South African Communist Party General Secretary Blade Nzimande. He currently serves as minister of higher education and delivered the keynote address at the annual party fundraiser.
Originally uploaded by Pan-African News Wire File Photos
Volume 8, No. 22, 3 December 2009
In this Issue:
Take the offensive to the financial bourgeoisie: Mobilise to make banks serve the people!
The nationalisation debate…more and more curious
Red Alert
Take the offensive to the financial bourgeoisie: Mobilise to make banks serve the people!
By Blade Nzimande, General Secretary
Our Central Committee (CC) meeting held over the last weekend expressed itself comprehensively on the offensive statement by the Banking Council of South Africa (BASA) to try and concoct an elitist escape to some of its commitments to the Financial Sector Charter Council. The Banking Association of South Africa announced last week that it would longer engage with the Community and Labour members of the Financial Sector Charter Council. Instead it opportunistically and foolishly stated that it would now only engage with government, and working together with the Association of Black Securities and Investment Professionals (Absip) as the only true representatives of what it refers to as 'black interests'.
Basa Managing Director Cas Coovadia held a media conference to say the banks would in future not engage with organised Labour and Community groups in relation to the Charter dispute over black ownership of financial institutions, but would engage only with Government and the Association of Black Securities and Investment Professionals (Absip) "because this body is among the organisations which have black interests". What a cheek!
Who are the banks trying to convince by claiming Absip represents "black interests" but organised Labour and Community groups do not? As has become increasingly clear during the financial sector campaign over the years, the banks are not willing partners in transformation, they are obstacles to it. In fact, banks are tyring to use their powerful position in capitalist South Africa to further entrench their powerful positions at the direct expense of the workers and the poor of our country. Last week's BASA statement is an expression of the most arrogant, if not outrageous, of attitudes towards the overwhelming majority of the people of this country.
In a joint statement issued by Cosatu and the Financial Sector Campaign Coalition (FSCC) (representing a total of about 50 community and related organisations) we called on both Government and Absip to publicly dissociate themselves from these attempts by Basa to undermine the Financial Sector Charter and, instead, urged them to resist attempts by the banks to subvert government and black professionals to their elitist cause.
Background
The background to the latest move by Basa is the Charter dispute, which has been going on for the past 20 months, over alignment with the BEE Codes of Good Practice. In 2008, Charter participants deadlocked over the refusal by the banks to align with the generic Codes as the basic minimum universal standards for transformation across all sectors of the economy. Media attention has focussed only on non-alignment with the direct (narrow) black ownership of financial institutions, which the Charter pegs at 10% and the Codes put at 15%, but there are several other areas in which the banks have not yet agreed to align. Negotiations were in limbo for much of this period as Charter participants waited for direction from government.
Following the election earlier this year, the new Ministers of Trade and Industry and of Finance convened a meeting of all Charter participants. Constituencies agreed to consider and quantify an equity equivalent to resolve the ownership dispute. Equity equivalent involves performance in other areas with an equal Rand value to non-performance in the area of equity ownership.
Charter parties agreed to report back to the ministers with proposals. Negotiations have taken far longer than anticipated, but have now resulted in a calculation of the 5% equity equivalent at R16,8 billion. Initially, agreement was reached on splitting this amount between financing for co-operatives, financial access by the workers and poor, financial assistance to resource-poor black farmers and low-income housing. However, banks subsequently tabled two "non-negotiable" demands:
--BEE Transaction Financing must be included in the equity equivalent split -by 2008 banks have already financed over R100bn in BEE deal financing, more than double the target, whilst refusing to finance low-cost housing and other related infrastructural programmes
--The Charter's "once empowered, always empowered" clause must be retained
--The Charter Council must reach consensus on proposals to the Minister for deviations from the Codes. So far, the banks have been unable to come up with a convincing motivation for retaining "once empowered" that other Charter participants can support.
The "once empowered" provision enables banks to do only a single once-off BEE deal in order to score full black ownership Charter points in perpetuity. Even if black owners exit from a BEE deal and sell their shares back to whites or to the bank itself, the BEE score can remain the same, as if they still retained the same shares for black owners, subject to Charter Council approval. This would mean a 100% white-owned bank could claim forever to be black-owned. But banks refuse to give up "once empowered" for the Codes' provision that black ownership points can be retained for a period, subject to certain conditions.
