S. African Investors Wary of Government

FOREIGNERS considering business prospects in the post-apartheid South African market are concerned about the ability of President Nelson Mandela's African National Congress government to follow sound economic policies.

Delivering on campaign promises to raise the living standards of black South Africans will undoubtedly be costly. But international investors and exporters wonder whether the government - which includes some ANC leaders who long espoused socialism - will interfere with the free market by stepping up state control in the private sector or resorting to inflationary measures, such as printing money to cover expenditures.

The new leadership is very sensitive to ``how heavy the hand of the state should be,'' says South African Minister of Trade and Industry Trevor Manuel. He is quick to point out that the ANC's reconstruction development program, which ``started out as an ANC election manifesto,'' has won the endorsement of every political party in Parliament.

Interviewed during a recent trip to the United States to promote his country as a premier opportunity for American investment capital and goods and tout South African exports aimed at the US market, Mr. Manuel sounded confident that the US ``is keen'' to beef up bilateral commercial ties.

Indeed, the Commerce Department has identified South Africa as one of the top 10 emerging markets for US goods and services.

``Certainly, in the realm of the current jargon, South Africa is not your stock-in-trade emerging market,'' Manuel says. ``We believe that a term `reemerging market' is far more appropriate.''

``We're different from many of the emerging markets, in that we have a highly developed infrastructure, both physical as well as financial,'' he says. ``We have an economy that is attuned to the norms of the world. We have pricing mechanisms that set us apart from many of the emerging markets of Eastern Europe.''

Manuel says the new government plans to spend an ``initial $800 million on new projects, and that sum will grow to about $3 billion by the fifth year'' of the economic development plan. But government planners are painfully aware of the country's limited financial resources, Manuel adds soberly, and they have accepted ``the broad dictates of fiscal discipline.''

Much of the funding for the needed infrastructure will come from ``improvements in productivity'' and by ``removing inefficiencies'' in state-run enterprises, Manuel says. ``With the resources at our disposal, we're saying that we can get more bang for the buck, rather than just throw money at the problem.''

In realizing development goals, he adds, official planners are intent on ``leveraging the full involvement of the private sector.'' Toward that end, the government is working ``to create an enabling environment for business.''

A senior State Department official says US aid - about $600 million over three years - will target housing, electrification, education, and other areas in need of development.

Overall, he says,Washington aims to promote the private sector ``as a vehicle for long-term growth, particularly for black-owned businesses.''

The new government faces huge challenges. According to a new United Nations' Human Development Report, South Africa is among the most ``endangered'' nations in income inequalities between its populations. The report says whites and blacks are so far apart in literacy and poverty rates that if white South Africa were a separate country, it would rank 24th in the world in human development; black South Africa would fall to 123rd place.

Acknowledging the UN report, Manuel says his government is undaunted. ``Clearly, this is a problem that must be addressed.''