Xolobeni requires us to find right balance
Three months ago, in preparation for the World Economic Forum in Davos, Klaus Schwab wrote about the challenges facing the world as it seeks to embrace globalisation 4.0 and the fourth industrial revolution.
In trying to make a case for globalisation in a world that is increasingly retreating towards closed borders under the guise of the pursuit of sovereignty, Schwab makes an important distinction between globalisation and globalism.
Globalisation refers to the integration of economies and industries, underpinned by technology and the movement of ideas, goods and people. Globalism relates to the idea that within a globalised world the formulation of policy should have the wellbeing of the world at large rather than an individual nation at its epicentre. Such an idea creates natural tensions when the level of discontent within a country leads its citizens to view globalisation as a construct designed by the elites to elevate global desires over national interests.
In the words of Donald Trump, the ideology of globalism conflicts with the doctrine of patriotism.
Pursuing the doctrine of patriotism does indeed lead to a focus on more national interests. This is easier for a country such as the US, whose economic construct is far more diverse than smaller nations. This diversity gives big countries bargaining tools at the table of economic trade-offs. A country such as SA lacks the muscle to materially influence the global economic agenda. Rather, its contribution is centred on the unique resources it brings to market.
In formulating policy around how such resources should be extracted and traded, it has to balance the need to sell resources in the world market with the question of what works best for its citizens. The historical trend has been for extraction to happen locally and for the beneficiation to occur elsewhere. This model sees the bulk of the economic benefits associated with the minerals industry being attributed to the secondary players rather than the primary producers.
The rise of resource nationalism is an inevitable consequence of this phenomenon. This is materially different from nationalisation, which seeks wholesale ownership by the state. At its core, resource nationalism seeks to capture and retain more economic benefits for the host country. This requires the formulation of policies that are global in intent to make the investment climate open to a wider pool of investors but also nationalistic in value distribution. Attracting investors with the risk appetite to engage in resource exploration is critical for a country whose own capital markets lack sufficient depth to finance largescale projects.
Recent political rhetoric centres on nationalisation as the avenue to pursue. But SA simply has neither the cash nor the competence to undertake wholesale nationalisation of the mining sector. Rather, the focus ought to be on how resource nationalism can be elevated.
The Xolobeni community case illustrates these tensions. While no-one doubts that the economic value of the Xolobeni land has the potential to make a significant change to the wealth of the community and country at large, the community’s anxieties are sensible. Historically, resource exploration in SA has relegated the legitimate owners of the minerals the communities to fringe participants in the value chain.
In seeking to champion the cause of foreign investors, the government has stumbled towards the globalisation of its resources. That in itself is not a bad thing, but it must be balanced with the national question of what model best balances the interest of the investors and host communities. For now, this remains the elusive goal of the state.
By resisting the wishes of mineral resources minister Gwede Mantashe and foreign mining interests in Xolobeni, mining communities may just force the government to finally find the right balance between the globalisation agenda and economic patriotism. Sadly, this will come too late for most mining communities.