Speculation alone is already an economic threat

It seems to have become fashionable in the ANC Alliance to call for the nationalisation of industries. Just how serious this quest is, is perhaps less important right now than the damage done by the mere threat thereof, and the effect it has on perceptions about the future of South Africa.

Should the Alliance be serious about its stated intentions, the effect thereof could be devastating for the country. As it stands, the current state-controlled entities are in a sorry mess – and the government has thus far been unable to turn around the situation.

Among the recent demands for nationalisation coming from the ANC-led ruling Alliance are:

Mines: The ANC Youth League (ANCYL), SA Communist Party (SACP), Congress of South African Trade Unions (Cosatu), and various others have called for the nationalisation of South Africa’s mines;

Reserve Bank: Some in the ANC; the Young Communist League (YCL); the SACP; Cosatu; the National Education, National Education Health and Allied Workers’ Union (Nehawu); the National Union of Metal Workers of South Africa (Numsa); and the South African Transport and Allied Workers Union (Satawu) have called for the nationalisation of the South African Reserve Bank;

Commercial Banks: Some in the ANC as well as the SACP, Cosatu and various others have called for the nationalisation of South Africa’s private commercial banks;

Food sector: Several Cosatu unions including Numsa, the South African Clothing & Textile Workers’ Union (Sactwu) and the Food and Allied Workers Union (Fawu) are demanding that the “whole food supply chain” be nationalised;

Public Transport: Cosatu unions Numsa and Sactwu, among others, want the entire public transport system to be nationalised;

Oil: The Cosatu-affiliated Chemical, Energy, Paper, Printing, Wood and Allied Workers Union (CEPPWAWU), National Union of Mineworkers, Cosatu and others in the Alliance, encouraged by among others the Venezuelan government, are demanding the nationalisation of South African oil and chemicals giant Sasol, while similar noises have been made with regard to the entire local oil industry, with the SACP in particular arguing in favour of the nationalisation of all South Africa’s petroleum resources;

Steel: Several Cosatu-affiliated unions and others in the ruling Alliance have called for the nationalisation of steel producer ArcelorMittal, one of the largest steel companies in the world; and

Private Wealth: Cosatu union Numsa, echoed by others in the Alliance’s communist quarters, has called for the nationalisation of private wealth including the private fortunes of business moguls such as Tokyo Sexwale, Patrice Motsepe, Saki Macozoma (amassed through the ANC’s programme of black economic empowerment) and the Oppenheimer family.

If, indeed, all these demands were to be met, it would leave precious little of Africa’s biggest economy in private hands. And judging by the government’s absolute failure to manage its current batch of state-owned enterprises successfully, it would plunge the South African economy into fatal decline.

However, wholesale nationalisation is not likely to occur, or at least not in the foreseeable future. For the current advocates of nationalisation in the broader ruling Alliance led by the ANC are far from sharing a single, coherent view of what exactly should be nationalised, or why, when and how. Disparate views still prevail in the Alliance.

Among others, Canadian mining and business organisations with interests in South Africa have warned against the talk of nationalisation, saying it would push investors away from South Africa. So have business leaders from other countries warned against the dangers inherent in the talks about nationalisation.

A few South African business leaders cautiously have added their voices of concern, but most have remained conspicuously silent – reminding of former Finance Minister Trevor Manuel’s irritation that South African business leaders do not stand up for their rights.

Nonetheless, it has been pointed out that South African mines face tough competition from South America, Canada, Australia and Russia, among others, and that Chinese state-controlled mining companies are on a shopping spree for struggling mines in Africa, picking up bargains.

Against this background of strong competition, South Africa’s mining industry, already struggling from the effects of the global recession, cannot afford any further negative pressure as caused by threats of nationalisation, no matter how serious or not these are. The same goes for other sectors of the economy.

All this talk of nationalisation is creating unnecessary concern, uncertainty and growing negative perceptions, all of which is already harmful for the country.

The ANC and the government would do well to formulate a clear and coherent position on nationalisation with all the specifics spelt out, while debate should be formalised within a structured and widely representative forum free of speculation, threats and rumour.