Meltdown of 2008 still here
In this interview, SACP general secretary Blade Nzimande speaks to Tim Modise of BizNews about the economy, his party and the challenges that lie ahead
The SA Communist Party (SACP) has been criticised by various commentators and analysts who look at the South African economic situation, saying the presence of the party in government is confusing the policy choices government is making and also confusing the ideology, if you will, of the ANC.
There is no truth in that. Firstly, what is the ideology of the ANC? In the first instance, the ANC is a broad organisation/broad movement that believes in a mixed economy, where you’ll have the private sector, but a strong public sector as well. Lately, the ANC has been emphasising where the state needs to play more of a leading role in the process of transforming the economy. And we agree with the ANC, in so far as those matters are concerned and the ANC takes decisions. These are decisions taken by the ANC, in its own structure. They are not decisions of the SACP. The fact that we agree on many things doesn’t mean that, for us, it’s the SACP trying to manipulate the ANC. That’s an old story, Tim, if you remember. That’s a Rooi Gevaar story, perceived by the apartheid government. I’m sure the people who are saying that are just people who would like to see the ANC as nothing but an extension of business – which the ANC is not and it has said so – not because there’s a communist party in the ANC. What do you think of the state of the economy at this time?
We raised this at the right time because, at the weekend in our central committee, our main item for discussion was our economy and the challenges. Firstly, we concluded one of the biggest problems facing the South African economy originates from outside South Africa. What is it? We are still dealing with the aftermath of the financial meltdown of 2008 in the US that led to the near crash of the global economy in a manner that had not been seen since the 1930s with the Great Depression.
How is this actually affecting us? We were partly cushioned, around 2009 to 2012, because China was absorbing a lot of mineral resources and South Africa was one of those countries that benefited because we were sending our iron ore, platinum, and a number of other mineral resources to China.
At the time, China was developing its economy, manufacturing and exporting a lot of the goods they were producing, partly from these resources they were absorbing from us. Later, about two years ago, China decided to embark on a different economic trajectory for itself, by wanting to focus on internal economic development and stimulating local demand. This meant, among other things, that the commodity boom we’d had came to an end and we’d possibly never be able to go back to selling our mineral resources at such high prices.
That is what is now affecting our economy. For instance, the prices for our commodities have gone down. We were talking about iron ore, coal and platinum. We counted about four of the commodities that have been affected. There is a problem with steel, as well. China produced a lot of steel and no longer needs it. The world demand has also gone down, and so there’s dumping of Chinese steel, very cheaply, which has affected our economy. That is the sum of the issue affecting us.
There is leadership in the country already. Two ministers, Rob Davies of trade and industry and Ebrahim Patel of economic development, have engaged unions and management in the steel industry. They have said they are going to have to provide some cushion but it’s not a freebie. Those companies must commit to creating jobs – and even save jobs under threat – because it can’t be just that they want to be bailed out but then continue the behaviour of retrenching workers.
Business must also come to the party. They have a responsibility. Doesn’t this offer an opportunity then, for mines to be nationalised, given that they are in trouble?
We do believe that certain key factors of our economy must be socialised. Some people are saying they must be nationalised. Well, it sounds nice and good – politically – but why should government nationalise companies in crisis? What we’d also be nationalising – largely – is debt, as with mining. That’s a problematic call for nationalisation when the mines are down. We must nationalise them when they are doing well so that, as government, we do not inherit debt. At the moment, they’ve been having it nice, selling steel in South Africa, produced in Vereeniging, as if it was ordered from China or the US. We are paying international prices, which is affecting all other companies that use steel as their input in manufacturing.
Even Sasol has been selling petrol to the petrol producers in South Africa at international prices. Then, when things are down, these companies rush to government for bailouts and want them as freebies. Some of the people, opportunistically, call for nationalisation, as a way of saying the state must absorb debt.
No – nationalisation must not actually entail nationalisation of debt. How do we get out of this difficult economic situation we find ourselves in, at this time, according to you?
Firstly, this is an opportunity to really up the game, in so far as industrialisation of our country is concerned, starting with beneficiation. For example, there is already talk that we need to beneficiate platinum to actually produce energy and other byproducts that can come out of that. You know, Tim, the mining industry has been resisting beneficiation. It’s time now, when we have this situation, to push harder for beneficiation so that our minerals begin to produce other products that we can even export.
The second thing we’re saying is that it’s important for government not to reduce – as much as possible – its investment in infrastructure. You’ll remember that the previous administration under President Jacob Zuma, for the first five years in office, invested R1 trillion in infrastructure.
That also went a long way in helping to cushion our economy from what could otherwise have become a huge jobs-loss blood bath. We need to maintain that. It’s very, very important because, in any case, we do need infrastructure, even for better days, so that our economy is able to perform better. The other thing the SACP, in particular, is calling for, is upscaling a national youth service so that we’ll be able to absorb many young people into internships and learnerships through public employment programmes. Even if they are not permanent jobs, but to expose them to work – because that may actually give many of those young people an opportunity to be able to do other things once they acquire some skill and get some work exposure. If we had appropriate skills being provided and many young people being trained appropriately, they would be able to create employment for themselves.
In our post-school education, one of the biggest weaknesses we face is that many of our kids who go to vocational colleges do not get work placements, which are necessary if we are to skill this country. That is why we are saying to employers: “Why are you always complaining that we are producing poor graduates? You know those graduates from colleges need work exposure. Open your companies for workplace experience.”
That will improve the quality of skills dramatically.