In the case of Standard Bank, it continues to claim 10% black ownership for its BEE deal with Saki Macozoma's Safika and Cyril Ramaphosa's Shanduka, even though this shareholding has reduced to less than 7%. Absa claims its full 10% black ownership score despite its BEE deal with Tokyo Sexwale's Batho Bonke consortium, unwinding. Only 3 % of the Batho Bonke shareholding was unencumbered but Absa continues to claim 10% black ownership recognition.
Ironically, if banks pull out of the Charter, in future they will have to comply with the Codes, so they will forfeit "once empowered, always empowered" anyway. So what is really behind the banks refusal to engage with Community and Labour and, in effect, pulling out of the Charter?
Banks have made it clear throughout the life of the Charter that they do not want to be in any structure that they do not have exclusive control over so that they manage this for their own profit-maximising interests. Banks refuse to be held to account in any forum which can measure genuine transformation in an objective and independent manner. They have been unwilling partners in the Charter process. Their intransigence has ranged from refusing to finalise performance standards to refusing to align with the BBBEE Codes. Banks believed controlling the Charter would enable them to hold on to their wealth, and their economic and financial muscle would shield them from transformation.
The banks have indicated that they will pull out of the Charter if they do not get their way on their two non-negotiables. At the same time, they say if government instructed them to align, they would comply, because then they could explain to investors they had been forced to do so, and did not comply voluntarily.
Recently, the banks have also embarked on an extensive, self-regulated so-called transformation process parallel to the Charter, co-ordinated by the Banking Association. This process includes co-ordinating banks' compliance with the Codes as well as overseeing sector-specific programmes such as consumer education and access.
Conclusion
Basa did not state this week that banks were withdrawing from the Charter Council, which is due to meet on 10 December 2009. Instead, Basa appears to be attempting to unilaterally restructure the Charter Council and to exclude Community and Labour. They have tried and failed to get government to restructure the Council by excluding Community and Labour.
The Charter Council constitution does not give Basa the authority to exclude any other Charter participant or member, although it does allow Basa to resign. In terms of Clause 20.2 of the Charter:
"A member may resign from the Charter Council at any time by delivering written notice to that effect to the Charter Council at its office, and that member shall thereupon cease to be a member of the Charter Council."
Basa is a "member" of the Charter Council in terms of 3.1.2 of the Charter Council Constitution. If the banks do not want to be part of a collective, representative, multi-stakeholder transformation Charter Council, they should resign. Community and Labour should not walk away from the Charter in response to bad behaviour from the banks. If anyone pulls out, it should be the banks.
There are a number of choices in dealing with the Equity Equivalent proposal, including BEE transaction and financing.
As the workers and the poor of this country, represented by labour and the community organisations we can choose one of two choices:
--We could refuse the demands of the banks; or
--Agree to include it, provided that any BEE transactions meet genuinely broad-based criteria
--Banks should say whether they have been mandated and whether indeed they do support the Basa position.
It is clear to us, given what some of the CEOs of the banks have said, that BASA did not have the mandate to issue such a dismissive and reckless statement.
It is for all these reasons that the SACP, working together with the Financial Sector Campaign Coalition, will resuscitate its mass campaign to make banks serve the people!
Asikhulume!
The nationalisation debate…more and more curious
By Jeremy Cronin
The present discussion on nationalising the mines runs the danger of becoming too narrowly focused. It's a mistake to detach the question of the ownership of the mines from the overall strategic thrust of our economic policy programme.
This strategic programme has emerged with increasing clarity from recent SACP and COSATU congresses, and from the ANC's December 2007 watershed 52nd national conference. Our shared strategic perspective has been further consolidated at our most recent mid-November Alliance Summit. If we are to make progress in the discussion around the mining sector, for instance, then we need to begin by identifying what we are saying is our key overall strategic economic priority. Last month's Alliance Summit summarised it crisply as "transforming the structure of the economy and moving to a different growth path".
So what is problematic about the structure of our economy? Why do we need to move to a different growth path? At the heart of our problems is that even when our economy has been growing, as it did in the recent past, this growth has tended to reproduce (and in some cases worsen) racialised inequality and under-development.
