South African freedom to ring in L.A. opportunities.

Local consulate flooded with inquiries from investors

The recent dismantling of apartheid and establishment of democracy in South Africa will bring increased trade and investment opportunities to Los Angeles-based companies, according to international trade experts.

Trade sanctions against Africa's richest nation have only recently been lifted by the State of California and the City of Los Angeles. Effectively, sanctions were in place for 10 years, explained Stefanus Botes, South Africa's economic consul in Los Angeles.

State and municipal bans against doing business in South Africa were in effect for many more years than the federal ban. Federal trade sanctions were lifted in July 1991, but the State of California held its ground until only a few months ago. Since then, however, the response has been tremendous, said Botes.

"We have been flooded with inquiries since two or three months ago from South African exporters and from American businessmen who would like to trade with South Africa," he said. "Also, many people who would like to export to South Africa and to invest there have contacted us."

Botes pointed out that trade is extremely important to South Africa and that the new Nelson Mandela-led government considers increasing trade as a key to economic development in South Africa. About 55 percent of South Africa's annual gross domestic product comes from import and export businesses, said Botes. Many of those businesses are hoping to export to Los Angeles, although the sanctions were damaging.

"The sanctions were in place for 10 years, and you will not be able to break that perception down immediately," said Botes.

Los Angeles was once a sizable market for South African goods. But in this highly competitive market, "it will not be easy to get back in," continued Botes.

Not only can we expect an increase in goods coming here from South Africa, but it is also likely that L.A. companies will be exporting to and investing in South Africa, according to international trade sources. Jackie Dahlberg, an international tax partner with accounting firm BDO Seidman, said she anticipates increasing demand for BDO's consulting services from clients who are looking to trade with South Africa. "Now all of a sudden there is an optimism and hope," said Dahlberg.

Part of that hope is coming from the fact that the country has a new president and a new political system. Mandela was elected president in the country's first-ever open elections. His administration is proving to be much more than symbolic of the struggle of the black people of South Africa, as Botes pointed out. The African National Congress' five-year economic plan promises enormous opportunities for foreign trade and investment.

The Reconstruction and Development Program, the cornerstone of the ANC's economic policy, is being billed as an attempt to rectify the wrongs of the past. The Mandela administration plans to build at least 1 million homes, provide electricity to 2.5 million homes, provide children with free health care and 10 years of free, compulsory education.

The plan was recently unveiled by Minister of Trade and Industry Trevor Manuel. Manuel has indicated that the five-year program will cost about $11.5 billion (U.S.). Botes pointed out that estimate has since been upped to about $22 billion (U.S.).

One Los Angeles-headquartered company that confirmed it is looking at opportunities in South Africa is Southern California Edison. Bill Nesbitt, Edison's manager of equal opportunity programs, said there is a real possibility Edison will look for business opportunities in the newly-democratized African republic.

"Edison is looking into doing business (in South Africa) through a subsidiary," he said. Business opportunities for Edison include building new power plants and providing maintenance to existing ones. Edison also hopes to provide assistance in the form of training electrical workers and managers and educating them about how to use new electrical technologies.

Nesbitt emphasized that working in South Africa would not have been possible up until the California trade sanctions were lifted in March.

Botes also indicated that he has been contacted by other Los Angeles County-based companies, such as Rockwell International, that are interested in researching opportunities in South Africa. Rockwell had no comment on whether it has any plans to trade with South Africa.

Other companies are not quite so secretive. Regional Cook, president of Long Beach-based trading company Cook International Inc., said he has seen business pick up so much since trade sanctions were lifted that he is putting together an investment fund to finance joint ventures between American and South African companies.