This lecture explores the role of business in the peaceful transition from apartheid to democracy in South Africa during the 1990s. While business didn't cause the transition, it significantly contributed to its peaceful and democratic nature, preventing potentially disastrous outcomes like civil war or military coup.
The lecture begins by emphasizing the fragility of the transition, highlighting the numerous obstacles and potential spoilers that threatened to derail the negotiations between the African National Congress (ANC) and the government. The timeline illustrates how close the country came to widespread violence, especially leading up to the 1994 elections.
The lecture then focuses on four key areas where business exerted influence: initiating negotiations, brokering deals, managing potential spoilers, and building public support for the new dispensation.
**Initiating Negotiations:** The lecture explores why big white businesses, despite the high asset specificity (inability to move assets like gold mines) making them vulnerable to post-apartheid policies, chose to engage with the illegal liberation movement in the 1970s. The pressure came from both "sticks" and "carrots."
The "sticks" included increasing labor unrest through illegal black trade unions, which businesses needed legalized to negotiate industrial peace. They supported the legalization of black trade unions, which, despite becoming magnets for political activism, allowed for negotiation, but also stimulated relationship development. Secondly, sanctions didn't really make a difference until financial sanctions from Chase and Citibank triggered massive capital outflows and a financial crisis. This crisis led business leaders to cultivate relationships with liberation movement leaders to encourage investment, paving the way for future cooperation.
The "carrots" were mainly due to the collapse of communism, which alleviated the white business elites' fears of a socialist-dominated post-apartheid South Africa. They began to see a future for themselves in a new South Africa that resembled Brazil rather than Cuba.
**Brokering Deals:** The concentrated ownership of the South African economy allowed businesses to act collectively. Anglo-American and other major companies formed a "K group," which could effectively coordinate and intimidate the government. This strategic position enabled them to facilitate communication and trust-building between the government and the ANC, particularly through clandestine meetings and personal relationships.
**Managing Spoilers:** The Consultative Business Movement (CBM), born from business engagements with the UDF, emerged as a credible broker because they openly favored majority rule democracy. They acted as the secretariat for multi-party negotiating forums. When Kissinger deemed a solution between the ANC and Encarta (an ethnic Zulu political organization) impossible, Coleman worked to meet Encarta’s political demands by getting buy-in from both the ANC and the government. Business played a critical role in resolving logistical problems for the elections.
**Building Public Support:** Business actively participated with the government, religious groups, and other organizations to host scenario planning sessions and develop economic models to positively influence the ANC in a favorable direction. They created an election fund to help ensure the elections were free and fair.
While business helped secure the democratic transition by averting the civil war, the transition had its problems. In the legacy of this outcome, issues such as a limited, single-party-dominated democracy that often correlates with corruption, as well as an entrenched labor movement, contribute to mass unemployment. Additionally, there is disillusionment with the ongoing economic issues. Today, South Africa remains one of the most unequal countries in the world. Although it avoided a catastrophe, it continues to struggle with deep-seated issues of inequality, poverty, and racial disparity, and it needs to transition to a new era in order to see improvements.