For decades in the second half of the 20th Century hundreds of thousands of New Zealanders took part in campaigns and demonstrations targeting apartheid South Africa, protests which the late Nelson Mandela said brought hope to him and fellow political prisoners on Robben Island. Murray Horton’s tribute to Halt All Racist Tours (HART) is in the Obituaries in Watchdog 72, March 1993, http://www.historicalwatchdog.blogspot.co.nz/2009/12/foreign-control-watchdog-march-1993.html. To quote from it: “CAFCA has its own reasons to mark the passing of HART. We have directly cooperated on past campaigns e.g. we bought $1,000 worth of Fletcher Challenge shares in the late 80s and let the anti-apartheid movement act as our proxy at the various special Annual General Meetings that resulted. This was an ultimately successful campaign to pressure (the former) Fletcher Challenge to disinvest from South Africa. We provided information on South African-owned mining companies involved in the NZ gold industry, another HART target of the 80s. We passed on a lot of information about multinationals breaching the economic boycott of South Africa, information that came our way in a variety of international publications and UN reports”. FIRST Union Strategic Advisor Edward Miller looks at the subsequent growth of South African investment in New Zealand. Ed.

In June 2014 New Zealand fashion retailer Postie Plus was put into voluntary administration after reporting an $11.6 million loss in the 2013 financial year.(1) Shares had slumped some 72% since 2012 and the company had become heavily indebted. Weeks later it was announced that the company had been sold to Roan Limited, a wholly-owned subsidiary of South African Investment group Pepkor Limited.(2) The sale was for an undisclosed sum, and Postie shed 16 stores and around 30 staff in the process.

Postie Plus’ acquisition is the third significant South African firm in one of FIRST Union’s coverage sectors (along with Bidvest and Youi), demonstrating the growth of South African investment capital, both in New Zealand and around the world. Between 2001 and 2014 total South African investment in New Zealand has almost tripled, now regularly over $NZ100 million a year. Outward foreign direct investment (FDI) flows from South Africa have increased from $NZ360 million in 2000 to $NZ7.5 billion in 2013,(3) the largest source country of FDI in Africa.

Losing The Freedom Charter

In 1955 the African National Congress (ANC) sent 50,000 volunteers into the townships and countryside of South Africa to collect peoples’ “freedom demands”. These demands were distilled into a document, the Freedom Charter, which formed the political backbone of the ANC’s agenda. Recognising the legacy of colonialism and an entrenched racialised order, it demanded equal rights for all people, wealth redistribution and land reform, human rights and labour rights, education, decent housing, peace and friendship. “These freedoms we will fight for, side by side, throughout our lives, until we have won our liberty”, the document declared. After decades of struggle, the people of South Africa achieved political freedom as the regime came to an end (the ANC was elected to Government in 1994 and remains in power today. Ed.).

However, despite the breakdown of the apartheid regime, while many of the Charter’s principles were articulated in the new South African Constitution, the substantive demands of the Freedom Charter were never fulfilled. Upon coming to power, the ANC soon found itself outflanked by a neo-liberal agenda that restricted policy space and embedded market ideology. Joining the General Agreement on Tariffs and Trade (GATT, now the World Trade Organisation [WTO]) prevented public subsidies and undermined job creation; central bank independence prevented Keynesian pump-priming to fund necessary services; International Monetary Fund (IMF) debt was conditioned on “wage restraint” preventing wage increases; public-private partnerships had become the norm under World Bank tutelage. The policies imposed by the outgoing apartheid regime effectively locked in inequality, while departure from these policies would result in aid cuts, capital flights and currency crashes.(4) As anti-apartheid activist Rassool Snyman explains: “They never freed us. They only took the chain from around our neck and put it on our ankles”.

More Unequal Than Ever

Post-apartheid South Africa has become more unequal than ever. According to an October 2014 Oxfam report, South Africa’s two richest people now have the same wealth as the bottom 50% of its population (i.e. 26.5 million people).(5) South Africa is now home to 47,000 millionaires (in US dollars), who hold a combined wealth of $184 billion.(6) That wealth has not, however, been used to create decent jobs in South Africa (by the end of 2014 unemployment had reached 24.3%). Instead, the wealth of the upper classes is heading offshore to chase greater returns.

