in South Africa
The Africa Fund • 1986
Companies in South Africa
Six of the top eleven computer
companies in South Africa are subsidiaries of US companies and one is a
distributor for a US company’s computers. These seven companies have a 47% market share. Of the remaining four, one is 25% US owned
while still another distributes some US computers. When all American companies operating in South Africa are included, US computer
companies account for at least half of the computer market in South Africa.
Company 1985 1985 l984 Employees
Sales Market Sales
($ millions) Share ($ millions)
IBM $180 20% $238* 1,973**
Barlows*** 90 10 73.4 784
Burroughs 81 9 104 580
ICL 81 9 112.2 1,000
Olivetti + 53.8++ 5.6 51 700
Hewlett-Packard 44+++ 5 47.6 290
Sperry 36 4 46.2 200
NCR 36 4 44.2 600
Control Data 27 3 40.8 300
Siltek 27 3 34 250
Wang (GBS)++++ 18++ 2 34 375
boldface are US firms or serve primarily as
distributors for US computers.
Figures for 1985
sales based on Financial Mail overall estimate of R2 billion computer
industry turnover divided by estimated market share. Where an exact figure is
known, this has been substituted and 1985 market share figure adjusted. (See
below for specifics.) 1984 Rand figures from Financial Mail. Figures
are somewhat distorted by the large shift in the Rand/Dollar exchange rate.
1984: R1 = $0.68. 1985: R1 $0.45.
* Includes some non-computer products, such
** In early 1986, IBM cut its work force by 16% to about 1,600.
*** Reunert Computers (a subsidiary of Barlow Rand) includes Persetel, the distributor of Hitachi equipment, and BarlowData. BarlowData equipment is largely imported, including some
from the US.
+ 25% owned by AT&T
++ Dollar figure is based on Rand figure that is actual from press source, not based on market share.
+++ Dollar figure is actual from company
annual report, not based on market share.
++++ US company has no ownership of South
African company, which is a distributor.
NOTE: Burroughs announced in May 1986 that it would acquire Sperry.
US Computers in South Africa: An Analysis
The growing divestment campaign in
the United States and increasing resistance
to apartheid in South Africa have combined in recent
months to focus new attention on the role of foreign investment in South Africa. American corporations provide direct
investment, loans and access to technology that, over the last twenty years,
has been critical to the maintenance of white minority rule. American computer companies have in
particular played a strategic role in providing equipment and technology that
has directly bolstered the apartheid system.
A ban on US computer company investments and sales in South Africa would
have a profound effect on the apartheid economy and would certainly help those
struggling to end white minority rule in that country.
South Africa is totally dependent on
imported computers. No mainframe
computers are made in South Africa. Some personal computers are assembled
locally, but the key parts of these personal computers are imported. American companies are by far the largest
suppliers of computers to South Africa. They account for more then 47% of overall
sales, 70% of the mainframe market, and they dominate the market for automatic
teller machines. Companies from Japan and the United Kingdom are the next largest
suppliers of computers.
Foreign firms provide technology and
advanced data processing equipment that South Africa simply cannot produce. “South Africa really needs US companies
in certain industries, particularly high tech industries and computers,” IBM’s
representative told investigators from the House Subcommittee on Africa in 1984. And the head of one major South African
electronics company, Bill Venter, concurred: “Economy of scale dictates that
the national market cannot alone sustain a truly viable electronics industry.”
The computer industry has been
growing rapidly over the past few years.
Imports of hardware in 1984 showed an estimated increase of 69% over
1983. Industry sales for the same period
increased some 70% in rand terms to R1.7 billion. By 1985 the market had grown to R2 billion.
Who Buys Computers?
The largest single user of computers in
South Africa is the white minority
government, which accounts for at least 25% of all sales. The government uses computers, including
American-made computers, for everything from collecting statistics on racial
classification to guiding shells during attacks in Angola. Municipal and provincial authorities directly
involved in administering apartheid also use computers. And as in any modern economy, computers are
integral to the functioning of major industries and provide key services to the
apartheid economy including the large state-owned steel and transportation
companies, and privately owned mining companies.
