Gigaba man: nationalise banks, insurers, mines

16 April 2017 - 02:03 By ASHA SPECKMAN
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Finance Minister Malusi Gigaba.
Finance Minister Malusi Gigaba.

Finance Minister Malusi Gigaba's new economic adviser - an economics professor from the University of the Witwatersrand - has tabled a blueprint that puts banks, insurance companies and mines in the line of fire for radical economic transformation.

The eight-page proposal, if it is adopted wholesale, starkly contradicts Gigaba's recent statements in which he backtracked on radical economic transformation and said the state would stick to fiscal discipline and inclusive growth. This followed a second credit-ratings downgrade to junk by Fitch Ratings last Friday.

On Thursday, Gigaba told investors in Cape Town: "We will be working hard in the coming weeks and months to avoid further downgrades and in the medium term, to restore our investment-grade rating." This included meeting this week with foreign investors in Washington at the IMF and World Bank Spring meetings.

The proposal by Professor Chris Malikane appears to be at odds with Gigaba's message. Mayihlome Tshwete, the minister's spokesman, confirmed this week that the professor was the minister's adviser.


Malikane was Cosatu's nomination to the National Development Plan panel. He favours state-interventionist policies.

Malikane said he had penned the article in his capacity as an activist, but added: "I'm not going to change my view. I'm not going to be shy about expressing those views."

The plan is premised on a view that the country has become a battleground for "capitalist groupings".

On the one side is white monopoly capital and credit-based black capitalists such as Deputy President Cyril Ramaphosa, Patrice Motsepe and Saki Macozoma, who have amassed wealth through black economic empowerment. Opposing them are black capitalists, who have taken advantage of state tenders. "In so far as the tender-based capitalist class has begun its war against the dominant white monopoly capitalist class, it has to be encouraged," the professor said.

"The cornerstone of the ownership and control of the state by white monopoly capital has always been the National Treasury, its associated agencies and the Reserve Bank.


"The leading officials and political principals have always been appointed by white monopoly capital."

The ANC had never exercised political autonomy in its appointments in strategic positions in the government's financial cluster, he said.

The proposal is to confront the ANC-led government with demands driven by a new national economic plan that will benefit black South Africans, particularly the working class. These include "expropriation of white monopoly capitalist establishments such as banks, insurance companies, mines and other monopoly industries to industrialise the economy". Further, the establishment of a state bank to consolidate all state-owned financial institutions, which will "facilitate affordable credit to the progressive class forces".

Malikane told Business Times: "At this point the country is fatigued with the growth rhetoric. The country is yearning for transformation." Radical economic transformation was broader than growth. "If we talk about inclusive growth then why not inclusive development?"

The plan also envisages nationalisation of the Reserve Bank and expropriation of land - becoming state-owned - without compensation. "The state uses the rent collected to support expenditure for the wellbeing of the progressive forces and for the use of the land in line with the national economic plan."


On the Reserve Bank being governed by the constitution, he said: "This is an anomaly. How did it come about that a private bank finds itself into the constitution?" Its ownership by the public was crucial, as was other public institutions having jurisdiction over it. This did not mean the Reserve Bank would lose its operational independence.

Social projects such as free education, health, housing, water, sanitation and electricity are other demands.

Malikane also proposed a wide-ranging audit of employment equity and labour law compliance with harsh penalties for defaulters.

He said the country had discussed transformation for years and questions about it displayed a degree of insensitivity and denial. "As an African, I see white domination everywhere. It's dehumanising."

Enoch Godongwana, the ANC's head of economic transformation, said he had not read the entire paper and could not comment.

Thabi Leoka, economic strategist at Argon Asset Management, said: "The problem here is that we haven't implemented any plan since 1994. We've moved from RDP to GEAR to Asgisa. When we launched the NDP in 2012, that was the holy grail of South Africa's economic path."


She said there had been questions about its adoption and the country's failure to achieve an economic growth rate of 5% to halve the unemployment rate by 2030.

"Each year it seems we are getting further away from the target. My concern with a new economic plan is we will lose credibility as a country ... Countries such as India and China - they are on their 12th and 13th (respectively) five year plan. You can see the successes of those countries because they've put plans in the 1950s and 1960s that they've stuck to and tweaked."

There was buy-in from investors in the NDP, but there was a lack of will to implement the new plan.

Malikane said other Brics countries had state-owned banks and were reporting "good growth", with the exception of Brazil which was struggling because it had "embedded itself in a rapid programme of neoliberalisation".

Malikane said his ideas would require a change of existing "neoliberal" policy framework. "It encourages foreign ownership of critical sectors." He suggested that banks would have to be taken over partially or wholly. The trend internationally was for state intervention in the sector.


For the programme to succeed, unity in action was required through campaigns and structures including labour, organised black business and black professionals and civic organisations and political parties.

"The current civil war between factions of the capitalist class ... provides a unique opportunity for the progressive forces to put forward an independent radical agenda of transformation This opening needs to be seized urgently ."

Read the full proposal by Malikane here

- Additional reporting by Pericles Anetos

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