Dec. 13 (Bloomberg) -- South Africa’s ruling party must end talk of nationalizing mines and set clear policy goals to revive confidence in the economy, said Stephen Koseff, chief executive officer of Investec Ltd., the country’s fifth-biggest bank.
The African National Congress has failed to curb corruption and improve education in Africa’s biggest economy, even as the government and central bank followed sound monetary and fiscal policy since the end of apartheid in 1994, Koseff said in an interview yesterday at Bloomberg’s office in Johannesburg. Investec owns banks and money managers in South Africa, the U.K. and Australia.
As ANC members meet next week to elect leaders and decide on policy for the next five years, some company CEOs and church officials published letters this week demanding the party tackle corruption and provide better schooling. Standard & Poor’s and Moody’s Investors Service have warned they may cut the nation’s credit rating again after downgrading its debt this year if the ANC adopts policies that threaten to boost spending and widen the budget deficit.
When investors “hear vague noise and talk of nationalization and all funny things, they get very nervous,” Koseff said about some of the ANC proposals. “Those things have got to be buried, 10 kilometers under ground, with cement.”
The ANC’s youth wing has led a campaign for all the country’s mines to be nationalized. South Africa is the world’s biggest producer of platinum and chrome and the fifth largest miner of gold.
The ANC should adopt the government’s National Development Plan that calls for increased spending on infrastructure projects to reduce the 25.5 percent jobless rate, Koseff said. Business leaders support the proposals that seek to create 11 million jobs by 2030, he said.
While the plan was commissioned by President Jacob Zuma and drafted by a team led by former finance minister, Trevor Manuel, some members of the ANC have said that more “radical” policies are needed to stimulate economic growth and create jobs.
“You can’t have everyone running down different plans,” Koseff said. “Once you have cooperation between business, labor and government, and the primary objective is to grow and develop the economy, then you will see job creation.”
Economic growth will slow to 2.5 percent this year, the least since a recession in 2009, after the worst mining strikes since 1994 and waning demand for manufactured exports from Europe curbs output, according to the National Treasury and Reserve Bank.
South Africa’s rand weakened 6.6 percent against the dollar since Aug. 10, when the labor unrest started at the nation’s mines, while credit-default swaps over five years have risen 14 basis points over the same period. The currency rose 0.1 percent to 8.6472 per dollar as of 8:21 a.m. in Johannesburg.
The ANC will consider raising taxes on mining companies at its meeting next week, Enoch Godongwana, the head of the party’s economic policy committee, said in an interview last week. While he and Susan Shabangu, the mines minister, have said that nationalization of mining assets has been ruled out, members of the ANC Youth League say they will continue to argue for it to be adopted as party policy.
“The first thing we need is policy clarity,” Koseff said. “There is some confusion as to what key government policy is. It is very important that government recognize that there is a strong voice from broader society saying we can’t tolerate this anymore. We can’t continue to see a breakdown of our social fabric.”
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