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In South Africa, Will Good Business Mean Black Business?

September 19, 1994

Undated (AP) _ Apartheid is banished. Trade barriers are gone. Business opportunities suddenly seem unlimited in South Africa, and black Americans are flocking to Johannesburg in the shared hope of doing good and doing well in one of the world’s potentially richest markets.

The Americans speak of the natural fit with South African blacks now moving up in politics and business. After years of opposing apartheid from U.S. shores, they see doing business in South Africa as the next logical step: bringing economic help and business skills to their South African brethren.

″We have the economic and social interest of each other at heart. We want to see each other succeed,″ says Sherry Williams, president of DJMA International Inc., an Atlanta-based consulting firm.

For entrepreneur Earl Graves, doing business with South Africa is the logical extension of his success.

″As long as I’ve been in business I’ve felt the first thing you try to do is make some money. The second thing is to give something back,″ says Graves, the publisher of Black Enterprise magazine and head of a joint venture with Pepsi Cola in South Africa. ″Doing business in South Africa should be good business and it should be the right thing to do.″

The Clinton administration echoes the sentiment. On Monday, the Commerce Department plans to announce a new United States-South Africa Business Development Committee formed of black and white business leaders from both countries.

Early next month, the department will sponsor a mission to South Africa for minority business people.

But some observers caution against the assumption American blacks can count on a special business relationship with South Africans. Analysts say pragmatic South Africans, black and white, are more interested in the color of investment capital than that of the person offering it.

And the notion of black-on-black bonding between the two nations may be less a fit than it seems.

″Black youths in this country go for American products they see in the media, like Levi’s and Reebok’s,″ says Denise Buckle, executive director of the Johannesburg-based American Chamber of Commerce in Southern Africa. ″Whether they have a cultural affinity for American blacks is another question.″

South Africa offers enormously inviting investment conditions: low foreign debt after years of trade sanctions; the globe’s 11th-largest stock market; and a solid, first world economy rooted in capitalism.

Along with rich natural resources, such as gold, diamonds, platinum and manganese, it is also rich with potential consumers. Improvements in the living standard of the country’s almost 30 million blacks would bring a huge new demand for everything from soft drinks to software.

One example: the plan to bring electricity to 1 million homes in rural townships.

″Once the electrification goes into place there will suddenly be a market for toaster ovens and dishwashers,″ says Timothy Lukens, the assistant director of the U.S.-South Africa Business Council.

Estimates put existing U.S. investment in South Africa at $2.5 billion. With 50 U.S. companies entering South African markets in the last 15 months, the figure is expected to double. No one has hard numbers on how much of that belongs to black-owned business, but Lukens believes American blacks have no guarantee of special consideration.

″You find a lot of mixed feelings about African-American investment,″ he says. ″Some African-Americans think they deserve a piece of the new South Africa. Some South Africans will agree with that notion. Others find it patronizing.″

Pauline Baker, an Africa specialist with the Washington-based Aspen Institute, says the new South African government is leery of giving special treatment based on race.

″To them it is an eerie perversion of apartheid,″ she said. ″It would be an mistake to assume because you’re a black American that you would get special consideration. They don’t want tokenism.″

Williams, the Atlanta consultant whose parent company advises firms on affirmative-action programs, sees this wariness in her dealings with South African businesses.

″African-Americans have to remember that South Africans are very aware of the success stories of African-Americans but skeptical about affirmative- action programs in the United States,″ she says. ″They are not interested in transferring them to South Africa.″

One stumbling block is the legacy of apartheid itself, which left few black-owned businesses to take on international partners.

David Miller, executive director of the Corporate Council on Africa, says it’s hard work for American blacks to find solid deals in South Africa.

″The problem is that apartheid didn’t leave a large group of black South African business people to deal with,″ he says. ″You need to identify who is capable of doing business there and who needs money.″

One early exception: the partnership formed this year to return Pepsi to South Africa. A group of black Americans, lead by Graves and such celebrities as singer Whitney Houston, basketball star Shaquille O’Neal and Los Angeles defense attorney Johnnie Cochran, invested more than $15 million for 75 percent of the business. Pepsi owns the remaining 25 percent.

Pepsi says plans call for South Africans to own a majority stake by decade’s end. The South African end will be run by Khehla Mthembu, who built his nation’s largest black-owned insurance company.

″We clearly want people to get the message that this is a black-empowered business that is delivering Pepsi to South Africa,″ Pepsi spokesman Brad Shaw says.

With Coca-Cola controlling 90 percent of the burgeoning soft drink market in South Africa, Pepsi won’t be shy about touting the fact that its outlet is black-owned and black-run. ″The only way we can compete with them is a black empowerment platform,″ Shaw says.