US Government Restrictions
For many years, US computer companies sold
computers to the South African police and military and other agencies directly
involved in enforcing apartheid. The government-owned
armament corporation, ARMSCOR, uses equipment from NCR, Burroughs,
Hewlett-Packard and Sperry, and the South African Defense Force’s command and
control system uses an IBM computer. The
United States government consistently
used its veto power in the United Nations Security Council to block a mandatory
arms embargo against South Africa.
In 1977, however, the Carter
administration, under pressure from the world community and activist groups in
the US, voted for a mandatory arms
embargo in the UN Security Council. US government export
regulations issued in terms of the arms embargo were enacted in early
1978. All sales to the police, military,
Department of Prisons and the Bureau of State Security were banned. Although limited in scope, the restrictions
were a major victory for the anti-apartheid movement. When the Reagan administration came into
office, however, these restrictions were weakened to allow the export of
computers to the police and military if they allegedly would not significantly
contribute to police or military.
By 1985 growing unrest in South Africa and an escalating
divestment campaign in the US led Congress to review
Reagan’s policy. As a result, when the
Export Administration Act was signed into law in July 1985, it contained a
clause which reinstated the controls that had been in effect under President
Carter. In a separate action, President
Reagan, in order to forestall tougher action by Congress, issued an executive
order in September 1985 which banned all computer sales to the military,
police, prison system and national security agencies. The US Department of Commerce has since
issued a joint set of regulations to implement the executive order and the
Export Administration Act.
While these restrictions are an important
first step, they do not stop the flow of computers to South Africa. Although sales are banned to ARMSCOR, the ban
does not extend to private business in South Africa. Yet ARMSCOR contracts out very significant
research and production to private industry.
One 1985 study reports that some 1000 private sector companies handle up
to 60% of military production in South Africa.
Computers from IBM, Control Data and
Amdahl are used by the country’s leading research institute, the Council for
Scientific and Industrial Research (CSIR).
CSIR is a government research institute that, in addition to civilian
activities, is involved in many types of military research. CSIR designed the Casspir armored car, which
today is widely used by the military and police in the black townships. It also has design responsibility for missile
systems and poison gases for the Defense Force. Sales to and servicing of US
computers at CSIR continue to this day.
Other government agencies not covered
under current restrictions include the Department of Statistics, Ministry of
Communication and Public Works and the Department of State Purchases. Not only do all these agencies serve the
white government, but all could also be used as “fronts” to purchase computers
for the military or other prohibited agencies.
Continuing Sales to the
Among the fastest growing users of
computers are municipal and provincial governments, where US companies have some 70
known installations. These sales are not
prohibited under the current restrictions, except if the US determines that the
purchasing agency is one that “enforce(s) apartheid.” Any distinction between municipal government
bodies that “enforce apartheid” and those that do not is essentially false. Municipal governments are arms of the
apartheid government and are designed to maintain strict segregation of blacks
and whites. The entire structure of
government in South Africa is based on apartheid, the idea that there are some structures that are
“apartheid enforcing” and some that are not is simply untrue.
Another loophole in the US regulations is that
computers and components are totally exempt from the ban if US technology makes up 20% or
less of the system price by value. This
means that the many foreign-made computers that use US technology or components
US companies have been
permitted to continue selling to large state corporations such SASOL (a coal
gasification company), the Iron and Steel Corporation (ISCOR), which makes
specialty steel for South Africa’s military, and the
Electrical Supply Commission (ESCOM) which supplies South Africa’s power needs. In 1985, the South African Transport Services
spent $68 (R100) million for data processing, $27.2 (R40) million of which was
for computer upgrades.
All sales to South Africa, even those to the private
sector, aid apartheid. The smooth
functioning of business is important to the smooth functioning of the apartheid
economy. Without computers, the apartheid
economy would face severe problems since key sectors of industry in South Africa, such as oil refining,
mining and banking, are highly computerized.
