soft options" and "defeatism". He called for a "plan for victory" based on the need to re-establish "stability" and the "upward movement" required to bring the "third world" (blacks) nearer to "our first world situation".

Non-Afrikaner business accommodates itself to apartheid

40. The NP came to power in 1948 on an "anti-capitalist" platform, whose proclaimed apartheid policy promised drastic state intervention in the functioning of the labour and other markets, and the strict state regulation of all sectors of the economy. Given the NP's overt intention to promote purely Afrikaner interests against the then predominant economic power centres, its accession to office struck pure terror in the hearts of most anglophile businessmen. The Johannesburg Chambers of Commerce spoke for all organised business with its 1949 declaration that the NP programme, policies and overall orientation tolled the "death knell" of the "free enterprise system".

41. However, to the surprise of many of its business opponents, even NP "extremists" like Native Affairs Minister Verwoerd proved remarkable amenable to the requirements of non-Afrikaner business. The overall effect of NP policies was exactly the opposite of that feared by the Chambers of Commerce. Under the governance of this "anti-capitalist" regime, the South African economy grew more quickly than any other capitalist economy except Japan during the 1950s and 1960s. Import controls and other protectionist measures led to a significant expansion of local manufacturing to supply the white consumer demand augmented by NP policies. According to the Governor of the Reserve Bank, after 1948, monetary policy was changed with a view to achieving "the highest growth rate with a stable and external environment". In effect, far from undermining economic growth, the NP's apartheid policies created the conditions for rapid accumulation by all capitalists.

42. Most businessmen took advantage of government interventions in the labour market and its decimation of black trade unions to drive down their labour costs. Real African industrial wages, which had risen by more than 50% between 1940 and 1948, now fell continuously for the next five years and did not again reach the 1948 levels until 1959. In the gold mining industry, as late as 1969, real African wages were still below the level of 1896. Apartheid thus proved to be good for every white business.

43. Whatever their moral and theoretical qualms with NP racial policy, we know of no anglophile liberal businessman who declined profit from this NP "interference" in the "free market", and raised their workers' wages. The NP government's overall assault on the employment practices, living standards and organisations of black workers clearly allowed a number of smaller and less competitive undertakings to survive and even flourish. The intensified exploitation, general level of profitability and rise in the gold price following the 1949 devaluation of Sterling, all contributed to a large and sustained inflow of foreign capital.

44. Much of this new foreign investment went into an increasingly diversified manufacturing sector. When coupled with the growing diversification of the mining houses into the manufacturing industry after the War, this accelerated the process of transition to corporate capitalism. The "anti-monopoly" NP did little to hinder this process. The responsible Minister admitted in parliament that its sole measure, the 1955 Regulation of Monopolistic Conditions Act, was "not anti-monopolistic legislation". Indeed, the NP government actually promoted the transition to monopoly capitalism in a number of ways. The state-owned Industrial Finance Corporation and Industrial Development Corporation both encouraged "rationalisation" through amalgamation and mergers in various industries. Tariff protection and tax and fiscal policies all favoured efficient firms. The fostering of a merchant banking sector, a money market, and the overall centralisation of credit and finance all encouraged the trend towards concentration and centralisation. Thus, while the NP government explicitly set out to nurture Afrikaner business, its overall policy climate created the conditions for the rapid accumulation of capital in all sectors of the economy. The growing collaboration between the apartheid state and non-Afrikaner business is seen most clearly in the emergence of a military-industrial complex in the 1970s and 1980s.

The military-industrial complex

45. By the end of 1977, virtually all commentators were agreed that on the burning issues of economic, social and political policy, behind the overt face of hard-line control and repression, the Vorster government was virtually rudderless. Afrikaner intellectual circles were rife with discussions of the possibility of a coup d'état. Indeed, the SADF general staff reportedly sent a memorandum to their Minister, P W Botha, pressing for a change of government and hinting at the possibility of a coup unless the Vorster government urgently introduced social and political changes to expand black political loyalty to the regime.

