By: Hadebe Hadebe
Corporate South Africa is perhaps the most powerful ‘entity’ in the post apartheid South Africa. Some people argue that it has more power than it had during apartheid. Professor Roger Southall of the University of Witwatersrand traces this rather bizarre state of affairs from the decision of the African National Congress (ANC) to present itself “as a partner with which large scale capital could play.”
To understand how capital shaped the politics of South Africa to date, one does not look further than Harry Oppenheimer and his larger-than-life company, Anglo-American. Anglo-American occupied the centre stage throughout the apartheid era, and Hendrik Verwoerd is said to have told Oppenheimer that he could collapse the South African state at any time.
Indeed as the apartheid government tightened screws on the rebellion by the African majority in the beginning of the 1960s, Anglo-American would gain even much more prominence. The killing of scores Africans in Sharpeville on 21 March 1960 resulted in capital flight out of South Africa. It was the enormous capital resources of Harry Oppenheimer’s Anglo American Corporation that save the day.
The New York Times wrote in 1983 that Oppenheimer’s “grip on the country’s resources has never been translated into effective political power.” So, the opportunity arose for him after the Sharpeville massacre to really influence the turn of events within the South African state.
Oppenheimer’s advantage was that he “personified the one power center the Government party has never quite managed to dominate.” As a result, tensions always existed between these two centers of power. The Nationalist party always lamented the power of ‘British-Jewish capitalism’ in the same way the present-day black nationalists complain about ‘White Monopoly Capital’.
With all the tension that existed at the time, “The Nationalists gradually learned to depend on Harry Oppenheimer to save them from the economic consequences of their own policies.” As already noted above, Sharpeville massacre created an untenable situation for the Nats – that is, a catastrophic flight of Western capital. This is when Oppenheimer’s money came in handy.
His billions assisted South Africa to slowly recover and to set the country in a path of becoming a sophisticated industrial state. Bill Freund cites the example of Oppenheimer’s gift to Afrikaners through the creation of Gencor. The company marked the entry of Afrikaners in mining. South Africa went on depend on Anglo-American which controlled almost every aspect of its economy.
The void left by the companies that departed South Africa handed Oppenheimer power to literally control much of mining and the economy. He was the king of diamonds, platinum, vanadium and uranium. According to Duncan Innes, his companies also produced coal, steel, nonferrous metals, pulp and paper, automobiles, fruit, wine, etc. His empire extended to banking, insurance and real-estate.
All in all, the Oppenheimer dynasty accounted for roughly half the value of South Africa’s exports and half the value of the shares traded on the Johannesburg Stock Exchange. And that is only South Africa. His wings stretched to Zimbabwe, Namibia, Botswana, Tanzania and – very discreetly – Angola and the Soviet Union. Oppenheimer and Anglo-American beat the tight exchange controls to own businesses in the USA. The flexible exchange controls were only introduced under the new black government in the late 1990s.
In 1983, the British weekly, The Economist, estimated Oppenheimer’s wealth at a whopping U$D15 billion. Much of this money needed to leave South Africa, and something had to be done. It is suggested, “From late 1984 onwards, a series of meetings between the exiled ANC and groupings from within South Africa [particularly the members of Corporate South Africa] began to take place, a process that was unprecedented, especially since the ANC had been banned since 1960 and was prohibited in any form inside the country.”
As far back as 1985, authors David Pailister, Sarah Stewart & Ian Lepper observed, “The most striking aspect of the South African economy is the degree to which it is dominated by just a few large companies…” This can be attributed to the dominance of Anglo-American and historical role the state played in the economy in its efforts to empower the then poorer Afrikaners in relation to their English-speaking counterparts.
The question that remains unanswered and continues to trouble many people is: Why did capital negotiate with the ANC in exile and not the apartheid government? Answers to this question would hopefully provide what could be considered compelling reasons that motivated Corporate South Africa to hurry in approaching a banned liberation movement and also to understand what exactly was the catch (deal) that was crafted for the exiled ANC leaders.
Without Oppenheimers, one doubts if these meetings would have taken place. Oppenheimer is/was the God that everyone in South Africa worship. The money buried within South African borders, and economic sanctions to a lesser extent, pushed white business to talk to the ANC. It was more the pariah status that was a huge problem rather than economic sanctions, which are often over exaggerated by some.
Nonetheless, it was necessary for capital to be seen to be reaching out to blacks in order to make an impression to the ‘international community’. This was a mere formalization considering that the West never really turned its back on South Africa. And a company like Anglo-American was already multinational corporation with interests all over the world. So, it was important to prep the ANC in terms of what to expect when it came to power via a negotiated settlement.
With a floundering organization in exile, the approach by white businessmen was a godly-gift for ANC leaders. It can be argued that they were negotiating from a position of weakness since they had no serious bargaining power. They were also acting against time as the Soviet Union was beginning to unravel. Also, Southall points out, “Just as the ANC was unable to overthrow the political, so it was unable to overturn the economic order.” There was no other route that the ANC could follow besides dancing to Corporate South Africa’s music.
