Nationalisation debate hots up

Forum to review policy next month

South Africa's economic policy direction is at a crossroads with pressure mounting from the ANC Youth League on President Jacob Zuma's government to massively expand the role of the state, including nationalising all new mines, setting up a state bank to oil their transactions and seeking at least a 50 percent share in existing mines.

But leading commentators and the old guard of the ruling party, including Zuma and his Mining Resources Minister, Susan Shabangu, have repeatedly said a nationalisation debate might be on the table but was not policy position.


Leading commentators drawn from the left of the political spectrum believe that the upcoming debates amount to little more than grandstanding and an attempt by black economic empowerment interests - in the mining sector in particular - to flex their muscles.

Their argument is supported by a discussion document on economic transformation on the ANC website. Released ahead of the party's national general council (NGC) meeting to be held in Durban next month, the document notes that the state 'must respond more effectively to factors that impose unnecessary costs on business'.

Significantly, the document states that 'for a capitalist economy to succeed' the state has to keep business sufficiently profitable. 'It should act to raise costs for business only where required by the imperative of achieving a more inclusive and equitable economy.'

The youth league, led by firebrand Julius Malema, believes that nationalisation will be the ANC's economic mantra by 2012 - when the next national conference is held.

It has made radical nationalisation proposals to the upcoming NGC, which is the forum where the ANC's economic and social policies are reviewed.

Among its proposals are that a state bank be set up to oil the wheels of the nationalised mining industry.

While Cosatu is expected to support calls for the Reserve Bank to intervene to weaken a consistently strong rand - which it argues is throwing workers out of jobs - Western Cape general secretary Tony Ehrenreich said at the weekend that he did not believe that nationalisation would gain policy traction in the ANC.

Asked if it would be part of the ANC's election campaign for the 2014 national elections, he said: 'Nationalisation is not a big thing for a broad spectrum of people.'

He said the government's role was to spread the wealth of the country and the state was 'the only force in society that really is mandated to do that'. However, it currently spread wealth through taxation.

The director of the Institute for Democracy in SA, University of Johannesburg professor Steven Friedman, said he believed much of the nationalisation debate was political theatre 'and deliberate smokescreens'.

Friedman noted that while mining had historically been the underpinning force of the country's industrialisation process, it was not the case now.

He said that while there was likely 'to be a fuss' around the nationalisation debate at the NGC, it was really just an indication that black economic empowerment interests were being articulated.

He said there was much talk about a state-owned mining company to consolidate the government's existing mining interests, but he noted that there already was a state mining company, Alexkor.

The concept of a state mining company, which would compete with private companies, has gained support among the governing elite, including Shabangu and Parliament's mineral resources portfolio committee chairman Fred Gona, a former National Union of Mineworkers official.

Friedman said: 'It is a wasting industry with costs rising on the whole. This (a state mining company) will probably waste public resources, but I don't think it will have a dramatic impact for the taxpayer.'

He added, however, that there was not much evidence of successful state ownership of mining operations. 'The experience around the world has not been a happy one.'

A good argument could be made that there should be public provision for public goods, including electricity, water, education and health services.

'But it is a less compelling argument that government should be involved in the production of private goods that are sold on the open market,' said Friedman.

Zuma has repeatedly downplayed talk of nationalisation, indicating that Malema's views on the subject were his own. Sapa reported the president as saying: 'Mr Malema, like any other South African, had the right to his views.'

Significantly, he also said: 'Historically the ANC Youth League has had very strong views. It does not mean these views will be accepted.'

The discussion document emphasises that conspicuous consumption by South Africa's wealthy elite needs to be tackled, but it also says that the country can 'no longer afford to let individuals, departments or agencies raise the cost of doing business in line with their own priorities and through poorly thought out measures'.

The discussion document notes that mining economies 'are typically concentrated, since most mining requires large producers'.

It adds that while mining exports remained important after 1994, most growth occurred in finance, communications, retail and business services.

'These four sectors accounted for two-thirds of all economic growth between 1994 and 2009.'

Source: Business Report