It’s not a bad idea, it’s a mad idea

Note to editors: The following remarks were delivered by the DA Shadow Minister of Finance, David Maynier MP, during the debate on the nationalization of banks without compensation in the National Assembly today.

1. Introduction

We are in deep economic trouble, with 9.4 million people who do not have jobs, or who have given up looking for jobs, in South Africa.

So, we need to consider every proposal that will give hope to the 9.4 million people who do not have jobs, or who have given up looking for jobs, in South Africa.

Now, the Commander-in-Chief, Julius Malema, has a proposal, which is, believe it or not, to nationalize the banks without compensation in South Africa.

The idea of nationalizing the banks without compensation is hardly original and is shared by:

- the finance minister’s economic advisor, Professor Chris Malikane, who seems to have attended the “Hugo Chavez School of Economics”;
- the boardroom communists, who talk like workers and who live like bosses, from the South African Communist Party; and
- the thugs who act as the Guptas’ “storm troopers” from Black First Land First.

So, let me be clear from the start: the idea of nationalizing the banks without compensation is not just a bad idea, it’s a mad idea that would crush the hopes of the 9.4 million people who do not have jobs, or who have given up looking for jobs, in South Africa.

2. Banking Sector

The Commander-in-Chief, Julius Malema, like his hero Hugo Chavez, wants to nationalize the banks without compensation, which in practice means:

- seizing ownership of 16 domestic banks, 15 foreign banks, 3 mutual banks and 2 cooperative banks; and
- seizing the assets of the banks, whose loans and advances totaled R3.7 trillion, and whose assets totaled R4.9 trillion, in 2016/17.

This, in a sector of the economy – “finance” – which actually creates jobs, with 140 000 jobs created year-on-year in South Africa.

3. Nationalization

The fact is that, when it comes to the nationalization of banks without compensation, the Commander-in-Chief, Julius Malema, has simply not thought through his proposal, and has not done his “homework”.

First, the nationalization of the banks without compensation would be unconstitutional and therefore illegal in South Africa.

Second, the first objection to the nationalization of the banks without compensation will not come from “White Monopoly Capital”, as he hopes, but from his best friends in Beijing, who are “significant owners” of the biggest bank in South Africa.

The Industrial and Commercial Bank of China will surely not take kindly to the nationalization of their R53-billion investment in Standard Bank, and it would not be long before they come knocking on his door.

Third, the second objection to the nationalization of the banks without compensation will – again – not come from “White Monopoly Capital”, as he hopes, but from the thousands of hard-working contributors, and thousands of beneficiaries, of the Government Employees Pension Fund, who are also “significant owners” of banks in South Africa.

So let hard-working people, like the thousands of policemen who protect us, know: the Economic Freedom Fighters want to seize R66.1-billion of your savings invested in Standard Bank.

And let hard-working people, like the thousands of nurses who take care of us, know: the Economic Freedom Fighters want to seize R35.7-billion of your savings invested in First Rand Bank.

And let hard-working people, like the thousands of teachers who educate us, know: the Economic Freedom Fighters want to seize R18.1-billion of your savings invested in Nedbank.

And let hard-working people, like the thousands of social workers who take care of us, know: the Economic Freedom Fighters want to seize R12.8-billion of your savings invested in Investec.

And finally, let the thousands of pensioners who rely on us to protect their savings, accumulated after years of hard work, know: the Economic Freedom Fighters want to seize R10.3-billion of your savings invested in ABSA.

And fourth, and most obvious, the nationalization of banks without compensation would trigger an economic meltdown with immediate sovereign credit ratings downgrades to “junk status”, which would ultimately result in a recession, massive job losses and even greater poverty in South Africa.

Of course, what is terrifying about this debate is not just that political formations like the Economic Freedom Fighters want to nationalize the banks, but that the banks themselves are silent about the nationalization of banks, preferring to:

- bury their heads in the sand;
- wave their white handkerchiefs; or
- more often than not, jump up and lick their opponents, like grateful Labradors.

Whatever the case, the fact is that the nationalization of the banks without compensation is not just a bad idea, it is a mad idea that will crush the hopes of the 9.4 million people who do not have jobs, or who have given up looking for jobs, in South Africa.

4. Conclusion

In the end, to give hope to the 9.4 million people who do not have jobs, or have given up looking for jobs, we need to:

- boost economic growth by announcing a package of structural reforms to build business confidence and stimulate private sector investment;
- stabilize public finances by announcing a “haircut” on all mandatory cost containment items and implementing a Comprehensive Spending Review;
- support the independence of financial institutions by making a strong statement in support of the institutional independence of the South African Reserve Bank, Public Investment Corporation and National Treasury;
- reform “zombie” state-owned enterprises by putting the national airline into business rescue with a view to stabilizing and then privatizing South African Airways; and
- mitigate significant long-term fiscal risks by terminating the nuclear build programme.

We hope that the next debate will be on proposals that will grow the financial sector, not proposals that will crush the financial sector, so that we can find ways to extend banking services to more and more people, especially more and more poor people in South Africa.

Issued by the DA, 7 November 2017