Quo Vadis after Malema?

The question in South Africa at present is not whether the nationalisation debate will continue or not, but rather what form it will take and whether suspended ANC Youth League leader Julius Malema will still be able to influence it in any way. While Malema and his ANC Youth League (ANCYL) firmly put the debate on the agenda, it is certainly not limited to their views.

The debate also is not unique to South Africa and is, in fact, emblematic of the situation facing mining companies around the world, as Mark Zastre, global leader for mining at Grant Thornton International said in August when the firm released a report on the issue. Three different reports have indicated resource nationalism as the number-one threat to the industry globally.

While Malema and company have claimed nationalisation to be ANC policy in line with the Freedom Charter, former President Nelson Mandela and the ruling ANC in fact shelved the idea back in 1994.

Economists and opponents of nationalisation variously argue that nationalisation will destroy the mining industry, could bankrupt the country, will lead to massive job losses and closure of mines, will prevent the industry from making long-term investments in its own future, and will severely inhibit foreign investment in the sector and the country.

It is an industry that invests R400bn a year, represents almost R2-trillion of the market capitalisation of the Johannesburg Stock Exchange (JSE), contributes around 8-10% of GDP, has created over 1-million jobs directly and downstream, and was the largest contributor by value to black economic empowerment (BEE) by 2009.

Already several studies and research and investment entities have warned that the uncertainty created by the Malema-instigated debate has cost SA dearly in loss of investment. President Jacob Zuma and members of his government and the ANC have consistently maintained that nationalisation is not current government policy. But neither have they been able to give any assurances that it will not become official policy in the future.

Under pressure from the ANCYL, which managed to place the debate officially on the ruling party’s policy agenda at its National General Council meeting in Durban last year, the ANC appointed a task team to investigate how a number of countries had dealt with nationalisation, including Chile, Zambia, Venezuela, China, Finland, Norway, Namibia, Malaysia and Botswana.

Early in September a report by Australian law firm Gilbert Tobin stated that in addition to South Africa, other nations also looking at options of nationalisation included China, India, Australia, Canada, the United States, Brazil, Peru and Chile.

The task team will soon deliver its report to the ANC’s National Executive Committee (NEC)  after which it will most probably go through a wider policy process to culminate at the ANC’s national conference next year.

Some commentators believe that with Malema removed from the political stage, the debate will die a natural death. They could not be more wrong. Firstly, as pointed out, the debate is part of a  wider global one.

Secondly, it is not a given that Malema will no longer be part of the debate. He is fighting desperately to remain on the political playing field, and has a number of cards he may yet play. However, even if Malema goes, the debate will live on.

While the ANC is likely to pursue a more moderate approach on the issue, two other opposing factions may try to step into any void left by Malema and the Youth League.

The one faction involves a powerful political-business network of individuals who are said to have backed Malema. It is said this faction has a vested interest in gaining control over the mining sector as it could bail out various failed BEE ventures in the sector.

The other faction consists of the political left, namely the Congress of SA Trade Unions (Cosatu) and the SA Communist Party (SACP), both of whom have repeatedly warned against Malema and the first faction, charging that they are using populist rhetoric to exploit popular support for their misleading nationalisation demands to feather their own nests. However, at present the two organisations are not comfortable with each other.

Both also woke up rather late, with neither laying any forceful claim to nationalisation as its policy before Malema and the ANCYL launched their nationalisation campaign. The two organisations then quickly saw their ideological turf being threatened and became vocal denouncers of Malema’s campaign and defenders of socialist-based nationalisation.

However, a likely more pragmatic and balanced stream of debate, taking its cue from the ANC task team’s report, is likely to emerge. Leading figures in the ANC and government, economists, politicians and a number of mining executives themselves are in agreement that more has to be done to make better use of the country's mineral wealth to help eradicate poverty and create jobs.

This could well lead to a compromise agreement - a third way as it were - along the lines of what has been envisaged by ANC secretary-general Gwede Mantashe when he said the ANC, through its task team, was looking at examples around the world of joint ventures, tax regimes, public-private mixes and other such models that could be used to fund anti-poverty measures. It does not seem that Mantashe in any way had in mind the kind of nationalisation either Malema or Cosatu have in mind.

Apart from Mantashe, a number of senior ANC, government and business leaders have since Malema’s disciplinary hearing been at pains to reassure the industry, investors, the markets and the public that there would be no Zimbabwe-style seizure of South Africa’s mines. Among them have been President Jacob Zuma, Deputy President Kgalema Motlanthe, business leader Bobby Godsell, Mineral Resources Minister Susan Shabangu, and ANC national treasurer Mathews Phosa.

While Motlanthe said "the views of individuals on these questions do not amount to policy”, referring to Malema of course, it was Godsell who pointed out the impossibility of the Malema option. Government and the ANC, he said, had neither the “trillions of dollars” required for compensated nationalisation, nor the 75% majority in Parliament to amend the Constitution for uncompensated nationalisation.

However, none of the above denied that there would be further debate. In fact Phosa said there would be a “robust debate (that) will follow an orderly course within the ANC”.

But reassurances are one thing; the uncertainty caused by the debate is another. When the National Planning Commission (NPC) headed by Minister Trevor Manuel recently released its 20-year National Development Plan to reduce poverty and create jobs, it warned that South Africa would need to address uncertainties including the allocation of mineral rights and ownership rights which were hampering growth in the sector.