TRC Final Report

Volume 4

Chapter 2

Subsection 10

■ BUSINESS IN THE 1980s

113 The 1980s was a period of reform and repression. Limited liberalisation occurred on both the political and economic fronts. Such efforts were, however, far from satisfactory and failed to stem the tide of rising protest from trade unions and anti-apartheid organisations.

114 Except for the boom years of 1980 and 1981 (primarily a response to the high dollar gold price), South Africa’s growth rate was low or falling during the 1980s and early 1990s. Investments performed very badly, unemployment rose and capital flowed steadily out of the country. The mid-1980s were particularly bad years for the economy. Various factors account for this. Perhaps most influential was the impact of high world interest rates, international recession and the instability caused by the ‘Third World’ debt crisis. Like other developing countries, South Africa had to cope with adverse external shocks.

115 Domestic factors, however, also played a role in South Africa’s economic woes. Monetary policy, for example, was unduly restrictive between 1982 and 1985. This was in part a consequence of the lifting of certain restrictions on capital outflow, which forced the South African Reserve Bank to raise interest rates to give some protection to the exchange rate. The rand was, nevertheless, allowed to depreciate against the dollar (in nominal and real terms) between 1982 and 1986.

116 This policy-induced recession of the early 1980s was exacerbated by political unrest (1984-7) which undermined investor confidence, encouraged capital flight and played a part in the refusal of major international banks (starting with Chase Manhattan) to roll over South Africa’s debt. Consequently, the government declared a moratorium on imposed debt repayment and, in August 1985, reimposed controls on the outflow of capital. Except for a brief respite in 1988, the economy limped along for the rest of the decade.

117 Business’s changing attitude to apartheid cannot be ascribed solely to the economic crisis. Apart from the debt crisis and the decline in exports and investment, the fall of the Berlin Wall and the moderation of ANC economic policy after 1990 probably contributed to changing business attitudes.

118 Many business organisations were uncertain how to react to the economic crisis and political unrest. As SACOB put it:

The business community was caught between a recognition of the inevitability and desirability of significant political reform, and a range of developments which resulted in a great deal of instability and which were, quite simply, bad for business stakeholders.

[Their response] to this acute dilemma was, on the one hand, to try to speed up the reform process and facilitate contact between the different political interests - both within and outside of South Africa - and on the other, to fight a rear guard action against the sanctions and disinvestment campaign, and the rising levels of violence, which threatened the economy and job creation.

119 Efforts to accelerate reform included further protests and representations to government, participation in consultative bodies (like the Economic Advisory Council) and visits by leading business representatives to the ANC in exile. The Consultative Business Movement (CBM), a body consisting of business people and representatives of community organisations, was formed in 1988 to work towards a non-racial democracy. The CBM actively sought alliances with popular leaders and attempted to guide business along the path of political transformation.

120 One of the rearguard actions by members of the business community was to become involved in the National Security Management System (NSMS) by participating in the network of Joint Management Committees (JMCs). A main function of the JMCs was to co-ordinate the work of all government departments in dealing with points of unrest. Mechanisms used ranged from police and army control to spending large amounts of money on upgrading townships. The goal was, however, essentially to prolong white domination. Business also participated in Defence Manpower Liaison Committees, whose function was to discuss military call-up needs and local security issues such as stay aways and unrest.

121 Charles Simkins, professor of economics at the University of the Witwatersrand, notes in his submission that:

These developments created new and unprecedented relationships between business and the government at a time when the capacity for public scrutiny was lowered. Of all the sub-periods between 1960 and 1994, this one needs the closest attention.

122 Unfortunately, the business submissions provided no specific details about this. Nevertheless, a few comments are in order. Where participation by business in the JMCs resulted in, or facilitated, subsequent human rights abuses by the security establishment, there is a clear case to answer. Where such participation resulted in the channelling of resources to townships, the moral issues are more opaque. While JMC-facilitated development in townships was certainly motivated by counter-revolutionary aims, there is an important difference between counterrevolutionary strategies based on providing infrastructure to people, and strategies based on torture and repression. Again, not all businesses played the same role in the process.

123 A different kind of rearguard action concerned business’s opposition to sanctions. In one respect, opposition to sanctions was self-serving; to the extent that sanctions reduced growth, most businesses suffered accordingly. However, opposition to sanctions also stemmed from a belief by some businesses that economic growth rather than the intensification of poverty promotes democracy. This view is evident in Mike Rosholt’s submission:

Barlow Rand was, unsurprisingly, opposed to sanctions and I state this quite openly. This was because in our view, the critical delivery of a better quality of life and jobs for the disadvantaged depended to a very large extent on economic growth, which obviously would have been detrimentally affected by sanctions, among other things.²⁴