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South Africa’s helpful exodus

www.breakingviews.com

When pessimists warned that South Africa's largest companies would leave the country when Nelson Mandela came to power a decade ago, they weren't completely wrong.

Some of the biggest companies have indeed left. Metals and mining group Billiton did so in 1997, moving its primary listing to London. It was followed by Anglo American, the mining leader, and South African Breweries (SAB). Then there was Old Mutual, the biggest life assurer, after its demutualization. These, along with two smaller companies, accounted for 15% of the market capitalization of the Johannesburg stock exchange and 7% of GDP. That is a huge shift.

But while the moves were certainly controversial – the trade unions, for instance, attacked evil white capitalists for scuttling off with their ill-gotten gains – that doesn't mean the pessimists were right. Corporate emigration has for the most part been beneficial to both South Africa and the companies involved.

Outward push after apartheid It was inevitable that South Africa's largest businesses would internationalize when the country's isolation ended. Firms started sloughing off the large non-core holdings they had built up for lack of an alternative during the apartheid years.

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