The SA Communist Party (SACP) has taken issue with the ANC, its alliance partner, over its slow pace in transforming the country’s financial sector, including putting on the table the issue of prescribed assets, which forces pension funds to invest in government stock.
The ANC held an event to review its 2019 election manifesto in Johannesburg on Monday, where higher education & training minister and SACP national chair Blade Nzimande gave a presentation.
“There is little, if any, progress achieved towards [implementing] financial sector transformation commitments. The financial sector is still dominated by private commercial oligopolies,” he said.
The SACP noted that commitments in the manifesto include transformation and diversification of the financial sector, state, co-operative and mutual banking, and “in this context, state-owned banking licences”.
“Also included is a commitment to introduce, following an investigation, prescribed assets on financial institutions’ funds to unlock resources for investments in social and economic development.”
The ANC has backed off from the idea of prescribed assets after a backlash from civil society and pension fund administrators and managers, with the party’s previous economic head and current finance minister, Enoch Godongwana, saying it is off the table.
Prescribed assets effectively refer to a government policy requiring retirement funds to hold a certain amount of investments in government bonds, with the aim of unlocking resources for investments in public works programmes.
The review of the ANC’s 2019 election manifesto comes as the country is set to hold provincial and national elections in 2024, when the governing party’s electoral support could dip below the 50% mark for the first time since democracy, according to several election polls and one by the ANC itself.
Grow faster
In the 2019 manifesto, under the subheading “Investing in the economy for inclusive growth”, the ANC admitted the rate of investment in the productive economy and infrastructure has slowed.
It said increasing such investments would “help us grow the economy faster, create jobs and boost incomes. This should help us to strengthen our infrastructure for more roads, schools, toilets, clinics and hospitals, housing, public transport, communications systems, energy generation and distribution.”
In pursuit of that the governing party undertook to increase investment levels by R1.2-trillion over the next four years as part of plans to grow the economy and create jobs. Data released by Stats SA in June shows the economy grew 0.4% quarter on quarter after a downwardly revised 1.1% decline in the prior quarter. Eight of the 10 industries recorded growth on a quarterly basis.
The Reserve Bank’s monetary policy committee expects the economy to grow 0.3% this year after forecasts of 0.2% in March and 0.3% in January. This is expected to rise to 1% in 2024 and 1.1% in 2025.
Besides slow economic growth, made worse by persistent power cuts, the country has a high unemployment rate, which in the first quarter rose to 32.9% from 32.7% previously. Stats SA data shows that the number of unemployed South Africans rose by 179,000 to 7.9-million.
The Association for Savings and Investment SA (Asisa) has come out strongly against prescribed assets, which it argues would force the industry to deploy citizens’ savings into entities that have over the recent past been “mired in state capture and lack of delivery. As custodians of these savings we have to oppose this.”
Speaking to Business Day on Tuesday, SACP spokesperson Alex Mashilo said the party’s input during the manifesto review event was presented by Nzimande. “The national chairperson did not blast the ANC. Rather, he drew attention to facts. We are still far away from establishing a state banking sector. Also, as the Financial Sector Transformation Council points out in its reports, the banks have failed to transform themselves,” Mashilo said.
“In addition, in our view as the SACP, a point we did not have enough time to make during our presentation, [is that] during the government’s Covid-19 interventions the banks, which are at the centre of the financial sector, showed that their commitment to transformation was at best synonymous with lip service.
“This is also evidenced by the way they administered the state-guaranteed Covid-19 loan scheme meant to support SMMEs. That left much to be desired,” he said.
Mashilo said the way forward is to re-examine and strengthen the strategies required to ensure successful implementation of the financial sector transformation commitments.
“The SACP has been campaigning for a review of the entire macropolicy framework followed since 1996, which in our view has failed to bring down the persistent high levels of unemployment and inequality,” he said.
Cosatu president Zingiswa Losi, delivering the Cosatu message of support at the event, said the alliance partners must not restrict themselves “solely to ticking what we did and did not do in the manifesto. Society is not static. Conditions on the ground fluctuated in unprecedented terms since 2019.”
Boost morale
Losi said the tripartite alliance should not waste the “remaining 10 months left in this administration”.
“We must work flat out as never before to deliver to our people, deal with our crises, and boost society’s morale.”
Cosatu called on the government to raise the R350 social relief of distress grant to the food poverty line, and extend the Presidential Employment Stimulus to accommodate 1-million active participants in October 2023 and 2-million in February 2024.
It also wants the government to unblock delays in rolling out public infrastructure programmes, repeal the Municipal Systems Amendment Act clause banning all “350,000 municipal workers from holding office in a political party at any level”, and allocate additional resources to ensure the police, National Prosecuting Authority, Special Investigating Unit, Hawks and judiciary are “well-resourced to win the war against crime and corruption”.
“We cannot afford, as we head towards the 2024 elections, where the entire alliance will be in judgment, to continue to sleepwalk or to repeat endless platitudes,” Losi said.
Update: July 11, 2023
This article has been updated with information from Cosatu.
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