Ivan Fallon: South Africans must know that capital has no colour

Racial divides are still evident in South Africa's business environment, where the country's last white president recently spoke out against the government's wealth redistribution plans.

CAPE TOWN // Since he stepped down from power in 1996, FW de Klerk, South Africa’s last white president, has studiously avoided public criticism of his successors. But as 6,000 delegates were about to gather in Cape Town for the annual Mining Indaba, he could no longer stay silent. In language intended to be heard across the business community, he warned that if the ANC government implements its proposed radical programme for wealth distribution, it is a “mathematical certainty” that it could, within 50 or 60 years, “result in the virtual elimination of the white minority in South Africa”.

Everybody who’s anybody in the mining industry turns up for these events, mostly, one sometimes feels, to enjoy the sunshine, food and other refreshments, which are all in abundance on the Cape in summertime. Last year, the conference was held against the worst slump in mineral prices since the 1930s and an even bigger fall in share prices – Anglo American was down 90 per cent in a year. That turned out to be the bottom and minerals and share prices have rallied marvellously: Anglo is up by 265 per cent since and Glencore, Rio Tinto and Billiton by almost as much.

This year the issues are different. Before he left for Europe at the weekend, Mr de Klerk attacked the Jacob Zuma government’s “openly hostile attitude to white South Africans”, which, according to informed leaks from the ANC itself, is about to result in an acceleration of land reform and a “revolutionary” transfer of wealth, land and jobs from whites to blacks that would be shared across the population on an ethnic basis.

For South Africa’s diminishing white population, which still owns most of the farmland and dominates the Johannesburg Stock Exchange, that is bad news. In 1990, when Nelson Mandela emerged from prison, there were just over 5 million whites out of a population of 36.8 million – or 14 per cent – while coloured people and Indians made up another 6 per cent. Since then the overall population has increased to 55 million, but the white population has fallen to 4.5 million, or 8.2 per cent, while the black population has climbed above 80 per cent. More than 500,000 whites have left in the past 20 years.

Mr Zuma is reported to have told the ANC national executive committee last week that the South African economy was constructed “on a racial basis”, and in recent weeks has lashed out at what he calls “white monopoly capital” that he blames for just about everything, including the campaign to force him out of power. “I will never on my own resign because if I do so‚ I would be surrendering to the monopoly capital,” he told his supporters at a public rally.

“Monopoly capital”, a phrase widely used by Zuma supporters, is code for rich white businessmen such as Johann Rupert, head of the Rembrandt Group, who have openly criticised ANC policies. It resounds through large parts of the black business community. Moeletsi Mbeki, the brother of the former president Thabo, says there is a reason for this. “Unable to meet the demands of economic modernisation,” he says, “the ANC has created a scapegoat in white monopoly capital.”

I was at a meeting the other day where Christo Wiese, the country’s third richest man, found himself facing a suddenly hostile audience when the subject came up. Mr Wiese is a robust, self-made billionaire who does not rattle easily, but he emerged visibly shaken. “There is a huge distrust for business, which I had not realised was as deep as this,” he told me afterwards.

The tone for the week-long Mining Indaba was set by Mark Cutifani, the chief executive of Anglo American, who called on the government to end a “20-year rot” in the mining industry and produce some investment-friendly guidelines on black empowerment. The latest draft of South Africa’s mining charter requires companies to have 26 per cent black equity ownership, even when original investors have sold out – which they often do. The mining companies, including Anglo, have argued strenuously for the “once empowered, always empowered” principle, but to little avail. Mr Cutifani this week argued that if you take pension funds and other investment vehicles into account, Anglo’s South African interests are at least 64 per cent black-owned. “We need to put aside the personal conversations and attacks … in today’s world capital has no colour.”

The business community is now waiting anxiously for Mr Zuma’s state of the union address tomorrow, when he is expected to develop his transformation strategy. A lot hangs on it. As Mr de Klerk says: “If South Africa fails, Africa fails”.

Ivan Fallon is a former business editor of The Sunday Times.

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