News / Africa
South Africa's radical Zimbabwe-style economic plan
11 Aug 2014 at 11:08hrs | Views
Johannesburg - Local mining houses may be forced to give up 49 percent of their companies to blacks if the Gauteng ANC's plans to table a policy proposal that recommends Zimbabwe-style ownership laws gains the support of the ruling party.
Described by at least one analyst as a "subtle form of nationalisation", the policy proposals will be tabled at the party's provincial conference next month for endorsement and may go all the way to the ANC national general council (NGC) scheduled for next year.
But the Gauteng ANC proposal will see the state buying the 49 percent in the companies, unlike in Zimbabwe, where the state compelled mining firms to hand over 51 percent of their companies to the locals.
The party's proposal appears to be a direct response to growing frustrations inside the ruling party over the slow pace of economic transformation and the low levels of black economic ownership.
But it also appears to be a response to the growing rhetoric around economic transformation, which is currently dominated by the Economic Freedom Fighters through its radical economic policies, which include the nationalisation of mines and banks.
The party has also proposed the establishment of a state-owned bank, a suggestion that seems to be gaining traction within the ANC.
The level of support for the proposals at the NGC will give indications of whether it can be endorsed at the party's policy conference, and thereafter at the ANC national conference, both in 2017, where the party will also elect new leadership.
If successful, it might see the review of the mining charter, which set a target of 26 percent black ownership of mining companies for the end of this year.
"As part of our concerted effort to radically transform the economy, it is critical that a policy that ensures that 49 percent of equity in mining companies is owned by blacks be urgently adopted and aggressively implemented.
"Development finance institutions like the IDC (Industrial Development Corporation) and the National Empowerment Fund should provide financial and other support for blacks to own and run enterprises, including mines, rather than the state owning equity in them, since state intervention in itself is neither revolutionary nor Left," states the proposal.
Contained in the party's draft documents for the September conference, the policy also proposes the formation of a state-owned bank, but not in the model of the currently state-owned Post Bank.
The suggestion is similar to one proposed by former SA Reserve Bank governor and ANC national executive committee member Tito Mboweni, who last week called on the government to buy one of the country's four biggest banks.
As with Mboweni's suggestion, the party has suggested that the central role of the bank would be to fund black entrepreneurs, as the major banks were reluctant to fund emerging black entrepreneurs.
"This situation calls for the establishment of a state bank that will provide finance to black entrepreneurs and SMMEs as part of our push for radical economic transformation," it says.
In what appears to be a clear but subtle reference to the EFF's policy on nationalisation, the party refers to the need to respond to what it calls the "narrative on the alternative growth path".
"Since the narrative on the alternative growth path envisages a greater role for the state in the economy, be it through increased regulation, direct ownership of the productive forces and increased intervention in the economy to direct development, this allows the ANC and its partners to craft and execute programmes that ensure re-industrialisation across key sectors of our economy with the added benefit of enabling us to create black industrialists."
The ANC in Gauteng suffered its biggest decline in electoral support in this year's provincial elections, dropping to 53 percent from about 63 percent in the previous polls.
It has attributed this mainly to the frustrations of the working class in the province around economic transformation, which it claims has therefore increased the EFF's electoral support.
"Breaking down monopoly capital and creating space for black industrialists to be produced is our immediate task.
"The EFF got an average of 10 percent of the vote in working-class townships, including in the suburbs… in particular, the economy has become the central issue on which the working-class vote and their ongoing exclusion and marginalisation from the mainstream of our economy is the festering sore that must be healed through radical economic transformation," it states.
Gauteng ANC spokesman Nkenke Kekana said there was frustration about the slow pace of economic transformation, and that there was a need for a much more radical approach towards the economy.
He said the proposals were still being discussed internally, but were informed by the lack of economic transformation.
Chairman of the ANC NEC subcommittee on economic transformation Enoch Godongwana said he expected economic transformation to dominate discussions at the NGC, as it was the central focus of the party's second transition emphasised during the Mangaung conference.
"You will expect a proposal like this because there was agreement that the second phase is about radical economic transformation," he said.
According to Godongwana, the state-owned bank issue was being frequently raised, as it was clear that there were weaknesses in terms of access to venture capital for black entrepreneurs in South Africa.
"The question is whether a state-owned bank is the right way to address this issue, and it should be answered as discussions continue ahead of the NGC.
"Certainly, those discussion have not taken place at the national level, but they are definitely taking place in other structures and they will be brought to national (attention)," he said.
While these proposals will be tested internally in the ANC, at least one analyst has warned they face being rejected by the broader leadership of the party because of the Gauteng ANC's standing in the current politics of the party.
Political analyst Ralph Mathekga said it was clear Gauteng was still considered as a formation that was trying to be independent, and that its role at the ANC national conference in Mangaung was still hanging over its head.
Gauteng opposed the re-election of President Jacob Zuma as party president, as well as the election of the ANC's current top six officials in Mangaung.
"Unfortunately, whatever they propose will be looked at suspiciously, and they'll be dealt a heavy blow by this. But the reality is that they are faced with different challenges from most ANC provinces.
"They are in a battle of the rhetoric with the EFF, and they need to respond more radically than the ANC would ordinarily respond at a national level.
