ANC seeks to finance mining, agriculture job drive
The ANC is looking at ways to finance its efforts to boost jobs in agriculture and mining, which may include getting pension funds to buy more bonds, the head of its economic transformation committee said on Thursday.
South Africa has lost more than one million jobs since the start of 2009—its first year in recession since 1992—and the country is unlikely to reach the 7% economic growth seen as needed to bring that down significantly. The national treasury has cut its growth forecast for 2011 to 3.1%.
The financing proposals, including one looking at incentives and penalties aimed at strengthening the key mining industry, are contained in a draft paper to be debated next week by the ANC’s national executive committee.
“We are not talking specifically about an export levy on raw minerals. What we are looking at is a carrot and stick approach to encourage investment in mineral beneficiation” or processing, Deputy Minister of Economic Development Enoch Godongwana said on Thursday.
He did not give details of the penalties and incentives being contemplated, however, saying this needed to be debated first.
Mineral processing is a key aspect of South Africa’s new growth path policy aimed at creating five-million more jobs by 2020 in the world’s top platinum and major gold exporter, where unemployment has remained at around 25% of the workforce.
Godongwana said separate research into how best the state can intervene in the mining sector, which comes amid recent nationalisation rhetoric, will be used to augment the draft economic proposals affecting mining.
He added that the ANC was not looking to compel retirement funds and insurers to buy state-owned companies bonds, although this was an option.
“It is not about forcing them to buy bonds, but rather to have a way for [state-owned enterprises] and finance development agencies to work closer with [pension] funds.
It may well be that they end up buying bonds, but we have not decided on the kind of [financing] instrument,” he said.
State-owned enterprises such as Eskom and Transnet , which regularly offers bonds, are investing billions of dollars to upgrade infrastructure and meet fast-rising power demand in Africa’s largest economy.
The Government Employees Pension Fund, Africa’s largest retirement fund with about R700-billion under management, said last year it would consider buying bonds via the Public Investment Corporation (PIC), which manages the fund.
The PIC has stakes in many of South Africa’s largest companies, including mobile phone operator MTN.—Reuters