Julius Malema
Julius Malema

THE election of Julius Malema as African National Congress (ANC) Youth League president in Mangaung in April 2008 marked a turning point in the mine nationalisation debate in South Africa. Before this, the conventional wisdom was that the debate had been buried by Nelson Mandela’s emphatic rejection of nationalisation on his return from the World Economic Forum in Davos in January 1992.

Malema’s championing of the nationalisation of South Africa’s mining industry, beginning with his address to the league’s political school in July 2009, was initially cautious. It gradually became bolder as a result of an ineffective response by the ANC, under its new youth league-supported leadership post-Polokwane, and business, led by the Chamber of Mines, that this simply was not ANC policy. Malema, a demagogic populist and a racial nationalist, successively exploited the gap, forcing the issue onto the ANC national general council’s agenda in Durban in September 2010. This, in turn, led to the commissioning of the State Intervention into the Minerals Sector report (SIMS), which, while rejecting nationalisation, proposed an array of interventionist measures for the mining industry, including a 50% resource rent tax, strategic nationalisation, compulsory supply of minerals for local beneficiation, and export duties, as an apparent palliative to outright nationalisation.

By reverting to its 1992 mantra of "ready to govern", the ANC’s June policy conference in effect kicked SIMS into touch by adopting the principle of strategic nationalisation, where deemed appropriate, "on the balance of evidence".

Although it remains to be seen how this will all play out at the ANC’s elective conference next month, in the wake of August’s Marikana shootings and South Africa’s worst labour unrest in a generation, Malema’s expulsion from the ANC earlier this year has certainly upended the equation.

Tim Cohen has written an interesting, timely and thought-provoking book on these issues in A Piece of the Pie: the Battle over Nationalisation (Jonathan Ball). Cohen — a contributing editor with Business Day — examines the topic of nationalisation not only in relation to the mining industry’s uniqueness in South African history, but in a global post-Lehman Brothers context, where the certainties of the Washington consensus around deregulation and privatisation broke down as the world’s financial system came close to implosion after September 2008.

Cohen uses this to examine the embrace of nationalisation in the wake of the Great Depression and the Second World War (and the influence of John Maynard Keynes), as much as its retreat in the Thatcher-Reagan era in the 1980s (coupled with the influence of Friedrich Hayek and Milton Friedman). The global financial crisis has ironically witnessed a revival of Keynesian economics, with its emphasis on demand, led by Paul Krugman and Joseph Stiglitz.

Cohen examines South Africa’s roots of economic nationalism within Afrikaner nationalism in the post-Second World War period in the context of the struggle against English capitalism. He quotes a Malema-sounding Nico Diederichs (subsequently National Party minister of finance and state president) saying that "all key industries, including the mines, must be placed under state control".

Cohen carefully analyses the underlying vacuity of the ANC Youth League’s increasingly radical nationalisation proposals, both in their own right and in the post-Polokwane revolt against the ostensible economic orthodoxies of the Thabo Mbeki-Trevor Manuel era. Cohen notes how the league was able to exploit the post-2008 crisis of capitalism as much as the ideological incoherence of President Jacob Zuma’s administration. In doing so, he notes the contradictory shifts in the party’s own economic thinking. It must be said that for all the league’s attacks on the supposed neoliberalism of the Mbeki-Manuel era and its "1996 class project", South Africa never, in fact, experienced the economic liberalisation of Brazil under Fernando Cardoso’s Plan Real or Argentina’s sweeping privatisation programme under Carlos Menem.

Cohen is most telling in his criticism of the Chamber of Mines’s "wavering and weak" response to the youth league; initially feigning somewhat incredulously, in 2009, that it was not an issue because it was not party policy and then claiming a year later that it was "premature" to discuss the matter as it was not government policy. By last year, the chamber had eventually found a sotto voce under its new CEO, Bheki Sibiya, but was hampered by the equivocal response of black business led by Cyril Ramaphosa and a "craven" Patrice Motsepe.

A chamber-commissioned report, released in February, by the Mining Industry Association of Southern Africa, written by economists Gavin Keeton and Mike Beer, provides the most telling answer to the economic cost of nationalisation (about R970bn based on the then market capitalisation of JSE-listed mining companies) or a net negative R25.7bn annual post-borrowing cost for the National Treasury. The report investigated nationalisation in Latin America (Venezuela and Bolivia) and Africa (not least Zambia and Zimbabwe). One quote from the report (citing a World Bank study) is particularly telling in a South African context: "Nationalisation is more likely when inequality is endemic or worsens in the country, and especially when the rents from natural resource or utility companies are perceived as benefiting only a minority. Nationalisation is more likely in countries with low human capital, an undiversified productive structure, and faulty public institutions."

After examining "models" of nationalisation in the UK’s National Health Service, the oil industry’s renationalisation in Hugo Chavez’s Venezuela, De Beers’s joint venture partnership with the Botswana government, and Codelco, the state-owned copper mining company in Chile, Cohen concludes by analysing where the South African debate is headed. Although written before Marikana, he observes that race-based economic inequality was "hard-wired into the apartheid system" and had, in fact, worsened under the Zuma administration. Far from resolving the issue, business had tried to "buy off" the ANC (just as it had done in the heyday of Afrikaner nationalism) through "cosy, backroom arrangements (with high-ranking ANC figures), rather than real attempts at spreading wealth" in the guise of genuine black economic empowerment.

Cohen ends the book by asking himself what he was once asked in an early debate with Malema: "What is the alternative to nationalisation?" The author’s answer — be patient — is inappropriate after Marikana. What Marikana clearly demonstrates is the need to develop a new social compact around the mining industry, involving not only a root-and-branch review of the Mining Charter itself, but the industry’s social wage, the migrant labour system, the role of national, provincial and local government, as well as the collective bargaining system.

This is a well-written and well-researched book, which anyone with an interest in South Africa’s political economy should read. Cohen has a light and deft touch and adroitly engages with some abstruse material. My only criticism is that the author was fortunate enough to contend only with the 57-page SIMS summary, not the full report of more than 600 pages.

Leon is partner and head of Africa mining and energy projects with Webber Wentzel.