South Africa’s governing party is meeting to fine-tune its policies and adopt new ones, with electricity shortages, welfare grants, central bank independence, immigration rules and the management of state companies among the items on its agenda.
(Bloomberg) — South Africa’s governing party is meeting to fine-tune its policies and adopt new ones, with electricity shortages, welfare grants, central bank independence, immigration rules and the management of state companies among the items on its agenda.
Several of the policies up for discussion by the African National Congress on Thursday are reiterations of previous decisions the party took years ago but were never executed. Others are couched in broad terms, which will give the government some leeway in deciding how to implement them.
The policy changes were originally meant to be debated at the ANC’s Dec. 16-20 national conference where President Cyril Ramaphosa won a second term as party leader, but that gathering was adjourned until Thursday because proceedings were delayed by registration glitches.
These are some of the key proposals:
Energy
The ANC recognized that South Africa’s energy supply crisis is the biggest impediment to economic growth but suggested that it should largely stick to its current path in tackling the problem. It proposed that a state-owned company continue to play a central role in bolstering the electricity supply, and the government consider using natural gas and more nuclear power to ensure a transition to renewable energy doesn’t place the country at a disadvantage. The party also suggested that the country’s weak transmission grid be strengthened and the development of green hydrogen and electric vehicle industries be prioritized.
Africa’s most industrialized economy was subjected to record power outages last year because state utility Eskom Holdings SOC Ltd., which supplies more than 90% of the nation’s electricity, was unable to keep pace with demand from its old and poorly maintained plants.
Read more: Why Blackouts Are Still Crippling South Africa: QuickTake
State companies
The proposals say that state companies operating in specific economic sectors should be overseen by the relevant government departments. That could potentially signal the dissolution of the Department of Public Enterprises. Eskom would then fall under the Department of Mineral Resources and Energy and logistics company Transnet SOC Ltd. and South African Airways under the Department of Transport.
That could raise concerns among some investors as Gwede Mantashe, the energy minister, has been a critic of plans to transition the economy to green energy even though Ramaphosa advocates doing so.
A comprehensive review of all state-owned entities was also proposed to determine which of them should be “retained, consolidated or repositioned.” There has been little follow-though on previous suggestions that the government sell non-core assets.
Read more: South Africa’s ANC Suggests State Firm Ownership Model is Dying
Welfare Grants
The draft documents state that the welfare system “should be protected from inflationary pressures, and should be expanded to provide for basic incomes as fiscal space allows.” The National Treasury has warned that an indefinite extension of the current temporary monthly stipend — which was introduced to cushion the unemployed against the fallout from the coronavirus pandemic and is seen by many as precursor to a basic income grant — could threaten the sustainability of public finances unless a permanent source of funding is found.
The ANC suggested that measures be taken to contain state debt and said that introduction of a wealth tax be considered to reduce inequality. The draft policy documents also reiterates that the government should establish a state bank, even though Finance Minister Enoch Godongwana has warned that the country can’t afford to fund it.
Read more: South Africa Buckles on Welfare Grants, Stands Firm on Wages
Central Bank
The documents state that the “historic anomaly of the private ownership of the South African Reserve Bank must be corrected, in a manner that does not enrich speculators or overburden the fiscus.”
The SARB is one of a handful of global central banks owned by investors — including individuals, commercial banks and pension funds — though its shareholders have no say over monetary policy or the appointment of its governors and Monetary Policy Committee. While the ANC first decided in 2017 that the state should own the central bank, the process — which will require a change to the Reserve Bank Act and an agreement on the price of shares — has stalled.
The ANC called on the SARB to “implement monetary policy in a balanced manner, taking into account growth, employment, and exchange rate factors.” The Reserve Bank implements its inflation-targeting mandate in the interest of balanced and sustainable growth, in line with the constitution, and has repeatedly said the obstacles to bolstering output fall outside the scope of monetary policy.
Read more: Kganyago Says South Africa Central Bank Owners Debate a Distraction
Immigration
The ANC has proposed that immigration laws and policies be tightened and that it no longer be possible to gain citizenship through marriage. It also suggested that refugee reception centers be established near borders to avoid the flow of migrants to the cities.
The ANC lost ground in the 2021 municipal elections to newly formed opposition parties that advocated a harder line on immigration. The country has been plagued by bouts of xenophobic violence for years, with poorer South Africans seeing foreigners as competitors for jobs, housing and government services.
Read more: South Africa Seeks to Curb Immigration, Plans Policy Revamp
–With assistance from Prinesha Naidoo, Paul Vecchiatto and Debarati Roy.
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