Conference on the socio-economic trends and policies in southern Africa

UNITED NATIONS

AFRICAN INSTITUTE FOR ECONOMIC DEVELOPMENT AND PLANNING

DAKAR

GS/2528-3 /(/^

CONFERENCE ON

»

THE SOCIO-ECONOMIC TRENDS AND POLICIES IN SOUTHERN AFRICA

(DAR-ES-SALAAM,

29 NOV.-7TH DECEMBER,

1975)

SOUTH AFRICAN IMPERIALISM IN SOUTHERN AFRICA.

BY

Nyathi, V.M.

SEPTEMBER 1975

#

Page 1

SOUTH AFRICA IMPERIALISM liST SOUTHERN AFRICA

The historical-materialist theory of the 19th and 20th cen-

* •

tury imperialism is the methodological "basis in examining the de¬

velopment of South African imperialism. According to this

theory

it is not social consciousness which _gave rise to imperialism but capitalist social being

(the

production of material wealth and pro¬

duction

relations).

Therefore the question of imperialism should

be understood and explained precisely on this basis.

In our examination of the development of South African imperi¬

alism we shall concentrate on its dynamics and meohanisms as well

as its effects on the imperialized countries and on South Africa itself. Imperialism can be defined as the external expansion of capitalism beyond its national territorial boundaries in an effort

to solve its internal crisis which have become an obstacle in its fundamental aim of maximisation of private profits. Capitalism is

a socio-economic system whose' motive foroe is the production

of surplus value and its appropriation by the capitalist class.

It is a system based on private ownership of the means of produc¬

tion and the exploitation of wage labour^$ and the main classes in

this socio-economic system are capitalists and workers, the former owning the means of production

(capital)

and the latter

only owning

labour power which is to be exploited by capital. In

the

case

of

South African capitalism labour to be exploited by capital is non migrant and migrant, the latter retains

limited

means

of

pro¬

duction in the reserves

(Bantustans).

But before dealing with the dynamics, mechanisms

and effects (which

actually constitute the

theory

of

imperialism of South

African imperialism,

it will be helpful to give

a

short criticism

CS/2528-3

Page 2

•

'

Y

to the

non-historical-materialist concept cf imperialism. The non-

historical-materialist

concept of imperialism is represented "by people

like D.K. Pieldhouse,

E.M. Winslow, J. Strachey and many others.

Fieldhcuse regards

imperialism

as

"a social phenomenon with roots in

A

political

facts." According to his opinion and belief the dynamics

of the 19th and 20th

century imperialism must be sought in the capital¬

ist social consciousness.

Winslow in his book "The Pattern of Imperi-

!

alisms A Study in the

Theories of Power" describes imperialism as a

2

political phenomenon.

Strachey in his book "The End of Empire" de¬

fines imperialism as

"the rule of

one

people by another".^ ^J.A.

Schumpeter in his essay

"Sociology of Imperialism" argues that an

explanation of

imperialism must not be sought in "economic realm but

4

in psychological

forces mediatized through politics". All these

people have one thing

in

common,,

that is, they use social conscious¬

ness as a starting point in investigating

imperialism} this is

a

metho¬

dological error.

The starting point in investigating any social pheno¬

menon should be social being. It is only on

this basis that

one

is

able to arrive at a scientific conclusion.

Political

(a

component of

the

super

structure) cannot be the

basic motive force of imperialism as Fieldhouse

would like

us

to

believe. Politics is not an end in human

activity; it is

a means

of

achieving an economic

objective (the term economic here is used in

a Marxist

concept). Political expansion into foreign territories

1. Niadel,

H.G. and Curtis, P., Imperialism and Colonialism p. 74

2. Kemp,

T., Theories of Imperialism p. 136.

3. Ibid. p. 155.

4. Ibid. p.

86.

f

CS/2528-3

Page 3

was a mechanism.of achieving an economic objective. Politics

to use Lenin's words, is; "concentrated' " i ' •'•*)1 ; expression of

economics".J

Strachey defines imperialism as the rule of one people by another. This is

highly

misleading because according to this de¬

finition after political withdrawal by imperialist powers from foreign lands imperialism no longer

exists, but

as we know imperi¬

alism still exists. The developing countries arè still exploited

and economically dominated by the advanced capitalist countries.

Political rule of foreign territories by imperialist powers was

and is only a means of achieving-an economic objective ^- develop¬

ment of capitalist mode of production whose essence is the maximi¬

sation of private profits. The real essence of imperialism is

economic, and it must be understood precisely on this basis and this is conformed by Jules

Perry,

French Prime Minister who in

1885 said "Is it not clear that the-great states of modern Europe,

the moment their industrial _power is founded are confronted with

an immense and difficult

problem,

which is the basis of industrial

life, the very condition of existence ^- the question of markets?...