46. This protracted paralysis of the Vorster government finally catalysed decisive political realignments. Two broad forces were crucial here: the military, and the most powerful of South Africa's capitalists. They shared an increasing identity of interests and their growing cooperation spilled over into similar strategic perspectives. As the regional situation deteriorated, the defence budget was again increased, rising from R327 million in the budget year 1971/2 to R692 million in 1974/5. Growing regional instability after 1974 and particularly the circumstances in Angola led to a further doubling of allocations for the military to R1,408 million in the two years 1974/5 to 1976/7. The debacle of the first South African invasion of Angola, followed by the Soweto uprising, crystallised SADF discontent with overall security policy.

47. The Defence Force recast its own training, organisation, logistics and strategic projections to take account of the new regional and international realities. It fought hard for a rearmament programme to enable it to correct the severe deficiencies in equipment revealed in Angola. More significantly, the generals and Defence Minister P W Botha clearly concluded that war was a far too important business to leave to NP politicians, and particularly the directionless, haphazard leadership of John Vorster.

48. In the aftermath of Soweto, the SADF lobbied for a complete strategic reformulation of South Africa's regional objectives and policies, insisting on the need for long-term planning and a coherent decision-making process. Steeped in the counter insurgency lessons of Malaysia, Algeria, Vietnam and the wars in the Portuguese colonies, Botha's strategic planners grew increasingly concerned with creating the broad set of conditions making for social stability. They argued that any such counter-insurgency struggle was "80% political and only 20% military".

49. The 1977 Defence White Paper proclaimed the SADF programme for a "Total National Strategy" to meet the complex crisis confronting the state. The fundamental aim, according to the SADF official organ, was "a guarantee for the system of free enterprise". This could only be achieved on the basis of a "comprehensive plan to utilise all the means available to the state according to an integrated pattern". This Total Strategy held that:

. "the resolution of a conflict in the times in which we now live demands interdependent and coordinated action in all fields military, psychological, economic, political, sociological, technological, diplomatic, ideological, cultural etc... We are today involved in a war... the striving for specific aims... must be coordinated with all the means available to the state".

50. However such "coordinated action" was no mere defence of a static status quo. Political and economic reforms were essential to ensure the defence of the state. In the words of the then Chief of Staff of the SADF:

. "The lesson is clear. The South African Defence Force is ready to beat off any attack.... but we must take account of the aspirations of our different population groups. We must gain and keep their trust."

. In effect, the Total Strategy doctrine argued that blacks had to be given a stake in the capitalist system, so that they would begin receiving the "benefits" of that system, their "quality of life" would have to be improved, thus supposedly giving blacks a commitment to the defence of capitalism in South Africa against the "Marxist threat". However the doctrine recognised that this would only be possible through the closest cooperation between the state and "the private sector". This was a far cry from the cabal's envisaged "Supreme Council".

51. The Total Strategy doctrine elaborated the ideological basis for overt collaboration between senior military officers and business leaders. It took up the loud appeals made in the early 1970s by the Sanlam vice-chairman and chairman of its Gencor Mining subsidiary, Dr W J de Villiers, for "cooperation between the public and private sector in an overarching strategy to ward off Marxism". P W Botha's biographers stress his high esteem for Wim de Villiers, and the impact on Botha's thinking of the analysis by this key member of the Cape nationalist establishment.

52. Cooperation between the captains of industry and the SADF generals grew out of more than just their converging strategic conceptions of necessary "reform". It also had a direct economic base. The imposition of the first arms embargo against South Africa in 1964 led to the emergence of a locally-based armaments industry, supervised by the state-owned Armaments Development and Production Corporation (ARMSCOR), under the ultimate control of the Ministry of Defence. By the end of the 1970s, ARMSCOR stood at the core of a new, indigenous military-industrial complex. The Corporation had become South Africa's third biggest industrial group, with total assets exceeding R1,200 million.

