The campaign against British bank involvement in apartheid South Africa¶

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Nerys John (2000). The campaign against British bank involvement in apartheid South Africa. African Affairs 99(396). Oxford University Press / Royal African Society.


Type	journal article
Scope	Economics and economic history of apartheid
Method	archival narrative
Period studied	1969–1991
Regions	South Africa, Britain
Themes	sanctions divestment, macro fiscal finance debt, business and state, resistance social movements, transition post apartheid
Citation key	`john2000`

Argument¶

The article reconstructs the British 'banks campaign' against apartheid, which pressed British banks to withdraw from South Africa and to stop lending to it. South Africa was vulnerable because it relied on foreign capital, and from the 1970s on loan capital in particular. Britain was the largest lender and home to the parents of the two largest South African banks. The campaign moved from the Barclays boycott (student and account-holder pressure) through the ELTSA shareholder resolutions at Midland to the 1985 debt crisis and the rescheduling talks. It claims the campaign achieved Barclays' 1986 sale and a lending moratorium, and that it reinforced market pressures that cut South Africa off from new long-term capital and helped push De Klerk to negotiate. Barclays' exit is attributed partly to commercial factors, and the campaign's causal weight on lending is acknowledged as hard to gauge.

Evidence and method¶

Primary documentation (AAM annual reports, ELTSA Barclays Shadow Reports, pamphlets, UN and WCC reports, Bank of England and other statistics, newspapers such as The Times, Financial Mail and Guardian) and interviews with campaigners and bankers, including Haslam, Terry, Woods, Craine and Barclays chairmen Tuke, Bevan and Quinton, and Standard Chartered's Galpin.

Place in the debates¶

Sanctions effectiveness (financial sanctions and the end of apartheid) (see Sanctions, disinvestment and the anti-apartheid movement). Argues that financial sanctions, especially the 1985 loan withdrawal, were an important lever that created a 'siege economy' and helped force De Klerk to negotiate. Concedes that the precise impact is hard to measure and that campaign influence is hard to separate from normal commercial considerations.
Commercial vs campaign motives for corporate disinvestment (Barclays, Standard Chartered) (see Sanctions, disinvestment and the anti-apartheid movement). Treats Barclays' 1986 sale as commercially motivated but shaped by the damage the boycott did to its British retail business. Treats Standard Chartered's exit as less campaign-driven than Barclays'.

Findings¶

South Africa's foreign capital inflows shifted from direct investment to loan capital in the 1970s, creating the vulnerability that the banks campaign targeted. (p. 3)

Between 1972 and 1976, the share of direct investment in total foreign investment fell from 64 to 41 percent; indirect investment more than quadrupled, while direct investment rose by only 66 percent.
British banks were the largest lenders to South Africa in the 1970s. (p. 3)

Between 1972 and 1976 British banks were involved in loans amounting to more than $2,700m., nearly 50 percent of South Africa’s total foreign market borrowing.
The Barclays boycott had early measurable effects on student business. (p. 5)

Barclays’ share of new student accounts fell from 48 percent in October 1969 to 33 percent in 1970.
The ELTSA shareholder resolution at Midland lost heavily but was counted a publicity success, and Midland later restricted its lending to identifiable trade. (p. 7)

The resolution was rejected by 47 million votes to 3 million.
Midland ended its general lending to South Africa after the campaign, limiting future loans to trade finance. (p. 8)

In the 1978 annual report Lord Armstrong announced that future loans to South Africa would be restricted to the financing of identifiable trade.
Barclays lost a large share of the student market, the clientele that most concerned the bank. (p. 10)

Barclays’ share of the student market had declined from 23 to 13 percent.
Barclays' withdrawal in 1986 was driven by weak profitability and capital constraints as well as by the campaign. (p. 12)

The 1985 annual accounts revealed that Barclays National, valued at £100m., contributed less than 3 percent of the group’s post-tax profits,
South Africa's foreign debt rose sharply in the early 1980s, leaving it exposed to a refusal to roll over loans. (p. 14)