Colonial policy is the offspring of industrial

policy..."^

^{not a}

political policy as Fieldhouse would like us to believe. After this short criticism let us examine the

dynamics,

mechanisms and effects of South African imperialism.

Accumulation of capital ^- Capital accumulation is the addition of part of surplus value to capital for further capital expansion and exploitation. Right through the history of capitalist develop¬

ment in South

Africa,

the need for capital accumulation has remained

5.

Varga,

Y., Politico-Economic Problems of Capitalism _p. 12.

6.

Nkrumah,

K., Africa Must Unite I _pp. 20-21*

CS/2528-3

Page 4

a x/namic

force for South African capitalism to expand beyond its

national territorial

boundary- ú, that is, it has been a dynamic

force for South African

imperialism. At the initial stage of

capitalist

development, when South Africa was a British colony,

capital

accumulation was not intended to dev.lop settler capitalism

in South Africa,

but for the expansion of the British economy which

at that time was

saddl- i -with

an

overproduction problem caused

by. the

high exploitât^

^.

of British workers and the loss of markets

by

British r..~nufaotures in Eur-pe (Prance, Germany and Belguim) and

United States of America,

These two factors combined to produce

a situation of

overproduction and unemployment. The surplus value,

in the form of raw

materials from

^•'

South Africa and

^{• :}

other

^J.i.

British

colonies helped to

lower production costs in the British economy,

and thus contributing

towards the solution of overproduction and

unemployment

problems. By saying that at the initial stage

capitalist

development in South Africa, capital accumulation was not

intended for the

development of settler capitalism in South Africa,

it does not mean that there was no

capital accumulation taking place

in the country

for the development of settler capitalism, it was

there,

particularly in the white agricultural sector. The need

for capital

accumulation for the development of settler capitalism

became critical after

World War X when the country was faced with

the problem of ^poor

whites and plight of Boer farmers. The Boer

political

leaders

^saw

the development of settler capitalism as

a solution to the problems

of Boer farmers and poor whites, as well

as the only solution

of weakening British imperialism with the

South African economy.

These three reasons contributed to the

development

of state settler capitalism in South Africa,

The

process"of capital accumulation through external expansion

has employed two

methods.

-

(a) import, of. foreign migrant labour

and

(b)

export

of capital. With the discovery of diamonds and gold

CS/2528-3

Page 5

which ushered in the era v..- :.

list development in South Africa

in the last half of the 13' - -a 'wry

foreign migrant labour was

imported into South

Africa. L

^.

I -*01

^,

the Chamber of Mines esta¬

blished the witwatersrand Native Labour

Association (W.N.L.A.) and

n

the Native Recruiting Cooperation

(N.R.C.) in 1$12, W.N.L.A. re¬

cruited African workers from

Malawi, Mozambique, Rhodesia, Zambia

and East Africa;

N.R.C.

was

responsible for recruiting African

workers from Botswana,

Lesotho and Swaziland. In 1904, in a move

to replace highly

paid white mine workers from Cornwall,

Northumberland and Yorkshire, the

Chamber of Mines imported

60,000 Chinese workers from Hong Kong to work on diamond and gold

mines,

but due to strong opposition from white workers Chinese

workers were eventually

repatriated in 1907»

Up to today South

African mines still continue to rely heavil

on foreign African labour,

about 60 percent of mine workers are

black foreign migrant workers.

Most of these mine workers come

from Malawi,

Mozambique, Lesotho, Botswana, and Swaziland. Import

African migrant labour

played and still continues to play a very

important role in

Capital accumulation for further capitalist de¬

velopment in South

Africa. At the beginning when the mining in¬

dustry was wholly

owned by the British capitalist, a large part

of profits generated in

the mining industry was transferred to

Britain for further capital accumulation

in that country and "a

small part of the

profits

was

reinvested in the mining industry

within South Africa; but in

1910, when South Africa became a don.in

ion within the British Empire

part of surplus value from the min¬

ing industry

began to play

an

important role in capital accumula¬

tion for the development of settler

capitalism in South Africa;

first in agricultural

sector. In 1912, the white government of

South Africa established a Land

Bank which provided white farmers

7. Sachs,

E.S., The Anatomy of Apartheid pp. 136-7

CS/2528-3

Page

6

with loins to purchase land, agricultural

equipment and fertilizers.

Most of the funds which the .Bank le a:i to white farmers --ere tax

revenues collected from the mining inbistry. The surplus value generated within the mining

industry began to play

a,,

critical role

in building settler■capitalism after World War I when the

South

African government embarked on a programme of

industrialisation;

it taxed the mining companies and used the revenues to established government-owned

industries like the Iron and Steel Corporation

(ISOQR)»

Industrial

Development Corporation (I.D.C.),

etc.

