The notion of nationalizing South Africa's rich mines may have strong public appeal in a country with high unemployment and poverty rates. But the South African government should do its homework and find out what happened with other African countries that tried that very tactic, says Sir Mark Moody-Stuart, the former chairman of AngloGold mining company.
Delivering the caveat in an interview with the Monitor on the sidelines of the "Shaping a Sustainable Future" conference in Johannesburg, South Africa on Wednesday, Mr. Moody-Stuart said the country should study the implications of nationalization.
The conference was organized by the National Business Initiative (NBI) with a view to creating sustainable economic growth and development in South Africa.
"Look at the advantages first before rushing to nationalize mines,” says Moody-Stuart. “What is the objective of nationalizing mines? What are you trying to achieve? I don't believe nationalization of mines would achieve greater economic transformation, and it will not generate much income."
He cited a number of countries, such as Venezuela, that rushed to nationalize their economies, and have since struggled to sustain growth.
"Discussion about nationalization is not bad," says Moody-Stuart. "We can’t say: 'Let’s not talk about it,' but from past research and experiences, nationalization usually doesn't attract the right people. It can't get the right investment. The advantage of capitalism is that you get capital."
Several other delegates who spoke to the Monitor on condition of anonymity said nationalization of mines in South Africa would trigger high rates of unemployment and worsen the rate of poverty if not done carefully.
Julius Malema, the outspoken leader of the ruling African National Congress's youth league, has been on a whirlwind crusade calling for the nationalization of all mines, warning that mining activities would be disrupted if the call was not heeded.
Mr. Malema’s radical call has been roundly condemned by the South Africa Chamber of Mines and the National Union of Mineworkers, but is finding fertile ground among poor, disaffected youths who struggle to find work.