Why SA needs nationalisation by EFF-led government

2013-10-27 00:56

In Kliptown in 1956 the Freedom Charter was drafted and accepted. The Freedom Charter was clear on the demand that the mines, the banks, big business and the land should become the property of the people. On 28-31 May 1992, at a four-day gathering in Kimberley, the ANC effectively dropped nationalisation, which stood as its central demand for 36 years, as an essential issue in the negotiation process. The Economic Freedom Fighters (EFF) aims to pick up where the ANC government has failed its people. The programme of nationalisation represents a shift in the economic policy of South Africa as currently proposed by the EFF. This is a radical policy shift to the left and this often displeases the majority of opponents of the EFF’s economic policy that emphasises on meaningful state involvement in the economy. These people solely believe in the failed capitalist system that states that the markets should be the sole determinants of the direction of South Africa’s economy.

Nationalisation of mines, banks and strategic sectors of our economy as stated as one of the 7 non-negotiable pillars of the EFF remains more relevant now than ever before. The majority of black Africans continue to live in dilapidated shelter; faced with abject poverty and dire socio-economic conditions whist those who own the mines continue to live luxurious lives with no regard on the poor. Our unemployment of 25% - 60%, depending, whom you believe, means we have been in permanent, structural recession since 1910 and beyond. All that changed in 1994 was that the unemployable got the vote.

Nationalisation during Apartheid

The idea of nationalisation is not really a new phenomenon in South Africa as it was previously done by the white apartheid government. The apartheid case was really about the intra-class struggles between the majority white Afrikaner versus the minority English monopoly capital. D F Malan (later Prime Minister of South Africa) was quoted as saying in 1943 that the state would have to intervene 'to help the Afrikaner achieve his rightful share of South Africa's economic cake'. Much of the economy was nationalised before 1943, and more was to follow, leading to a state sector of about 40 per cent in both employment and Gross Domestic Product. Afrikaner capital expanded and many more jobs were secured for whites. There are several examples which the apartheid government used to nationalise the country’s resources. The two shining ones are the steel and energy sectors. The apartheid government engineered the formation of state enterprises such as ISCOR and SASOL. Historically the mining industry has been the pillar on which the apartheid economy rested and was the most critical for the survival of the state and acceleration of other sectors. This allowed the apartheid state to spend more on social wage for the poor white Afrikaners which were large electoral constituency.

Definition of Nationalisation

Nationalisation basically means the taking of control by the government over assets and over a corporation, usually by acquiring the majority or the entire stake in the corporation. There are two basic means by which the government may take assets or corporations into public ownership. The first is via appropriation or confiscation of the assets.

The second is by purchasing the assets from their current legal owners. These processes have taken place for decades – from October 1917 in the USSR to latter day nationalisation by populists such as Hugo Chavez in Venezuela and with experiments in diversified countries such as Egypt, Ghana, Cuba, Norway and South Africa under apartheid as explained above. It was fine back then when it benefited the white Afrikaner minority in the country. But when it has to benefit the black majority there is a huge outcry. Why is that?

Whenever the topic of economic redistribution and nationalisation gets raised, people point at Zimbabwe and claim that we’ll end up like that if we even contemplate the idea of sharing the economy more equally with everyone. That is absolutely not true. I can’t state that more vehemently. For many years in South Africa during the apartheid days, strategic sectors of the economy were owned and controlled by the Apartheid government and investors never flew or left South Africa. Why do we expect it to be different when the same principles are applied by a black-led EFF government?

How does the EFF plan to implement nationalisation? 

The state ownership of minerals beneath the soil will in effect entail the discontinuation of total private ownership of production means in the production of mineral wealth in South Africa. The route towards total transfer of mineral wealth to the ownership of the people as a whole will include the creation of an efficient and impactful state-owned mining company. It will be efficient and impactful because a state-owned mining company should contribute to job creation, while being efficiently managed and administered in a manner that will raise the levels of public confidence in the capacity of the state to do business and contribute to economic development.