In 1994 unemployment was around 24%. Just before the global recession began to bite locally, in the latter half of 2008, after some fourteen years of "unprecedented" growth, we had barely managed to return the unemployment level back to the same crisis level of 24%. After 15 years of democracy, and notwithstanding many important efforts, we succeeded in going round in a circle! The rich got richer, but our country was not transformed. In the present recessionary conditions the unemployment levels are now rocketing up, with nearly 1 million jobs lost in this year alone.
Why is it, then, that even in the "good times", our economy reproduces crises of inequality, poverty and general under-development?
The answer is that we are still locked into basically the same semi-colonial economic growth path that was first forged in the imperialist-dominated mining revolution in SA over one hundred years ago. Our economy remains excessively dependent on primary commodity exports. On the other hand, we are excessively dependent on imports of capital goods (machinery), technologies and luxury goods. Even relative to many developed capitalist economies, we have extremely high levels of corporate concentration ("monopoly capital"), especially in the minerals and energy complex, in finance, chemicals, and increasingly in agro-processing. These high levels of concentration continue to shape our economy in many problematic ways. Our economy tends to be capital not labour-intensive. It is extremely energy-intensive, and the infrastructure (transport logistics, ICT, water, energy) is all skewed towards the narrow interests of monopoly capital.
All of these features, along with collusive, monopoly pricing practices by the dominant monopoly capital sectors, serve to throttle any organic growth of more labour-intensive, medium and small-scale light manufacturing, agricultural and service sectors – not to mention cooperatives. High levels of unemployment and skewed infrastructural and spatial development narrow our national market, and further entrench our export-oriented dependency. Historically, big capital in SA has also acted aggressively as a sub-imperialist power, undermining a more balanced approach to regional development and production, further weakening our potential regional market.
This is why our recent Alliance Summit statement is absolutely correct to identify the transformation of the STRUCTURE of our economy as the key strategic task. In fact, this is now the key multi-class and, indeed, non-racial patriotic task of the national democratic revolution in the present conjuncture.
And this is why we need always to ensure that any economic discussion – whether it be about BEE, or infrastructure development, or nationalising the mines – always returns to this fundamental question: Will this or that specific economic policy proposal actively contribute to transforming the highly problematic STRUCTURE of our economy? Or will it, wittingly or unwittingly, simply help to REPRODUCE the same essential semi-colonial structural features?
The strange case of nationalising in order to privatise!
Sello Rasethaba, chairperson of the Lobbying Corporation of SA, has made an interesting contribution to the debate around nationalising the mines ("We should follow the Chinese route", City Press Business, 29 November). Rasethaba positions himself as a protagonist of nationalising mines in SA. His article, however, confirms and compounds the concerns that many of us in the ANC-alliance have about the timing and motivation behind at least some of the recent calls for nationalisation.
Rasethaba mentions, in passing, the SACP's recent interventions on this topic. He claims that "Jeremy Cronin" has said "many mines were now owned by struggling BEE groups, which meant that nationalisation would be little more than a bail-out at taxpayers' expense. I do not know where he [that's me] gets his evidence from, but he is wrong because the top 30 resources companies that control more than 90% of the sector are in white capital's hands and are controlled by foreigners."
There are two major confusions here. No-one has ever said that BEE groups are dominant in our mining sector. What has been said is that our mining sector in general has been hit by the global recession. BEE interests in mining tend to be particularly vulnerable precisely because many operate in marginal mines and because most of their share-holdings are highly geared. Moreover, some (not all) of our resource sectors are now in serious long-term decline. The obvious example is gold, where, despite the recent significant surge in the gold price, output has declined by 9%.
While, in principle, the SACP certainly supports the nationalisation of the commanding heights of our economy, any move to nationalise mines now needs to be closely scrutinised. Would nationalisation be the best allocation of billions of rands of public money in the current reality? Whose class interests would be served? Would we be baling out capital in general and not just BEE elements (although these latter might be particularly anxious to be bought out, given their high levels of indebtedness)? Would we be saddling the public sector (and therefore taxpayers) with the burden of managing down declining sectors, allowing those who have made trillions of rands of super-profits to walk away from responsibilities to workers, communities, and a ravaged environment plundered for over a century?
