Mboweni scathing on ‘reckless’ nationalisation row

19 Jul.

Mboweni scathing on ‘reckless’ nationalisation row.

Former Reserve Bank governor Tito Mboweni has warned that the debate on nationalisation is being “handled recklessly”, negatively affecting investor sentiment.

While the debate on the call to nationalise mines intensifies, Mr Mboweni has called for cool heads. In an address at the Students in Free Enterprise awards ceremony on Thursday night, Mr Mboweni cautioned against the reckless manner in which the debate had been handled.

“The manner in which the issue has been raised has lacked an appreciation for the consensus-building spirit that has informed the construction of new and ongoing agreement in our society,” he said.

A discussion on the subject had to look at a historical context of mining and politics. “It is indisputable that mining is the industry that transformed and modernised SA’s previously rural economy … Yet we cannot ignore SA’s mining’s roots and its culpabilities for much of what was wrong with SA for the century that ended in 1994.”

While the industry could have done better in implementing the Mining Charter, debate focused on the failure to meet “tough targets” instead of what had been achieved. “The industry cannot claim that it has done no harm, nor that it has acted sufficiently timeously to remedy harm it has done, nor that it could not have done better in implementing its side of the Mining Charter bargain,” said Mr Mboweni.

He acknowledged the industry’s willingness to comply with some of the government’s policies, especially on black economic empowerment (BEE). However, while progress had been made with black ownership, that was not enough, he said.

Transformation was further constrained by the global financial crisis, which “damaged prospects for many BEE transactions, particularly those less well structured”.

The proposal to nationalise mines was tabled at the African National Congress national general council in Durban last year. The gathering mandated the ANC national executive committee to conduct research on the modalities of state intervention in the mining industry. This appointed a research team that included independent researchers who have visited several countries to study nationalisation models . The task team is expected to report back to the ANC in November.

The ANC Youth League has used the debate to lobby leaders for the ANC elective conference to be held in December next year, saying it would back only leaders that supported nationalisation . The debate has caused further division in the tripartite alliance.

Mr Mboweni said all sides should approach the debate with cool heads. “The solution does not lie, as some opponents of nationalisation would have it, in business shouting back so loud that they look very foolish indeed.”

Mr Mboweni said the government’s plans for enhancing the role of a developmental state were a positive development. The idea of a state mining company was actually not a bad one, he said.

“The state capacity might be just what we need to connect the private mining companies with the developmental state. There are too many examples of this around the world and so there is no need to scream and shout at each other about this.”

Youth league leader Julius Malema has responded to the those opposed to nationalisation by challenging them to provide alternatives. Writing in the league’s newsletter last week, he labelled business’s response as an attempt to threaten SA with disinvestment, and said the South African Communist Party’s reaction was “lots of hot air”.

“All we hear from all these forces is that they are opposed to nationalisation of mines and expropriation without compensation, but we do not hear the alternatives to nationalisation because all of us agree that the status quo is not an option,” he wrote, calling for “well-informed engagement” .

“If business feels nationalisation of mines and expropriation without compensation will scare investors, they should propose how best does the state take ownership and control of its strategic sectors of the economy and still find a role for the private sector to productively and profitably play.”

Source: Business Day