Taxa¬

tion-of the mining .companies and. their

ownership^ after World War II

predominantly becoming South African made it possible for a

large

part of surplus value generated within the mining industry

to be

used for the expansion of the South African economy. A large sur¬

plus of this surplus value used in expanding the South

African

economy is contributed by imported African migrant labour

which

constitutes about 60 percent of the mining labour forre. In order

to appreciate the role played by foreign African migrant workers

one has to look at the rate of exploitation from 1911 to 1972.

TABLE I MINUTO INDUSTRY

, YEAR 1911. 1920 1930 1940

'

1950 1961 1970 1972

Rate of exploitation

of African labour in 181

331.

^{232 365 240 278 318 415}

Sources Davis, R., The White Working Class in South Africa

P. 50.. ^.. ,

CS/2528-3

Page 7

In

1972,

if we consider that foreign African migrant labour

constituted about 60 percent in the mining industry, its contribu¬

tion to surplus value was 249 percent. This is just to give

one example, but th^ contribution of foreign African migrant labour

to South Africa's capital accumulation has been always remarkable5

since right through the history of the mining industry it has

been predominant. Of _course, by highlighting the contribution

of foreign African migrant labour we do not mean that local African workers have not contributed to capital acumulation, they have also contributed. Only white mine workers have not contributed to capital accumulation. According to available

data from 1911 to 1972 it shows that white workers have not,

since these workers are not exploited by the mining capital. The

table below clearly shows that white mine workers are not exploited by the mining capital instead they benefit from it.

CS/2528-3

Page 8

TABLE II

ROUGH ESTIMATION OF ,TÎITE MlIïERS' SHARE IN SURPLUS PRODUCED IN THE MINING II-TDUSTRY

TEAR 1911 192O 1930 1940 1950 1961 I97O 1972

Total market value

of sales

(R million) 95,358 136,664 118,570

255,090 393,314

893,281 1,563,375 1,942,344

Which is composed of

Depreciation C

28,030 3^,686

^35,470

^{71,834 142,726 341,216 615,046 632,739}

liages V

37,634 46,068 40,446

75,322 139,224

293,259 488,100

570,757

Surplus Value S

29,694

54,910

42,654 111,934 111,364 258,806 400,229 738,848

Average I Allowable

"Wage with no surplus content

(annual)

S+V Labour force

R 222 R 345 ^R 242 ^R J77 ^R 507 ^{R 826} R1,347

R1,963

Average white wage II ^R 560 ^R 819 ^R 648 ^R 911 R1,594

R2,501

R4,074

R5,098

Surplus content of

white wage

(il-l)

^R 338 ^R 525 ^R 406 ^R 534

R1,087 R1,675

R2,727 R3,135

Average black wage R 62 R 64 ^R 59 ^R 69 ^{R 110 R} 159 ^R 235 ^R 302

Source; Davies, R*., The White Working Class in South Africa, p. 50.

ft# »

/ t

SOTjTÏÏ AFRICAN

IMPERIALISM

IK SOUTHERK

AFRICA

CS/2528-3

Page 9

The 249 percent

of surplus value

as

mentioned above (besides some

part of it

being reinvested in the mining industry for further

expansion)

is used

t>y the mining companies within South Africa

for financing the

development of other economic sectors. For

example, the

Anglo-American Corporation, the leading mining giant

in Southern Africa has

invested in the following industries:

breakfast foods and cereals,

cold storages, shipping, real estates,

railway, bricks

and..tiles,

^"

ranching, fertilizers,- chemicals, ceramic

g "•••* t- .

;

explosives and

munitions.'" According to Ruth First, "Anglo-

American has substantial

holdings in almost

a

thousand companies

in South Africa-.

Palling-within- its orbit

are

three ..of the top

four mining houses, six

of the ten top finance houses, the largest-

investment trust., the

second largest property company, and the

second largest merchant

"bank in South "Africa. It includes the

most profitable

industrial

company, as

well as the biggest trans¬

port company.

Anglo-American Industrial Corporation (aMIC) created

in

1964, has been the principal vehicle for the groups' programme

9 of Industrial deversification."

I i

; •. ?

Capital export ^- Before

examining capital export by South

Africa as an instrument of capital

accumulation, it will be import¬

ant first of all to dismiss certain erroneous

"ideas advanced by

bourgeois economists

in connection wi'th capital export. Bour¬

geois

economists like Fortmann view export of capital as trans¬

fer of value from a

capital-exporting country to

a

capital-receiving

country. They argue

that if capital export continues eventually

the capital-receiving

countries will be developed. This is

8. Colin and Margaret Legum,

South Africa: Crisis for the West

p.^117

9. First,

R., The Openheimer Empire, p. 28 Africa No. 27, Nov.,

1973.

