Undermining the ANC

2010-02-25 00:00

IN his recent reply to the debate on his State of the Nation address­ President Jacob Zuma defended the right of Julius Malema to raise the issue of nationalisation. While making clear that this is not a policy of his government, he said he is not going to haul the African National Congress Youth League president into line.

He told the national assembly: “What members should do in an open democratic society is that if the president of the youth league, Julius Malema, raises an issue of nationalisation, they must raise their counterargument to him if they want to debate on this. This must be done instead of saying to the government that [it] must stop him and make him keep quiet­.”

It is not difficult to rehearse the arguments as to why nationalisation would not be a particularly good thing for this country. There are no end of examples from the rest of Africa as to what the consequences are likely to be.

For example, in 1973, Mobutu Sese Seko set about “returning” the wealth of Zaire “to the people”, as Malema would like to do here, through a programme of “Zaireanisation”. Michela Wrong* writes that he decreed “that foreign-owned farms, plantations, commercial enterprises — mostly in the hands of Portuguese, Greek, Italian and Pakistani traders — should be turned over ‘to sons of the country’. This was followed by radicalisation, in which the largely Belgian-controlled industrial sector was confiscated.

“In theory, departing foreigners were to be compensated and the performance of new owners would be carefully monitored. In practice … no guidelines were drawn up to specify who got what. The result was an obscene scramble for freebies by the burgeoning Zairean elite. Thousands of businesses, totalling around $1 billion in value, were divided among top officials in the most comprehensive nationalisation seen in Africa.

“As expatriate managers headed for the airports, the new owners pocketed savings, sold herds, dumped equipment on local markets and ripped up bushes. The proceeds were spent on luxury items, with imports of Mercedes-Benz hitting an African record one year after Zaireanisation. Ordinary Zaireans, supposed beneficiaries of the process, watched in shock as businesses closed, prices rose, jobs were doled out by new bosses on purely nepotistic lines, and shelves emptied.”

The Zairean economy had been doing quite well up until 1974, Wrong notes. But after Zaireanisation it went into a long and unstoppable decline. Efforts by the Mobutu regime to attract investors back to the country were futile. “Those who had put their faith in Zaire had been looted on the president’s orders. In future, businessmen who ventured there would demand exceptionally high rates of return and quick profits to justify the risk they were running, and would be careful to repatriate their proceeds rather than invest.”

Whatever the initial statement of intent, nationalisation is like a boulder on a steep hillside — it is initially difficult to get moving but, once set in motion, is almost impossible to stop or control. The probability is that any kind of expropriation process would rapidly degenerate into the wholesale looting of the economy, and the imposition of a dictatorship to protect the ruling elite’s ill-gotten gains.

In the medium term the productive sector of the economy would be destroyed and with it our tax base. This would seriously erode the power and reach of the state, and its ability to act independently of outside influence. At best we will be reduced to an impoverished dependency of China or the West; at worst, the state will collapse, opening the way to warlordism and civil strife. As in Zaire­, only vulture capitalists will be willing to fly back in to pick at the carcass remains.

Promoting a discussion on the merits of nationalisation, in this context, is a bit like encouraging a debate on whether the best way of curing a mild headache is taking a Panado — or putting a loaded gun to one’s head and pulling the trigger.

There is though a less obvious lesson from history that Zuma seems insufficiently mindful of. As Malema has correctly noted, the ANC had a policy of wholesale nationalisation up until the early nineties. This, as much as sanctions and calls for disinvestment, contributed to a falling away of investment in the South African economy in that period.

This was useful to the ANC in one sense, and harmful in another. On the one side it helped checkmate the National Party’s ability to govern. Without a growing economy and increasing tax revenues that regime could not try to spend its way out of trouble (at least in a sustainable fashion). On the other, Western support for the ANC’s ascent to power in the early nineties was conditional on it renouncing nationalisation as a policy.

Zuma may allow Malema to go around threatening the seizure of racial minority wealth but it is difficult to see how it will benefit him or his government. The threats are already so loud and persistent that they are drowning out whatever positive message the government is trying to convey. If such threats come to be seen as credible, they will erode confidence in the future of the country and kill off inward investment as surely as they did in the late eighties. But, this time around it will be the ANC’s own ability to govern that will be fatally compromised.

— Politicsweb.co.za

* Michela Wrong, In the Footsteps of Mr Kurtz, (Fourth Estate: London, 2001).

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