FirstRand questions state’s ‘populist’ policies
The government has adopted populist policies that the country cannot afford, says FirstRand chairman Roger Jardine.
These policies include “higher public-sector wages, a questionable approach to higher education funding” and the introduction of national health insurance, the chairman of Africa’s biggest bank by value said in FirstRand’s annual report on Thursday.
If the government’s drive to amend legislation to transfer land to black owners without compensation is “implemented poorly” it runs the risk of compromising the property rights of SA citizens, Jardine said.
With elections looming next year, President Cyril Ramaphosa has embraced the notion of expropriation without compensation and has said the country’s constitution may need to be changed to allow for this.
“So far, the presidency is navigating this issue well,” Jardine said. “The process is transparent and designed to be inclusive of all views, but the assertion that mortgaged private property assets can be expropriated without compensation, and the banks will just have to absorb the loss, is a ludicrous and dangerous fallacy.”
The country’s biggest lenders have an estimated R1.6-trillion extended in loans financing real estate, according to the Banking Association SA.
“We need to ask ourselves if SA really requires a national [air] carrier that costs the country billions of rand a year when the vast majority of our citizens do not use its services,” he said.
Ramaphosa unveiled plans last month to reallocate R50bn of the national budget, set up a new infrastructure fund and implement a range of other measures to revive the economy. SA’s economy contracted in the first and second quarters and the central bank projects 0.7% growth only this year.
Jardine said reforms in the stimulus package would not lift economic activity over the near term. “Together with other structural reform initiatives — such as addressing state-owned enterprises’ finances and removing other policy uncertainties — they could start to bear fruit towards the end of [2019] and into 2020.”