CS/2528-3

Page 10

completely wrong

and highly destructive Tor the developing

countries. Capital export is

actual transfer of válue from

capital importing

countries to capital exporting countries, and

this can he supported by

the following table.

table hi

direct investments and profits

of usa MONOPOLIES in latin AMERICA (in

million

dollars)

YEAR ^New capital in- - vestment

Prof-its—from di¬

rect investment transferred to usa

Rates of profits calculated to the nearest in

1957 ^{800 •} 915 ¹¹⁴

1958

^{317 653 206}

1959 ^{347 600 173}

1960 ^{264 641 24O}

1961 ^{500 770 154}

Sources Frumkin, a.,

Modern Theories of International Economic

Relations, p.

206.

Rates in calculated

by the author.

The. 1960s have witnessed a great expansion

of the South African

manufacturing industry.

Between the periods 1947 and 195^ "the

manufacturing sector accounted

for 16.5 percent of national out¬

put, but by

the mid-1960s, the picture had completely changed,

the manufacturing industry was the leading

contributor to the

national output? it

accounted for 21,2 •percent. Between 1962

and 1969 the average grovith rate

of the domestic product had

been 9*9 percent. This high

growth rate

was

mostly contributed

by the fastly expanding

manufacturing.sector. Through her policy

CS/2528-3

Page 11

of building -a self-sufficient economy,

South Africa has been trying

to lay à foundation for an

independent industrialised

economy.

This

policy has made South

Africa to be in great need of capital and she

has been importing a large amour/'

of capital goods and encouraging

foreign investors to invest in the

manufacturing industry. The im¬

portation of large

amount of capital goods, (instruments of produc¬

tion)

and ^arms as well as a large

inflow of foreign investment has

increased South Africa's liabilities. The, table below reflects

■H '

South Africans foreign liabilities as compared .against

her assets.

TABLE IV

' " '

• .

-, MILLIONS OF. ffAKDS

Year Assets Liabilities Assets as

f-

of Liabilities

1956 ^{824 279O 29.5}

1957 798 ^{• ■} 2822' ^. 28.2

1958 ^{828 2995 27.6}

1959 973 8049 ^•CO

1960 899 ^{3073 29.2}

1961 1076 3028 35.4

1962 ^{1320 3023} 43.6

1963 1448 ^{3053 47.3}

1964 1390 ^{3155 44.2}

1965 1385 3471 39.9

1966

1678

^{3828 43.8}

1967 ¹⁷⁷¹ 3966 43.1

1968 ²³³² 4583 50.8

Source; Murray and Stoneman, Private

Overseas Investment in

Southern and Central Africa 1970«

N.B. Gold Reserve Assets are also

included.

CS/2526-3

Page 12

In order to

liquidate her foreign liabilities, in recent years

South Africa has

stepped

up

her export of capital; since capital

export,'(among other things) is a mechanise of capital accumulâtion»

Capital

export by South Africa as a mechanism of capital accumulation

takes two forms

(i) investment and (ii) leans. On the question of

investment the profits

generated in the capital-importing countries

are transferred to

South Africa, and the loan receiving countries

have to pay

interests. Profits from investments and interests paid

for loans are usea lor expanding tho

South African

economy.

To em¬

phasise the importance

of capital export in the form of loans, the

South African government in

1968 formed Economic Cooperation Promo¬

tion Loan Fund with an initial capital

of 5 million rands. Through

this organization, the

South African government exports capital to

African-countries, especially to

those of Southern Africa. Countries

which are exploited by the South African

exported capital for capital

accumulation are Angola, Botswana,

Lesotho, Malawi, Mozambique,

Namibia,

Zambia and Zimbabwe. Angola is ^a Portuguese colony ahd

South African capital in this country is

mostly involved in the

ex¬

traction of gold, iron ore

and oil. Mining is not the only area

where South African capital operates in Angola, South

African

govern¬

ment and private companies have heavily

invested in the Cunene P.iver

Project

(Cunene

River forms

the border between Angola and Namibia)

whose construction began in

1969»

The total

cost of this multi¬

purpose project is about

64O million American dollars and all of it

was supplied by South Africa on

non-reimbursable grant and long-

10 !

term basis; this means

that for

a

long-term loan Portugal has to

pay a certain amount of interest to

the South African government and

companies which supplied finance

capital.

10. United Nations

A/9023 (Part III)

p.

9.

-

CS/2528-3

Page 13

In Mozambique which is

another Portuguese colony, South African

capital has found

its

way

to mineral prospecting, tourism and. agricul¬

ture

(cashew

nuts

and sugar)

as

well as to another river project

fCabora

Bassa

River Project). In t) is project whose construction

began in 1970 an

is to be completed in 1974, 3/4 of capital came

from South African companies

(especially the Angla-American Corpora¬

tion)

^and the

South African government. As a who'le Sean Gervasi

estimates that South African

investment in these two Portuguese

colonies is about £10 million and he

gives this

as a

consersative

estimation. Since this estimation ^was

made in 1966 before the two

river projects were

started; it would be

even

correct to say that

South African investment in Angola and

Mozambique is twice

as

big

as the figure given in

1966,

With the discovery of minerals in

1967 in Botswana (a former

British

colony)

South African

capital, mostly private, has found

its _way to Botswana.

