Private companies must take over South Africa’s failing state-owned firms — ANC draft policy

A draft policy document compiled by South Africa’s governing party suggests the private sector play a greater role in the economy, a proposition that’s favoured by President Cyril Ramaphosa and provides further evidence of a shift in thinking in an organisation that’s traditionally backed state-led growth.

The African National Congress document, seen by Bloomberg, recommends that private companies invest in infrastructure and take over state-owned firms.

It also envisions businesses and individuals donating land to kickstart a program to improve access for Black farmers.

Efforts to revive an economy have foundered in the wake of the Covid-19 pandemic and nine years of misrule under Ramaphosa’s predecessor, Jacob Zuma, during which the government estimates more than R500 billion ($32 billion) was stolen — mainly from state companies.

Many of the firms are now dependent on government bailouts, and the country’s ailing power utility, Eskom Holdings SOC Ltd., has subjected the country to an increasing number of electricity outages, known locally as load-shedding.

The government has faced criticism for displaying inertia in addressing the energy shortages and clearing bureaucratic hurdles to investment.

In February, Ramaphosa called for a more conducive environment for businesses to create jobs.

The ANC has an alliance with the South African Communist Party and retains strong ties with Russia and Cuba, and it previously adopted proposals to establish a state bank, nationalise the central bank and make it easier to seize land without compensation.

“Programs to unlock wider access to land ownership have not been effective or sufficiently ambitious in scale,” the ANC said in the document dated April.

“The mobilisation of investment in new productive capacity has been inadequate and in the past 15 years has been severely constrained by load-shedding due to the shortage of electricity.”

“All this has been further worsened by the Covid-19 pandemic.”

Pule Mabe, a spokesman for the ANC, didn’t respond to requests for comment. The document’s preparation comes ahead of the party’s policy conference, which will take place later this year.

Land Donations

A key plank of the party’s draft recommendations is that the Land Reform and Agricultural Development Agency proposed by the government facilitate land donations and reward those companies with recognition for boosting Black participation in the economy, a requirement to do business with the state.

Other proposals in the document entitled “Strengthening Economic Recovery and Reconstruction Towards an Inclusive Economy” include:

  • Steps be taken to boost exploration for gas and so-called green metals — nickel, vanadium, copper, cobalt and platinum
  • The government should work with the private sector to implement at least 10 “high-impact” infrastructure projects in the 2022-23 fiscal year
  • Support for the creation of green hydrogen and electric-vehicle industries.

South Africa’s Sunday Times newspaper reported on the document earlier.

Now read: “Era of bailouts” for SABC, Post Office, Eskom at an end — ANC plan

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Private companies must take over South Africa’s failing state-owned firms — ANC draft policy