53. While itself directly manufacturing a wide range of arms and other military equipment, roughly 60% of ARMSCOR's production was contracted out to the private sector, together with much of its research. In 1976 alone, 25 000 contracts were handed out to about 1 200 private arms contractors. Of these, 50 "main contractors" were "directly involved" in the manufacture of arms, another 400 sub-contractors supplied major components and the remaining firms delivered the "nuts and bolts" to keep the war machinery running. Some 5 600 "business operations [were] linked into the defence establishment" at the end of the 1970s. These included the subsidiaries of virtually all of South Africa's major non-state conglomerates, as well as a number of high profile multinationals such as IBM, Shell, Daimler-Benz and many others.

54. Almost all levels and branches of the private sector were locked into a direct, and highly profitable, relationship with the military via the burgeoning armaments industry. Indeed, so close was the link between the major conglomerates and ARMSCOR that in 1979, at the prime minister's request, South Africa's then largest industrial private corporation, the "liberal" Barlow Rand group, seconded one of its key executives, Johan Maree, to act as ARMSCOR's Executive vice chairman in which capacity he sat on the highly influential Defence Planning Committee. The Financial Mail listed as one of Maree's achievements "the heavy private sector involvement, both at board and production levels, in armaments production". This close integration of the military and the private sector through ARMSCOR led one observer to conclude that in the corporation were concentrated "the interests of capital intensive, mainly monopoly capital, the military apparatus, and the political organs of the state".

55. Yet the link between the SADF and private capital went beyond arms production. Military contracts made up a substantial part of the production of the textile, mechanical engineering, electronic and building industries and "many segments of the private sector are today either directly or indirectly dependent on Defence Force contracts". By the mid 1970s, business leaders and senior commanders had grown accustomed to working together, and clear agreement was emerging between on the need for "reform" of apartheid to make it militarily defensible.

56. In late 1977, the National Management and Development Foundation convened a crucial meeting of business leaders, senior military officers and Department of Labour officials, to "enable each group to understand the other's needs". Chaired jointly by a senior general and the chairman of a leading bank, the meeting was held in camera and under the cloak of the Official Secrets Act. The major political beneficiary of this cooperation was the man who ultimately presided over ARMSCOR, Defence Minister P W Botha. Botha's "Total Strategy" Programme of 1978-1984 won the enthusiastic endorsement of the vast range of South Africa's major business undertakings.

57. The hundreds, if not thousands, of South African private companies linked to the ARMSCOR network were not the only private sector companies involved directly in the growing militarisation of South African society. We want to reiterate the fact that many business people were active participants in the National Security Management System (NSMS), which was one of the key institutional expressions of P W Botha's Total Strategy approach. Under the Total Strategy approach, South Africa's military strategists increasingly projected themselves as defenders of "free enterprise", asserting that "military strength is inseparable from economic strength" (General Magnus Malan, quoted in Grundy, 1986, p.67). This was closely connected to the Total Strategy philosophy that the war in South Africa was only 20 percent military, and 80 percent social, economic and political.

58. The NSMS structures sought to build "moderate" social buffer forces in certain strategic townships (they were called "oilspot" townships), around housing development. As Major-General Wandrag, head of counter-insurgency in the SAP, explained:

. "The only way to render the enemy powerless is to nip revolution in the bud, by ensuring that there is no fertile soil in which the seeds of revolution can germinate"

. (ISSUP Review, October 1985, p.15).

59. Lacking sufficient resources for this kind of programme, the security forces needed to draw in the private sector, and many business people were, for a time, happy to be involved in lucrative projects with or without regard to the wider security agenda.

60. In January 1984, Paratus disclosed that the Demalcom was planning the massive increase in conscription proposed in the Defence Amendment Act of 1982. This included drawing up of guidelines for employers of national servicemen, to encourage employers to make up the difference between company salaries and national servicemen's pay. One researcher, writing in 1988, estimated that "most private companies currently do this, and… one-fifth continue to pay full salaries" - even though there was no legal obligation to do this. (Philip, "The private sector and the security establishment", p. 211).