When apartheid came to an end in 1994 FDI flowed almost uniformly from developed to developing nations. Outflows from South Africa were practically negligible. By 2013 FDI outflows from developing countries had reached $US553 billion, equating to 39% of global outflows (compared with 12% at the beginning of the 2000s). And, while the largest part of this increase can be attributed to China, each of the BRICS* nations has become both a significant destination and source of investment flows.* BRICS = Brazil, Russia, India, China and South Africa. Ed.

Within the African continent, the growth of FDI outflows from Southern Africa has been particularly startling. As well as being the biggest consumer of investment on the continent (16.5% of the total), South Africa is at the forefront of growth in intra-African and broader emerging market investment, according to Ernst & Young.(7) It is the fifth most significant source country in terms of cumulative investment in new projects in Africa (after the US, UK, France and India), with a phenomenal compound annual growth rate of investment of 57% over the years 2007-2012. Successive South African Finance Ministers have taken steps to relax cross-border financial regulations and tax obligations, making it easier for banks to operate across South African borders.(8) Patrick Bond has even attributed “sub-imperialist” ambitions to South Africa, noting the growth in the South African financial and military presence throughout the African continent.(9)

South African FDI In New Zealand

As the adjacent graph demonstrates, South African investments in NZ have grown significantly. This section will look at some of the acquisitions made by South African firms to gain a foothold in the NZ economy.

Bidvest

Bidvest’s Chief  Executive Officer (CEO) Brian Joffe made his first million by selling a pet food business he had purchased a 50% share of in 1978.(10) The Bidvest empire has been built by way of an aggressive expansion-by-acquisition strategy, and today has a market capitalisation of over $NZ10 billion and employs 143,000 people worldwide. In the 23 years since Bidvest took its current form it has had a compound growth rate of 28.6% per annum, and made a 2014 profit of more than $1NZ billion in profit.(11) Somewhat ironically, since 2005 Bidvest’s Chairperson has been Cyril Ramaphosa, who 25 years ago led the National Union of Mineworkers in a key strike against the white minority regime and a co-author of the post-apartheid constitution.

Bidvest is the 19th largest company listed on the Johannesburg Stock Exchange (by market capitalisation), and Bidvest’s South African investments cover the automotive, consumer products, electrical, financial services, freight, industrial, office, rental, services and travel and aviation sectors. Its international expansion began in 1995 with the purchase of 50.1% of stock of Manettas (renamed to Bidvest Australia). As well as investments in Australia and NZ Bidvest has acquired assets in France, UK, Netherlands, India (operating the Mumbai airport), Singapore, Hong Kong, China, Czech Republic, Slovakia, Poland and Chile. Recent major acquisitions of Home of Living Brands (2013) and outsourcing firm Mvelaserve (2014) added 36,000 staff to Bidvest’s global operations.

Bidvest’s expansion into NZ began in April 2000 with the purchase of Crean Foodservice, followed soon after with a string of other purchases, including Mainstream Foods, CoolFoods, Oceanic Foods, Chef Direct and Growers Direct. It is now the largest specialist foodservice distributor in NZ, with 1,600 staff spread across its 30 NZ locations. Profitability in NZ has benefited greatly by the fact that the labour relations are organised on a site-by-site basis and there is no national collective agreement, making it much harder for workers to place pressure on the company. In 2014 Bidvest’s NZ operations reported an after tax profit of $NZ25.6 million, a 20% increase on the previous year.(12)

Pepkor

Christo Wiese became Executive Director of Pepkor, a clothing firm his parents had started, in the 1970s. In 1979 it purchased the Shoprite brand, then a chain of eight struggling supermarkets, which now has 2,020 stores across 15 countries. Through the 1980s and 90s the Pepkor Group acquired new retail brands, including Ackermans clothing, Smart Group Holdings, Cashbuild, Checkers and Stuttafords.(13) The acquisition of Postie Plus in 2014, mentioned at the beginning of this article, was just the latest in a series of acquisitions outside of Africa for Pepkor.

