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Let's mine, not undermine

Cyril Ramaphosa | 2011-08-07 03:00:29.0
Cyril Ramaphosa. File photo
Image by: Tyrone Arthur / Sunday World

The ANC Youth League and South Africa's mining giants can find a way forward to turn the nationalisation 'threat' into an opportunity instead, writes Cyril Ramaphosa

Anyone who wishes to see South Africa becoming a successful and prosperous country should welcome initiatives that are aimed at reducing poverty and inequality and making our economy more inclusive.

The ANC Youth League has put the challenge of economic freedom sharply on the nation's agenda. Though many are critical of some of their proposals, most notably the nationalisation of mines, they have correctly drawn attention to the most serious issue facing the country - how to ensure that the economy develops in a way that sustainably meets the needs of the poor and marginalised.

Some of the concerns they have raised reflect the observations made in the diagnostic overview released recently by the National Planning Commission, which identifies the continued social and economic exclusion of millions of South Africans as the greatest challenge facing the country.

What is significant is the enthusiasm with which the youth league is pursuing what they have termed the goal of economic freedom.

This enthusiasm should be applauded, as young people comprise the majority of the country's population.

Unemployment, inequality and low skills levels most adversely affect them. We need to effectively address the challenges the youth face as they are the ones who will carry that burden for decades to come. Amid the sharp (and sometimes shrill) public commentary on nationalisation, the greatest mistake we can make is to ignore the concerns they are raising, because they go to the heart of the issues that we need to be grappling with.

There are very sound arguments against nationalisation as an effective means to achieve sustainable growth and redistribution of wealth. In fact, nationalisation has the potential to have precisely the opposite effect.

I believe that the objectives the youth league seeks to achieve can be achieved in better, less costly, less value destructive and smarter ways than through nationalisation.

We should learn from many countries that have tried this option and failed. Successful countries have always shied away from reinventing a wheel that does not move.

Much as we understand that poverty and unemployment are rooted in decades of economic injustice, so too must we accept that the frustration being witnessed today arises in part from our collective inability to sufficiently transform our economy. This inability has certainly sparked the call for the nationalisation of mines.

It is highly plausible that the call arises in the context of a mining industry that has been seen to profit from a commodities boom, but fallen short of the commitments made in the Mining Charter. In its 2009 review of progress in the implementation of the charter, government found very little transformation had been achieved. Diversification of management and core-skilled workers has been minimal.

White men continue to dominate top management and technical positions and earn much more than their black counterparts.

The mining industry needs to own up to these shortcomings, as do government and other stakeholders. They need to focus greater effort and apply greater urgency to meeting these objectives, not merely to forestall any move towards nationalisation, but because transformation is an economic, social and moral imperative.

The mining industry is huge, powerful, effective and efficient. It still accounts for one third of the market capitalisation of the JSE and continues to act as a magnet for foreign investment.

But the industry also has a sad history of exploitation and neglect. Over decades it did little to develop the skills of all its workers or acknowledge the needs of the impoverished communities in which it operated. Mining in practice and in reality epitomised the harshness and cruelty of the apartheid state machinery and its economy.

The transformation of the mining industry is therefore an important litmus test of our ability to transform our economy, and, by implication, our society. It should therefore be a matter of great concern to all of us that transformation in mining appears to have faltered. This is a risk both to the industry and the country.

It could have done so much more. The industry spent upwards of R50-billion in capital expenditure last year. Could, say, 5% of that expenditure not have been spent on programmes that make a bold and tangible difference like producing 10000 new mining engineers over 15 years or building accommodation for its workers, building top-class schools and clinics in communities where mines are located? Would this not have made the industry less vulnerable to calls for its nationalisation?

Money spent doing this would be money well invested to secure a sustainable future for the industry and all who benefit from it. More importantly, it would have demonstrated its commitment to change in a way that is visible and quantifiable.

It is certainly not too late. The mining industry has an opportunity to prove wrong those who think it cares little for transformation. It needs to come up with a bold and far-reaching plan that extends beyond the requirements of law or government expectations.

It should do so not merely because it wants to avoid nationalisation, but because it wants to be foremost among the industries that forge a new democratic SA economy.

We need to recognise that challenges in the mining industry reflect a broader economic problem. Even after 17 years of democracy, after the longest period of sustained growth in our history, we still face severe unemployment, massive inequality and widespread poverty.

We are indeed engaged in a struggle for economic freedom. This is a struggle that we must wage together and on several fronts, just as we waged a common struggle to defeat apartheid. This struggle is about ensuring that the country's resources are equitably distributed. It is a struggle that we must necessarily pursue with greater vigour and determination.

There are some who justifiably view the call for nationalisation with concern, as a threat to sustainable economic growth and stability. This concern should not however blind us to the fundamental point that is being made - that South Africa needs to urgently attend to the problems of unemployment and disempowerment.

The enormity of these problems demand that we look beyond a narrow nationalisation debate to the fundamental economic challenges that we must confront. It demands that meaningful engagement takes place across society on economic challenges we all face. It requires that we set aside partisan interests and resist efforts to ridicule or belittle each other's views.

The mode of debate needs to change. Business should demonstrate not merely that it is opposed to nationalisation, but, more importantly, that it is truly committed to economic transformation. By the same measure, the youth league needs to ensure that the pursuit of economic freedom does not become ensnared in a sterile exchange about nationalisation that fails to address the underlying challenges. We are all called upon to do something rather than retreat to our respective ideological trenches.

We should seize this opportunity to work together to accelerate meaningful and sustainable change. Let us rather nationalise the acquisition of skills and the economic empowerment of mining communities.

  • Cyril Ramaphosa is the chairman of Shanduka Group and a member of the ANC NEC

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