Economic Effects of Disinvestment
While post-colonial African countries had already imposed sanctions on South Africa in solidarity
with the Defiance Campaign, these measures had little effect because of the relatively small
economies of those involved. The disinvestment campaign only impacted South Africa after the
major Western nations, including the United States, got involved beginning in mid-1984. From
1984 onwards, according to Knight because of the disinvestment campaign and the repayment of
foreign loans, South Africa experienced considerable capital flight. The net capital movement out
of South Africa was:




R9.2 billion in 1985
R6.1 billion in 1986
R3.1 billion in 1987
R5.5 billion in 1988
The capital flight triggered a dramatic decline in the international exchange rate of the South
African currency, the rand. The currency decline made imports more expensive which in turn
caused inflation in South Africa to rise at a very steep 12-15% per year.
The South African government did attempt to restrict the damaging outflow of capital. Knight
writes that "in September 1985 it imposed a system of exchange control and a debt repayments
standstill. Under exchange control, South African residents are generally prohibited from
removing capital from the country and foreign investors can only remove investments via
the financial rand, which is traded at a 20% to 40% discount compared to the commercial rand.
This means companies that disinvest get significantly fewer dollars for the capital they withdraw.
Economic Effects of Disinvestment
While post-colonial African countries had already imposed sanctions on South Africa in solidarity
with the Defiance Campaign, these measures had little effect because of the relatively small
economies of those involved. The disinvestment campaign only impacted South Africa after the
major Western nations, including the United States, got involved beginning in mid-1984. From
1984 onwards, according to Knight because of the disinvestment campaign and the repayment of
foreign loans, South Africa experienced considerable capital flight. The net capital movement out
of South Africa was:




R9.2 billion in 1985
R6.1 billion in 1986
R3.1 billion in 1987
R5.5 billion in 1988
The capital flight triggered a dramatic decline in the international exchange rate of the South
African currency, the rand. The currency decline made imports more expensive which in turn
caused inflation in South Africa to rise at a very steep 12-15% per year.
The South African government did attempt to restrict the damaging outflow of capital. Knight
writes that "in September 1985 it imposed a system of exchange control and a debt repayments
standstill. Under exchange control, South African residents are generally prohibited from
removing capital from the country and foreign investors can only remove investments via
the financial rand, which is traded at a 20% to 40% discount compared to the commercial rand.
This means companies that disinvest get significantly fewer dollars for the capital they withdraw.