• Road to riches

    Taxpayers keep funding structures with big plans but who knows what efficacy, says Mandi Smallhorne.

  • Don't fall for Ponzi scams

    An expert unpacks the tell-tale signs to watch out for.

  • Inside Labour

    A smokescreen of misleading rhetoric won't make SA's problems go away, says Terry Bell.

See More

Godongwana on Mangaung

Dec 06 2012 12:19 *Peter Attard Montalto

Enoch Godongwana. Picture: City Press

Related Articles

ANC says no to nationalisation

Godongwana quits as MP - report

Godongwana unaware of nature of scheme

Enoch Godongwana resigns

Deputy minister linked to missing R100m

No need to debate inflation target - ANC

THE HEAD of the ANC's transformation policy committee Enoch Godongwana on Wednesday morning gave a very important and interesting interview to Bloomberg. He is responsible for guiding various policy topics through Mangaung in two and half weeks. 

In this interview he said (and this comes from someone on the "conservative", investor friendly wing of the party) that the ANC should ignore the warnings of Moody's and S&P and impose taxes and more aggressive redistributive policies on the mining sector at Mangaung, to then be implemented more rapidly by the government. 

Till now Nomura had highlighted the risks of post Mangaung downgrades due to "deleterious" policies being enacted and the agencies latching onto these (as per Moody's downgrade statement last time). 

However we had always thought the ANC would shy away from such specific acts in terms of conference policy outcomes, instead, expecting broad generalities and inclusion of terms like economic nationalism. 

As such the possibility of downgrades on fluffy generalities was more uncertain. However if what Godongwana says is actually enacted (and with its discussion will probably come much more active discussion of nationalisation than might otherwise occur) then downgrades in the first quarter of next year actually now become more likely again. 

Redistribution from the mining sector is certainly necessary though we should not forget it already does occur under the existing tax framework to some degree. The issue here is if monetary redistribution is really acceptable if it risks jobs and investment in the industry (when added to the existing non-competitiveness and labour unrest). My gut instinct would be no and that it should be phased in very slowly over the longer term and offset by jobs growth or investment incentives... but that's exactly the debate the ANC will have at Mangaung. 

I still think the ANC may struggle to reach agreement on specifics though the lack of specifics from the June policy conference was more of a function of the leadership battle as opposed to policy. Equally we should be careful that even a final policy statement couched in generalities might still have implicit direction to government behind the scenes.

Other areas to watch for that are rating negative are greater use of state owned banks, proscribed assets (though we disagree this is a bad thing with ratings agencies) and possibly very aggressive targets around NHI or wider restrictions on the private sector in order to construct a developmental state. 

Minimum wages will be a hot topic but probably not overly ratings negative given there are already numerous sectoral minimum wages.

*Peter Attard Montalto is an emerging markets economist at Nomura, all opinions are his own.


Follow Fin24 on Twitter, Facebook, Google+ and Pinterest



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

We're talking about:


Johannesburg has been selected to host the Global Entrepreneurship Congress in 2017. "[The congress] will ensure that small business development remains firmly on the national agenda and the radar screen of all stakeholders, the Small Business Development minister said.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

People who fall victim to Ponzi scams are:

Previous results · Suggest a vote