Then there is the other confusion embedded in what I have just quoted from Rasethaba: "the top 30 resources companies that control more than 90% of the sector are in white capital's hands and are controlled by foreigners." If these resources are controlled by "foreigners", then are they really in "white capital's hands"? Yes, I suppose, if you assume that "foreigners" are necessarily "white". So who are these foreigners? Well, of course, foreign holdings in the SA resources sector are diverse, typically cosmopolitan investment funds and multi-national corporations. In the interesting example that Rasetheba cites, the ASA Metals joint venture, it is a Chinese state-owned corporation that has a 60% controlling interest, while 40% is currently held by a provincial publicly-owned entity, Limpopo Economic Development Corporation (LimDev).
All of this illustrates that it is far too simplistic to divide capital into "white" and "black". (Is Chinese capital "yellow", and if it is state-owned is it then "red"?) I am not for a moment denying that we are living still with the terrible reality of racialised inequality and exclusion impacting upon the black majority of South Africans. In the SACP we are not colour-blind liberals. Our national democratic struggle is all about the radical eradication of national oppression AND the structural realities that still keep reproducing it. We fully support broad-based black economic empowerment (after all, it was the Communist Party that first pioneered this call in SA in the late 1920s).
But to make sense of different sectors and strata of capital, we need to analyse them in terms of their dynamic and functional realities. Is it capital that is largely dependent for its reproduction on productive investment, or on speculation, or on rent-seeking as a comprador go-between? Is it bound to a national market, not so much by sentiment, but by its location within the accumulation process, or is it cosmopolitan? Is it structurally parasitic on the state? Is it locked in by its indebtedness to others? We also need to distinguish between the agents of capital accumulation (owners and managers), with their various subjective political, cultural and ideological inclinations, and the underlying laws of capital accumulation (which ARE colour-blind).
Above all, we always need to ask what leverage the working class and other popular forces, together with our democratic state, have over different sectors and strata of capital and its agents in order to discipline them, as much as possible, into the transformative agenda we have highlighted above.
Unfortunately, Rasethaba's attempt to promote nationalisation asks none of these strategic questions. And he doesn't ask these questions for a very simple reason - he has a very different agenda.
Beneath the surface of his argument a strange paradox is apparent. He is in favour of public ownership of mining interests…but essentially as a route to then privatising much of them on behalf of aspirant black capitalists! He commends Limpopo's publicly-owned LimDev's endeavours "to sell 30% of its [minority] stake in ASA Metals…", and its "expression of interest for a BEE partner to buy 62,5% of its 40% stake" in the same company (I don't quite understand the arithmetic here, but nevermind). But he doesn't explain how any of this will contribute to job creation, or enhanced beneficiation.
He bewails the fact that the "state missed [an] opportunity to assist black mining entrepreneurs by not using the proceeds from the royalties legislation to fund new entrants". Again, he doesn't tell us how using public proceeds in this way would advance the transformation of our skewed, semi-colonial growth path. I am not saying that it wouldn't – but I am saying that we need to know how it would.
He calls on SA to "nationalise companies in strategic sectors" using the balance sheets of the state-owned African Exploration Mining and Finance Corporation, the IDC, PetroSA, the PIC, Eskom and Transnet. But to what end? He tells us that "these entities must expand into the African continent and eventually go global…" Again, he simply replicates the sub-imperial ambitions of Cecil Rhodes and all of his successors. Again he simply calls for the intensification of the same flawed growth path.
It is true that he qualifies himself by saying we must expand beyond our borders "while heeding the national interest and security of the republic and the welfare of South Africans". But what about our neighbours? What about Zambians or Mozambicans or Angolans? What about an entirely different kind of relationship of developmental solidarity between SA and its region?
The ironies of Rasethaba's intervention, where nationalisation is espoused to advance privatisation, are best explained by understanding that he consistently conflates South Africa's national interests with the sectoral interests of aspirant black capitalists. Emerging black capitalists may well be able to contribute to a multi-class national struggle to transform our society. But this will not happen spontaneously. They will need to be marshalled within the discipline of a common strategic objective of transforming the STRUCTURE of our economic growth path. And that is quite a different matter from simply changing the supposed "colour" of capital.
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