Nationalise! Expropriate! The Pillars for Economic Transformation according to the ANCYL

As the African National Congress Youth League (ANCYL) starts its 24th National Congress, the focus will be on the elections, especially since everyone in South Africa has a view on Julius  Malema. The policy debates will be reduced to the background, but potentially have a bigger impact on public policy in South Africa, than the outcome of elections. This article summarises the discussion document titled A clarion call to economic freedom fighters: Programme of action for economic freedom in our lifetime.This article seeks to understand the argument, an important first step to debating the issues at a later stage. The proposals focused on youth are contained in a separate document.The discussion document can be downloaded at the ANCYL website.

Contextual Underpinnings

The discussion document provides a context to the proposals being undertaken, that can be seen as having five important descriptions of the problems:

  1. Recognition that the 1994 political breakthrough, left economic power relations intact. More to the point, it argues that the ANC-led government has had good performance on service delivery, but that it has not been able to create
  2. Empirical evidence is presented that shows the continuities of the past, showing that economic opportunity and outcomes are still largely determined by race. There is a strong emphasis on race as a defining feature shaping income and employment outcomes. The pecking order for both income and employment sees whites at the top, followed by Indians, who are followed by coloureds and Africans in last place. Importantly, the argument is substantiated by official data from Statistics South Africa, and independent sources.
  3. The ANCYL takes policy and political stance that without doing something different and dramatic, the economic outcomes are likely to reproduce the same results of exclusion and inclusion. It argues then that the Freedom Charter is the strategic mission, drawing  political legitimacy for its more contentious proposals directly from the charter.
  4. It locates South Africa as still exhibiting the economic characteristics of the colonial economy. The strength of large companies, the continued exporting of raw materials and the inability to industrialise are cited to support this argument.
  5. The ANCYL also argues that the mobility of black people has been driven through processes such as employment in the public and private sector, black economic empowerment and even corruption. Importantly, the argument is that blacks are not yet engaged in the productive activities.

Key proposals

The major proposals of the ANCYL that will debate are clustered under these headings, which it calls the “7 cardinal pillars”:

  1. Expropriation with compensation
  2. Nationalisation for industrialisation
  3. Inclusive and Decentralised Economic Growth and Development
  4. Land restitution and agrarian reform
  5. Building a strong developmental state and public service
  6. Massive investment in the African economy
  7. Provision of education, skills and expertise to the people
  8. Attendant issues – with comments on monetary policy and energy supply

So at this point, readers will either be calling the ANCYL the greatest danger to South Africa, or its saviour. After all prescriptions, such as nationalisation and expropriation are not nicely tailored policy proposals, but rather a stance that emphasises government’s role in redistribution. Both sides of the coin, should however focus on the proposals being developed. A summary of the key proposals is now undertaken.

Expropriation without compensation

The ANCYL argues that the Expropriation Act of 1975 is not aligned with the constitution, and requires changes to align it with the commitments to redress in the constitution. It motivates its proposals in the following basis:

  1. Expropriated land can be used for public purposes and public benefit, including township development, building schools and land reform, amongst other purposed.
  2. Transfer of wealth from the minority to the  ownership of the people as a whole. It notes that there are Constitutional limitations to transfer wealth, but argues that the spirit of the Constitution is not attainable without amendments to the property clause.
  3. The government operates on a “slim” budget, and cannot afford to pay compensation. Yet, without expropriation government will not achieve its goals of economic emancipation.
  4. Redress, and to do so quickly. The ANCYL thus argues that “the State should expropriate strategic sectors of the economy without compensation  because paying all the key and strategic resources stolen from the black majority and Africans in particular will take more than a lifetime to realise.”

The central proposal is to amend the property clause in the Constitution (Section 25), although the exact nature of the amendment is vague.  The manner of framing the argument is important as it locates the argument in the Constitution itself. The core argument is that without expropriation, the intentions of the Constitution will not be realised.

Nationalisation for industrialisation

In arguing for nationalisation, the ANCYL focus is on the “commanding heights” of the economy identified in the Freedom Charter. The list of sectors and institutions to nationalise is large, and includes the minerals, metals, banks, energy production, and telecommunications and retain the ownership of central transport and logistics modes such as Transnet, SASOL, ESKOM, TELKOM and all Harbours and Airports.
The argument for doing so makes for compelling reading, and includes the following dimensions:

  1. Strengthen small business and build a productive economy– The ANCYL argues that nationalised mines would provide inputs for beneficiation and through that which could be “left to industrial and manufacturing entrepreneurs, co-operatives and Small and Medium enterprises, so as to develop productive forces of the South African economy, which is still reliant on production of primary commodities”
  2. Jobs –  Through the beneficiation of minerals and metals beneficiation  “a very firm, sustainable and labour absorptive industrial process, which will be both import-substituting and export-led industrialisation.”
  3. Bigger fiscus – The receipts of nationalised companies would bolster the fiscus, and consequently increase funds for education, health and other social and economic services.
  4. Investment in areas where mines exist, which would lead to more equitable spatial development.
  5. Better salaries and working conditions will be offered in nationalised companies
  6. Greater political and economic sovereignty.
  7. Industrialisation – The ANCYL argues that nationalisation will provide a basis for industrialisation, arguing for a combination of exports and import substitution. The exactness of the industrialisation strategy is however not fully developed.

The ANCYL recognises that there will result in international condemnation, arguing that political mobilisation would be needed to withstand the condemnation.

