The Multinational Monitor


G L O B A L   N E W S W A T C H

Bankers Funnel Money to South Africa

Multinational banks have recently cut back on much of their foreign lending, due in part to shaky political conditions in borrowing nations. One glaring exception to this pattern is South Africa, where banks have funnelled increasing amounts of money over the past year.

South Africa has gone on the "biggest borrowing spree since the early 1970s," said the Rand Daily Mail of Johannesburg early this year, noting that in the first six weeks of 1982, South Africa borrowed more in the Eurocurrency markets than the $500 million it borrowed in all of 1981.

This latest spurt in South African borrowing follows the boost in U.S. bank lending that occurred in the second half of 1981.

Recently released figures from the U.S. Federal Reserve Board reveal that U.S. lending to South Africa took a dramatic leap from June to December 1981. U.S. banks increased their total loans outstanding to South Africa from $1.8 billion in June 1981 to $2.7 billion in December 1981. New loans by U.S. banks to South African banks rose $521 million in that six-month period; U.S. lending to South Africa's public sector went up $238 million; and U.S. loans to non-bank borrowers in South Africa climbed by $112 million.

Known syndicated credits by foreign banks to South Africa in 1981 include:

  • A $100 million 7-year loan to the African Explosives and Chemicals Industry (AECI), South Africa's largest chemicals manufacturer, with past ties to ARMSCOR, South Africa's state-run arms industry. Citibank was the lead manager of the loan; other participants included Lloyds Bank International, Manufacturers Hanover, Chase Merchant Banking, and National Westminster.

  • A $50 million 5-year loan to Volksas Bank, a South African government bank handling military and police accounts. Participants included Citibank, Chase Merchant Bank, Manufacturers Hanover, First National Bank of Boston, Dow Banking, Kredietbank International, and Hessische Landesbank.

  • A $45 million 7-year loan to ESCOM, South Africa's state-owned Electricity Supply Commission, which manages South Africa's nuclear program. Lenders included Deutsche Bank Cie. Financiere Luxembourg, Commercbank International, and Cie. Luxembourgeoise de la Dresdner Bank.

  • A $58 million loan to South Africa's Standard Bank Import Finance Co., and a $29 million loan to South African Railways and Harbours.

Report by Carole Collins, national coordinator of the Campaign to Oppose Bank Loans to South Africa

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