Major private users of American computers are
Anglo American Corporation and Gencor, the largest employers of migrant labor
in South Africa, and pillars of the
Even small, personal computers can
have strategic importance. The Pentagon,
for instance, attempted to block sales of personal computers, such as the IBM
PC, to Eastern bloc countries for fear of possible military uses. Such a total ban on sales in South Africa has never been considered
by any US administration. PCs are sold widely in South Africa and obtaining them would be
a simple matter for the military, police or other government agencies, even
though such sales would be in violation of US law.
The ability to tightly monitor the
restrictions on sales to South Africa, even if the political will
were there, is open to question.
Although an export license is necessary for computers, increasing
numbers of US companies are operating in South Africa indirectly through
distribution and licensing agreements with other companies. IBM itself has admitted that “it would be
misleading to suggest that any manufacturer can control how its products are
Yet the restrictions
enacted in 1985 are not without some effect, and they do represent a victory
for anti-apartheid forces. The American
Chamber of Commerce estimates that the restricted government bodies represent
30-40% of all computer sales. A
spokesman for Xerox’s South African subsidiary told a business publication that
it expects to lose 15% of its sales because of US restrictions. Other US computer companies,
however, have been less concerned. “These sanctions won’t have a major impact,”
said a spokesperson for Hewlett-Packard.
With the growth of the divestment
campaign, US corporations are now seen as possibly unreliable suppliers. The main competition to US companies comes
from IBM compatible mainframe computers, especially those made by the Japanese
company Hitachi. By the end
of 1985, Hitachi had captured a 10% market share. Hitachi mainframe computers are
compatible with IBM computers and will run software designed for IBM. In South Africa, the move toward Hitachi is motivated in large part
by the threat of computer sanctions. The
data services manager at Barclays Bank in South Africa told Business Week in early
1986 that “[A]s an added protection against any possible boycotts by US-based
companies, we have started buying from Hitachi.” Even US companies are hedging their
bets. “We are not saying we are going to
switch from IBM,” commented an official at Mobil South Africa, “but there is no
question anyone who has his eggs in one basket is concerned.”
South Africa’s ability to find alternative
sources of computers is open to question.
In October, Japan announced it would ban the
export of computers to South Africa for sale to the armed
forces and police. Commonwealth
countries have also adopted a common program of action that includes a “ban on
the sale and export of computer equipment capable of use by the military
forces, police or security forces.”
US computers play a key role
in South Africa. The government uses them for a wide range of
applications, from military to scientific, and they are a vital part of the
economy as a whole.
While the anti-apartheid movement has
achieved some significant victories in limiting computer sales to South Africa, many loopholes still need
to be closed. The Reagan administration’s
restrictions on computer sales to South Africa read as if they were
drafted by the computer companies to deflect the anti-apartheid movement rather
than to help end apartheid. All sales to
the government are not forbidden, nor are sales to private companies that
contract with the government.
Enforcement of the current
restrictions is also far from adequate.
There is little effective monitoring of the actual use of computers
sold, with US government officials relying for the most on part the word of the
South African purchaser. Furthermore, an
increasing number of companies are operating in South Africa by selling hardware and
technology through South African companies rather than through their own
subsidiaries. In these cases, it is
almost impossible to ensure that even the limited restrictions that do exist
American computer hardware and
technology continue to bolster white minority rule in South Africa. There is only one way to
be sure that US computers in South Africa are not used to maintain
apartheid. That is a total ban on all sales of hardware, software and
technology to South Africa.
Amdahl delivered its first computer
in South Africa in 1975. The company is now involved in sales of computers
and network systems through the Amdahl International Corporation and Tran
Systems (Pty.) Ltd. The company has a
total of 56 employees in South Africa. In late 1985, Amdahl computers were selected
as part of a large new system to be installed by ESCOM. Other Amdahl customers include CSIR and
Shell. Tran Systems currently assembles
about 25% of its equipment in South Africa. Recently Tran Systems decided for “strategic
reasons” to manufacture its complete line of communications equipment in South Africa.