Foreign debt had soared from $6,000m. in March 1980 to $22,000m. in mid-1985.
The short-term share of foreign bank debt rose steeply before the 1985 crisis, increasing the vulnerability. (p. 15)

Short-term debt to foreign banks leapt from $3,000m. in 1980 to over $12,000m. in 1984.
After 1985 South Africa was effectively shut out of new foreign borrowing for several years. (p. 17)

There had been no new foreign borrowing in 1986 and 1987, and only token borrowing in 1988 and 1989.
The debt crisis triggered a large capital outflow, much of it debt repayment. (p. 18)

On 8 February 1989, du Plessis announced that since 1 September 1985 R25,000m. had left South Africa, over half of which constituted foreign debt repayments.
The author judges that the campaign reinforced rather than caused market pressures on lenders. (p. 19)

It does seem fair to surmise, however, that the ‘banks campaign’ reinforced market pressures.

Evidence ledger¶

Sources used¶

Source	Kind	Period	How used
Personal interviews with campaign participants and Barclays/Standard Chartered executives (Woods, Terry, Haslam, Harries, Craine, Tuke, Quinton, Bevan, MacThomas, Galpin; 1998-99)	interviews oral history	interviews Dec 1998-Feb 1999, covering 1969-1991	Establishes the chronology, internal motives for Barclays' and Standard Chartered's withdrawals, and campaigners' tactics.
ELTSA Barclays Shadow Reports 1982-1986 and ELTSA Newsletter 13 (Oct 1977)	union or movement records	1977-1986	Source for claims on lost Barclays accounts, exposure figures, Shadow Board activity and Midland's loan policy.
R. Stares, British Banks and South Africa (London, 1979), incl. Bank of England statistics	secondary literature compilation	1972-1977	Supplies figures on British bank lending volumes, share of South African borrowing, Midland resolution votes, and bank deposit shares.
UN Centre Against Apartheid bank loan studies (Klein 1982; Militz 1985) and Klein 1981 PCR Information	commission or official report	1972-1984	Establishes that British banks participated in more loans than any other country's banks, and ranks Barclays and Hill Samuel.
Bank of England Quarterly Bulletin (June 1985) and Federal Reserve Bulletin (June 1985)	official statistical series	1984	Compares end-1984 British bank exposure ($5,600m.) with US banks' ($3,900m.).
Corporate Information Centre, The Frankfurt Documents (New York, 1973)	secondary literature compilation	1970-1973	Reveals EABC loans to the South African government, with Midland the main British contributor, which launched the ELTSA campaign.
Barclays Chairman's Reports and Annual Accounts 1985; Barclays confidential briefing paper 'South Africa and Namibia Fact Sheet' (1983)	company records or reports	1983-1985	Shows Barclays' defence of its role, its reduced stake, the small profit contribution of Barclays National, and its view of ELTSA's reports.
Midland Bank annual report 1977 and 1978 (chairman Lord Armstrong) and AGM shareholder votes	company records or reports	1976-1978	Documents Midland's neutrality stance, vote shares for the ELTSA resolutions, and the shift to trade-only loans.
British and South African newspapers (The Times, Financial Times, Financial Mail, The Guardian, The Citizen, Rand Daily Mail, Cape Herald, Business Day, Morning Star, Daily News, Daily Telegraph, Wall St Journal)	newspapers periodicals	1973-1987	Dates events, reports votes and losses, and records the reaction of financial commentators and bankers.
World Council of Churches publications (WCC, The WCC and Bank Loans to Apartheid, 1977; Sjollema, Isolating Apartheid, 1982; WCC Sanctions Mission)	union or movement records	1977-1986	Documents church links, shareholder sell-offs (Hill Samuel) and consequences of the Midland resolution.
S. Bell, Apartheid's Debt to the West (1986); Garner and Leape, South Africa's Borrowings in International Capital Markets (1991)	secondary literature compilation	1980-1991	Source for the debt-crisis figures (short-term debt, indirect investment share, borrowing drought).
Clarke (1978), Jenkins (1990), Jones and Muller (1992), Nattrass (1981) data on foreign investment structure	secondary literature compilation	1972-1984	Supports the shift from direct to indirect foreign investment and the 1984 foreign liabilities rise.
UK Foreign Affairs Committee, UK Policy Towards South Africa, Vol 1 (March 1991); Commonwealth Heads of Government Harare Communique (Oct 1991)	commission or official report	1991	Cited to show official recognition that financial sanctions were effective.
AAM and ELTSA, British Banks Policy on Loans to South Africa (1991); ELTSA Southern Africa Briefing 1 (1991)	union or movement records	1991	Based on replies from British banks, concludes that most major banks would not extend new loans to South Africa.
Other movement and reference works (Schoeman Sanctions Directory 1946-88 and Chronology 1985-92; Labour Party Research Department 1986; African Research Bulletin 1985/6; ANC press release 1991; UN, The UN and Apartheid)	secondary literature compilation	1946-1992	Used for chronology of local authority boycotts, Barclays' stake reduction, debt moratorium and ANC positions.

