CAPE TOWN — Turfed former Deputy Finance Minister-now-reinstated Finance Minister, Nhlanhla Nene, newly returned from Zuptoid Coventry, has probably the most difficult balancing act of all our new cabinet. On the one hand, he’s reassuring the global community ten to the dozen that land expropriation without compensation will somehow successfully address social challenges without in any way harming the economy. On the other he’s talking fiscal consolidation, tightening revenue collection and curbing spending. All this in a post-Zuptoid economy riven by corruption and dysfunction, not to mention populist opportunism. The two concepts may not be mutually exclusive, but they sure as hell don’t sit comfortably in bed together. One can only hope that Fitch Ratings and Moody’s Investor Services for whom he’s been doing this juggling on a tightrope act, gives him sufficient time to pull off the greatest high wire act of his career. – Chris Bateman
(Bloomberg) — Land expropriation without compensation would be dealt with in a “responsible manner” that addresses social challenges without affecting the economy negatively, South African Finance Minister Nhlanhla Nene said.
The government will have concrete proposals for land reform “on the table” by August, Nene told reporters in London after a series of meetings with investors. The issue “has the potential to be abused” for political purposes, he said.
A parliamentary committee is currently looking at amending the constitution to allow land seizures without compensation, a change the main opposition Democratic Alliance says will deter investment and curb agricultural production. The ruling African National Congress, backed by the opposition Economic Freedom Fighters, argues that existing mechanisms to address inequalities in land ownership are inadequate.
The ANC decided at its December conference, where it elected Cyril Ramaphosa as leader, to pursue expropriation without compensation and also to change legislation to make the central bank state-owned instead of being in private hands. This is not a priority and the Reserve Bank’s mandate and independence is not in question, Nene said.
South Africa is committed to fiscal consolidation, both on the revenue and expenditure side, and would look to increase capacity at the South African Revenue Service to improve tax collection, Nene said.
The minister and Treasury officials met with Fitch Ratings Ltd. and Moody’s Investors Service on Monday, Nene said. South Africa’s seeking to avoid a cut to sub-investment grade by Moody’s which in November put the nation on review for a downgrade.
The Treasury’s team is scheduled to meet investors in New York later this week.