APPLE COMPUTER INCORPORATED
“Apple rejects the apartheid policies
of the current government...and [we] are therefore discontinuing our activities
in South Africa,” announced Apple’s
president, Michael Spindler, in August 1985.
Apple’s decision to pull out
demonstrates the importance of the campaign to isolate South Africa. Apple has never had a
subsidiary in South Africa, but rather sold its
computers through the South African company Base 2. In reporting Apple’s decision, Base 2
managing director John Floisand acknowledged the role of the divestment
movement by saying: “It is mainly political unrest in America that has driven Apple to
take this step. Most of our hard and
software is developed in co-operation with leading American universities and it
was here, especially, that Apple ran into difficulties.”
Even before the decision to end direct
sales, Apple had suffered considerable loss of market share in South Africa. In 1981, the company had an estimated 85%
market share in the personal computer market, but as a host of other
microcomputers came on the market — including the IBM PC and compatibles —
Apple’s market share fell to 20%.
At the end of 1985, the effect of
Apple’s action was still unclear. “We
will source Apple products from other countries,” said Base 2 managing director
John Floisand in a statement shortly after the announcement was made.
Burroughs is the third largest
computer company in South Africa with assets between $20 - $40 million and 1985 sales estimated at $81 (R
180) million. The company sells mainframe and microcomputers through its
subsidiary Burroughs Machines Ltd. in Johannesburg with a total of 580
employees. Burroughs’s market share was about 9% in
1985. In May 1986, Burroughs agreed to acquire Sperry, which will boost
Burroughs’s market share in South Africa to 12%.
Burroughs’s sales in South Africa have been growing rapidly
over the last three years. Major areas
of sales include the government and financial sectors. At least 15 municipal governments use
Burroughs equipment. A number of other
public institutions, including several bantustan
agencies, use Burroughs machines. In the
financial sector, customers include several South African banks, including
In September 1985 a group of ten US companies, led by Burroughs
Chairman W. Michael Blumenthal, and including IBM and General Motors, met with
President Reagan to discuss the growing divestment movement. Following this meeting the group announced
the formation of the US Corporate Council on South Africa. Its initial press statement said that Council
members “see an urgent need for changes and reform of the apartheid system,
which will lead to its ultimate elimination.”
As the black rebellion inside South Africa continued to escalate,
Burroughs told the Detroit Free Press in November 1985 that it was
drawing up contingency plans to withdraw from South Africa should the situation
not improve. However, it seems unlikely
that Burroughs will withdraw soon.
Profits by its South African subsidiary continued to increase in 1985.
CONTROL DATA CORPORATION
Control Data ranks ninth in South Africa with estimated sales of $27
(R60) million through sales of mainframe computers, computer networks and
education software from the Control Data (Pty.) Ltd. and Interdata subsidiaries
located near Johannesburg. Control Data also controls 40% of Intell’, a computerized system to help users of the service
target potential customers. The company
had assets of about $44 million in 1983 and approximately 300 employees as of
December 19821. CDC has a market share
of about 3%.
A major market for Control Data is
state-controlled corporations. ISCOR
bought its first CDC computer in 1965 and ESCOM bought one in 1971. In 1983 ESCOM purchased the powerful Cyber
170/865 computer for use in designing new power stations and for project
control as part of its effort to double power generation by 1990. This 1983 sale is one of the first known
instances of this powerful computer being sold outside North America. ISCOR also bought ten
smaller Cyber 170/800’s.
In 1985, CDC was one of the most
active companies lobbying against the imposition of comprehensive computer
sanctions on the South African government.
The results of this activity are reflected in the way the Reagan
executive order affects one of CDC’s main customers, the Council for Scientific
and Industrial Research (CSIR). CSIR is
a large government-run research agency involved in both strategic and military
related activities. The US regulations prohibit sales
to CSIR for “weapons research.” CDC
claims that its computers are not used for military research. Yet the Control Data computers are the core
of CSIR’s Centre for Computing Science scientific/numeric system. According to the CSIR Annual Report, “Some 23
CSIR institutes situated in various parts of the country have access to these
facilities, directly or via some 300 terminals, or via minicomputers or remote
job entry stations.” It is difficult to
see how such a system can be effectively monitored, particularly since CDC
ultimately can only rely on CSIR’s own assurances that CDC computers are not
used for military purposes.