Before the discovery of minerals South African

capital was only found in

commercial services. The South African

companies which are

engaged in mining and prospecting of minerals

in Botswana are De Beers Prospecting Botswana

Ltd., Anglo American

Corporation, and

Anglo-Transvaal Consolidated Investment Company Ltd.

In addition to

21,500,000 rands which De Beers has invested in the

Botswana mining industry has

granted the Botswana government a loan

for the construction of a road from Prancistown.

to Orapa,

a

diamond

11 mining centre.

In Swaziland

(a

former

British colony) also South African capi al

dominates the economy of that country.

Most of South African capital

in Swaziland belongs to the

Anglo-American Corporation- which has

11. 1970—73 Botswana National

Development Plan

pp.

71-4.

CS/2528-3

Page

14

gone into

raining;,

commerce,

finance and manufactufing, In the fielu

of mining South

African capital ie engaged in the extraction of iron

ore and coal. An iron mine

at Mgwenja is operated by the Swaziland

Iron Ore Development Company

(S.I.0.D.C.),

a

subsidiary of the

12

Anglo—American

Corporation; and coal at Hpaka is mined by the

Swaziland Collieries

Ltd, also

a

subsidiar r of the Anglo—American

Corporation.

Namibia

(South

West

Africa) which became

a

colony of South Africa

in 1920 is the

most exploited country by South African capital, that

is, the

surplus value created by the people of• Namibia is appropriated

by South Africa.

During the First World War, South African troops

in the name of Allied cause invaded and

occupied Namibia which was

formerly a German colony;

and after the

war

in 1920, the League of

Nations mandated Namibia to South Africa.

Since from that time,

South Africa has been consolidating her

position in Namibia against

the stand taken by the' United Nations

General Assembly in 19^4 that

Namibia should be placed on U.N.

trusteeship arrangement with a view

to self-determination and ultimate

independence for the peoples of

that

territory.1"^

In order to exploit,

that is, ta appropriate surplus value

created by the people

of Namibia South Africa

uses

three mechanisms (i)

taxation

of foreign companies which operate in Namibia (ii) ex¬

port of capital by

South Africa and (iii) import of raw materials

by South Africa from

Namibia.

12. Swaziland Second National

Development Plan

p.

106

13. Davis,

A.J., and Baker, K.J., Southern Africa in Transition p. 59.

4

CS/2528-3

Page 15

In

19^9}

"to make sure that the surplus value generated in Namibia is appropriated by South Africa for her capital accumulation, the

South African government passed the South West African. A ffairs Act w:iich gives the white government of South Africa the right to take

control of revenue, commerce,

industries,

labour and mining. This

means all major _revenues, duties and taxes paid by foreign companies must be directly.-paid to the South African government. For example,

the Tsumeb Corporation, a mining subsidiary of American Metal Climax

Inc. and the Newmont Mining Corporation

(also

an American

company)

from 1968 ^to 1971 have paid a total sum of 28.9 million rands in a form of taxes to the South African government.14

Besides collecting taxes from foreign companies South Africa also exports capital to Namibia. This exported capital takes two forms investments and loans. Some of the South African companies

which export capital to Namibia are Be Beers Consolidated Diamond Mints. Ltd., Anglo-Transvaal Consolidated Investment Company Ltd., Anglo-American Corporation, Uistin Mine

(a

^subsidiary of.Iron and Steel

Corporation,

a government owned

corporation), General

Mining

and Finance

Corporation,

Industrial Mining Corporation

(iMCOR)

also

a subsidiary of Iron and Steel Corporation

(57 percent), Camites

Min¬

ing Company

(Pty.)

_Ltd., a subsidiary of Iron and Steel Corporation

(iSCOR)

with 25 percent of interests^. Johannesburg Consolidated

Investment and Fedmar of South Africa which is a subsidiary of Federals

*• -jC

Volksbeleggings

(South African).

All these companies are involved either in mining or mineral prospecting. South African capital

14. United Nations

a/9023 (Part III)

^p. 122, 1-5. Ibid. _pp. 124-126.

CS/2528-3

Page

16

is not only confined to mining

but it. also spreads to other economic

sectors ^- fishing, commerce,

banking agriculture, transport etc.

In addition to investments, South Africa

grants loans to the

Namibian colonial administration. In 1974, "the

Namibian colonial

administration borrowed 6 million rands from the South African

* '

' 1 (j

Treasury and 11 million rands

from the Reserve Bank of South Afric

,

In the form of raw materials, South

Africa appropriates the

sur¬

plus value created in Namibia. As it has

been stated above, I SCO?,

operates a tin mine in Damara and the

tin produced at this mine is

exported to South Africa. In

1971,

about

63

percent

of ISCCR's repair

ments of tin was supplied by this mine in Damara. This is just to

mention one example, South Africa imports

other

raw

materials from

Namibia.