Nationalised mineral wealth will in effect constitute a very firm basis for the beneficiation of these products in both heavy and light industrial processes in South Africa, which could be left to industrial and manufacturing entrepreneurs, co-operatives and small and medium enterprises, so as to develop the productive forces of the South African economy, which is still reliant on the production of primary commodities. This process will conspicuously be coupled with an effective skills-development, training and education strategy, which will directly feed into a growing industrial and manufacturing process.

As part of this programme, the transfer of wealth to the ownership of the people as a whole is not limited to mines only, but should necessarily extend to monopoly industries. The creation of a State Bank and the nationalisation of the Reserve Bank constitute an immediate task and essential to the development of the South African economy, as it can be progressively positioned to improve the existence of state-owned development finance institutions, in order to finance new industries. The State Bank will also provide enterprise finance, housing finance and vehicle finance for all South Africans in a manner that promotes development, not the narrow pursuit of profits.

Failure of South Africa’s Big 4 Banks

South Africa’s banks have failed to assist in the reduction of poverty, unemployment and inequality. Given the scale and depth of South Africa’s problems, the banks should have more to contribute to transformation, growth and development but they have failed. They have failed in these areas in particular: investment in job-intensive sectors, SMME financing, co-operative financing, infrastructure financing and agriculture financing. Since they are prudent commercial enterprises, our banks are set up to lend to long-established businesses and have mostly ignored the new emerging businesses and they have failed to accelerate growth and effectively put red tape.

Since they have failed nationalisation of banks needs to happen here and now. Once the EFF has established a state bank, interest rates will be set to respond to the government’s developmental imperative which is to eradicate poverty for the black majority. Furthermore, nationalisation can yield more state revenue and a more equitable distribution of wealth.

State Ownerships VS Private Ownership

There is this notion that private ownership is good and state ownership is bad. That is a whole load of hogwash that is perpetuated by capitalist ideologies which have proved to be a failure in South Africa.  If state ownership of assets were to occur in South Africa it would be held accountable by regulation enforced by a regulatory body. When it comes to nationalising a country's resources, no one system is better than the other. What we need to be sure of is that at the end of day the state is held accountable. A country's ability to turn its natural wealth into human wealth depended on the quality of public expenditures, not on ownership. So this argument that private ownership is good and state ownership is bad needs to be quashed.

Immediate benefits of nationalising mines by EFF-led government 

  • A sector that is nationalised, will allow the EFF-led government to have direct control over that sector. If the mining sector is nationalised, this would entice the government to sell more minerals within the South African borders rather than export these minerals to foreign countries.
  • If mines were to be nationalised, then the revenue generated would be part of national revenue, and thus would benefit the entire country as there would be more service delivery. Economic development and the total well being of the individual will be improved.
  • South Africa has an unequal distribution of income, this extra revenue will allow government to redistribute income more equally, thus reducing poverty as well as lowering the unemployment rate.
  • All the employees will have compulsory benefits, like the pension funds, health insurance.
  • Nationalised mines will also open a space for the development of new economic centres and the establishment of multiple concurrent industrial development zones, which will reinforce the existing economic centres while developing local economies and absorbing many of our unemployed.
  • Nationalisation has many other economic benefits, including the safeguarding of South Africa’s economic sovereignty and shedding the colonial legacy of being an exporter of natural resources and an importer of finished goods and services.
  • Nationalisation of our mines will increase mineworkers` safety and protection of mineworkers` rights as the state will set this as a top priority whereas privately owned companies are profit-driven and pay less attention to these matters. Furthermore, the environmental costs of mining should be greatly reduced if the state were to take control which will prevent the economy from suffering due to expensive environmental clean-ups.
  • Communities will be one of the primary stakeholders in the mines and they will help decide on the development of the town and cities to avoid the issue of ghost towns like currently have.

Conclusion

What is democracy without economic emancipation of our people? Let us nationalise these mines, banks and strategic sectors of our economy in order to empower our communities so that they can also enjoy the fruits of living in a democracy. Nationalisation in South Africa will benefit the majority of South Africans. The current bourgeois economic machinery needs to be dismantled in order to ensure true economic emancipation of the majority of South Africans.

/li

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