South Africa's ruling party is moving to appease investors and business in the country, if its draft economic policy document is anything to go by.
Mine nationalisation is off the agenda, monetary policy will remain on an inflation-targeting regime and a business-friendly alternative has been found for the controversial youth wage subsidy.
Due to be discussed this week by delegates at the party's elective conference in Mangaung, the document strikes a conciliatory tone with markets after years of radical policy-change calls by the ANC Youth League and others, which were seen to have damaged investor confidence.
And, unless the document is dramatically changed during discussions with delegates, the policy proposals are unlikely to impress the party's alliance partners, particularly trade union federation Congress of South African Trade Unions, which has railed against both the youth wage subsidy as well as what they dubbed the country's "narrow" monetary policy.
Throughout the document there are nods to demands that have been made for radical policy changes that favours state intervention in markets. But repeatedly a gentler alternative is offered.
The document calls to immediately replace the "willing buyer, willing seller" principle in terms of land reform, with the "just and equitable" Constitutional principle. And expropriation without compensation is only mentioned in connection with land "acquired through unlawful means or used for illegal purposes."
Some of the other proposals from the draft document, which the Mail & Guardian has seen, includes:
The draft document notes the concerns of its leftist alliance partners but seems determined to push ahead with a solution to youth unemployment. "All these proposals aim to bring new entrants into the workplace, while still protecting the jobs and conditions of existing workers." It proposes a tax credit to incentivise youth employment, the provision of training subsidies and a youth work-seekers grant.
A transformed mining industry
The document notes the "robust but still comradely" discussion around nationalisation by delegates, but goes on to make a host of alternative proposals to ensure South Africa's considerable mineral wealth benefits all of its people, as per the freedom charter. These include:
- Improving our weak beneficiation strategies
- Consolidating state mining assets into a single state mining company, which will partner with the private sector in strategic mining ventures
- Improving safety and sustainability of both communities and the environment at our mines
- Pushing for more broad-based socio-economic empowerment for new mining operations in particular, to improve participation by black people and women
- Rapidly increase the supply of coal at competitive prices with the aim of containing energy costs
A transformative, yet restrained fiscal policy
The document argues against large deficits, noting that it would be more effective for economic transformation if spending were shifted towards "investment in growth-enhancing assets".
A flexible monetary policy:
While giving a nod to "take account of employment and growth objectives", the document notes that this will be taken care of by expanding the fiscal space, which would allow for a more competitive currency and lower interest rates. It cautions that there needs to be a stable long-term expectation for inflation. "This can best be realised by anchoring monetary policy to an inflation target."
The document comes on the back of other moves to impress the business sector, including the appointment of billionaire businessman Cyril Ramaphosa as ANC president Jacob Zuma's deputy.
As deputy chair of the national planning commission, Ramaphosa is expected to champion the commission's national development plan, which plots an ambitious growth path for the country over the next 30 years.
The plan has received the stamp of approval from South African businesses. A week before the conference began, 30 prominent business leaders bandied together in an open letter calling on government to implement the plan, which until now received a muted response from the ANC and government. The state has had several plans in circulation from different ideological factions.
But the national development plan got the thumbs-up in Zuma's political report on the first day of the conference on Sunday, when he declared it the party's chosen plan and that there was "nothing that must go in any other direction".
The ANC's plans still remain left of centre, however.
"The changes we seek will not emerge spontaneously from the 'invisible hand' of the market," notes the draft document. "The state must play a central and strategic role by directly investing in underdeveloped areas and directing private sector investment."
This was revealed in a proposal to "link income to productivity". The party proposed "moderating the growth of packages of those in secure, well-regulated employment, with particular emphasis on the higher-end of the income distribution". The party also emphasises reinvestment, rather than consumption of surplus income "so that income moderation genuinely results in accelerated and more inclusive growth, rather than higher levels of consumption amongst the rich".
Businesses in South Africa have effectively been on an investment strike for some time. South African corporate savings are at a multi-decade high. The sector was sitting on roughly R520-billion in mid-2012 – the highest levels since 1995. The ANC's conciliatory noises may well induce – and pressurise – the sector to finally invest in the country's economy.