De Klerk steadies the boat after Thatcher onslaught

IN COMMON with many South Africans, the Deputy President FW de Klerk might feel that Baroness Thatcher has stabbed him in the back. Upon arrival in London yesterday to promote investment in South Africa, he would have read in the papers that Lady Thatcher had told businessmen in Bombay that foreign capital was wary of investing in South Africa because of violence and political uncertainty. While she insisted later that she wished South Africa well, she did say to her Indian audience: 'What you are getting is people who look at the rest of Africa. They say: 'Look at Rwanda, look at Somalia. Are we going to have the same thing happening in South Africa?' '

Mr de Klerk, choosing his words carefully, said the comparison with South Africa's chaotic continental neighbours was 'really very unrealistic'. But he did acknowledge that there was 'a school of thought among business people in Europe, in England and America who adopt a sort of wait- and-see attitude'.

The man who presided so judiciously over the fall of apartheid was probably nearer the mark than his old friend, Lady Thatcher. The evidence so far indicates that she was correct in her diagnosis, but wrong in her analysis of the symptoms. Foreign businessmen are not falling over themselves to invest in the new South Africa: that is true. They are indeed watching and waiting, as Mr De Klerk said. But they are eager to invest when the moment is ripe.

The figures available to the British government for British investment so far this year do, however, endorse Lady Thatcher's conclusion that South Africa has not yet experienced a windfall of foreign cash. These show that only pounds 5m have been forthcoming since 1 January - not a great deal in the light of the fact that pounds 421m was invested between 1990 and 1993, and that the total British investment in South Africa, the highest of any country, adds up to pounds 10bn.

A British official was quick to stress, however, that not all investments are reported to the government, and that the pounds 5m figure probably reflected the extremely cautious attitude of investors before the April elections rather than what he described as the relatively bullish sentiment today.

Lady Thatcher's sensationalist comparision with Rwanda is not uppermost in potential investors' minds. Their greatest concern is to obtain policy assurances from the Mandela government that South Africa will be transformed into a land of commercial opportunity.

John Major echoed the sentiments of the British businessmen accompanying him on his trip to South Africa - notably the CBI's Director General, Howard Davies - when he told the South African Chamber of Business on Wednesday that South Africa needed to lift exchange controls and reduce tariffs to compete successfully for foreign investment.

At a dinner on Wednesday night at the British ambassador's residence in Pretoria, British businessmen made the point again, but stressed that they were encouraged by the peaceful outcome of the elections and by the evident climate of political stability. 'You can sort of see into the future now which you couldn't before,' one businessman said.

In India, Lady Thatcher said that much of the new US investment in South Africa was, in fact, re-investment, to protect existing interests. Denise Buckle, manager of the American Chamber of Commerce in Johannesburg, said yesterday that Lady Thatcher's observation had been astute. 'Most companies that have come over the last year are re-investing. There's Honeywell and IBM, for example. On the whole, though, out of the 45 US companies that have re-invested, very few are making capital investments, very few are setting up manufacturing plants. It's mostly sales and marketing offices we're seeing.'

Ms Buckle did not take quite as rosy a view of the political situation as some of the British businessmen on Mr Major's trip. She noted that perceptions of instability remained, and quoted the US Commerce Secretary, Ron Brown, as saying, with reference to the South African transition, that Americans did not believe in miracles. 'But,' Ms Buckle said, 'the message is filtering through slowly that things are coming right here, and it's the lack of clarity on government policy that has emerged now as the main obstacle to capital investment. It will happen, though, in the next year,' she said.

A spokesman for the South African foreign trade Organisation said yesterday the attitudes being taken by British and US investors were reflected across the board.

(Photograph omitted)