Protest against divestment and the end of apartheid

On May 9, 1994, Nelson Mandela, an anti-apartheid activist who was released from prison only four years ago, was democratically elected as the President of South Africa.Mandela’s historic presidency was impossible during apartheid—the end of apartheid was partly achieved through protests against divestment.

Protests against divestment are a form of dissent, in which shareholders intend to sell their assets from the company to achieve social change. By selling stocks, the protesters hope to influence the company to oppose certain aspects of its business. In this case, people who opposed apartheid wanted to prevent companies from doing business in South Africa. In this article, we will explore South Africa’s protests against divestments to show how the simple act of selling stocks can affect real social change.

Understanding divestment

Anti-apartheid protests prevailed in the 1960s, especially on the campuses of American colleges and universities. Initially, the protesters wanted to end apartheid, but there were not many ways to influence the South African government through traditional forms of protest such as pickets or demonstrations.

In the end, members of the university-based anti-apartheid movement thought of a more practical way to achieve change, that is, to pressure their universities to divest the stocks of companies doing business in the country. Many students build huts on their campuses to represent the living conditions faced by many oppressed South Africans every day, thus drawing people’s attention to their careers.

Schools use a certain percentage of endowment funds as investment tools, and many schools have quite large endowment funds. In 2017, the endowment fund of more than 90 schools in the United States exceeded US$1 billion, and the purchasing power was amazing.David Swensen, the chief investment officer of Yale University, is probably the most famous example of the importance of investment at Yale University. He successfully managed the school’s funds and made him known as the most successful money manager of his time. one.

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It is easy to see the impact of colleges and universities on businesses operating in South Africa. Although the sale of shares of companies with operations in South Africa by universities may not have much impact on the company’s stock price or market value, they can certainly draw attention to the interests of South African companies. No CEO in the world is willing to suffer from bad public relations. . If enough companies stop doing business in South Africa, its economy will deteriorate, which will put the South African government into a major dilemma. Its choice becomes to reform its politics or risk complete and complete economic isolation.

Complications and concerns

Despite numerous political, racist, and economic problems in South Africa, the country still has a population of 30-40 million, and its abundant natural resources (including 33-50% of global gold production in the 1980s) make it an attractive Market. At some point in the 1980s, half to one-third of the S&P 500 had operations in South Africa, making these companies one of the best investments of the time. These are blue chip stocks and are the key to the success of the endowment fund.

When selling assets, the university must pay the same fees and charges as any other investor. Because of the large amount of funds — funds used to continue and promote school operations — it is understandably difficult for university financial staff to sell these assets.

Someone made a valid argument that by putting pressure on companies to stop doing business in South Africa, the people the protesters tried to help would only be punished further. After all, companies provide jobs and income. In a country with high unemployment and low wages, any job can help. In addition, many American companies have established policies to ensure that South Africans of all races can work under fair employment conditions and receive equal pay. If these companies leave the country, how can the poor and the oppressed hope to improve their lives?

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In addition, many policymakers in colleges and universities believe that the purpose of schools is to educate students, not on corporate responsibility or political issues, or even issues of good faith like the abolition of apartheid.

Sports success

Although there are strong arguments against divestment, many students continue to protest. Ultimately, university administrators see it as a student. Hampshire College was the first school to agree to divest its portfolio of companies operating in South Africa. By 1988, a total of 155 colleges had been at least partially divested.of

Although the roots of the divestment movement took root on American university campuses, other large entities soon sold their shares. By the end of this century, 90 cities, 22 counties, and 26 states had adopted some form of economic stance against the South African government.Therefore, many public pension funds are required to sell assets related to South Africa. The divestment campaign is also making progress in other countries. University-based divestment efforts may or may not immediately affect the South African economy, but they do raise awareness of apartheid. After the divestment movement became notorious, the US Congress was forced to pass a series of economic sanctions against the South African government.

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From 1985 to 1990, more than 200 American companies severed all ties with South Africa, resulting in a loss of US$1 billion in direct investment in the United States. As companies, investors, and funds leave South Africa, South Africa is ravaged by capital flight. The South African currency rand depreciated sharply, and the inflation rate reached double digits. The economic situation and the resistance efforts of the victims under apartheid mean that the South African system must end.of

First, the various apartheid laws of apartheid have been cancelled. Then, blacks and other people of color gained the right to vote. In 1994, the country elected Nelson Mandela as the new president. The divestment campaign was not the only reason for the end of apartheid, but it was a major contributing factor.

Divestment outside South Africa

Since the successful end of apartheid in South Africa, divestment has been used and suggested as a tool to influence changes in other areas. A large-scale campaign was launched to require universities, investment groups, pension funds, and various government agencies to divest any stocks that do business with Sudan. The Sudanese government is related to the cruel violations of human rights in Darfur. Other groups have launched divestment campaigns against countries such as Iran, Syria and Israel, while groups such as the American Medical Association have called for a divestment campaign against the tobacco industry.

Although these movements have achieved varying degrees of success, it is certain that protests against divestment have become a way for protesters to influence the financial and economic situation to achieve their political goals.

Not worried about becoming an ethical investor?Maybe “guilty stocks” have a place in your portfolio.

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