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Johannesburg - As the ANC prepares for its National Policy Conference in June, analysts say that investors may have reservations over a few statements made by the party.
Credit Suisse recently published a report on the nine discussion documents it analysed ahead of the ANC’s policy conference. It found that investors are concerned about the strategy and tactics of the ANC related to radical economic transformation.
The report indicates there is still no clarity on the radical policies to be implemented.
Further, Credit Suisse identified 70 statements which can be viewed as positive by investors, of which 32 statements may create doubt in investors. There are also eight statements that will be viewed negatively. Of the 32 neutral statements by the ANC, 19 may create uncertainty among investors.
Negative statements
Among the proposed policies is to drive national development through fiscal redistribution, state-owned enterprises (SOEs) and regulation and procurement. However, Credit Suisse is of the view that the suggested means to improve the social welfare system, such as procurement and SOEs, have been ineffective and costly. Additionally, SOEs have a poor track record.
The ANC also suggests a balance between social and private ownership of investment resources. The ANC wants this to be determined by development needs, but this raises concerns among investors over the presiding body which would determine what these needs are, according to the report.
Regarding economic transformation, the ANC has suggested centralising the economy, with oversight from the Presidency and the National Planning Commission. Investors may see this as the sidelining of Treasury, suggested Credit Suisse.
Other statements by the ANC include the proposal for a single human rights body. Investors may poke holes at this as there are currently eight institutions to "guard democracy". Merging these into a single human rights body could weaken their profile, Credit Suisse stated.
Positive statements
The proposals viewed positively by investors still create underlying uncertainty about how they will be implemented, according to the report.
For example, even though the National Development Plan remains a long-term path for the country, investors may feel this is a case of continued “lip service” with minimal action, the report said.
Credit Suisse also highlighted that efforts towards transformation to make restitution for the wrongs of the apartheid past have good intentions. They includes efforts for deracialisation of ownership and control of wealth, management and the professions, and land redistribution.
However, investors are mostly concerned about the tactics and policies to be implemented to achieve this transformation. They seek more clarity on the “nature” of radical economic transformation, the report said.
Energy programme and nuclear risks
The discussion documents also consider the government’s commitment to the Independent Power Producer Programme (IPP) as well as the Integrated Resource Plan. However, investors are likely to raise questions about the slow implementation of the IPP by Eskom as well as the role of nuclear energy in the energy mix, and the sovereign risk it presents.
The ANC suggests splitting the generation and transmission responsibilities of Eskom. But investors may require more certainty before contributing their investments.
