Minister tells ANC to drop nationalisation
Shabangu moves to reassure investors after a second ratings agency downgrade in three weeks
Mining Minister Susan Shabangu has warned the ANC to axe nationalisation at its Mangaung conference if it wants to save the economy.
Speaking after an emergency meeting about the vulnerable state of the economy – called by President Jacob Zuma on Friday night between government, business and labour – Shabangu said it was going to be “very difficult” to restore investment confidence.
The high-level meeting took place at the same time as the country was hit by another international vote of no confidence in the economy.
Standard & Poor’s (S&P) downgraded South Africa’s credit rating by one notch on Friday, saying the continuing mining strikes and growing “social tension” would “increase spending pressure and reduce the country’s fiscal flexibility”.
The downgrade follows the move by Moody’s, which last month cut the country’s credit rating and also downgraded the top-five banks over concerns about the government’s ability to solve economic problems.
A financial analyst has warned that South Africa was moving closer to “non-investor” status.
“The negative outlook reflects our view that the medium-term political, economic and fiscal ramifications of South Africa’s social tensions could deteriorate beyond our current expectations,” S&P said on Friday.
Although not naming nationalisation, the ratings agency suggests the ANC’s future policy frameworks will likely be influenced by the mining strikes.
“We see an increased likelihood that the ANC will take on board more populist elements for its policy framework in the lead-up to the 2014 presidential elections,” S&P said.
Former ANC Youth League leader Julius Malema’s calls for the nationalisation of mines have enjoyed wide support from striking mine workers.
Shabangu, meanwhile, has been travelling the world in the wake of the Marikana massacre to allay fears about this and other violent wildcat mining strikes, and to restore investor confidence in South Africa.
After attending Friday night’s meeting, Shabangu told City Press that investors were not only concerned about the ongoing mining strikes, but were “jittery” about the issue of nationalisation and in particular the fact that strikes were spilling over to gold, coal and other sectors of the economy.
While the ANC rejected the issue of wholesale nationalisation at its midyear policy conference, the party deferred the final decision to nationalise “strategic assets” to Mangaung.
“The biggest issue when it comes to policy issues is whether Mangaung will nationalise (mines). We’ve dealt with that issue, but (investors) continue to raise it,” Shabangu said.
“We are confident that when we come out of Mangaung we will be able to put this matter aside and it will bring and instil much more investor confidence.”
Independent financial analyst Ian Cruickshanks said South Africa was “no longer the shining example of a well-managed democracy on the continent”.
The downgrade moved the country a step closer to “non-investor” status and would defer potential investors from investing any further money in the country, he warned.
“The likely outcome is that the rand will weaken more, everything we import will cost more and you’ll have to pay more for it, including a barrel of oil,” said Cruickshanks.
On Friday night Zuma called on business and labour to work together to find solutions “so that we can revert to the primary task at hand to build the country, build the economy and improve the quality of life”.
He was “seriously concerned” about the violent nature of recent strikes and said labour disputes “do not need to degenerate into violent confrontations”.
Shabangu said investor confidence was low as a result of the strikes. “The most difficult thing for everybody who invests is you invest with the intention of having returns and that’s the key issue that has dampened the spirit of the investors.
“One of the biggest challenges for investors was the protracted strikes. It has been a cause for concern because it’s not a once-off; it is sort of spiralling in the mining industry. It was platinum, then gold, then coal. So indeed it is a cause for concern.
These are some of the issues they were concerned about.”
She said Friday’s meeting was a step in the right direction to restore investor confidence.
“It’s not going to be easy. It’s going to be very difficult for us, but I am confident that the first step we are taking is right indeed.
“We also have a responsibility to assure investors that what has occurred will not happen again and . . . that when they come into South Africa, their money is protected.”
Cosatu general secretary Zwelinzima Vavi confirmed that the meeting discussed the S&P and Moody’s downgrades.
He praised Zuma for showing leadership in convening an urgent meeting to rescue the economy.
“If anything, the statement says to the country that there is leadership and that leadership is concerned about the state of affairs,” Vavi said.
He expressed relief that the meeting, which lasted for more than three hours, condemned the violent strikes and urged law enforcement agencies to curb the illegal action.
Another meeting will take place on Wednesday, where the country’s final response to the impending economic crisis will be announced.
National Union of Mineworkers general secretary Frans Baleni, who attended the meeting, said they also discussed the high remuneration of mining bosses.
“We know that ratings agencies react on the basis of perceptions, not facts. The important thing is that the leaders of South Africa should send positive messages, not negative signals,” he said.
Baleni added: “If we don’t do anything and things continue as they are, we could find ourselves in a recession. Therefore, it requires that it shouldn’t be business as usual.”
Federation of Unions of SA president Koos Bezuidenhout said they were told the police and army had been put on high alert to arrest those involved in ongoing strike violence.
AngloGold Ashanti chief executive Mike Cutifani confirmed discussing the issue of executive pay at the meeting.
“We said we will go back and raise those messages with our constituency. It’s too early to talk about what it means,” he said.
He said the investment downgrade was a serious matter, saying matters such as unprotected strikes were major issues for investors. “If we allow the current situation to continue, thousands of jobs will be lost.”
» Deputy President Kgalema Motlanthe did not attend the meeting. Zuma’s spokesperson, Mac Maharaj, said Motlanthe didn’t attend because of a “diary clash”.
But Motlanthe’s spokesperson, Thabo Masebe, said he was “not expected to attend”.
“As far as I know, it was never on his programme,” Masebe said.