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Periodically, movers-and-shakers in the ANC raise their voices about transforming the economy from pure capitalism to a system with greater state control. Is recent talk about transforming South Africa just a bit of noise ahead of elections in a bid to attract the votes of a populace tired of promises and no tangible improvement to lives? This time there could be a more concerted effort to implement plans to overhaul the economy. Liesl Peyper of Fin24 highlights the growing rhetoric about white monopoly capital. Transformation could easily be on the cards, with South Africa’s commercial listed banks in the spotlight yet again. Banks have already attracted the ire of senior political figures after they refused to do business with entities linked to the Gupta family, which is influential in President Jacob Zuma’s elite circle, as a result of suspicions of moneylaundering. The mining sector is also being targeted in the drive to boost black economic empowerment. With businesses deterred from investing more heavily in South African operations, additional state funds will have to come from somewhere. The ANC has indicated it would like to tax the wealthy more heavily to boost state coffers. With the screws already tightening on entrepreneurs and higher net worth individuals, it seems inevitable that loud calls for greater state control of the economy and greater empowerment red tape will only serve to dampen investor sentiment and encourage more business operators to spread their wings globally. – Jackie Cameron
By Liesl Peyper
Cape Town – South Africa needs to move away from a pure capitalist state to a state-managed developmental economy, the ANC said at a media conference on Monday.
In preparation for its 54th National Conference in December 2017, the ruling party is mooting radical economic transformation through among other things changing the banking environment to less “concentrated and racialised” and more in the interest of the vast majority of the country.
The ANC said it intends on using the Constitution, legislation and regulation, licensing, broad-based black economic empowerment (BBBEE), the national budget, state-owned enterprises and development finance institutions to change the ownership and control of the economy “in favour of all South Africans, especially the poor, the majority of whom are African and female”.
The ruling party has recently taken a stronger stance against the fact that the economy remains in the hands of a small white minority. At the party’s birthday celebrations on 8 January at the Orlando Stadium in Soweto, President Jacob Zuma made a plea for accelerated economic transformation.
He made similar remarks at a recent gathering of the ANC’s National Executive Committee (NEC) – utterances perceived by some analyst as an attempt to rescue his legacy and to respond to pressures from opposition parties such as the EFF.
In its statement following the lekgotla, the ANC named a number of initiatives aimed at changing the course of South Africa’s economy.
The ruling party called on government to develop and implement a programme for the transformation and de-racialisation of the financial sector.
Similar utterances were made by Yunis Carrim, chairperson of Parliament’s Standing Committee on Finance, who recently scheduled 14 March for public hearings during which several stakeholders will be allowed to give input on how South Africa’s financial sector needs to change to become more representative.
At the time, Carrim cautioned that banks need to transform, otherwise “it will be done for them”.
In line with this, the ANC said in its post-lekgotla statement that the process to license the Post Bank need to be fast-tracked in order for the institution to become the “principal distributor of social grants”.
The payment of social grants has been mired in controversy after the Constitutional Court in 2014 had found that the current distributor, Cash Paymaster Services was invalid. The South Africa Social Security Agency (Sassa) is supposed to take over the contract at the end of March.
The ANC further said it “directs” government to consolidate government-owned mineral holdings and to make haste with the implementation of the Minerals and Petroleum Resources Amendment (MPRDA) Bill, which was passed by the National Assembly late last year.
The Bill has been sent to Zuma for ratification.
In addition, the ANC wants government to utilise the mining licence regime and the Mining Charter to facilitate BBEEE, promote local procurement and the development of black industrialists.
The Mining Charter is another subject of controversy, as government is legally challenged by the Chamber of Mines over the black ownership requirement, which states that mining companies need to keep black ownership at 26% even if empowerment partners sell their stake.
The ANC also calls for urgency in the implementation of a wealth tax to enable better investment in infrastructure and skills development.
A heavier tax burden for affluent South Africans is in store with new legislation that will penalise individuals who use trusts for their assets and employees who earn extra income through tax-free share schemes.
Not a novel notion
The notion of a “state-managed developmentalist” economy, mentioned in the ANC’s post-lekgotla statement is by no means a novel idea.
Former President Thabo Mbeki mentioned it in 2001, and the ANC adopted it as central to its policy at the party’s 2007 elective conference in Polokwane.
At the time, Jeremy Cronin, in his capacity as SACP member, explained that a developmental state is “an active state with the capacity to intervene in the economy to coordinate and drive transformation”. – Fin24
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