61. Under Botha, the ranking executives of Barlow Rand, South African Breweries, SA Mutual and Gencor were appointed to the Public Service Commission to oversee the reduction of the apartheid state machinery into a "smaller, but better paid" administrative force. P W Botha explained this appointment, and that of other business leaders to the Defence Advisory Committee as but one step in his "policy of cooperation between the government and the private sector".

62. The National Key Points Act of 1980 created another network of collaboration between the apartheid security forces and the private sector. In terms of the Act, the National Key Points Committee in any region could designate a factory as a "national key point", and in so doing it could then determine the minimum security standard required on site.

63. The management at a factory so designated was required to meet certain security requirements at its own expense. There was some initial opposition, but it was reported soon after the implementation of the Act that management at 85 percent of 633 national key points was cooperating fully.

Repression and reform

64. Capital often claims it played a role in bringing an end to apartheid and supported reforms. The truth is that they were bystanders in the struggle for transformation. They dismissed workers who participated in political strikes to bring down the apartheid regime. When the democratic movement called for sanctions, they were the first ones to oppose it. At the same time, they used their access to the Reserve Bank to take money out of the country illegally.

65. The attitude of a sizeable part of the business community to the apartheid-led "reform" process in South Africa is well illustrated by a 1985 statement by Sir Michael Edwardes, former chairperson of British Leyland and subsequently head of the Anglo American Corporation off-shore operation, Minorco. South Africa, Edwardes said, could regain international acceptability:

. "by sensible representation but without the trauma of one-man one vote… Before the issue becomes one of a choice between isolation and total franchise, and nothing less, for God's sake get discrimination of all sorts and varieties out of the system totally, for all to see."

. (Financial Mail, Johannesburg, 29 November 1985)

66. Edwardes was calling for the scrapping of petty apartheid discrimination "for all to see" in order to pre-empt the "trauma" of "total franchise", that is, basic democratic rights.

67. It is clear that the "reforms" that leading elements of the business community supported in South Africa in the 1980s were not about dismantling white minority rule. They were either:

Ø. reforms that were perceived as being necessary from the perspective of business's profit-seeking interests. As Harry Oppenheimer said: "Nationalist policies have made it impossible to make proper use of black labour", "Business and Reform", Financial Mail, 6 September 1985); or

Ø. reforms that were, very self-consciously and cynically, designed to pre-empt the ending of minority rule.

68. Fred du Plessis, a leading adviser to President P W Botha and, at the time, chairperson of Sanlam, talked in 1988 of the need for delivering economic benefits to key sectors of the black community, to take the pressure off the mobilisation for political change. He envisaged:

. "a situation where people ten years from now feel things are going so much better for them that they do not feel anxious about political power." ("South African Alert", Business International, London, March 1988).

69. Jan Steyn, first executive director of The Urban Foundation - established by leading business-people in the immediate aftermath of the Soweto Student uprisings - speaks of a similar agenda underlying the social projects of the Foundation:

. "…we dare not leave it to the political processes only. We cannot place representatives of the disadvantaged communities in a position in which they feel obliged to challenge the interests of advantaged South Africans to seek redress". (Steyn, Managing Change in South Africa, with a foreword by H F Oppenheimer, Tafelberg, Cape Town, 1990, p.101). Reform is about depoliticising and diverting the aspirations of the majority, or at least of the majority's "representatives." (see also ibid. p.80).

70. Precisely because the reforms were designed to pre-empt substantial political transformation, the reform process of the late 1970s and 1980s was not separate from, it was part of an intensified process of political repression. This repressive-reform agenda was well understood by key elements of business in South Africa, and it was publicly endorsed by them.

