Business As Usual

Moral disapproval is rarely an effective force in international business. Opponents of South Africa's white supremacy policies are discovering the validity of this old truism. Three years ago, when Jamaica launched a boycott of South African goods which was eventually joined by 17 other African, Asian and West Indian countries, South Africa's exporters were badly worried. A year later, after South Africa left the Commonwealth in high dudgeon, foreign investors began to pull capital out of the country at such a rate that foreign reserves sank to an anemic $15 million, and the government was forced to apply stringent currency control.

But in South Africa today the businessman's gloom is fading. Last week the big British weaving firm of Cyril Lord Ltd., which produces fine poplin for Brooks Brothers and Sulka, announced that it was closing two of its British mills and planned to replace them with a new, $2,000,000 plant in South Africa. New British investment in South Africa has jumped from a scant $11 million in 1961 to an estimated $28 million this year. Britain now has $2.5 billion invested in South Africa (v. $2.2 billion in the U.S.). In addition, increasing amounts of U.S., French and German capital are flowing into the country.

Meantime, the trade boycott has turned out to be remarkably ineffective. Since it began, South African exports have risen considerably (see chart). Of the nations that have proclaimed boycotts, at least four are still doing some business with South Africa; Ghana, one of the leaders of the boycott, has broken down and bought South African mining machinery. Between the continued high level of exports and increased foreign investment, South Africa's foreign exchange reserves have now climbed back up to a healthy $200 million. Oddly enough, much of South Africa's renewed economic health rests on the fact that, for all its ugly racial tensions, it appears to foreign industrialists to have a better chance for political stability than most African nations. Says one British businessman: "If it weren't for apartheid--never mind whether we like it or not--we would not think of investing there.''

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