CDC advertisements in South Africa point to the advantages to
be gained by using its PLATO educational software system to educate
blacks. Yet Control Data’s own
employment record reflects the company’s refusal to place blacks in positions
of responsibility. CDC management is
100% white, its professional staff 97% white and supervisory staff 88%
white. “White people think they have
done something remarkable... but it’s nothing,” Mandla Adonial, one of Control
Data’s top black employees, told the Minnesota Star and Tribune. He was listed in CDC’s report on compliance
with the Sullivan Principles as an “assistant manager.” Not so, says Adonial. “If I am an assistant manager on paper, in
practice I should be given the challenges and the real job of a manager. They put it in the report for window
dressing. It’s a lie, and it angers me.”
is the sixth largest computer company in South Africa accounting for $44 million
in sales in 1985. Hewlett-Packard’s 1985
market share is estimated at 5%. The
American company sells a range of computers and large instrumentation devices
through its wholly owned subsidiary Hewlett-Packard SA (Pty.) Ltd.
headquartered at Santon industrial park near Johannesburg. Hewlett-Packard SA had 290
employees in 1985.
Thomas Conrad of the American Friends Service Committee (AFSC) obtained data
from South African industry sources in 1985 proving that a Hewlett-Packard
computer is part of a new calibration system developed by Naschem, a subsidiary
of Armscor involved in the production of high-caliber ammunition and bombs.
computers are used by a number of government agencies, including the South
African Reserve Bank. “The system really
proved itself over the past couple of months, when the rand was slipping
against the dollar and the gold price was dropping,” noted one bank official in
a 1985 interview.
sells process control equipment through its wholly owned subsidiary Honeywell (Pty.) Ltd. In 1983 Honeywell had sales of $49 million
and about 200 employees. The company
reports assets of $25 million. Of
Honeywell’s employees only 21% are black, and whites dominate the top job
categories. According to the company’s
own 1985 statistics, 100% of the managerial, 94% of the professional and 83% of
the supervisory staff are white.
Honeywell process control system is used at the vast SASOL coal-gasification
installation at Secunda, one of world’s largest industrial computer
“It is IBM’s policy not to bid for
business where it believes its equipment would be used to abridge human rights
or for repressive purposes. We know of
no case where it is so used.”
Operations in South Africa”
IBM is by far the
largest computer company in South Africa, with estimated total sales
of about $180 (R 400) million. IBM’s
sales are twice those of its closest competitor. IBM has clear dominance in the area of
mainframe computers. An estimated 40% of
South Africa’s installed computer base
is of IBM origin, and the company had a 1985 market share of 20%. But IBM’s dominance has slipped significantly
in the area of mini-mainframes from 25% to 15%.
In software, IBM holds a commanding lead with estimated 1984 sales of
$23.8 (R35) million of a total market of some $95 (R140) million.
IBM has operated in South Africa since 1952 and currently
sells a full range of computer equipment through two wholly owned subsidiaries,
IBM SA (Pty.) Ltd. and IBM SA Product Distribution (Pty.) Ltd. However, IBM has been challenged worldwide
with IBM-compatible computers, and in South Africa the growth of the IBM
mainframe-compatible market has meant that IBM has not grown as fast as it had
anticipated. As a result, in March IBM
reduced its work force in South Africa by about 16%, from over
1,900 to 1,600 workers.
In an April 1985 policy statement,
IBM said that government accounts “yield a small portion” of IBM’s revenues in South Africa and that no sales are made
“to the police, prisons, military, agencies for
national security, the Department of Cooperation and Development or the
Department of Home Affairs.” This, in
fact, is little more than what US government export
regulations already prohibited.
