Get more Mail & Guardian
Subscribe or Login

Nationalisation back-and-forth damages the economy

Continued confusion over the implementation of nationalisation in South Africa is doing untold damage to the South African economy.

This is the sobering view of analysts monitoring the economic aftermath the ANC's national policy conference in Midrand.

Chris Hart, chief economist at investment Solutions told the Mail & Guardian the lack of clarity on the issue, and the missed opportunity to "kill the nationalisation debate" have undermined the South African economy.

"Keeping the debate alive by not saying outright that nationalisation is off the table is causing major damage to possible investment," said Hart on Thursday.

At its national policy conference in Midrand last week, the ANC promised "radical policy change" would be in the offing, particularly with regard to nationalisation and the minerals sector, but the meeting closed with no especially radical proposals in sight.

The conference did discuss a range of drastic options, including proposals to demand that majority stakes in mining companies be handed over without compensation, but in their final formulation, policy proposals made no such calls.

"Whether or not to keep nationalisation as an option was discussed at length. The consensus was that there should be a greater state intervention," ANC national executive committee member Enoch Godongwana told reporters at the conference.

The final policy discussion document on economic transformation proposed a 50% super-tax on profits exceeding about 15%. Such a tax could be expected to yield about R40-billion a year at current prices.

Godongwana could, however, not elaborate on the exact intentions the ruling party had.

In President Jacob Zuma's final address,he claimed ANC members agreed that state intervention in the minerals and mining sector was urgently required.

"Conference has agreed that the state intervention with the focus on … industrialisation is urgently required in the minerals sector," Zuma said.

Adding further fuel to the fire, the ANC Youth League – the main proponents of the push for nationalisation since 2009 – called last week's policy conference a victory as they and the ruling party were now speaking with a "unified voice" on the matter.

"There is not much difference between what we've called for and what the ANC is now saying. We have won the debate, but it's not a victory for the youth league – it's a victory for the nation," league spokesperson Magdalene Moonsamy told the M&G.

Moonsamy said nationalisation remains at the centre of ANC policy discussions and as such "there is no running away from it".

"When the ANC talks about this radical policy changes that need to be phased in, what else could you be talking about?" Moonsamy asked.

The ANC, however, remains unconvinced of the league's assertions, saying it opportunistic for any affiliated body to claim any policy forward from last week's gathering as their own, as all matters continue to be debated.

"The NEC is the custodian of those resolutions and they are the ones who will facilitate the interaction with out branches on any matters emanating from the policy conference," ANC spokesperson Jackson Mthembu told the M&G. "For anyone to claim a victory for any policy would be jumping the gun at this stage." 

But as the conversations continue, South Africa is missing out on possible investment.

Hart said that investors remain fearful of long term investment in the mining sector as long as discussions around nationalisation remained in play.

"It's difficult for anyone to put up money for a project that will only bear fruit in over a decade, in an environment with such uncertainly,' he said.

As things currently stand, the country's mining output retreated 14.5% in February 2012 as compared  with a year earlier, indicating the highest drop in mining productivity since March 2008.

Nonetheless, it may not be all doom and gloom for the mining sector in foreseeable future.

Cadiz mining analyst Peter Major said that while it would be hard to gauge the economic damage the nationalisation debate is inflicting on the economy, the continued uncertainty could be down to political posturing.

"Official ANC policy has always been very mature in its approach to mining. What we are seeing now is mere pandering to various factions in the run-up to party elections. The whole world sees this type of thing, so we shouldn't be that alarmed," Major said.

However, Major added that the proposal surrounding the contentious mining approach is a "worrying factor", as ANC leaders continue "walking a tightrope" in the hopes of re-election.

"If we didn't have an example like Zimbabwe just north of our border, investors would simply shrug this off. The ANC continues to have strong ties to Zanu-PF and until there is absolute clarity it remains an issue," he said.

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Nickolaus Bauer
Nickolaus Bauer is the Mail & Guardian's jack of all trades news reporter that chases down stories ranging from politics and sports to big business and social justice. Armed with an iPad, SLR camera, camcorder and dictaphone, he aims to fight ignorance and pessimism through written words, photographs and videos. He believes South Africa could be the greatest country in the world if only her citizens would give her a chance to flourish instead of dwell on the negativity. When he's not begging his sub-editors for an extra twenty minutes after deadline, he's also known to dabble in the occasional poignant column that will leave you mulling around in the depths of your psyche. The quintessential workaholic, you can also catch him doing sports on the weekday breakfast show on SAfm and presenting the SAfm Sports Special over the weekend.

Related stories

WELCOME TO YOUR M&G

If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here

Advertising

Subscribers only

Data shows EFF has lower negative sentiment online among voters...

The EFF has a stronger online presence than the ANC and Democratic Alliance

Hawkish Reserve Bank sees South Africa edge towards a rates...

Analysts say the Reserve Bank could start tightening monetary policy as early as next month

More top stories

Data shows EFF has lower negative sentiment online among voters...

The EFF has a stronger online presence than the ANC and Democratic Alliance

Greenpeace investigation exposes countries trying to dilute climate report

Greenpeace team says it has obtained leaked records of countries asking scientists to water down upcoming scientific report on climate change

Zondo responds to Fraser’s objection to his nomination as chief...

The deputy chief justice said all the former spy boss had to do to respond to bombshell testimony implicating him in state capture was to apply for a turn to testify

Immunocompromised finally prioritised for Covid-19 booster shots

Organ recipients are at greater risk of death from Covid-19, while waiting lists for transplants grow
Advertising

press releases

Loading latest Press Releases…
×