Taxes collected from foreign companies operating in Namibia, profits made by South African companies operating in Namibia,

and

interest paid for loans given by South Africa to Namibia are

all trans

ferred to South Africa as finance capital for further capital accumu¬

lation in South Africa. Any economic undertaking which takes place

in Namibia is intended to aid South Africa in her economic expansion.

In the exception of the Southern part of Namibia which is

occupied by

white settlers, the

whole

economy

of Namibia is

a

subsistence

one.

The role of the subsistence sector is to supp ly labour to colonial capitalist economy which is centred in the south of the territory.

Zimbabwe

(Rhodesia)

is another country which is South Africa's

source of capital accumulation. Por many years South Africa's capital

has been dominating certain sector

(e."g.~còál mining)

of the Zimbabwe

16, Murray Roger, South Africa Grabs

Namibia's Money

p.

14

Africa Development, Jan.

1974.

cs/2528-3

Page 17

economy,

but with the proclamation of Unilateral Declaration of

Independence

(u.'d.i.)

in

1965 b/ white settlers. South African

capital has been on

the increase in the country. After U.D./. ^econo

mic embargo was

imposed

on

Zimbabwe by the United Nations$ this

economic embargo gave South

Afri

a

chance to increase her capital

export to

Zimbab-'

^, sauce

other a>entries, according to the terms

of economic .-mbargc are net, ai

other things, to export their

capital to Zimbabwe.

South Africa seized this opportunity and re¬

fused to comply with the terms

of the United Nations economic sanc¬

tions programme, For

example, in 19^5» the South African government

gave a loan of

5 million rands to the settlor a doministration in

the territory to finance

"a number of capital development

₁

projects

7 such as the Chiredzi Dam and

Chiredzi-Mbezi rail link."

The amount of capital exported

by the white government of

South Africa is not as huge as

the amount of capital exported by

private

companies. The U.n. economic sanctions forced the settlers

in Zimbabwe to diversify the economy,

and

one

of'the sectors which

received a boost was the

mining industry. The need to expond the

production

of minerals brought

a

large amount of South African pri¬

vate capital into

the country. For instance, immediately after U.D.

the Anglo-American

Corporation opened one of the biggest nièkel mine

at Bindura and decided to expand

phosphate mining at Dorowa. This

is just to

mention

a

few developments which are connected with South

African capital after

1965» but the whole story is that there are

very few economic sectors,

if

any,

where South African capital does

not operate. Large

amount of South African private capital is to be

found in the mining industry.

Some of the South African companies

17. africa Institute

Bulletin Vol. XI^ No. 4 1973 p. 128.

CS/2528-3

Page

18

which are engaged ^xn

mining and .prospecting of minerals are, Messina

(Transvaal) Development Company Ltd., Anglo-American Corporation,

Jobannesbury-Consolidated Investment Company Ltd. (J.C.I. ), Gold

Fields of Souti.

Africa, and Inyala Chrone Compare- (a subsidiary of

the associated Ore

and Metal Corporation of Soutl Africa).

The

Angi--American Corporation has the largest investment in the

country; in

mining it is engaged in the extraction of nickel, copper,

iron and coal. It has

also interests in iron, steel and ferrochromo

production. h# a

matter of fact, the production of nickel and coal

(Wankie coal mine is owned by Anglo-American) is dominated by the

Anglo-American

Corporation. Besides mining the Anglo-American Corpora¬

tion has also invested in

banking, manufacturing, agriculture and

forestry. In

agriculture, it has a controlling interest in the

Hippo Valley

Estates Ltd. which is the largest sugar plantation in

Zimbabwe and a producer of citrus

fruit; and it also controls the

Mazoe Citrus Estate. In the field

of manufacturing, the Anglo-

American corporation is

engaged in brewery through its subsidiary,

the South African Breweries.

To cut the story short, in the year

1973 the total

assets of the Corporation in Zimbabwe were estimated

to be more than 50 million Rhodesian

dollars.