Historically, IBM has sought out
business with the government’s repressive apparatus. In 1965 IBM bid on the passbook system but
lost to a British company. Since the
1970s IBM computers have been used in the system of identity documents for Coloureds and Indians known as the “Book of Life.” The Atomic Energy Board has an IBM 370/155
computer and the South African military is also known to have IBM
computers. More recently, in a 1980
publication in South Africa, IBM advertised a “Law
Enforcement System” as available. When
the AFSC exposed the existence of the ad, IBM denied that the system was
available, saying that “we don’t know how” the advertisement got into the
IBM’s statement that government
accounts are a small portion of its business in South Africa also appears less than
accurate. According to IBM, government
accounts make up less than 1/6 of its revenues in South Africa, but IBM excludes from the
definition of “government” municipalities, public utilities and state-owned
corporations. In December 1985 IBM won
two contracts with state-owned corporations, one estimated at $7 million from
the South African Transport Services and another from ESCOM. A number of municipalities also use IBM
computers. Other government IBM
installations include South African Airways, the Council for Scientific and
Industrial Research, the Kwazulu Development Corporation, and the South African
nuclear research facility at Valendaba.
IBM services a number of strategic US multinationals in South Africa including Mobil Corp. and Caltex (both sell oil to the police and military). IBM computers are also used by many large
South African companies including many of the mining companies like GENCOR in South Africa and Consolidated Diamond
Mines in Namibia, which illegally exports
diamonds from Namibia. In early 1986 Barclays Bank, South Africa’s largest bank, agreed to
acquire two large IBM mainframe computers, an IBM 3090/400 and an IBM
3090/200. The IBM 3090/400 sale will be
the first time that computer has been sold in South Africa.
IBM is not only in the
business of selling mainframe computers, but also is responsible for about half
of all personal computer sales in South Africa. Unlike mainframe computers, most PC sales are
through 72 IBM authorized dealers. PCs,
despite their name, are actually aimed at the business market. In addition to sales through its dealers, IBM
has begun making direct sales to large clients.
This strategy had a major success in August 1985 when IBM closed a deal
with South African Transport Services to supply 500 PCs worth $900,000 (R2
US companies frequently justify their
continued investment in South Africa by pointing to the
‘benefits’ received by their black employees.
IBM is no exception to this trend, and was one of the original 12
companies to sign the corporate code of conduct known as the Sullivan Principles. IBM is rated as “making good progress” under
the Sullivan Principles monitoring system, but it provides a graphic example of
the inadequacy of such codes. Eighty
percent of IBM workers in South Africa are white. Only 2.3% of managers are black. As recently as 1980 IBM had no black sales
people and by mid-1983 only four, none of whom sold computer products.
Because of its dominant market
position, IBM has been a special target of anti-apartheid activists. When 12 US companies were targeted by
church groups, IBM was on the list. IBM
has been the target of many demonstrations, shareholder resolutions and
divestment actions. IBM has also been a
target for sit-ins by student groups in New York, Oregon and Rhode Island.
IBM has been affected by both unrest
in South Africa and the divestment campaign
in the United States. While denying any plans to leave South
Africa, in a September 1985 statement IBM said the “South African government’s
lack of progress in dealing with its problems is further alienating it from the
community of nations” and that the “deteriorating situation is having a
significant impact on IBM’s South African business.” More recently, in April IBM chief executive
John Akers said, “The economic activity there is worse than it was a year ago,
the economic pressure in the United States is heightened, and Mr.
Botha is too slow... If we cannot have as successful a business remaining in South Africa as we would have leaving,
then I think we would have no choice than to leave.”
NCR sells both mainframe and
microcomputers in South Africa through NCR Corp. SA (Pty.)
Ltd. With 1985 sales estimated at $36
(R80) million NCR is the eighth largest computer company in South Africa. NCR employs some 600 people, of whom 180 are
black. The company increased its market
share to 4% in 1985 from 3% in 1983.
Although the NCR South African subsidiary contributed only about 1% of
the company’s worldwide sales, operations in South Africa were the 13th largest of
the 180 countries where NCR is represented.
