There was much to digest in finance minister Enoch Godongwana’s medium-term budget policy statement (MTBPS), delivered in early November. Most underreported, and possibly the most important for economic growth for SA, was this little nugget in his speech: "Also of importance is a need to strive for policy coherence and policy certainty across government. We must also continue to strengthen the capacity of the state to implement policy and intervene in the economy in a manner that enhances and not inhibits growth."
Policy coherence means cabinet ministers and their departments presenting and implementing policy that points towards one goal. The orchestra’s many parts must give us a unified and satisfying piece of music. Certainty means making the playing field even, transparent and capable of being used by any local entrepreneur or moneyed foreign investor. It means there is no quicksand in the middle of the playing field.
People have to know what they are buying into. You cannot say one thing today and do something different the next day. No-one will invest in your country.
Minister of mineral resources & energy Gwede Mantashe has no grasp of this simple concept. He seems to revel in sowing policy incoherence and uncertainty. The most glaring example of his inability to realise that he is trampling on SA’s biggest opportunity has unfolded over the past three months.
In September, a full bench of the high court in Pretoria ruled that certain aspects of the 2018 mining charter are not enforceable and once a mining company is empowered, it is always empowered. The mining industry had argued for years that once a company has met the threshold for black ownership of 26% as laid out in previous charters, or 30% for new mining right applications, that holds — even if the empowerment holders subsequently sell their stake.
Mantashe and the department held that a company must keep topping up its BEE ownership stakes, at considerable cost, every time a black owner exits. They lost. This judgment brought certainty to an area that had been of major concern to investors for years. If Mantashe did not like it, he had to say quickly that he would appeal the ruling.
Domestic and international investors will now have to wait and see where exactly the policy will end up
Well, Mantashe does not like certainty. So, when he attended the Joburg mining indaba in early October, he stoked the fires of uncertainty by answering a question thus: "To me, appealing or not appealing the latest charter ruling is not the issue … For me, the major issue is whether the industry is committed to transformation, and will we see more black capitalists? If the industry is committed to transformation, we will not be appealing."
What is this? Mantashe was essentially saying: "I will keep you in limbo, uncertain and confused, for longer." Does anyone really think that any right-thinking foreign mining company will sink billions of rands into a 30-year investment in SA without knowing the government’s position on 26%-30% of its equity stake?
While President Cyril Ramaphosa clings to his ambitious target of $100bn in new investments over 2019-2024, Mantashe is one of those frustrating his dream. This is sad because it is exactly the mining sector Mantashe must be grateful for this year, as Godongwana put it in his MTBPS: "Taxes paid by the mining sector have been strong, due to the commodity price rally which continued through the first half of 2021."
As a cherry on top, last week Business Day reported that Mantashe and his department are at it again. This time the ministry said that instead of "appealing against the judgment, the MPRDA [Mineral & Petroleum Resources Development Act] would be amended to incorporate the transformation objectives of the mining charter that the court judgment had overturned. Compliance would be obligatory."
And so we enter another extended period of uncertainty and policy incoherence. Domestic and international investors will now have to wait and see where exactly the policy will end up. I wouldn’t hold my breath for a swift resolution. Mantashe has been in office for four years and we still find ourselves with this problem. Meanwhile, there go the jobs and the investments.
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