‘Charter can’t stem the tide’
ANC economic heavyweight Enoch Godongwana warns that the new Mining Charter could add to the increasing tally of job losses in the sector
The head of the ANC’s economic transformation committee, Enoch Godongwana, has sounded a warning about the new Mining Charter, saying it cannot hold back the tide of a weakened economy and will, in fact, add to the number of job losses in the sector. Godongwana expressed concern that the charter’s provisions would not be implemented, given that opposing parties might spend years in legal contestation.
Already R50 billion of the mining industry’s share value has been wiped off since the contentious charter was gazetted last week by Mineral Resources Minister Mosebenzi Zwane.
Godongwana said the ANC-led government needed to concern itself more with the policies it promulgated as these could negatively affect investment and harm business confidence.
“Over the past five years, the mining sector has lost more than 1 000 jobs a month. It should be worrying us that whatever policy we put in place is able to stem that tide,” he told City Press this week.
“Unfortunately, the Mining Charter is not the policy that can stem that tide, given the job losses in that sector. That is the challenge we have.”
On Thursday, President Jacob Zuma backed the controversial charter, which has triggered anger and may be subjected to a legal challenge by the Chamber of Mines.
Zuma sang a different tune to Godongwana’s when he told MPs in Parliament that the charter would not adversely affect the mining sector, adding that the country would come out of its first technical recession faster than everyone thought. But Godongwana said it could trigger more job losses. He was quick to point out that he did not have a problem with the target of 30% black ownership, but rather the mechanism used to achieve that target.
The charter increases the BEE ownership requirement in mines from 26% to 30%. Mining firms are required to reach this percentage within 12 months.
It also directs them to procure 70% of goods and 80% of services from BEE companies. This has ruffled feathers as mining firms claim these percentages are unaffordable.
Godongwana said the ANC needed to be aware of the fact that the country was facing economic problems, given the current technical recession.
He was part of an ANC delegation that held a meeting on Tuesday with mining bosses.
It is unclear what the ANC achieved in that meeting, but Godongwana said both parties needed to find a mutual understanding.
“First and foremost, we need common ground among ourselves so that we know our approach and our response to this.”
Godongwana warned that, without a compromise version of the Mining Charter, there would be no way that this new legislation could be implemented – because it would trigger a long and tedious judicial process.
“The end result is that you have a nice document but no implementation. So the choice is to have a nice document but no implementation because the mining industry has interdicted it, or [to work towards] a compromised version that can achieve the implementation quickly.”
Godongwana said the original charter was “a product of genuine negotiations”, hence it worked.
“Fundamentally, all charters work because they are a product of negotiation. If the parties cannot agree, they must use the trump card clause in the BEE code and impose a solution.”
Meanwhile, Godongwana said boosting business confidence was important for the country. This could be done by implementing existing legislation, such as the amended Mineral and Petroleum Resources Development Act.
To grow the economy, government must remove structural bottlenecks, he added.
“Chief among those is skills transfer. We need to focus on skilling young people. The bulk of the country’s unemployed is composed of young people, who are largely unskilled.”
Godongwana was unimpressed by Public Protector Busisiwe Mkhwebane’s recommendation that Parliament change the mandate of the SA Reserve Bank, saying her decision was unfortunate and added to the economic quagmire.
She ruled that the bank had failed to protect the public by bailing out Bankorp, Absa’s predecessor, between 1985 and 1991.
In response, Absa, the Reserve Bank and Parliament said they would seek a judicial review.
“I have never heard it anywhere in the world that fiscal and monetary policy are separated,” said Godongwana.
“It is just unworkable in terms of policymaking. I do not know where the Public Protector came up with that. ANC policy says there must be tighter coordination between fiscal and monetary policy,” he said.
“The other issue concerns whether it is constitutionally correct for a chapter 9 institution to push for constitutional changes. When you say the Reserve Bank’s focus must now be something else and that it must change its policy direction, you are interceding in the policy space. This is causing huge problems.”
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SEEKING COMMON GROUND The ANC’s Enoch Godongwana