Business vs. ApartheidAuthor(s): James GreeneSource: Africa Today, Vol. 4, No. 6, South Africa: Alternatives to Disaster? (Nov. - Dec., 1957),pp. 42-44Published by: Indiana University PressStable URL: http://www.jstor.org/stable/4183909 .

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Business vs. ApartheGid

By JAMES GREENE Attempts to assess the health of any economy must take into

account factors that have little to do with economics. Figures alone are almost invariably misleading unless they are hedged in, confined by a whole complex of political and social factors that differ in their very nature from the cold objectivity of numbers.

Since this is so, I could not hope in the space allotted to do justice to the realities and potentials of the South African economy by intro- ducing all the non-economic factors vital to a total view. This issue of Africa Today contains many articles devoted to non-economic ele- ments in South Africa; perhaps they will supply what this article lacks in that regard. The economic consequences of apartheid are, of course, yet to be felt. They will, we may hope, never be felt. But I believe it could be useful to look at the direction the South African economy is taking and outline what those consequences could be.

As Africa's most industrialized nation, the Union is in many ways a laboratory, and the importance of the experimentation going on within it cannot be exaggerated. For here, the full impact of Western civilization is being felt in African life; the amazing industrial growth of the Union during and after World War II has placed the most advanced Western methods and technology on African soil. The way in which the Union develops over the next few years will be closely watched by the rest of the world as an early indication of how all Africa will develop.

In wider perspective, the Union now faces an immediate future in which Communist and free nations will be vying with one another for influence in Africa, in which underdeveloped nations will be attempting to compress developments that have traditionally taken centuries into mere decades. These facts place the racial situation in South Africa on a world stage; the universal interest in that situation stems not from any intention of interfering in the Union's internal affairs, but from the belief that the resolution of the Union's race problem is of far-reaching and historic importance. The chaos, politi- cal, social and economic that would follow a wrong solution would engulf more than the citizens, white and non-white, of South Africa.

Because, in the West, no nation has experienced genuine develop- ment as anything but a socially homogeneous whole, the world's busi- ness community has viewed with misgivings the Union's introduction of apartheid, with its assumption that the non-white may develop in

his own "areas" separate from, al- beit parallel to. the white. In fact the Nationalist Party's challenge to its businessmen that, if they

James Greene is the Eur-Africa editor of a prominent international business maga- zine.

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accept economic integration, they must accept its consequent political and social integration, is beside the point. Economic growth is an integrating influence; the Nationalist Party if it insists on apartheid as an enduring and unalterable policy must, for its part, face con- sequences of eventual economic stagnation. tAs the Union's influential industrial magazine South African Industry and Trade has put it: "The forces of economic change, and especially industrial change, are resistant to and disruptive of apartheid." The majority of industrial- ists in the Union believe, according to this magazine, "that the course of change must be away from apartheid toward economic integration."

South African experts project an annual growth rate for the Union of approximately 2 to 2.4 per cent over the next decade. The figures are modest compared with past achievements but they assume a domestic tranquility seriously threatened by present government policy. Whatever their views on the racial question, the Union's busi- nessmen realize that their nation cannot meet the problems of the future with its hands confined by ideological handcuffs.

In addition, South African growth in the past has been heavily dependent upon imported capital. This source of funds to finance development dropped from ?51 million in 1955 to ?15 million in 1956 and, while the world-wide shortage of capital contributed somewhat to this decline, it is certain that the social uneasiness in the Union also contributed. To offset this decline the Union has been encouraging the formation of domestic pools of capital through investment compa- nies and will soon introduce a forced savings levy.

In the very recent past South Africa has been attempting to develop its "natural" export markets in Africa; it has been successful in the Rhodesias in supplanting Britain as the number one supplier to that country in 1956. For Africa as a whole, there is now in the planning stage an export drive based upon the findings of experts who visited various territories. But it is extremely unlikely that this drive can be successful in any permanent sense without a settlement of the racial problem in the Union. While it is true that the Union is a greatly valued source of minerals and metals needed for growing industrial economies, it is also true that income from the export of these "essential" items could not alone guarantee the continued growth of the Union. As the U. S. trade mission to the Union asserted in its final report "the complexity of the interracial problem is a matter of serious concern among business people and its ultimate solutions will be a determining factor in the future development of the country."

Militating against even the so-called "moderate" apartheid is still another factor: In the past forty years the non-white in the Union has moved from a primnitive stage to a place in the working class of a modern industrial society. He has put down, irrevocably, his spear and taken up the tools and skills of the modern workman. Without him, the Union can only fall far behind the rest of Africa.

The Union's relations with the U. S. have been extremely close during its period of rapid expanision, and it has been the American

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manufacturers' largest market in Africa. In 1955 goods worth $281 million were shipped to the Union from the U. S.; in 1956, $278 million. For these two years, imports to the U. S. from the Union were $74.4 million and $81.2 million respectively. American products going to South Africa are mainly automotive products, industrial machinery and appliances as well as chemicals and raw rubber. South African exports to the U. S. include gold, wool, precious and semiprecious stones, ferro-alloys, lead and other metals. Because the price of its imports has been gradually rising while the price of gold remains con- stant and the price of commodities falling, South Africa has been attempting to persuade Americans of the need for a rise in the gold price, but this plea has fallen so far upon deaf ears.

Nevertheless, for the first time in history, South Africa's bal- ance of trade payments showed a surplus-roughly, export earnings exceeded import expenditures. The large amounts of capital poured into the Union for industrial production are thus beginning to make their effect felt by contributing to the national income. Benefits from this development will be even greater over the next few years, but after that, unless additional funds from overseas can be attracted, South Africa faces an economic stalemate.

The "favorable investment climate" awaited alike by Union and foreign businessmen will certainly not develop before the elections next spring. Many U. S. firms, however, are watching the developments in South Africa closely and believe that the "favorable climate" will return and with it the opportunity to set up their own manufacturing and sales organizations in the Union. It has been pointed out that domestic capital in the Union has tended to go into building societies and savings rather than into commercial industrial enterprises. This fact, among others, makes the overseas investor "shy."

In the preceding paragraphs, I have attempted to outline how the economy of South Africa is linked to the rest of Africa, to the U. S. and to the world at large. Its immediate past has been one of impres- sive economic gain, and the erection of this industrial complex has only served to bind it closer to the rest of the world. The imposition of apartheid upon such an international complex is, if not ridiculous, at least anachronistic. Against the background of an emergent Africa and Asia the policy of apartheid can play but a brief hour on the stage. The declared aim of that policy is, even in the economic, i.e., non-moral, sphere, self-contradictory. The government that unalterably opposes the economic advance of a majority of its people invites disaster.

The business community is inclined to be optimistic about South Africa's future. It believes that once an ideology blocks the advance of an economy it is watered down to the needs of the moment, and gradually watered out of existence. To feel this as a businessman is not to suspend all moral judgment about apartheid. Before the Nation- alist Party is convinced of the futility of its policy South Africa is likely to pay a heavy price in human suffering and anguish.

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