What seems to be a point of interest though is the nature of economic benefit that the ANC probably expected from the white businesses in exchange for some political agreement. Besides the ‘donations’ that were given to ANC leaders like houses, cars and cash, black economic empowerment (BEE) became the mainstay of uplifting former cadres and others by large businesses after the fall of apartheid. But also the likes of Nelson Mandela “forged strong relationships with both Harry Oppenheimer, Chairman of Anglo-American, and Clive Menell, vice chairman of the rival Anglo-Vaal mining group.”
Nonetheless, it is important to point out that the idea of BEE wasn’t born after the end of apartheid as such but much earlier. Opposition figures who were liberals such as United Party leader Sir de Villiers Graaff believed that “The permanently de tribalized Bantu [should get] the right of representation in Parliament as a separate group” as well as rights as home ownership in their own areas and freedom of movement. The purpose was to “develop a responsible property-owning Bantu middle class in whose interest it would be to accept the responsibility of ensuring not only peace but also Western standards.”
Oppenheimer himself, also a sponsor of the United Party, once told Anglo-American stockholders that “South Africa would not follow the pattern of other African countries by handing over power to blacks.” But it was through the Urban Foundation, which was his personal project that Oppenheimer outlined his vision of building up “a black middle class as a bulwark against revolutionary elements, and to provide a stable community with solid materialistic values.” In fact, Oppenheimer had done the same with Afrikaners in the 1960s.
The BEE policy was a gift given to the ANC-led government by Anglo-American who was responsible for distributing patronage to cadres as a thank you for leniency towards capital. Sociologist Donald Mitchell Lindsay in his PhD thesis titled: ‘BEE Informed: A Diagnosis of Black Economic Empowerment and its Role in the Political Economy of South Africa’ reveals that one ANC cadre, who had just been released from prison, once suggested to Oppenheimer that “he be given the De Beers Venetia Diamond Mine in Limpopo Province in exchange for his political support,” as per information provided by Michael Spicer (an ex-Anglo executive.
Lindsay adds that Oppenheimer did not agree to this proposal. Instead, Lindsay continues, Oppenheimer “suggested an alternative package of assets for this individual who, today, is one of the richest and most politically influential men in South Africa, largely on the back of unproductive BEE-type investments. He is also a member of the NEC of the ANC.” That is how basically BEE was operationalised and benefitted the politically strong within the ANC.
It is important to note that BEE was never an economy-wide policy but it is started in mining and later replicated to other sectors. That explains why mining BEE codes were different from the rest. DMR and DTi have not harmonized the two sets of BEE codes. Mining has a 26% requirement which Mosebenzi Zwane wanted to increase to 30%.
The Mining Chamber opposed the changes because they argued ‘once empowered always empowered’, meaning that the gift (patronage) had already been given to those who mattered, for example Mzi Khumalo, Tokyo Sexwale, Cyril Ramaphosa (President), Patrice Motsepe, etc. who could have been proxies of powerful individuals within the ANC, and or even the ANC itself. The perception that the ANC is a “machinery for accumulation”, using Roger Southall’s phrasing, is not far from the truth considering how the BEE turned cadres to instant billionaires in a whim.
In summation, the creation of BEE threshold in mining literally cushioned Oppenheimer’s assets from a possible takeover through nationalization. This also diverted wealth that should have been part of national patrimony to individuals in the name of empowerment. To this day, countries such as Namibia, Niger and others have state-owned mining companies that contribute directly to the welfare of their populations.
Oppenheimer did not help the ‘new’ South Africa or Botswana as he did with Israel. Using his Jewish heritage, he “personally directed that Israel receive the necessary diamond raw products from De Beers to establish itself as one of the world’s diamond polishing and exporting countries.” Both South Africa and Botswana are extractive colonies where he created his wealth but Israel was strategically placed in the tertiary side of diamond processing value-chain though it has no single diamond mine.
South Africa has a handful billionaires who unfairly attained their wealth from Oppenheimer who undermined the democratization project. Oppenheimer not only used BEE to protect his massive financial interests but used his financial muscle to manipulate economic policy to take his billions out of South Africa. Anglo-American is one of the companies that benefitted from the flexible exchange controls; they used this change in policy to relocate to overseas markets.
Capital continues to shape the South African political landscape to this moment. It used its strength to determine the outcome of the ANC conference in 2017. This reality means that the South African state exists in the shadow of its powerful companies – the reasonable conclusion is that capital will continue to twist everyone’s arm until it seen in a positive light across the political spectrum. There are no short-term intentions to abandon the country but things such as high unemployment, low growth and ‘investment strike’ are used to flex the muscle more than anything else.
¡Si ya banga le economy!
