A carefully crafted discussion document is intended to guide the debate on economic transformation at the ANC’s policy conference, but it does not address burning issues such as land expropriation without compensation, the Reserve Bank’s mandate and the contentious Mining Charter.
The document espouses several policies to spur on so-called radical economic transformation, which it said is primarily concerned with a developmental state that reduces unemployment, poverty and inequality.
The nine policy discussion documents present little that is new and what is on the table evades the critical issue of leadership, critics say.
Where the economic transformation discussion document does touch on the questions of land reform, monetary policy and mining, it is reasonably tame and presents investors with little cause for concern.
But with factionalism in the party seemingly at breaking point, it’s likely that these and other issues will have party members at odds.
The discussion document notes that at the “heart of the economic transformation programme is a strong integrated and inclusive rural economy”.
It acknowledges that the restitution and redistribution of land has not resulted in effective production. “This is a situation that clearly has to change,” it states.
The document lists some concrete steps to be taken, which include promoting agricultural development based on successful land reform, and alternative ways to finance beneficiaries and vesting them with property rights that do not burden them with a large debt.
“The ANC must continue to drive land reform and agrarian transformation in order to fight poverty and to guarantee food security,” the document says, which could be done by increasing the investment in tools and infrastructure.
The contentious phrase “expropriation without compensation” does not appear in the economic transformation discussion document.
Leaders such as the minister in the presidency, Jeff Radebe, have said land grabs are not on the table and everything must be in accordance with the Constitution.
But Small Business Development Minister Lindiwe Zulu, who is a close ally of Jacob Zuma, has reiterated the president’s comments that the Constitution must be changed to accommodate expropriation without compensation. She said the government should be able to sidestep compensation where it deems this to be suitable.
The discussion document notes that increasing black ownership and control of the economy and the transformation of the mining sector with the implementation of the recent amendments to the Minerals and Petroleum Resources Development Act must continue.
“This process will also be enhanced through processes to reduce investor uncertainty in the mining sector and correct weaknesses in the mining licensing process,” the document states.
It stresses the need for policy certainty in key areas, such as mining, to transform the economy, particularly when growth is low. It further requires the state to strengthen relations with the private sector to encourage employment initiatives in sectors such as mining.
Meanwhile, the recent release of the revised Mining Charter, which proposes that black ownership be raised from 26% to 30%, has been widely criticised for its potential to do serious harm to the economy and kill jobs. It wiped R50-billion off mining stocks on the day of its release and is now the subject of an urgent interdict by the Chamber of Mines.
It is feared a drawn-out legal process will further weaken investor confidence.
Mineral Resources Minister Mosebenzi Zwane this week accused the charter’s critics of opposing transformation.
The public protector recently recommended that Parliament should consider changing the Reserve Bank’s mandate, which has given rise to a new debate about monetary policy. Deputy Minister of Finance Sfiso Buthelezi this week said the inflation-targeting mandate of the bank should be debated.
The ANC’s economic transformation discussion documents hardly mention monetary policy and say only, in the current prolonged period of low economic growth,
the role of fiscal and monetary policy to provide short-term stimuli to the economy are both severely limited.
Neil Coleman of trade union federation Cosatu said the ANC had a lot more to say about this in the past.
“In its 2009 elections manifesto, it said fiscal and monetary policy mandates, including management of interest rates and exchange rates, need to actively promote creation of decent employment, economic growth, broad-based industrialisation, reduced income inequality and other developmental imperatives,” Coleman said.
And the 2012 ANC conference articulated the emerging international consensus that the approach to monetary policy needed to change. “Without sacrificing price stability, monetary policy should also take account of other objectives such as employment creation and economic growth.”
But Coleman said the policy stated in ANC manifestos was not reflected in government policy. And, in the 2014 medium-term strategic framework, monetary policy is not mentioned, suggesting that it has “retained its holy cow status, under the erroneous assumption that the Constitution prevents government from shaping the Reserve Bank’s mandate”.
Thabi Leoka, an economist strategist at Argon Asset Management, said debating monetary policy was healthy, but entertaining
arguments not backed by facts and research was dangerous. “You can’t change monetary policy without understanding why you are doing it.”
Global financial services company Credit Suisse has determined that, of the 108 policy statements and proposals in the nine documents prepared for the ANC’s national policy conference, in isolation, 70 proposals would be positive for growth, productivity and investment; 30 were deemed neutral, either because of uncertainty about their intentions or would have little direct impact on financial markets; and eight were viewed as negative.
What is included in the economic transformation discussion document has proved positive. The only aspect of the economic transformation document that Credit Suisse research found to be negative was a proposal to formalise economic co-ordination through the presidency and the National Planning Commission. It says centralisation has its risks and there was concern that this would result in sidelining the treasury.
“It is still not clear what radical policies and tactics will be employed. Its nine discussion documents, prepared for its national policy conference starting on 30 June, do not in general reveal much that is radical, in our assessment,” the Credit Suisse report says. “Interventions may well be formulated at the policy conference in July and adopted at the elective conference in December 2017.”
Dumisani Hlophe, governance specialist at the Unisa School of governance, said the discussion documents tended to reflect mostly what had been said in previous conferences and were “routine, complacent and generic”.
He suggested documents should have been tabled on leadership, the ANC’s internal balance of forces and the state’s performance.
“The primary problems of the ANC are with its leadership, not its members or the masses. It is unable to manage internal differences,” Hlophe said. “These differences are normal in libertarian democratic dispensations, [but] the problem is they sneak in leadership issues in other discussion documents. The ANC needs a dedicated, focused discussion on leadership.”
There is a discussion document on the balance of forces that focuses on external elements. But what was destroying the ANC and leading to its decline was internal, he said. “The ANC needs leadership capable to manage internal differences. They need a better strategy to manage them and to deal with the issue of modernisation of the ANC.”
The state’s performance under the ruling party also needed to be properly discussed, particularly in the light of issues of integrity, which are manifested by the misgovernance of Eskom and SAA and the emergence of evidence of state capture.
“The ANC is in crisis and in decline. What it really needs is a turnaround policy conference. Left to its own devices, democracy is self-destructive and needs to be managed,” Hlophe said.
Business Unity South Africa (Busa) this week said black economic transformation had been too slow and it would now take a lead in accelerating this.
The economic transformation discussion documents pre-empt opposing arguments to its recommended approach.
“The approaches of populist and right-wing forces will lead to a severe reduction of the potential of [the] developmental state, as they would severely limit the mobilisation and redistribution of society’s resources from the relatively well-off to the relatively poor,” the discussion documents said.
But the discussions will need to go further than what is outlined in the documents, which were drafted before South Africa’s rating downgrades and reports of a technical recession.