Inference¶

Quantification: Illustrative figures.

Chronological narrative case study of the British banks campaign, built from campaign documents, press reports and elite interviews, with scattered statistics from secondary compilations. Causal claims on campaign impact are inferred from participants' testimony and timing of events, not tested against counterfactuals.

Key claims¶

Claim	Basis	Strength
Britain was the largest lender to apartheid South Africa, with British banks involved in nearly half of foreign market borrowing in 1972-76. (p. 417)	Stares (1979) and UN Centre Against Apartheid loan studies, plus Bank of England and Federal Reserve Bulletins.	Partial data
Student and account-holder boycotts imposed real commercial costs on Barclays, especially in the student market. (p. 419)	AAM annual reports, The Times, ELTSA shadow reports and interviews with Barclays chairmen.	Partial data
The ELTSA shareholder campaign pressured Midland to stop lending to the South African government. (p. 422)	Stares, press reports, ELTSA newsletter, Midland annual report and Haslam interview; no direct evidence of Midland's internal reasoning.	Illustrative or anecdotal
Barclays sold its stake in Barclays National in 1986 as a result of campaign pressure combined with commercial considerations such as low profit contribution and capital weakness. (p. 426)	Interviews with Bevan and Quinton, Barclays 1985 accounts, The Citizen; self-reported motives by bank executives.	Illustrative or anecdotal
Standard Chartered's withdrawal was less influenced by the campaign than Barclays', being driven more by broader financial difficulties. (p. 428)	Interview with Rodney Galpin (former chairman) and press reports.	Illustrative or anecdotal
The 1985 debt crisis and cut-off of foreign credit created a 'siege economy' and was a decisive factor in apartheid's downfall. (p. 428)	Debt statistics from Bell, Garner and Leape, AAM reports; Hain's quoted assessment; Du Plessis's statement on capital outflow.	Partial data
The campaign's own influence on denial of new loan finance is hard to gauge, though it probably reinforced market pressures. (p. 433)	Author's judgement, noting the difficulty of separating campaign effects from commercial considerations.	Asserted

The author's caveats¶

The author notes that the apartheid government's reluctance to disclose official statistics makes it hard to judge the crisis's precise economic impact, and that the campaign's influence on lending is hard to gauge, with banks' motives difficult to separate from commercial considerations. She also notes that few banks released exposure details, and that one interviewee gave only a personal perspective.

Gaps in the evidence¶

The causal claim that the campaign drove withdrawals rests on interested participants' recollections and campaign publications, with no bank board minutes or internal documents. Time series of Barclays' deposits, account closures and Barclays National's profits, plus loan-level data on syndicated lending to South Africa, would test the effects better; some of this exists in bank archives and BIS or Bank of England data. The article also lacks South African Reserve Bank and treasury material to separate campaign effects from market and political-risk factors.

Replicability: Data poorly documented.