Why South Africa Should not Nationalize Its Mining Industry Yet

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Nationalisation of mines can be seen as either a good thing or bad, depending on each of our believes. The freedom charter singed and conserved in June 1955 (UKEssays, 2015) states that “South Africa belongs to all who live in it, black and white, and that no government can justly claim authority unless it is based on the will of the people.” So the question really is, will it benefit the people of South Africa or not? Given the history of South Africa’s state owned entities, nationalisation would cause a wide spread of panic among the people of South Africa and foreign investors (UKEssays, 2015). Every state owned company has affected the mining industry namely: Eskom, Transnet and the SABC (UKEssays, 2015). As a result of the evidence collected and statements from people, the government is not ready for such a big step as yet and that there is still a lot of improvement needed with other state owned entities.

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According to corruption watch “SOEs drive the socio-economic goals of government and fulfil both a commercial and developmental mandate in this regard.”

(Corruption Watch, 2018). Energy costs, that was controlled by Eskom have increased with 238% between 2007 – 2012 (Leon, 2016). In South Africa mining companies are hanging on to the growth and financial state of Eskom for power as well as Transnet for the transportation and export of minerals (Leon, 2016). When you take the R910 million loss of the SABC into consideration it is not hard to believe that there was a big loss in viewers and revenue in the mining industry that came from advertising (UKEssays, 2015). Nationalisation of mines would decrease unemployment, undoubtedly as all profit would remain within the borders of the country. If Zambia is taken as an example, the success of the economy of the Zambia depended on the ability of the state to control the revenue of copper mining

(Limptilaw, 2011). Due to the focus of the government being shifted away from the production of profit to the production of employment and social services the country experienced no profit during the 1970’s (Limptilaw, 2011). It is important to know that if profit can be shared, loss also have to be shared. Therefore with nationalisation any losses due to a fall in prices of minerals or other factors can be detrimental for the economy, because the state is then solely responsible for the reinforcement of the economy.

Nationalization of Mines

As a result of all the evidence collected it is safe to say that South Africa is not ready for such a big step as yet. The state needs to show rapid improvement in the management of state owned entities, and the growth of the economy. The state also needs to show its interest in the wellbeing of the people of South Africa and that the country belongs to all who live in it. Therefore the economy can be shared and is not there for the convenience of the government.

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