Southern Africa Report (Johannesburg)

South Africa: The Politics Behind SIMs

analysis

Photo: Anglogold Ashanti/MediaClub SA
Drilling underground in a South African gold mine.

Nationalisation of South Africa's mining sector has not been in prospect for more than a decade, despite a massive push by the youth league of the ruling African National Congress (ANC).

Greater state intervention, by contrast, clearly is.

Proposals by the ANC-appointed commission into options for increasing the contribution of the country's minerals sector to development and poverty alleviation envisage a quantum shift in national policy and massive changes to virtually every aspect of the sector - and within the government itself.

The report, titled State Intervention in the Minerals Sector (Sims), was presented to the ANC National Executive Committee (NEC) at the weekend. It will now be circulated in and outside the ANC for comments and suggestions ahead of the party's national policy conference in June, itself a precursor to the party's elective conference in December 2012 - the ANC's centenary conference. Procedurally, the policy conference will flag any policy changes to the country's minerals regime for final discussion and adoption at the national conference as official ANC policy.

Changes proposed in the Sims report include an overhaul of South Africa's Cabinet, creating a super-economics ministry; the establishment of a professional minerals commission; and a presidential audit of all existing mining rights, including those granted as new order rights under the current Mineral and Petroleum Resources Development Act (MPRDA).

Contest for control of economic policy is a key feature of governance in the ANC-led alliance with the 2-million member Cosatu trade union federation and the South African Communist Party (SACP).

This explains ongoing push-pull tensions in Cabinet between the Ministry for Economic Development under Ebrahim Patel (a former Cosatu official), Finance Minister Pravin Gordhan (South Africa's former tax commissioner) and Planning Commission Minister Trevor Manuel, himself a former finance minister.

The proposal for an all-powerful super economics ministry to manage the country's Minerals-Energy Complex (MEC) could set off an intense battle among ministers over who ultimately directs economic policy. The contests will be further complicated by attempts by the three tripartite alliance parties to put its stamp on economic policy formulation and implementation.

Sims argues that lack of co-ordination and strategy alignment between key departments (Mineral Resources and Trade and Industry among them) has seriously compromised the management of South Africa's mineral resources. It blames this for the lack of backward- and forward-linkages which should be contributing to economic development more broadly and to job creation.

It also blames the misalignment for monopoly and import-parity pricing of critical mineral feedstocks into the economy, and the consequent loss of job-creation opportunities.

The solution Sims posits is to combine minerals governance and industry governance to maximise the national industrial development benefits of South Africa's vast mineral resource base, which it describes as its only real "competitive advantage" in the global economy.

It therefore proposes the merging of the Ministries of Trade and Industry, Mineral Resources, Energy, Public Enterprises, Economic Development and of Science and Technology into a super-ministry.

This idea of a super-ministry is not new. It was first mooted by the SACP and Cosatu ahead of President Jacob Zuma's election as party and South African president. They argued that a super-ministry would form the basis of a two-tier Cabinet system with senior and junior Cabinet ministers, and would align budget with policy decisions - not the other way round.

This was a tough sell in the ANC and was ultimately rejected. Instead an enlarged Cabinet was created to accommodate conflicting ideological interests and internal ANC dynamics.

The architects of Zuma's Cabinet fashioned a series of changes in the executive, creating several new ministries (among them Economic Development and the National Planning Commission), while splitting others (most graphically a single education ministry into basic and higher education). Several ministries were clustered together to encourage a cross-cutting approach to better align the developmental needs. This was a departure from the departmental silo approach favoured under President Thabo Mbeki, which gave effective control of economic policy to conservative National Treasury mandarins.

Sims says the setting up of an economics super-ministry would be a "vital first step" in tackling South Africa's unemployment challenges, maximising the impact of the country's resources "competitive advantage" on economic development, creating sustainable upstream and downstream industries.

It suggests a two-stage approach: first, the establishment of a "co-ordinating ministry immediately that will lead the cluster and oversee the merger"; and second, operationalisation of the super-ministry.

Recognising just how uphill the battle for a super-ministry will be, Sims' authors prudently suggest several variants. As a minimum, they argue, the ANC should merge the ministries of mineral resources, of energy, of economic development and trade and industry, citing Norway, Angola, Finland and Sweden as countries that have chosen that option to facilitate coherent governance of their MEC.

And if this doesn't find favour, it proposes a virtual super-ministry - an MEC ministerial cluster, with a presidentially-appointed chairperson to coordinate the cluster to ensure coherent and integrated strategies.

The ideas are aimed at more effective MEC management and greater benefit flow. But they have the potential to set off such a contest between competing ideological influences in the alliance that it would knock the current presidential succession struggle into a poor second place.

It also addresses the current licensing regime, significantly arguing for a professional licensing body comparable to the South African Revenue Service (Sars), the country's tax collection agency under National Treasury. Combined with a proposal for a comprehensive, presidentially-overseen audit of all existing licences, this is clearly intended to challenge the prevailing reality in which the few black beneficiaries of the system are a select group, linked to powerful figures in the ANC and their private business interests.

Sims is emphatic on the need for a decisive state role in reorganising and managing the minerals sector, arguing that market forces alone will not help to align South Africa's rich and diverse mineral resources with its developmental needs, and have signally already failed to do so.

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