International Business: SOUTH AFRICA
SOUTH AFRICA IS A NATION UNDER SIEGE
Even President Mandela admits violent crime is out of control
In a fashionable Johannesburg neighborhood on Aug. 15, carjackers shot and killed Erich Ellmer, 48, South African company secretary for Germany's AEG. Two weeks later, in the poverty-plagued black township of Soweto, the father of a national soccer hero was slain during another car heist. And in August, five South African policemen were killed in one week.
Two years after apartheid's official end, South Africa stands at a crossroads. Once hailed as a model for social and economic change on the troubled continent, the country now looks more like a nation under siege. In the past six months, the rand has tumbled about 20% against other major currencies. The government has failed to live up to its pledges to privatize state companies and loosen exchange controls. Worst of all, violent crime has mushroomed, and many citizens have lost faith that the government can stop it. Warns Johannesburg's Institute for Defense Policy in a recent report: "[South Africa] teeters on the brink of becoming simply another African basket case where violence, corruption, and brutality rule."
The crime wave threatens to discourage investments needed to shore up the economy. German carmaker BMW, for example, may reconsider plans to invest $223 million to boost output at its Pretoria plant if crime continues to escalate. Bernd Pischetsrieder, BMW's chairman says crime has discouraged auto-parts suppliers, on which BMW depends, from setting up in South Africa. Notes Dennis Dykes, chief economist of Nedcor Bank: "When [companies] contemplate sending a manager here, the crime problem becomes a major consideration."
NO.1 PROBLEM. Portfolio investors are also concerned. While crime is not solely to blame, the country has seen a "substantial decline" in net capital inflows in the past six months, the South African Reserve Bank reported. That has pushed down the rand, created a current account deficit, and changed "foreign investors' assessment of South Africa," says the bank's Governor, Chris Stals. It's "of crucial importance that the present wave of crime and violence be seen to be curtailed," he adds.
By some accounts, South Africa ranks among the world's most violent societies. According to a recent Nedcor study, South Africa has a murder rate of 45 per 100,000, compared with a world average of 5.5 per 100,000. From 1990 to 1995, murders jumped 26%, rapes 81%, and serious assaults 38%. Nearly half of the population regards crime as the country's most serious challenge.
The problem has led to an equally alarming outbreak of vigilantism. One mob, under a banner proclaiming itself People Against Gangsterism and Drugs (PAGAD), shot and burned to death suspected drug kingpin Rashaad Staggie in Cape Town last month. Vigilante leaders say they must take the law into their own hands because corrupt police refuse to arrest gang leaders.
URGING CALM. While corruption is a problem, police units also lack trained personnel. The U.S., concerned by South Africa's spiraling crime, is pledging help. The Federal Bureau of Investigation and the Drug Enforcement Administration plan to open offices in Pretoria soon. The U.S. is also offering retraining programs for police officers.
So far, government efforts to resolve the security problem seem inadequate at best. The Safety & Security Ministry is planning to send 1,000 troops into Gauteng Province, which includes Johannesburg, to patrol with automatic weapons. The arrest of a PAGAD leader helped defuse the vigilante crisis. President Nelson Mandela admits that crime is out of control and has urged calm.
But critics say he has done little else to restore confidence. On Aug. 31, the ruling African National Congress convened a crime summit, which voted to reconsider the party's stand against the death penalty. But Mandela's opposition means there's little chance a measure to restore capital punishment will be adopted. After months of unfulfilled government promises, few South Africans expect major change.
Black and white citizens alike were shocked by displays of vigilante blood lust on the evening news in early August. And they are outraged by continued outbreaks of seemingly random violence. If South Africa is going to live up to its potential, a crackdown on crime seems urgent.By Kathy Chenault in Johannesburg, with Stan Crock in Washington