THE African National Congress (ANC) has ditched the concept of "strategic nationalisation" in favour of "strategic state ownership" after an 11th-hour intervention by President Jacob Zuma.
He told the drafters of the party’s economic policy resolution at its conference in Mangaung to remove the word "nationalisation" — a bold effort to restore policy certainty for investors and turn around South Africa’s flagging credit ratings.
An attempt by the ANC Youth League to have the word reinstated when the resolution was presented to conference delegates on Thursday, failed.
"The state will increase state ownership in strategic sectors where deemed appropriate, on the balance of evidence ," the resolution read.
The state would further increase its participation in the mining sector through equity, using the state-owned mining company as its vehicle.
The resolution implied that there will be higher taxes for the mining industry, but did not specify what form these might take. It said the state should "capture an equitable share of mineral resource rents and deploy them in the interests of long-term economic growth, development and transformation".
Enoch Godongwana, chairman of the ANC’s economic transformation committee, told a media briefing this could take the form a resource rent tax, a "windfall tax" on super profits or another, unspecified, measure. "There will be a tax, what form it will take has not been decided."
The resolution further raised the prospect of export taxes on designated "strategic minerals" deemed important for industrialisation or as key inputs into downstream products. Among those in line for designation are iron ore, coal, base metals and gas.
The party said it wanted to assure investors that "nationalisation was off the table".
"The national conference has refused to be drawn into the (use of) the word nationalisation," said Public Enterprises Minister Malusi Gigaba. "This means that the issue of nationalisation, that we have discussed over the past few months, is off the table.
"We are providing final clarity. There shouldn’t be any expectation from here that we will come out and say we are going to nationalise."
Mr Zuma called the drafters of the resolution — who included Thaba Mufamadi, chairman of Parliament’s standing committee on finance, Mr Godongwana and Mr Gigaba — to an early morning meeting on Thursday. Participants close to the process said the president told them they should take out "that word".
Provincial chairpersons and secretaries were hurriedly briefed before the presentation to the plenary on Thursday and asked to support the resolution.
But global rating agencies are likely to continue sitting on the fence for a while in terms of their assessment of South Africa.
Standard & Poor’s (S&P) MD for Southern Africa Konrad Reuss said on Thursday the agency would wait to see what follow-through action the government took before revisiting its sovereign rating of South Africa, which it downgraded in October. "From our perspective the jury is out — we have to see what it is that is going to be implemented as far as policy action is concerned ."
Anything that would support growth in the economy, deal with social and labour market issues, and support fiscal consolidation, would be constructive for South Africa’s rating, Mr Reuss said.
S&P has put a negative outlook on its BBB credit rating for South Africa, citing the recent wave of strikes, which it said might increase "uncertainties" related to the country’s economic policy framework.
The Black Business Council (BBC) said it was "relieved" that the ANC had "once and for all buried the threat" of the wholesale nationalisation of mines and banks. "The BBC believes the ANC should better manage the perceptions around its economic policy choices and reaffirm the private sector as the appropriate agent for accelerated economic growth and employment creation."
The council believed the role of the state should be to create conducive conditions for good and socially responsible business.
MD of Pan African Investment and Research Iraj Abedian, said the ANC’s economic policy resolution was " more of the same".
"The ANC has always engaged in rigorous, left-sounding debate, or more recently, populist oriented, but when all is said and done there are fairly pragmatic and realistic policy choices ."
The ANC further resolved that there would be no ban on labour brokers. The South African Chamber of Commerce and Industry welcomed the resolution.
" One must take it as an appreciation by the ANC that labour broking has a role to play in job creation," CE Neren Rau said.
"On the issue of nationalisation, it’s good that this has been clarified. It will be positively received by the international community."
Source: BD Live