Assets in 1983 were less than $40 million. NCR sales have grown some 30% overall, 50% in
the area of smaller mainframes. NCR computers are used by at least 40
major area of growth for NCR is automated teller machines, of which it is the
number one international supplier, but number three in South Africa with a 12% market
share. The State of Connecticut divested from NCR in 1984
because the company provided strategic goods and services to the South African
OLIVETTI & COMPANY
Although Olivetti is an Italian
company, it is actually 25% owned by American Telephone & Telegraph
(AT&T). Olivetti is also the largest
distributor in South Africa of Digital Equipment Corporation minicomputers. With 1985 sales of $53.8 (R112) million,
Olivetti is ranked fifth, and has a market share of 5.6%. A particular strength for Olivetti is the
banking sector, where the company controls 35% of the market for automated
teller machines. Olivetti employs some
In 1986, Olivetti stopped
distributing the AT&T personal computer following a decision of AT&T to
stop marketing it in South Africa. This action was taken in response to
divestment pressure by AT&T’s US employees. However, AT&T refuses to use its influence
with Olivetti to pressure that company to withdraw from South Africa, despite the fact that
AT&T is represented on the board of Olivetti.
Skok Systems is a Cambridge,
Massachusetts-based computer software company that specializes in computer-aided
design and drafting (CADD) systems.
Originally, Skok was a South African company. In 1983 Skok moved its headquarters to the United States. At that time the company estimates that it
had 70% of the CADD market in South Africa, where it still does 50% of
its business. Skok has an installed base
and orders of some $18 (R27) million in South Africa. It maintains a subsidiary for sales and
service with 35 employees, ten of whom are black.
Skok financed its reorganization with
$4.4 million raised from investors in the United States in exchange for 30% of the
stock. A number of well-known venture
capital firms are involved, including Hambrecht and Quist and the venture
capital arms of BankAmerica and the Fidelity Group.
Skok CADD system was designed to run on a Hewlett-Packard computer.
With 1985 sales of $36 (R80) million,
Sperry is the seventh largest computer company in South Africa and has a market share of
some 4%. Sperry employs 200 people and
had assets in 1983 of $33 million.
Sperry sells both mainframes and micro (personal) computers. In May 1986 Sperry agreed to be acquired by
Sperry has long been a key strategic
computer supplier. In 1972 Sperry sold
SASOL (South Africa’s key coal-gasification
plant) a $1.9 (R1.5) million computer.
Sperry bragged in an advertisement at the time, “SASOL epitomizes modern
South Africa’s vivid industrial
progress... [To meet its] requirements SASOL looked for a computer system that
was fast, reliable and versatile. Their
choice was UNIVAC.”
Sperry’s strategic role was
recognized in 1984 by the State of Connecticut when it divested itself of
Sperry. Under Connecticut law, companies must be
divested from state pension funds if they supply strategic products or services
for use by the South African government.
Other Sperry customers included the South African Reserve Bank, the Cape
Provincial Administration, and several municipalities.
Telex Computer Products, a subsidiary of
Telex Corporation, sells IBM compatible computer terminals through a South
African distributor. It has an installed
base of more than 8,000 terminals in South Africa and is a major market for
Comments Telex Corporation's Alfred
Mockett, “We have felt no pressure to disinvest…. Our investment has been in
the form of technology, training and financial support, and we see no reason to
change this.” Telex is reportedly
studying the possibility of manufacturing equipment in South Africa.
WANG LABORATORIES INCORPORATED
Wang does not have a subsidiary in South Africa, but rather sells through
its agent General Business Systems. GBS
sales of $18 (R40) million in 1985 gave it an 11% growth in South Africa and a 2-3% market
share. About one quarter of its sales are the Wang PC.
Customers include a number of municipalities and ESCOM.
New Jersey-based Ultimate Corporation
recently entered the South African market through Ultimate Computer (SA). The US company
claims no ownership in the South African company. “Although there is no direct investment, we
are expected to act as a subsidiary and follow all the rules,” said Ultimate
Computer (SA) managing director Gavin Fairon.