South African capital in Rhodesia

is not only confined to the

" '' ' " ' . . J •

mining industry,

but it also operates in other economic sectors

- agriculture,

manufacturing, banking and social infrastructure. The

Huletts Corporation, a

South African

sugar

producing company, through

its subsidiary in Zimbabwe

controls the Triangle Ltd., an important

sugar plantation in

the country. In the year 197net profits

of the Huletts in the Triangle Ltd.

amounted to 1.8 million Rhodesian

dollars. In the field of

manufacturing South African capital is to

be found in'cement, glass,

steel fertilizer and food processing in¬

dustries. In the cement industry, the

Pretoria Postland Cement Company

CS/2528-3

Page 19

of South Africa has interests

in he odesian Cement Ltd. which

is one of the ,20 largest inc. is

trial

romp ■

ûi-.-s in the country. The

Saole Chemical Industries

of South Africa ad the Industrial Dove-

lcpment

Corporation (i.L.C.) ^a,.e the principal financiers of the

.nitrogeneous

fertiliser i. tu-try in Zimbabwe. The furniture industry

is also in the hands of Spring

Master Corporation, a subsidiary of

the Associated Furniture

Companies of South Africa. Spring Master

operates six

furniture factories in Zimbabwe. In the sphere of

social infrasture,

Southern Sun Group of South Africa owns a num¬

ber of hotels in the

country. In banking and finance the following

South African institutions - the

South African Mutual Life Assurance

Society

(91

million

rands), Colonial Banking Trust Company and the

Netherlands Bank have large

assets.

South African companies do

not repatriate all of their profits

which they make in

Zimbabwe, part of these profits are reinvested

in the country for

further exploitation. The reinvested profits

lead to the expansion of the South

African capital within the

Zimbabwe economy, and

thus increasing Zimbabwe's dependence on South

Africa as far as the

ownership of capital is concerned. On Zimbabwe's

future economic relations with

South Africa

one

can assume that, as

long as the

U.N. economic embargo, which gave South Africa a chance

to increase her investment in the

territory remains in force,

Zimbabwe's peripherial relation

with South Africa will oontinue

to grow,

Zambia which became independent in

1964 has been trying to re¬

duce the amount of South African

capital, but to what extent this

attempt has reduced

South African capital within the Zambian economy

is not clear. In the year

1968, the Zambian government introduced

Economic Reforms whose aims were

"to acquire control of the major

means of production,

distribution and resources of Zambia, i.e. to

CS/2528-3

Page

20

break the colonial

pattern of control.

₁₈

To encourage the growth

of a Zambian class

of businessmen." Before the government imple-

menxed the Economic

Reforms of 1968, "h Anglo-American Corporation

in 1957 had

obtained 52 pefcent of c-pger production in Zambia.

According to

Economic Reforms arrangement, the Zambian government

acquired

51 percent of the Anglo-American Corporation shares. :The

Zambian government

for the

s

ho ros acquired paid K125 million, 'j.i...c.

the

government reduced the amount of shares held by the Anglo-Ant r now

Corporation in

the Zambian copper mining industry, hut manage;

sales services are still

under the control of the Corporation,

₁₉

..t

least for a period of ten years

according to the contract. y fh?s

arrangement has

given the Anglo-American Corporation, including the

Roon Selection Trust

(RST) the chance to take out of Zambia all their

profits.

The Anglo-American Corporation has not been interested in

reinvesting its

profits in Zambia. For further expansion in the min¬

ing industry,

the Anglo-American Corporation as well as the R.S.'A

prefer to borrow

from abroad. The profits which the Corporation

makes in Zambia are

transferred to South Africa for financing econo¬

mic development in

that country.

Unlike Zambia,

Malawi (former British colony and became indepen¬

dent in

1964)

has

not taken steps to restrict the expansion of the

South African capital

within her

economy,

instead she has done con¬

trary to what

Zambia has done; she has like Zimbabwe encouraged

the importation of

South African capital. From 1966 South African

private and

public capital has been finding its way to Malawi. In

18. Zambia Frofile

of the Economy

^-

Trade Opportunities p. 7.

19. Ibid; p.

18.

CS/2528-3

Page 21

1966,

the

South African Industrial Development Corporation (i.D.C.)

Malawi a. loan of 6 million rands for thé erection of a sugar-

uillj and three years later the very

corporation (i.D.C.) ^loaned

Malawi 11 million rands for financing the

construction

^of Bacala 20 1

rail link between Malawi and Mozambique. In addition to the

two loans that have been mentioned above, the South

African

govern¬

ment granted Malawi a loan of

8

million rands for financing the con¬

struction of a new Malawian capital at Lilongwe- and the contract

to plan and design the. new capital was awarded to a South African company, Imoz

(Pty.)

Ltd.

This

is only to mention a few5 South

African capital has found its way t.o almost ^every sector of the

Malawian economy. It has gone to tourism

(financing

the building

of a tourist hotel on Lake

Malawi)

and fertilizer industry. Optichem,

a South African firm has build a fertilizer factory in Malawi and imports fertilizer from South Africa.21 In addition to what we

have said above about South African capital in

Malawi,

the South African Mututal Assurance Society has invested 245 million rands in Malawi,22

Lesotho a former British colony, is completely surrounded by

South Africa, Since this country became formally independent South

African private and public capital has been on the increase. Im¬

mediately after formal independence in

1966,

the South African Mutual

Life Assurance gave Lesotho a loan of

143,210,000

rands and the

same assurance society has investments in Lesotho totalling to

412,000

rands.

