The quote comes from a press conference held by the British Prime Minister at the Vancouver Commonwealth summit on October 17th. For years thereafter comments made at this press conference and at the summit in general help cement her reputation as a supporter of South Africa's Apartheid regime.
Throughout the summit Thatcher stood alone among the participants as opposed widening, tightening, and intensifying sanctions against South Africa - as demanded by almost all the other Commonwealth leaders. In his reaction the ANC representative at the conference, Jonnie Makatini, said Britain's refusal to support further sanctions would result in "the further intensification of the armed struggle". It is in that context in which Thatcher's comments about the ANC were made.
Thatcher was asked by a journalist for her response "to a reported ANC statement that they will target British firms in South Africa?" She replied: "when the ANC says that they will target British companies. This shows what a typical terrorist organisation it is." Referring to that same press conference, the Washington Post reported that "When a Canadian reporter suggested that the African National Congress might overthrow the white South African regime, Thatcher's spokesman responded, 'It is cloud cuckoo land for anyone to believe that could be done.'"
Over the years she has been criticized, even ridiculed for these comments. Indeed, in light of subsequent events, they have taken on an apocryphal quality. To be fair, however, the "cuckoo land" remark likely came from a spokesperson, and not from Mrs. Thatcher. One must remember too that the ANC did not overthrow the "white regime" in the immediate context of a coup or civil war, as the context of the original question suggested, but rather as a result of long and difficult negotiations followed by a national election. So the remark is not so far removed from reality as the legend would have one believe. Still, Mrs. Thatcher will never be considered a friend of the ANC, and rightfully so. The U.K. along with the U.S.A. lagged well behind the positions of other western nations in their official positions toward the Apartheid state.
In her report back to the House of Commons on 22 October she summarized Britain's position towards South Africa, particularly on the question of sanctions:
Britain, for its part, has faithfully implemented the limited measures to which we agreed at earlier meetings, as a signal to South Africa. We shall continue to do so. But [where we disagree with other Commonwealth Governments is on the most effective means to get rid of apartheid. We believe that sanctions only harden attitudes, as the recent elections in South Africa have shown. Moreover, so far as they do have an effect, the first to suffer are the black people of South Africa whose jobs and livelihoods would be put at risk, without any social security to fall back upon.
• Pan African News Wire ,(2011),"How Gaddafi Helped Bring An End to the Humiliation of Apartheid "(12 June ) ,From:Pan African News Wire,[online] Available at: www.panafricannews.blogspot.com [Accessed on 19 October 2012]