Ultimate Corporation is selling its special operating system known as
PICK, which runs on Digital Equipment Corporation and Honeywell systems. Clearly in cases such as this, there is no
effective way to monitor technology uses.
OTHER COMPANIES BRIEFLY NOTED
plans for South African “locally made” computers have been reported in the
press. One is to be made under license
from California-based Mitac, with only 20% local content. The
local content will consist of the circuit board and plastic case; the rest will
be imported. And the computer is really
only a PC-style microcomputer. Another
is by the South African company Psion Computers to start local manufacture of
the VPC, made under license from Victor Technologies in California. A sophisticated check clearing system used by
Nedbank was purchased from the US company
Recognition Equipment Inc. The Dutch company Philips sells the
US-made Diebold automated teller machine, which has 5% of the ATM
market. The largest US software house Cullinet operates in South Africa through a South African
distributor. The distributor paid $1.2
million in royalties to Cullinet in 1984. Mohawk Data Systems, whose
equipment is in use by a subsidiary of ARMSCOR, sold its South African
subsidiary to local management, which continues to act as a distributor for
Mohawk Data products. Measurex Corporation maintains a subsidiary in South Africa that markets and services
process control systems. Computer Sciences Corporation of California sold its 20% holding in
Computer Sciences Ltd. in 1985 but at the same time broadened and extended its
license and technical agreement with the South African company for ten
years. Datapoint Corporation computer products are sold in South Africa by Computer Sciences
Ltd. Perkin Elmer Corporation sold its
South African operations in 1985. Foxboro
Company computers, distributed in South Africa by AFH Devers,
have been reported to be used by the Uranium Enrichment Corporation and by the
oil industry in Cape Town. Microsoft
Corporation announced in April 1986
that it had terminated its relationship
with its South African distributor and would end all direct distribution. Lotus has
long considered it a violation of its copyright for its product to be used in South Africa.
should be noted that figures on computers in South Africa are frequently incomplete
and sometimes contradictory. Figures
used in this paper are those available and presumed to give a reasonably
accurate picture. Exchange rates used
are: 1972 R1 = $1.29, 1983 R1 = $0.90, 1984 R1 = $0.68, 1985 Rl = $0.45. Because
of the fluctuation in exchange rates, many percentages used in this paper are
based on rand figures.
research done on the uses of computers in South Africa has been conducted by
Thomas Conrad of the American Friends Service Committee. Two publications of AFSC, Automating
Apartheid: US Computer Exports To South Africa And the
Arms Embargo, NARMIC/American Friends Service Committee 1982 and Military
Exports to South Africa by Thomas Conrad, UN testimony in September 1985
are extensively used for this paper.
Newspapers: The Financial Times (London), Minneapolis Star and Tribune, The
New York Times, The Wall Street Journal, The Washington Post.
Magazines: Bulletin of the Atomic Scientists (Chicago), Business Week
(New York), Datamation (Washington, D.C.), Electronic
Business (Boston), Financial Mail (Johannesburg), Management
(Johannesburg), South African (Pretoria), TransAfrica
Forum (Washington, D.C.).
The South African Computer Users’ Handbook, 1985 edition, Systems Publishers, Braamfontein 1986. (Also used earlier years.)
McGregor, B., McGregor’s
Investors’ Handbook, Purdy Publishing Co. McGregor, 1986.
Northwest Research Center, Unified List of United States Companies with
Investment or Loans in South Africa and Namibia, The Africa Fund, New York,
annual reports, Form 10K and personal communications.
by the Investor Responsibility Research Center, Washington, D.C.
Copyright 1986 The Africa
THE AFRICA FUND, founded in 1966, provides
humanitarian aid to Africans struggling for independence and promotes public
understanding of African issues through research, publications and public
education projects. A complete list of
publications and annual report are available on request.
Contributions to The Africa Fund are tax
is Literature Director of The Africa Fund and the American Committee on Africa. He conducts research on US corporations in
southern Africa and is The Africa Fund’s Project Manager for the Unified List of United States Corporations with
Investments or Loans in South Africa and Namibia.
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