The

Anglo-American

Corporation

and De Beers, the

20. Africa Institute Bulletin Vol XI Ko. 4 p.

128,

1973

21. Malteno Robert,

Africa

and South Africa p. 9

22. Africa Institute Bulletin Vol. XI Bo.4,

1973,

p.

128

CS/2528-3

Page 22

•mining grants

of South Africa have planned to spend 750,000 rands

ovèr a period of 12 ^years

to promote afforstation as well as to ccr—

hat soil erosion. Sanlour, o

South African insurance company has

also planned a

400,000 rand shopping centre for Maseru, the capital

of Lesotho.

In the Lesotho National

development --Corporation (L.N.D.C.),

which was initiated by Dr.

Pupert,

a

South Afrlcaii industrialist

who owns a cigarette empire,

South African direct private investment

is estimated to be more than

14»5 million randsj and the yearly in¬

come from this investment is more

than 800,000 rands. This 000,000

rand yearly income is

reinvested in Lesotho for further exploitation.

L.N.D.C, operates a

number of industries

-

assembly plant for trac¬

tors,

weaving and clothing factories, light—fitting factory, dia¬

mond cutting and polishing

factory, candle factory,"jewellery shop,

two potteries and ^a

250

room

hotel. This means that South African

capital through

L.N.D.C. has spread to almost every sector of the

Lesotho eoonomy.

South Africa does not

repatriate all its profits generated in

Lesotho, some

part of these profits which accrue to the South African

capital is

reinvested in the country. Like in Zimbabwe this leads

to the accumulation of South

African Capital in Lesotho and making

Lesotho to become more

dependent

on

South Africa

as

far

as

capital

ownership relations are

concerned.

To cut the story short,

concerning South African capital export

to the countries of Southern Africa,

according to Murray and

Stonemann 'Private Overseas Investment in Southern

and Central

Africa 1970" South African

investment

on

the basis of 1966 statistics

was about £375 million. At that

time the investments

were

distributed

as follows: ~ ' " • ™—

ç

s/2528-3

Page 23

South African Investment in

£ million

Non-South African in¬

vestment in

£ million

Zimbabwe, Zambia &

Malawi

Namibia

Botswana, Lesotho

249*

96

315

and Swaziland Angola and

Mozambique

TOTAL

25

10

376

120

115 550

m

1963*

Source: Gervasi,

S., South Africa's Economic Expansionism p. 18;

First R., Steele,

J., and Gurney, S., The South African

Connection p. 263.

These figures only

reflect book value in

a

conservative mannef. It

is likely.that South

African investment is far much higher, then ik

is estimated to be; since after

1966

^,

the-, only country in Southern

Africa, which

has been trying to reduce South Africa capital in her

economy is Zambia; in

other countries oi Southern Africa, South

African capital has been

increasing. If

^we

also add to the amount

of investment various loans that South

Africa has been giving tc

the countries of Southern Africa it .becomes clear

that South Africa

has a large amount of

capital

in

the subcontinent. It can be roughly

said that -South Africa is not the leading investor in

the countries

of Southern Africa. In the non-South

African investment Britain

probably comes

first and followed by the United States of America.

CS/2528-3

Page 24

Ii: conclusion concern-.,g the effects of South Africa's

capital

on th- countries of Southern Africa we can say that it will per¬

petuate their underdoveicpment , r even

aggravate

it.

Surplus value

which is tht source of economic"expansion is being pumped, out of

th- countries of Southern a '--ica by South Africa through her export

of capital and using it for her own economic expansion. It must

be remembered that one of the main causes of underdevelopment

of the countries of the Thiru World is that surplus value generated

in these countries is siphoned from them by developed countries;

and one of th methods used is the export of capital by the de¬

veloped countries to the Third "orla. It is common knowledge to¬

day that the past decade saw an increase in the export of capital

oy developed countries to the countries of the Third World. It

is also common knowledge that during the same period developed

countries became richer and the countries of the Third World be¬

came poorer. Up to today the gap between the rich and the poor coun¬

tries continues to widen; and the export of capital

by developed

coun¬

ties continues to grow. Bourgeois economists have like to argue

that

among other things export of capital creates employment in capital importing countries; this is true on every limited scale. .The

limitations are caused by the fact that surplus value which is

the source of economic expansion is transferred to the capital- exporting country. The limitation of imported capital in creating employment in developing countries has been demonstrated by the

ever swelling unemployment in these countries. So, the countries

of Southern africa vy importing South African capital are not solving their problems of underdevelopment but aggravate them.

For example, Lesotho and Malawi which are heavy importers of

South African capital still send many of their people to work on South African mines because they cannot find employment in their

own countries.