Nationalisation: President Zuma must stop Malema before he undermines investor confidence

President Zuma must stop any debate in the ANC on the nationalisation of South Africa's mines before it starts. It is not sufficient for him to declare that nationalisation is not government policy, then immediately state that he cannot stop the ANC Youth League (ANCYL) from debating it, as he did in his State of the Nation speech and again in today's press.

The state's policy on nationalisation has a considerable effect on investor sentiment, so any debate on the topic by any structure of the ruling party will raise questions about South Africa as an investment destination.

President Zuma is the leader of the ANC, so he should be able to stop Julius Malema from starting a debate that will undermine investor confidence. If he does not do so he is either being irresponsible with South Africa's investment prospects, or is demonstrating that his leadership is compromised, or is simply showing that he does not understand the nature of investment markets.

The President can end the debate before it starts by pointing out to Malema the obvious fact that the Mineral and Petroleum Resources Development Act of 2002 transfers South Africa's mineral rights to the state.

Private sector mining companies happen to be the most efficient extractors of mineral wealth, thereby ensuring the state recoups maximum benefit through taxes and royalties charged. Anyone who suggests the state can run a mining company better than the private sector need only look at how poorly the government has managed the state mining company Alexkor.

Statement issued by Tim Harris, MP, Democratic Alliance member of select committee on finance, February 21 2010

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