Revolutionary madness? ‘Let’s nationalise banks, mines, insurance companies’ – Gigaba man

If you thought ‘captured’ Brian Molefe was a scary prospect as South Africa’s finance minister, take a closer look at Malusi Gigaba. The new finance minister, who was installed after the much-respected Pravin Gordhan was axed, has an adviser who proposes radical ways to “complete the revolution”. In an opinion piece published in a major South African newspaper, Christopher Malikane gives some insight into his thinking on how to run the economy. He is evidently a firm believer in nationalising businesses that are best left out of state hands – like commercial banks, mines and insurance companies. Malikane would also like to bring the South African Reserve Bank into a state bank combining all government-owned financial institutions. He is also keen on speeding up land expropriation without compensation to owners. The “revolution” Malikane speaks about ties in with plans being hatched in Saxonwold. It is evidently designed to centralise control of state finances – and widen the pot of money available to the corrupted clique around President Jacob Zuma and his friends. Malikane is a senior lecturer in economics, according to various profiles that include his own on LinkedIn, though some refer to him as a full professor. In a paper published in 2015, Malikane indicates that he believes state control of the economy is the only way to avoid a crisis and that it is inevitable that the economy owned in private hands will face a gradual fall in the rate of profits and that “the socialist state gradually raises its ownership towards 100% in order to limit the crisis emanating from private capitalist ownership”. Although Gigaba has told banks there will be no shift in policy, there is every reason to believe that he will seriously consider moves to take greater control of businesses and state entities. Gigaba has no credentials to be the minister of finance other than his allegiance to President Zuma, who has been encouraging talk of radical economic transformation. – Jackie Cameron

By Rene Vollgraaff

An adviser to South Africa’s new finance minister advocated the state takeover of banks, mines and insurance companies in a newspaper editorial, two weeks after President Jacob Zuma’s ouster of Pravin Gordhan shocked investors and led to a debt downgrade.

File Photo: Home Affairs Minister Malusi Gigaba welcomes President Jacob Zuma upon arrival for the launch of Desmond Tutu Refugee Reception Centre in Pretoria, 17 Feb 2017.

In an opinion piece titled “Our chance to complete the revolution,” published in South Africa’s Sunday Times, Christopher Malikane, an economics professor at Johannesburg’s University of the Witwatersrand, also proposed the establishment of a state bank that would combine all government-owned financial institutions, the nationalization of the South African Reserve Bank and the expropriation of land without compensation to the owners.

The Sunday Times said Malikane, who has advised the Congress of South African Trade Unions, is an adviser to Finance Minister Malusi Gigaba, citing Gigaba’s spokesman Mayihlome Tshwete. Gigaba. who was appointed March 31, has pledged to avoid further debt downgrades, and said on April 13 that he urged Zuma to stick to previous budget plans and wants management continuity at the nation’s treasury.

Malikane in February wrote an opinion piece for Independent Media, which publishes 15 newspapers in South Africa, in which he disagreed with the ruling African National Congress policy to transfer resources to citizens. He said: “The only sensible way in which the people as a whole can own these basic resources is through nationalization carried out by a democratic state, which is the only institution that can justly claim to represent the will of the people.”

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Gigaba and his deputy, Sfiso Buthelezi, who was also appointed March 31, have met with the chief executive officers of Standard Bank Group Ltd., Barclays Africa Group Ltd., Nedbank Group Ltd. and FirstRand Ltd. and assured them there would be no shift in policy, the Banking Association of South Africa said on April 5.

Gordhan’s ouster as finance minister in a cabinet reshuffle led to S&P Global Ratings and Fitch Ratings Ltd. cutting South Africa’s credit rating to sub-investment grade. Moody’s Investors Service has put its assessment of the nation’s debt, which is two levels above junk, on review for a downgrade on April 3.

Tshwete, the finance minister’s spokesman, didn’t immediately respond to a phone call and text message Sunday seeking comment on Malikane’s appointment and role at the Treasury.

Source: Bloomberg

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