Sri Lankan businesses told how S. African firms revived sanctions-hit economy
ECONOMYNEXT – The way South Africa’s businesses helped the country recover from the isolation and sanctions of its apartheid era by funding peace efforts and pay hikes to avoid strikes was highlighted at a forum of Sri Lanka’s corporate elite.
Speaking from experience, South African High Commissioner Robina Marks said the primary role of businesses is to play an active part in uniting a country, for both their own survival and sustainability, and for the country’s economic development.
“Across the world, South Africa was seen as a pariah state because of apartheid that separated races…. We were ostracised by the international community,” she said, adding that the international anti-apartheid movement succeeded in applying sanctions against South Africa.
This in turn snowballed into civil society, who refused to buy and consume South African products, as that was seen as tantamount to condoning apartheid, she told the Ceylon Chamber of Commerce annual general meeting held recently.
The country soon hit an all-time low, as the South African economy was in free-fall.
“From the mid-1980s, foreign governments and businesses cut many economic ties with South Africa, and in 1985, international banks began refusing to roll over short-term debt with the result that, over the next year, the country would have to pay one billion US dollars in loans,” Marks said.
“Inflation rose to 16 percent, the currency tumbled and the government introduced exchange controls. By 1986, over 100 multinationals had disinvested from South Africa,” a statement quoted the High Commissioner as saying.
However, the country was able to turn themselves around, in just 25 years. South Africa is now considered to be a leader in the African continent, with a gross domestic product of 385 billion US dollars, compared to Sri Lanka, which has a GDP of 90 billion dollars.
Marks attributed this to an invisible role played by their business community and private sector.
The business community “quite frankly, didn’t have a choice,” she said.
The economy was down, domestic consumption was down, and the international export market was shrinking.
The private sector had two choices — to help the apartheid government and white society, or to help build a climate of trust in which the political leaders could move the country towards a more stable future.
They chose the latter, with the private sector banding together to push South Africa towards success.
“They funded efforts at maintaining the peace,” Marks said.
“They knew that it was in their own interest to make concessions around a decent living wage that would quell the many industrial strikes that we had at the time. Many of them improved their working conditions, improved salaries to workers, and offered scope for promotion to their black workforce.”
South Africa’s private sector elped to market the vision of a non-racist South Africa to the international community.
“They were vocal about the fact that the country was on the right track, that good, fair and inclusive governance could also be good for business, and more importantly, because they had vested personal and business interests, that they had no intention of leaving,” Marks said.
“So when prominent companies like Anglo American started ‘selling’ the new South Africa, the outside world took notice that there would be no local capital flight,” she said.
Business leaders all stayed back.
“Nothing demonstrates confidence in a country more than staying and not leaving for what might be seen as greener pastures,” Marks said.
(COLOMBO, 17 July, 2019)