Gap in living standards will take years to narrow


JOHANNESBURG, South Africa -- That was no magic wand the president of the United States waved over troubled South Africa yesterday.

South Africa's government and business leaders applauded President Bush's decision to lift U.S. sanctions as a boost to the country's flagging economy and a benefit to the suffering population.

The move comes at a time when South Africa is looking for financial help from the outside world to achieve its new goal of a democratic society with opportunities for all its citizens, regardless of race.

But the gap between black and white living standards in South Africa -- widened over decades of racial repression -- is so vast, it will take a fortune and many years to close.

For millions of blacks, life in South Africa has meant coping with poor schools, inadequate housing, shoddy municipal services, landlessness and joblessness. That is the legacy of apartheid, and the problem that needs to be corrected before the term "new South Africa" has any real meaning for the majority of blacks.

Economists say it will take massive investment in the country to achieve the goal of raising the average living standard of the country's 28 million blacks.

"Only large-scale private investment can ultimately create the wealth needed to put our economy back on a growth path sufficient to raise the living standards throughout southern Africa," said Naas Steenkamp, president of the South African Chamber of Mines.

Government leaders expressed confidence yesterday that the lifting of the 5-year-old U.S. Comprehensive Anti-Apartheid Act would prod other countries to follow suit and would spur an influx of foreign investment.

"We now hope that this momentous decision will lead all over the world to the termination of sanctions, particularly by those governments who indicated that they were waiting for the lead of the United States," Foreign Minister Roelof F. "Pik" Botha said shortly after the sanctions decision was announced in Washington by Mr. Bush.

But the lifting of the Comprehensive Anti-Apartheid Act is not likely to start a sudden rush of new investors to the country, because there is still much uncertainty about South Africa's political future.

"This is only the start of a process," said Ben van Rensburg, chief economist for the South African Chamber of Business.

"Maybe the process is going to take quite a long time. Many of the sanctions against South Africa are voluntary and were not really enforced by law," he said.

Sanctions imposed by U.S. banks, state and local governments, universities and other institutions will remain, he said, and the financial sanctions were the most effective of all because they cut off South Africa's access to foreign loans.

"Many of those will not be lifted until the ANC gives the go-ahead," he said, "because those were driven by people who felt very strongly about apartheid."

The African National Congress, Nelson Mandela's anti-apartheid organization, has opposed the lifting of sanctions because it sees sanctions as an important tool in the campaign to pressure the white government to change.

Only last week, the ANC softened its sanctions position, saying it wanted to be flexible and to support a phased lifting of sanctions. But the organization termed Mr. Bush's actions in removing the U.S. sanctions as premature because, it said, the South African government had not met all the conditions laid out in the bill.

In particular, the ANC disagreed with President Bush that all political prisoners had been freed, as the act requires. The ANC also has expressed uncertainty about the de Klerk government's intention to create a truly democratic society, devoid of white privileges.

But the biggest uncertainty for many foreign investors looking at South Africa is the ANC itself. Seen as the most likely organization to control a new black government in this majority-black country, the ANC has been unclear on its economic policies.

Because of the ANC's close alliance with the Communist Party here and because of its past support for the nationalizing of industries, investors may hold back until they know more about the ANC's economic plans for a future South Africa.

In the immediate future, South Africa is not likely to experience a quick turnaround in its economy, which is in a recession.

But economists think that some money and some business will start flowing into the country, and that this will help the government in its program of closing the massive economic gap between blacks and whites.

"Many of the American companies still present in South Africa will now feel free to support an expansion of their programs. That is important to us," said Mr. van Rensburg of the Chamber of Business. "They know the country and will not feel threatened by the political situation.

"New companies will only risk investing their money once we've shown we're going to create a stable political environment and stable economic policies," he said.

The American Chamber of Commerce in South Africa says 129 U.S. corporations are still doing business in South Africa, while 197 disinvested.

It said U.S. corporate assets in South Africa dropped from $2.6 billion in 1981 to $1.5 billion now, although trade between the two countries has increased.

The South African government, which campaigned long and hard against economic sanctions, has always maintained that the impoverished black population suffers most when trade restrictions are imposed and when foreign companies pull out.

The ANC argued that the massive joblessness and other hardships suffered by blacks were mostly due to the harsh policies of apartheid.

The lifting of those policies and the subsequent removal of sanctions represent a convergence of developments that should ultimately improve economic prospects for the black majority of 28 million.

But, given the extent of the problem that needs to be corrected in the new South Africa, those prospects will not be very bright very soon.

Copyright © 2020, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad