By Rafiq Raji, PhD
Much dust has been raised over increasingly louder calls for more economic equality in South Africa. If a country’s wealth is concentrated in a few hands, it is almost inevitable that those who feel left behind would some day make bold their misgivings. The growing disenchantment amongst the mostly poor black but majority population with the stranglehold of so-called “white monopoly capital” should not be trifled with in any way. The resentment runs deep. Christopher Malikane, whose brightness and erudition is well-known at Wits University where he is an associate professor of economics, has proposed what some may consider radical views over how to resolve entrenched racial inequalities in South Africa. Prof Malikane proposes that the South African Reserve Bank (SARB), which is privately owned, be nationalised. He also wants banks and mines to be state-owned. And like an increasing number of black South Africans not as radical, Prof Malikane wants currently white-owned land to be expropriated without compensation. Were he not an obviously close adviser to new finance minister Malusi Gigaba, scant attention would probably be paid him. After all, his current views are not significantly different from those he has long held, most recently before his current position, as an adviser to the Congress of South African Trade Unions (COSATU), one of the partners in the ruling African National Congress (ANC) party tripartite alliance that also includes the South African Communist Party. Prof Malikane is entitled to his views. Those who disagree with him should simply offer theirs.
Time for a new deal
True, Jacob Zuma’s newfound economic radicalism smacks of desperation by a beleaguered politician with limited options. There is no gainsaying that his populist motives are writ large. Still, Nelson Mandela’s magnanimity to the white minority population has over the years proved to be costlier for black South Africans and the pace of economic progress slower for an increasingly antsy majority than even he probably ever envisaged. The need for a new deal can hardly be refuted. But what shape should this deal take? Better still, what would be an ideal compromise? If Prof Malikane’s proposals are taken as one extreme and that of the ANC hitherto another, is it so out of the realm of possibilities that a negotiated middle ground could still be reached? And quite frankly, it would be disingenuous of white South Africans to think that the current economic configuration is sustainable. But the argument could also be made that so was apartheid. And look how long that lasted? An anomaly could endure long enough that when change does eventually come, it may not matter much. With distortions and divisions already entrenched then, it would be too late for the type of negotiated and accommodative change that also does not destroy. This is why all views, no matter how extreme they may seem, should at the very least be heard. Truth be told, without some push now, current inequalities would deepen further and the economic apartheid that has persisted since 1994 would further endure. Ordinarily, black leaders should have the foresight to recognize this exigency and not be only enthused about it when their political survival depended on it. In any case, wondering about the motives of politicians is needless. So irrespective of the likely ulterior motives behind Mr Zuma’s “radical economic transformation” what should matter at this time is that finally a proper debate can be had on the issue.
Learn from past mistakes
Should land be expropriated without compensation? But what is compensation really? Besides, value already accrued to current beneficiaries of the land could easily be justified as enough compensation. Better still, is a scenario not possible where land though expropriated could be leased to the clearly more skilled white farmer with some technical arrangement for skills transfer to blacks in the mix? To use the minerals sector as an analogy: with extractive industry economics in favour of beneficiation, of what use have extracted minerals sold in their primary form been to owner African governments? The same applies to land. And examples abound of land transferred to unskilled black South Africans that have proved to be less than productive. Zimbabwe is not so far off that the potential pitfalls of a land “re-grab” which does not address the intricacies that govern the creation of wealth are not so palpable. Owning land is not enough. It is hard to argue against the nationalisation of the SARB, however. A central bank should be owned by its government. But it would most definitely be counterproductive to do the same for commercial banks. Besides, what should matter more should be how to ensure that every South African, whether black or white, has access to capital, possesses the requisite skill to acquire it and ensure its efficient allocation. Bear in mind, much of the capital that drives the South African economy is foreign. Thus, taking over local banks would hardly alter the configuration of global finance nor inoculate the economy against its reach. So it behoves policymakers and their eggheads to ensure South Africa remains friendly to global capital even as they strive to ensure opportunities abound for all.
Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. https://www.businessdayonline.com/the-malikane-proposals/