Mandela to Review Nationalization Policy
JOHANNESBURG — AFRICAN National Congress President Nelson Mandela returned to South Africa from a two-week trip abroad Feb. 8 to face his toughest policy test - a review of the ANC's economic policy.
The ANC's ambiguous position on nationalization and the repayment of foreign loans is undermining its credibility and discouraging potential foreign investors, economists say.
During a Feb. 5 speech to Danish businessmen, Mr. Mandela hinted that he would initiate a review of the ANC's policy of selective nationalization on his return. "If we want to create a climate where investors will not fear losing their investments ... we have to take a decision on the question of nationalization," Mandela said. "We have to choose whether we want investment from foreign companies ... we have to make a choice."
The ANC is expected to consider economic policy at the weekly meeting of its National Working Committee on Feb. 12. De Klerk urges ANC policy review
President Frederik de Klerk, who also returned from a 10-day trip abroad Feb. 2, said he detected a shift in the ANC's political thinking and believed that Mandela had accepted that the ANC's economic policy would have to be reversed. Mandela said such policies had ruined the economies of Eastern European countries and he urged the ANC to cut its communist links.
The economic debate between the ANC and the government centers around how to correct the racial imbalances of the apartheid era. The ANC calls for redistribution of wealth through nationalization and taxation while the government argues that only export-led economic growth and foreign investment will enable South Africa to address the legacy of apartheid.
In recent months the ANC has accepted the importance of foreign investment and economic growth. Mandela has said he is prepared to look at methods other than nationalization for redressing past imbalances if the business community can come forward with an alternative plan. IMF hopes for moderate economic path
A recent report by a team of economists from the International Monetary Fund (IMF) warned that any future government would have little hope of redistributing wealth through taxation without wrecking the economy. Income inequality should rather be addressed through "better training and better employment opportunities" for blacks, the IMF report said.
After a downturn last year, economists are predicting a mild upswing in the economy and real 2 percent growth this year.
Responding to questions from businessmen in Davos, Switzerland, on Feb. 3, Mandela said that it would be a disaster for a future ANC government to not honor its debts. But on Feb. 5, the ANC's national executive met in Johannesburg in Mandela's absence and later condemned a current bid by the Development Bank of Southern Africa, a government-funded agency, to raise 100 million deutschemarks in the European capital market.
The ANC's statement said that "a future democratic government will be compelled to weigh with great care its obligations to service and take responsibility for the debts contracted by the present illegitimate regime prior to the formation of an interim government and a formal request by such a government for the lifting of economic sanctions."
The ANC is opposed to development agencies raising capital abroad even for the purposes of black advancement projects. The ANC statement says that it believes that "these borrowings are designed to impose a costly and heavy burden of international indebtedness on a future democratic government."
In a Financial Times interview, Mandela played down contradictions in policy. He said that a future ANC government would honor its debts but added that some loans may need to be renegotiated. Internal ANC conflict over its nationalization policy was evident in a speech Mandela gave to the World Economic Forum in Switzerland, where he abandoned a section of the official text that articulated hard-line socialist views on nationalization and state intervention.