South Africa becoming continent's economic powerhouse

Banks, railroads, technology among businesses taken over

Rachel L. Swarns, New York Times
Sunday, February 17, 2002
©2002 San Francisco Chronicle

URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2002/02/17/MN108070.DTL


Douala, Cameroon -- The strangers from the south set up shop two years ago in this port city of rusting shacks and neglected buildings, and soon thousands of sleek cell phones were chirping in one of the world's poorest countries.

Cameroon's shabby and unreliable railway started carrying more cargo and passengers than before. When foreigners chattering in Zulu and Afrikaans started buying beers in the faded hotels, the bartenders knew it could mean only one thing.

The South Africans had arrived.

Shaking off decades of apartheid-era isolation, South African executives -- black and white -- are moving north to buy struggling banks, rebuild rundown railways and bring First World technology, including cell phones, cash machines and locomotives, to an impoverished continent.

South African businesses are running the national railroad in Cameroon and will soon run Madagascar's. They are managing power plants in Mali and Zambia. They are brewing local beers in Mozambique and Ghana. They are the leading providers of cell phone service in Nigeria, Uganda and Cameroon. They control banks and supermarkets in Tanzania, Mozambique and Kenya.

As the powerful nation stretches beyond its borders, fellow Africans are watching with awe and admiration, but also with some unease at the prospect of ceding so much control to outsiders.


METAMORPHOSIS
This explosion of trade and investment -- exports have tripled in recent years -- is one of the most vivid illustrations of South Africa's metamorphosis since apartheid ended in 1994. Once a pariah state, South Africa now seems poised to dominate the continent that once shunned its products and leaders.

The economic expansion has been accompanied by South Africa's growing political influence. South African President Thabo Mbeki is an architect of a well-regarded plan to promote prosperity in sub-Saharan Africa. South Africa's soldiers, who invaded neighboring countries during white rule, are now helping to keep the peace in Burundi, Congo, Ethiopia, Eritrea and the Comoro Islands.

Many people praise South Africa's championing of new partnerships among African nations that many officials hope will reduce economic dependency on former colonial rulers in Europe.

"This is what we call South-South cooperation," said Claude Claude Kontcho, the Cameroonian railway manager, as he showed off newly laid tracks and freshly painted carriages.

The amount of cargo carried by rail has jumped 14 percent since the government privatized the railroad and handed a South African company, Comazar, a 20-year contract, officials say. Comazar has replaced worn beams on the tracks, brought in modern locomotives, installed computers and sent employees to Johannesburg for training. "We have a lot to learn from them," Kontcho said of the South Africans.


NEW COLONIALISM?
But there are also cries of outrage from politicians and businessmen who view South Africa's rapid expansion as a new form of colonialism.

In Kenya, President Daniel arap Moi has criticized a deal that gave the South African Bottling Co. control of one of Kenya's largest bottling businesses last year. An opposition party legislator spoke out even more sharply, warning that the South African invasion had to be stopped before it was too late.

"If we continue doing this, we'll end up owning nothing in Kenya," said the legislator, Matu Wamae, who is also a prominent businessman.

"They are looking for control and that's where the conflict is coming in," Wamae said of the South Africans. "They bulldoze their way around. It seems like they still have the old attitudes of the old South Africa."

In Johannesburg, executives huddle over maps of the railway tracks and the power lines they hope to extend across the continent. They say South African businesses will help Mbeki fulfill his dream of an African renaissance by rebuilding shattered infrastructure and extending much-needed technology.

South Africa already accounts for 40 percent of the continent's economy. Unlike oil-rich but dilapidated Nigeria and Angola, South Africa has sophisticated technology and expertise in many fields.

Under white rule, companies exploited blacks as cheap labor and harnessed the country's vast store of diamonds and gold to build a powerhouse. Today South Africa has telephones that work, well-developed banks, experienced computer technicians, a First World stock exchange, industries that manufacture cars and clothing, and a bureaucracy that aggressively collects taxes.


FAMILIARITY WITH AFRICA
It also has executives who feel little of the trepidation that deters many Western investors. They know that the number of stable democracies in Africa has grown over the past decade and that the phenomenon has created new business opportunities.

Many are familiar with poor communities where crime rates are high and recognize that few people have credit histories since most of South Africa's population still lives in poverty. When the trade sanctions that were imposed on the apartheid government, mostly in the 1980s, were finally lifted in the 1990s, South Africa began to expand.

Some Africans complain that decades of isolation left South Africans ignorant about other countries and customs. They say businessmen -- many of them white -- barge in with a sense of superiority and little sensitivity.

Still, South African companies are courted by many countries and companies. They often take risks that no one else will. While most foreigners were racing out of troubled Zimbabwe, the South African company Impala Platinum Holdings decided to invest in two platinum-mining businesses there last year.

In Mozambique, the South African bank ABSA decided to buy mismanaged Banco Austral, even after a Mozambican official assigned to account for the bank's unpaid loans was murdered last year.

"We believe we understand African risk and can mitigate the risk," said Rupert Pardoe, a director of ABSA. "But we're not investing in Africa for altruism. We're investing in Africa to make some money."

©2002 San Francisco Chronicle   Page A - 14

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