Inclusive and Decentralised Economic Growth and Development

The ANCYL makes common cause with the Reconstruction and Development Programme, arguing that it focussed on linking redistribution and economic growth. It goes on to explain that redistribution includes the provision of basic services and the decommidification of essential services. The link to industrial policy is established  by arguing that “evidence  always shows that labour participation rises when basic needs are met”.
The key issue raised in this section relate to industrial development in rural areas, located in a national spatial development strategy. The ANCYL proposes that the state run Industrial Development Zones (IDZs) in the following areas, starting in 2014:

  1. Sekhukhune in Limpopo
  2. Bojanala in the North West
  3. Kuruman in the Northern Cape
  4. Welkom in the Free State
  5. Witbak in Mpumalanga
  6. Overberg in the Western Cape
  7. East London and Coega in the Eastern Cape
  8. Far-Northern KwaZulu Natal—linked to Kosi Bay

These new IDZs will be linked to the industrial development zones  in East London, Eastern Cape and Richards Bay in KwaZulu Natal concerning transport  infrastructure. For instance, the Sekhukhune Industrial Development Zone should be anchored on minerals beneficiation and agro-processing from across the Limpopo Province. Funding for these rural IDZs will be from reinvestment in these areas, and through investment by Development Financial Institutions.
The policy intent is to turn rural areas into cities. As the ANCYL argues:
The Industrial Development Zones should also be accompanied by clear plans to turn these areas into cities, with the necessary amenities and services that define cities.
Importantly, there is advocacy position to provide incentives to rural areas, but also disincentives in “overpopulated areas”.

Land restitution and agrarian reform

The ANCYL raises the warning provided by Zimbabwe, arguing that looks what happens if the land question is not addressed. The ANCYL notes the slow pace of land restitution and land redistribution. The core proposal is for the “Custodianship of all Land to the State” through passing appropriate legislation.
The intention is for those who currently occupy land to apply for a license to use the land, and that the license conditions – for both individuals and private corporations – include specifying what the land will be used for and over what period of time. The proposal further indicates 30 years as an appropriate length to lease land, subject to utilisation based on conditions in the license, and with the state having the power to expropriate if land is not used for the purposes specified.
To make land productive, the state should provide implements and purchase food from small scale farmers. The ANCYL cites the example of Brazil which buys more than 40% of food for hospitals, prisons and schools from small scale farmers. The intent is to make small scale farming a viable economic activity.

Building of a Strong Developmental State and Public Service

The ANCYL endorses moves to coordinate government through the establishment of the National Planning Commission and the Performance Monitoring and Evaluation Ministry. It however notes that there are a multiplicity of priority setting mechanism, what it calls “delinked planning instruments” and uncoordinated funding instruments, amongst a litany of coordination failures. “The rationalisation of planning/budgeting/monitoring instruments and processes across the three spheres will therefore be crucial”, argues the ANCYL.
The remainder of the section provides direction for building the public service, through:

  • Prioritising internal capacity for activities, as opposed to tenders
  • Fighting corruption
  • Ensuring that public services are properly maintained and serviced and that public servants are adequately remunerated at all levels.
  • Providing state owned enterprises (SOEs) with developmental mandates and to have both “carrots and sticks” available to “mobilise around and enforce”.

Massive investment in the development of the African economy

This section places South African SOEs at the centre of the development of the continent, through providing expertise, infrastructure and support industrial development across the continent. The ANCYL argues that this expanded role would be different from how Western Powers and China do business in Africa. A compelling proposal is the development of a Sovereign Wealth Fund, which would invest on the African continent. The proposal is further motivated as the Sovereign Wealth Fund would insulate the South African Rand from currency volatility. Countries such as United States, China, Chile and France have such funds, and the ANCYL indicates that “it will not be unconventional for a natural resources endowed South Africa to establish one.”
Provision of education, skills and expertise to the people.
The ANCYL provides several proposals to improve skills in South Africa, with an emphasis on the following:

  • alignment of skills to industrial sectors,
  • expansion of post secondary education and training,
  • transformation of higher education and training and
  • introduction of a new scholarship which will provide educational and training opportunities of South African youth outside the country

There are several important features in the proposals, including:

  • Establishing institutions focussed on an economic sector (e.g.  Information and Communications Technology University, Mining Engineering University/College, Finance and Accounting University/College)
  • Expand post school education for all learners by providing opportunities for training in a range of institutions and through SMME mentorships. The intent seems to be that the system absorbs all students.
  • A comprehensive strategy of insulating indigent learners from paying fees in all these institutions.

Attendant Features

The ANCYL identifies two further issues that are needed to meet its goals. These are:

  1. Monetary policies should therefore be aligned to the objectives of building a labour absorptive industrial economy
  2. Stabilisation of energy resources, and a specific call for research into the use of Uranium as a possible energy source.

[Note – This article is meant to summarise the discussion document, not to provide views on the proposals suggested]

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2 thoughts on “Nationalise! Expropriate! The Pillars for Economic Transformation according to the ANCYL”

  1. As an ANCYL member one has to then say that we do appreciate and highly recognise the work done by the league solely for its attentiveness in ensuring that our Afrcan peolpe,most in particular youth,ought to be the driving force in channelling the success of the country,but now the question that I would like to impose though is that as much as we strive for economic freedom,how then shall this be fully accomplished in a capiitalist state such as South Africa,one, but further beyond that if our call for economic freedom is as geniune as we claim it to be,then we must not then alienate ourselves from the ideological perspective as to say for instance that the ANC has been able attain political power,and through it as a liberation movement,we have been liberate with political power. Now the issue then arises when we strive for economic power but our very own youth are in jail,high school and varsity drop-outs etc. what is the programme of the ANCYL first in ensuring that we first create a drive for shaping a youth that will be radical and politically conscious to then be the full drivers of the vehicle for economic freedom rather than just the few???

    • Dear Nomcebo,
      Thanks for posting a thought provoking question. To summarise it – how do the many become economic freedom fighters? I do not have a ready answer to this question, but as Zapreneur we are trying a range of things. Watch this space!
      Thanks for reading Zapreneur

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