"Unless the situation changes between now and when the proposals are tabled, it will be hard for them to get them (the proposals) through."
Described by at least one analyst as a "subtle form of nationalisation", the policy proposals will be tabled at the party's provincial conference next month for endorsement and may go all the way to the ANC national general council (NGC) scheduled for next year.
But the Gauteng ANC proposal will see the state buying the 49 percent in the companies, unlike in Zimbabwe, where the state compelled mining firms to hand over 51 percent of their companies to the locals.
The party's proposal appears to be a direct response to growing frustrations inside the ruling party over the slow pace of economic transformation and the low levels of black economic ownership.
But it also appears to be a response to the growing rhetoric around economic transformation, which is currently dominated by the Economic Freedom Fighters through its radical economic policies, which include the nationalisation of mines and banks.
The party has also proposed the establishment of a state-owned bank, a suggestion that seems to be gaining traction within the ANC.
The level of support for the proposals at the NGC will give indications of whether it can be endorsed at the party's policy conference, and thereafter at the ANC national conference, both in 2017, where the party will also elect new leadership.
If successful, it might see the review of the mining charter, which set a target of 26 percent black ownership of mining companies for the end of this year.
"As part of our concerted effort to radically transform the economy, it is critical that a policy that ensures that 49 percent of equity in mining companies is owned by blacks be urgently adopted and aggressively implemented.
"Development finance institutions like the IDC (Industrial Development Corporation) and the National Empowerment Fund should provide financial and other support for blacks to own and run enterprises, including mines, rather than the state owning equity in them, since state intervention in itself is neither revolutionary nor Left," states the proposal.
Contained in the party's draft documents for the September conference, the policy also proposes the formation of a state-owned bank, but not in the model of the currently state-owned Post Bank.
The suggestion is similar to one proposed by former SA Reserve Bank governor and ANC national executive committee member Tito Mboweni, who last week called on the government to buy one of the country's four biggest banks.
As with Mboweni's suggestion, the party has suggested that the central role of the bank would be to fund black entrepreneurs, as the major banks were reluctant to fund emerging black entrepreneurs.
"This situation calls for the establishment of a state bank that will provide finance to black entrepreneurs and SMMEs as part of our push for radical economic transformation," it says.
In what appears to be a clear but subtle reference to the EFF's policy on nationalisation, the party refers to the need to respond to what it calls the "narrative on the alternative growth path".
"Since the narrative on the alternative growth path envisages a greater role for the state in the economy, be it through increased regulation, direct ownership of the productive forces and increased intervention in the economy to direct development, this allows the ANC and its partners to craft and execute programmes that ensure re-industrialisation across key sectors of our economy with the added benefit of enabling us to create black industrialists."
The ANC in Gauteng suffered its biggest decline in electoral support in this year's provincial elections, dropping to 53 percent from about 63 percent in the previous polls.
It has attributed this mainly to the frustrations of the working class in the province around economic transformation, which it claims has therefore increased the EFF's electoral support.
"Breaking down monopoly capital and creating space for black industrialists to be produced is our immediate task.
"The EFF got an average of 10 percent of the vote in working-class townships, including in the suburbs… in particular, the economy has become the central issue on which the working-class vote and their ongoing exclusion and marginalisation from the mainstream of our economy is the festering sore that must be healed through radical economic transformation," it states.
Gauteng ANC spokesman Nkenke Kekana said there was frustration about the slow pace of economic transformation, and that there was a need for a much more radical approach towards the economy.
He said the proposals were still being discussed internally, but were informed by the lack of economic transformation.
Chairman of the ANC NEC subcommittee on economic transformation Enoch Godongwana said he expected economic transformation to dominate discussions at the NGC, as it was the central focus of the party's second transition emphasised during the Mangaung conference.
"You will expect a proposal like this because there was agreement that the second phase is about radical economic transformation," he said.
According to Godongwana, the state-owned bank issue was being frequently raised, as it was clear that there were weaknesses in terms of access to venture capital for black entrepreneurs in South Africa.
"The question is whether a state-owned bank is the right way to address this issue, and it should be answered as discussions continue ahead of the NGC.
"Certainly, those discussion have not taken place at the national level, but they are definitely taking place in other structures and they will be brought to national (attention)," he said.
While these proposals will be tested internally in the ANC, at least one analyst has warned they face being rejected by the broader leadership of the party because of the Gauteng ANC's standing in the current politics of the party.
Political analyst Ralph Mathekga said it was clear Gauteng was still considered as a formation that was trying to be independent, and that its role at the ANC national conference in Mangaung was still hanging over its head.
Gauteng opposed the re-election of President Jacob Zuma as party president, as well as the election of the ANC's current top six officials in Mangaung.
"Unfortunately, whatever they propose will be looked at suspiciously, and they'll be dealt a heavy blow by this. But the reality is that they are faced with different challenges from most ANC provinces.
"They are in a battle of the rhetoric with the EFF, and they need to respond more radically than the ANC would ordinarily respond at a national level.
"Unless the situation changes between now and when the proposals are tabled, it will be hard for them to get them (the proposals) through."
Source - Sunday Independent