Business support for intensified repression in the 1980s

71. Many in the business community gave open support to government's increasingly heavy-handed repression in the course of the 1980s. The large-scale SADF occupation of townships in 1984 was defended by the Financial Mail, for instance. It reassured its readership that "No-one except the ANC is demanding political rights tomorrow."(12 October, 1984)

72. However, business support for the apartheid government began to waver in 1985. The popular mobilisation appeared not to be subsiding. More seriously from the business point of view, a looming debt repayment crisis provoked a serious economic downturn. In these circumstances, business circles voiced growing concern about the slowness of the reform process. 1985 was the year in which a business delegation first visited the ANC in Lusaka. However, with the debt crisis temporarily averted to 1990, with foreign banks agreeing to rescheduling, and with the thousands of emergency detentions quelling mass mobilisation for a while, leading business voices backed the apartheid government once more.

73. Gavin Relly in his 1987 Anglo American Chairman's Annual Statement said:

. "The imposition of the State of Emergency last year, and its recent renewal, though regrettable, were necessary." (widely published as an advertisement in many newspapers, example Independent, London, 14 July 1987)

74. Trust Bank, in its otherwise generally depressed review of the economy in October 1988, said:

. "The 60 percent increase in South Africa's security expenditure over the past two years was clearly essential in the circumstances. In fact, the damper put on socio-political instability by the security forces has definitely played a role in the recently improved performance of the economy."

75. In March 1988 the Financial Mail concurred with these sentiments:

. "Business confidence, that fragile reed, will probably be bolstered by government's latest crackdown on black dissent."

The use of cheap labour, child and forced labour

76. The incessant drive of white farm-owners to find the cheapest and most coercible labour power led to the increasing exploitation of child labour. The attitude of many white farm-owners to this practice was captured clearly by G J Knobel MP (and farmer), who told Parliament:

. "My son (who runs the farm) came to me and told me he did not have enough labourers. Then I told him to go to the principal of the Bantu school - it was during the holidays - and ask him whether every Bantu pupil, boys and girls, above the age of eight could work for him on the land the next day. And sir, they did that work as well as any big, fat grown up Bantu woman could do it and the work costs much less that way." (Hansard, vol 19, col 198, cited in Marcus, 1989, p.111)

77. We are not aware of precise overall figures on the numbers of children employed on white farms, but there are a few localised studies that provide some indication of the scale of the practice. A pilot study of extensive livestock farming in the Albany district found that, of the 615 "part-time" workers, 129 or 25 percent were 18 years or younger. In another study of grape farms in the Hex River Valley, it was estimated that no fewer than 51 percent of the seasonal workers who did not live on the farms were children of school-going age (both examples cited by Marcus, 1989, p.104).

Farm Schools

. While the honourable G J Knobel, MP, was able to boast in Parliament of recruiting, for a particular occasion, children from a local "Bantu" school, the use of African schools as a source of cheap child labour for white farms often assumed a more systematic and institutionalised form.

78. Naturally, African families themselves were desperate to ensure whatever education possible for their children. It was around this real need that white farm-owners developed the farm school. Often presented as a great act of philanthropy, and as evidence of their "concern" for their black labourers, farm schools became a central component of the organisation and reproduction of a cheap, child labour system.

79. Farm-owners exploited the desperate need for education, by building schools on their farms to retain children in the farming areas. This patronage was then exploited to the full:

. "Whether farm workers' children are allowed to attend school or not, when farm or rural schools are allowed to operate, and indeed whether they are allowed to open at all, are all matters decided by the demands of the farmer. This does not only mean that school 'holidays' are timed to coincide with seasonal peaks in the production cycle, but that the school day itself is organised around the demands made on child labour during the working day…starting and finishing times are adjusted to ensure that school does not interfere with the work children are expected to do before and after lessons. Moreover, the farmer can (and does) prevent them from attending school, or plucks them out of the classroom at any given moment. Thus whether drawing directly on the farm, or indirectly through the collectivised child labour pools that country schools provide, restructuring has intensified and expanded the exploitation of child labour in the black worker family." (Marcus 1989, p.105-6)

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