Between 1994 and 1997 it acquired a 70% stake in British discount retailer Browne & Jackson, in 1998 it purchased struggling Australian retail chain Best & Less (which has since expanded significantly to over 180 stores), and in 2012 Pepkor added the department store Harris Scarfe’s 49 locations to its list of acquisitions.(14) In Poland, Pepkor owns a 500-store chain, and there are also growing Pepkor businesses in Czech Republic, Slovakia, Romania and Hungary. Months after Postie was acquired, it was announced that a 92.34% share of Pepkor itself was to be acquired by Steinhoff International Holdings,(15) a Cape Town-based family company that has traditionally focused on furniture. The new entity has a joint market capitalisation of $NZ24 billion. 73-year-old Christo Wiese is now said to be the fourth richest man in South Africa, with personal wealth estimated at close to $NZ10 billion.(16)

Youi

Youi launched in NZ in June 2014, targeting the car, home and contents insurance markets that are currently dominated by the Insurance Australia Group (IAG), which holds a 50.5% share of the overall insurance market. Youi is a wholly owned subsidiary of OUTsurance, the largest direct insurer in South Africa. OUTsurance was started with the financial assistance of FirstRand, South Africa’s largest bank by market share and earnings (which posted a full-year profit of $NZ2.1 billion in 2014, a 24% increase on the previous year). FirstRand was the result of the merger of two large South African banks, and has banking subsidiaries in Botswana, Mozambique, Namibia, Swaziland, Tanzania and Zambia; is targeting other African nations like Angola, Ghana and Nigeria; and also has a presence in India.

In 2008 OUTsurance entered the Australian market with the development of the “Youi” brand. In 2010 FirstRand sold its shareholding in OUTsurance to South African insurance investment vehicle Rand Merchant Insurance Holdings, which has a global portfolio of insurance brands in South Africa, China, Mauritius, Ireland, Singapore, UK and US. Youi claims to be Australia’s fastest-growing car and home insurer, although it is still early days to assess its entry into the NZ market. It has, however, been the subject of a number of Commerce Commission complaints.(17) 

Signs Of Hope

Since the downfall of the apartheid regime South Africa has become a significant source of FDI, flowing not just to developing countries but also now developed countries. New Zealand is now a target for this investment, which has largely taken place through the acquisition of existing firms. Kingston University lecturer Ewa Karwowski suggested to me that many South African companies have long been global (or rather Anglo-American) in their focus, and sanctions during the 1980s simply shaped their corporate strategies, forcing them either into or out of South Africa. The liberalisation of capital movements after apartheid meant many some large firms based on the Johannesburg Stock Exchange shifted their headquarters overseas to access greater capital (with SAB Miller as the archetypal example). Certain sectors of the economy have been extremely profitable, particularly mining, however the majority of South Africa’s people have remained desperately poor. Financial liberalisation has brought with it other issues: according to a 2014 Global Financial Integrity report on illegal capital flight South Africa ranks 12th amongst the biggest exporters of illicit financial flows, losing a total of $NZ175 billion over the decade from 2003 to 2012.(18)

However there are signs of hope. There has been an increase in labour militancy in the mining sector since the 2012 police massacre of 34 striking Marikana mine workers; in 2014 a five-month Association of Mineworkers and Construction Union strike threatening 80% of global platinum supplies won workers a 20% wage increase; and a five-week strike soon after won 10% wage increases for National Union of Metalworkers members. The “Marxist-Leninist-Fanonist*” Economic Freedom Fighters Party entered Parliament in 2014 after less than a year of existence, holding the ANC to account. *Named after Frantz Fanon (1925-61), a leading figure in the Algerian liberation struggle, Fanonism is defined as “critical nationalism”. Ed.

Radical protests have targeted traditional symbols of colonial power (search: #RhodesMustFall), and NGOs and academics are increasingly shifting their allegiances from the ANC.(19) The recent news that the main South African opposition, the Democratic Alliance, has, for the first time, elected a black leader, 34-year-old Mmusi Maimane,(20) indicates a shift of the traditional lines of racially-delineated struggle, to one that more accurately reflects today’s class analysis. FIRST Union will continue to do our bit to ensure that South African firms operating in NZ are forced to engage in collective bargaining, and we are pursuing dialogue and international dialogue with our global union partners on how best to organise in the new transnationals emerging from the BRICS countries.