City agencies can no longer purchase products from companies that do business with South Africa or Namibia, the City Council decided last night.

The council approved a resolution introduced by Councillor Saundra M. Graham stating that the city "shall not support through the purchasing power of municipal government the social system of South Africa and Namibia that is founded on racial segregation."

The resolution directs City Manager Robert W. Healy to establish a purchasing preference policy that avoids contracting with South Africa-related companies and to maintain a list "of all persons doing business with or in South Africa and Namibia."

Calling apartheid "a social system whose policies are so antithetical to the principles of the people of Cambridge," the declaration defined that term as "a policy of racial exclusion and repression [that] is the official policy of the governments of the Republic of South Africa and Namibia."

Businesses that produce medical supplies "for which there is no substitute" and those that provide replacement parts for existing city equipment are exempted from the resolution.

The policy, which will take effect by July 1, 1989, includes more than 100 companies and corporations, among them Gillette, Bristol-Meyers, Hewlett-Packard and Johnson & Johnson.

Fast Food, Fast Cars

The council also heard a long and sometimes emotional debate over a Domino's Pizza planned for the busy intersection of Broadway and Prospect St.

Three persons have been killed at the intersection in the last two years, and neighborhood residents said at the meeting that they fear the pizza delivery service would make traffic more dangerous.

Councillors also expressed concern at the level of traffic and asked Healy whether the business could be classified as a fast food restaurant. Fast food establishments must obtain an additional permit before opening, said Councillor Alice K. Wolf.

The councillors and city manager did not agree on the definition of fast food, however. Healy reported that Domino's Pizza applied for a building permit as a "automobile-oriented" business, but he said the pizza place might also fall under the fast food classification.

"What is fast food?" asked Mayor Alfred E. Vellucci. "If they go a hundred miles an hour, is that fast food?"

`Wonderful Interaction'

In other business, the council passed a resolution recognizing CityStep, a Phillips Brooks House dance and theater program.

"This wonderful interaction between Cambridge children and Harvard University students is mutually beneficial to all involved," the resolution said.

The council also declared March 20-26 as Daffodil Days in support of the American Cancer Society.