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S. Africa Business Optimistic

May 16, 1999

CAPE TOWN, South Africa (AP) _ At first glance, Raymond Ackerman, chairman of one of South Africa’s biggest retail empires, and James Mureithi, a poor black street peddler, seem to have little in common.

But both run their own businesses _ and, more tellingly, both typify the optimism in the business sector as the country heads into the June 2 national election, which the ruling African National Congress looks certain to win.

In marked contrast to the anxieties that surrounded the all-race vote that ended apartheid in 1994, the handover of power from President Nelson Mandela to Deputy President Thabo Mbeki is viewed without fear.

``There is a quiet confidence he will be a very good president,″ said Ackerman, 68, who founded the Pick’n Pay supermarket chain.

``For the first time in years the changeover of power is not an angry one. You can’t compare the feeling now to the feeling in 1994 or the 1980s when we were standing on the edge of a cataclysm.″

Mureithi, 35, who left his native Kenya three years ago to search for a better life in South Africa, agrees.

``The elections are just like you or me changing jackets. It is no big change,″ he said, standing in front of a stall of African trinkets he sells to tourists in Cape Town. ``I think the government has done well and Thabo Mbeki will continue in the same way.″

So confident is the business sector in the government that it shrugged off a controversial appointment May 1 of a top ANC official to a key post in the central bank.

Although Deputy Finance Minister Gill Marcus is a ruling party stalwart, making her appointment highly sensitive, economists praised her economic know-how and expressed confidence she would act independently of her former political bosses as a deputy central bank governor.

Hampered by apartheid-era policies and years of isolation from the world economy, things have not been easy for ordinary South Africans in the first five years of black rule.

The currency, the rand, has suffered several collapses, at least 500,000 jobs have been shed and the global economic crisis in developing markets _ which started in Asia in 1997 _ has hit the country hard as foreign investors pulled out funds.

But the ANC has stuck firmly to market-friendly tactics of controlling government spending and paying off its debts.

While that policy outraged ANC allies in the Communist Party and the labor movement, it has won over many international investors and made friends in big business.

The policy also helped South Africa weather the economic storms far better than other emerging markets such as Indonesia and Malaysia, which were forced to slash government spending programs.

``South Africa did not escape entirely because they had to raise interest rates, but they did not have to make any severe adjustment to their fiscal plans,″ said Hania Farhan, an economist with FBC Fidelity Bank.

Though Farhan predicts no economic growth this year, she forecasts 2.5 percent growth for 2000. Even the notoriously shaky rand has been steady for months.

Of course, a nasty shock in the election could upset all that.

Any outbreak of violence similar to the bloodshed that almost derailed the 1994 election could see foreign investors pull out in droves and shatter business confidence.

However, despite a handful of isolated incidents, political tensions are low. Politicians from all sides are campaigning openly in their opponents’ strongholds, even in areas like KwaZulu-Natal that would have been off limits five years ago.

Most importantly the key issue of the election _ the result _ is already clear.

Opinion polls consistently show ANC support well over the 50 percent it needs to maintain its commanding majority in parliament. With Mandela having adopted an increasingly ceremonial role, Mbeki has already been effectively running the country for several years.

``The truth is that everybody knows who is going to win,″ said Farhan ``It is no big deal and there will be no big changes.

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