Soothed by President Cyril Ramaphosa and the sensible economics team around him, the markets and the wider public have discounted the ANC’s promise of prescribed asset legislation in its election manifesto.
Ramaphosa’s people have whispered that this is unlikely to happen, as it is an evergreen but never-realised promise in successive ANC manifestos.
But should we be so easily soothed? I would argue not. It impacts each of us with savings, either long- or short-term.
The EFF, the third-largest party in South Africa, and the one likely to make the biggest percentage point gain in the election, has even more strenuous promises of forced investments dotted across its detailed and very long election manifesto.
If the EFF doubles its support (which is not unlikely) from its maiden result of 6% of the national and provincial poll in 2014, then there will be double the number of red-suited MPs in the National Assembly and the wider legislature. With the ANC’s radical (or state capture) wing, they are likely to use prescribed asset legislation as well as the push for the nationalisation of the SA Reserve Bank’s as battering rams to win populist support and positions.
- READ: 5 questions: ANC economics head on Reserve Bank independence and the Bosasa effect at the polls
The EFF manifesto has muscular positions on how private savings should be used. Take a look at these examples from the party’s manifesto:
- "The EFF government will pass legislation for insurance companies to largely mandate black-owned asset management companies to manage their funds as a requirement to keep their license.
- "The EFF government will give banks and asset management companies six months to change their management to mainly black people, particularly Africans, to make a up a majority.
- "The EFF government will establish a state-owned asset manager to manage municipal pensions of all municipalities by 2021."
In addition to all this, the EFF manifesto promises that if it becomes a government, it would enforce prescribed assets for 30% of the value of investments in the private sector and for 40% of government pensions.
This would, theoretically, support the party’s plans to protect South Africa from imports and re-industrialise the economy through a radical localisation programme.
It’s mad as mad economics gets, but I wouldn’t discount it as unimportant. EFF leader Julius Malema is batting his eyelashes at the ANC. Last week, he discounted coalitions with the DA after the elections; this week, he indicated that the ANC is his natural partner party. The ANC is taking a beating in some provinces and may need EFF support to govern. The latest Ipsos poll from February, released in March, showed the EFF could be the official opposition in three provinces.
If this alliance should happen, the loud and powerful EFF caucus could be used by the weaker part of the ANC faction to push its proxy positions to limit central bank independence and to make real both parties' promise of prescribed asset legislation.
With the revelations at the Public Investment Corporation commission of inquiry showing how badly the government pension fund is managed, and with new revelations showing how the EFF leadership allegedly received some of the VBS Mutual Bank funds looted from municipal funds, this should send shivers down the spine of hard-saving South Africans.
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