Malema, Mandela and Nationalisation

by Allistor Spark, March 2010

As Julius Malema’s misdemeanours multiply, one of the most egregious has been allowed to go unchallenged for months. This was his misrepresentation of ex-President Nelson Mandela’s position on nationalisation.

In punting his own populist campaign for the ANC to adopt a policy of nationalising the country’s mines, Malema has sought to give his proposal unchallengeable support by claiming the great man as a champion of it. In fact Mandela, though once a believer, rejected nationalisation as ANC policy a full two years before becoming President.

Malema, who began his nationalisation crusade last July, dragged Mandela’s name into the heated debate four months later when responding to criticism by Jeremy Cronin, deputy general-secretary of the South African Communist Party.

“In his first public address after release from prison,” Malema said, “former President Nelson Mandela said, ‘Nationalisation of the mines, banks and monopoly industry is the policy of the ANC and a change or modification of our view in this regard is inconceivable.’”

That is factually wrong in the first instance, and elliptical beyond that for it omits Mandela’s change of mind on the issue.

Mandela made no mention of nationalisation whatsoever in his first public address after being released from prison, which was delivered to a vast crowd on Cape Town’s Grand Parade on the evening of February 11, 1990. Julius Malema was eight years old at the time and I doubt he was present, but I would have thought he might have read the historic text at some point during his political education.

What actually happened is that Mandela released the text Malema refers to while he was still in prison, a month before his release. He did so to quash rumours that had been published in newspapers at the time that he had undergone a change of mind in recent years, that he had weakened in his political resoluteness during his long imprisonment.

The rumours were false. The issue of nationalisation had been debated for years within the ANC, in exile and on Robben Island, and while not all were in agreement Mandela himself had been convinced it was the right policy. He had seen how Afrikaner leaders had used it to advance, empower and enrich their own people, and he believed the ANC should follow suit. But what was of primary importance to Mandela at the time, prompting him to issue the statement, was to reassure the ANC leadership in Lusaka that he had not gone soft in prison.

Mandela stuck to his views for a time after his release, but doubts began to creep in as he realised the extent to which a general disillusionment with state-ownership had set in around the world while he had been incarcerated. After he made another statement, in response to a journalist’s query, reaffirming his belief in nationalisation, I wrote a column in The Star on August 15 1990 saying I believed such a policy would be a serious mistake.

Next morning my phone rang and Mandela was on the line. “I’ve read your article and I’d like to talk about it,” he said. “Won’t you come and have lunch with me?” So I drove to his house in Soweto where we talked for three hours.

I cited the example of Zambia’s unhappy experience in nationalising its copper mines soon after independence in 1964. President Kenneth Kaunda had raised a loan to compensate the mining companies, Roan Selection Trust and Anglo American Corporation, and had then had to enter into a management contract with those companies, paying them to continue running the mines because the Zambian government didn’t have the expertise to do so.

That done the copper price crashed, leaving Zambia with an enormous debt to service from depleted copper earnings while Anglo American took the compensation money and established a hugely successful offshore subsidiary called Minorco. That, I suggested, had marked the start of Zambia’s slide from copper-bottomed prosperity to worst-case penury.

We ran through some figures, looked at the market valuation of South African gold shares at the time to get an idea of the compensation that would be required, did a rough estimate of the cost of servicing the debt involved, then looked at what the companies had paid in dividends and at the tax revenue the government would get from the mines anyway — figures I felt showed nationalisation to be a non-starter.

Mandela listened carefully but still seemed unconvinced, still harking hack to the National Party government’s success in helping its people through state-owned industries. Then in a moment of candour he turned to me and said: “But I don’t know very much about economics. I must go and talk to some businessmen about this.”

Which he did, consulting many top business people and economists in the months that followed. But it was only later, when he went to the World Economic Forum in Davos in February 1992, that Mandela finally turned against nationalisation. The late Anthony Sampson, Mandela’s authorised biographer, tells us what happened there.

The routine at Davos is that the world’s top politicians, bankers and industrialists mingle together at a series of presentations, lunches and dinners. As Mandela confided, he found himself being lionised by everyone but as he went from table to table he found they all wanted to know about his position on nationalisation. And when he told them, the message was the same — there was no way the new South Africa would be able to attract foreign investment if it stuck to the old philosophy.

Mandela was finally turned, according to Sampson, by three sympathetic delegates from the left. “The Dutch Minister of Industry was sisterly and understanding, but smashed the argument. ‘Look, that’s what we understood then,’ she explained, ‘but now the economies of the world are interdependent. . . No economy can develop separately from the economies of other countries.’

“Leaders from two other Asian socialist countries — China and Vietnam — told him how they had accepted private enterprise, particularly after the Soviet Union collapsed.”

That changed Mandela’s view entirely. That night he struck out the passage on nationalisation in a prepared speech he was to deliver the next day, substituting one which said the ANC visualised a mixed economy in which the private sector would play a central and critical role to ensure the creation of wealth and jobs .

Mandela went on to make similar statements in Copenhagen and Paris, then returned home where, he told Sampson, he summoned other ANC leaders and told them: “Chaps we have to choose. We either keep nationalisation and get no investment, or we modify our attitude and get investment.”

Thus came about what I described in my book Beyond the Miracle as “The Great U-Turn” — and which the left wing of the ANC alliance later attributed to Thabo Mbeki and derided as “the 1996 class project.”

This is all well documented history. Members of the ANC leadership know it, yet they allow Malema to go on propagating an historical falsehood to further his own demagogic ambitions. This I find reprehensible and even dangerous, for potential demagogues must he reined in early before they can establish a mythology to support their own simplistic solutions and unleash the dogs of havoc.

Allister Sparks is a veteran journalist and author. His latest book “First Drafts,” is published by Jonathan Ball.