True economic freedom exists beyond nationalisation – Analysis

June 29, 2012   ·   2 Comments

South African Finance Minister, Pravin Gordhan

The youth of South Africa has to consider that they may have been duped by political leaders into the belief that nationalising was feasible in the country and that it going to liberate them from unemployment and inequality. Alas true economic freedom may still exist beyond nationalisation.

During the Mining Indaba that ended on 7 May 2012, the South African government made it clear that the country would not be embarking on the much anticipated process of nationalising of the country’s mineral resources. The government decided in favour of increasing taxes to about 50 percent on mining companies. The ANC has also tabled a document, The State Intervention in Minerals Sector report which seeks to regulate the mining industry in the country.

South Africa has a high unemployment rate and 73 percent of that comprising of young people below the age of 35. During the reign of former ANC Youth League president Julius Malema ordinary South Africans were made to believe that the nationalisation of the mines was the answer to the country’s high inequality and unemployment. It is important to consider, whether nationalising of the country’s natural resources would have amounted to true economic freedom.

The fact of the matter is that the South African government has always been concerned with attracting and retaining foreign investment in the country. Creating a stable investment destination is important to South Africa’s image as an economic hegemon in Africa. The process of nationalising the mines is in opposition to this. The mining industry needs the highest level of efficiency and expertise that the government may not have been able to provide at this point. The view from the executive seems to be quite firm that nationalisation of the mines was never really a plan that the government was keen to implement, with comments from current Minister of Mineral Resources Susan Shabangu was quoted as saying “nationalisation over my dead body” at the mining indaba.  Secondly mining being such an important source of revenue in the country, control over labour would have been very important. The South African government’s very close ties with labour through the tripartite alliance would not have been conducive with profit driven nature of mining.

The question is whether nationalisation would not have suffered the same fate as the BEE policy of the Mbeki regime, or the tender and procurement policy. BEE like nationalisation of the mines was supposed to transfer wealth from the hands of South Africans to blacks but more than 15 years after BEE, white South Africans are still the mainstream of the economy. The BEE’s overall effect was a poor trickle-down effect and a recycling of wealth among South Africa’s political elite. In a country where corruption in government is rated one of the highest in the world it is hard to imagine that resource nationalisation would have been the answer for the youth’s problems. One of the problems with BEE was its poor implementation. Mining is still South Africa biggest contributors to the country’s wealth and unlike BEE the country cannot afford to get it wrong. The mining sector is built on high productivity and efficiency that a divided ANC cannot provide. Nationalising the mines would have had the effect of politicising a very important sector of the economy thus making it vulnerable to the factionalism of the ruling party.

According to the Black Business Council what is needed is more young people venturing into entrepreneurship and creating not only jobs but new wealth in the economy. Seeking only to create jobs would solve one aspect of the problem, but the control of the economy would still be in the same hands. Encouraging entrepreneurship among the youth would distribute economic power. Secondly financial institutions that are ready to invest in young people, without imposing strict standards of banks are essential. It cannot be disputed that entrepreneurship is the cornerstone of the capitalist system. If young people are attain true economic freedom they work for it Nationalisation of the mines in as far it purported to reduce unemployment by creating more jobs is, an important aspect of true economic freedom. In a country where corruption in government is rated one of the highest in the world

Africa’s history with resource extraction and deriving minimal benefit from is a long one. It is for this reason that the nationalisation debate was one that South Africans needed to have, with one another and the government. The ANC’s proposed State Intervention in Minerals Sector report must amongst other things, should shed light to South Africans on why nationalisation was not the best route for the country and persuade us as to why a revised tax is better solution.

No trickle-down effect will bring true economic freedom; trickle down effects are in their nature passive processes. In essence true economic freedom requires a more active youth. I requires young people who create employment for themselves, an empowered youth. Political leaders should not be leading the economic struggle.  The government’s role should be to give the necessary support to those you. Big business should also join forces with government for the necessary skills transfer to take place.

The slogan of true economic freedom was a tool used by the ANC Youth League in order to gain the support of South Africa’s unemployed and increasingly apathetic youth. The expulsion of Malema from the ANC should also expel a certain type of thinking amongst young South Africans, namely that the government will bring economic freedom to the people. The youth must know that true freedom is attained through struggle.

-Libongo Ndabula

l.ndabula@politicalanalysis.co.za