Avoiding Economic Land Mines

The sad fact is that the generation before us lost the battle over resources. All the political freedom in the world has not given the majority of South Africa’s people the same access to the economic prosperity which will make that freedom meaningful.  In the period since the freedom charter declared that “all shall share in the country’s wealth”, the economic context has evolved, mutated and advanced at the speed of thought, yet strangely, youth activism’s approach has remained dead still. Unchanging. It is as if youth discourse has been stuck in a time capsule while the economic situation has played out in fast forward around it.

The brouhaha around “economic freedom in our lifetime” recently reached fever pitch at the ANC Youth League’s 24^th National Congress this year. Yet, in my view, what is still missing from the equation is the realization that economic freedom in our lifetime does not mean economic freedom in our lifetime only, that is, we should not allow the urgency of economic justice in the short term to compromise the significance of economic freedom in the generations to come. Economic freedom in our lifetime therefore, is inextricably bound with the freedom of the lifetimes that follow. Distressingly, the dominant approach articulated towards achieving this aim demonstrates a desire for the former at the expense of the latter. In my view, a more nuanced and diverse approach must be followed.

The dominant approach to economic freedom in our lifetime is characterized by the continued call for the state expropriation of land and mineral resources. This claim has been captured most clearly in the popular consciousness by the call for the nationalization of South Africa’s mining sector. In a nutshell, the argument is that the resources of the land were unfairly stripped from the black African majority and that reclaiming them will not only bring about justice - because the land will be returned to its rightful owners - but also provide the state with the increased economic muscle it requires for the fight against poverty by facilitating a greater capacity for service delivery to the poor.

However, one important question has been absent from the debate thus far – do we have enough mineral wealth to bring about economic freedom? Take the gold mining industry for instance. Since 2001, gold production has gone from about 85 million ounces to about 75 million ounces a year. Production has fallen steadily since 1980: at current rates, liberal estimates expect gold to dry up completely in the lifetime of a South African child born today. Worryingly, some of the more conservative gold mining estimates claim that gold mines may close for business within two decades. This is why many of our foremost mining houses are already diversifying away from South African gold mining towards greener pastures in South America and Asia. No resources, no income. No income, no transfer of power to the people.

The same is true for coal, a resource that the government has identified as its entry point into the mining industry. Recent research reveals that our estimates of the quantity of minable coal may also be optimistic. In fact, a recent article in the South African Journal of Science argues that coal will reach maximum production within eight years, whereafter, the resource will be progressively more difficult and expensive to mine. This will have deep ramifications for South Africa’s already delicate relationship with energy production. The increased difficulty of extracting more remote coal may significantly undermine the state owned mining company’s ability to earn any profits in the coal sector and indeed its ability to produce the quantity of coal it will need to be socially beneficial.

The situation is no better in the case of land. The often-overlooked reality is that economically arable land makes up only 13% of the total 122.3 Hectares of the land area in South Africa. This figure is simply not enough for the majority of our people to flourish on alone. Even if all the arable land was transferred from white to black hands tomorrow and the land was farmed at optimal productivity, only a minority of our population would benefit, a smaller proportion would prosper and an even smaller proportion flourish.

Moreover, in a recent diagnostic review of the South African economy published by the National Planning Commission, a group of experts has argued that one of the major flaws of the South African economy is precisely our resource dependency. The dependency is problematic both in the way that it has prevented the country from diversifying its exports (which it will need to do as resources run out) but also in the way that the interprovincial transportation of goods and the rapid urbanization of the population continues to demand more energy than the country can readily produce.

Given all of this, we must reassess whether the reform proposals on the table are sufficient to bring about the desired goal. In my opinion, they are not imaginative enough to take us to economic freedom in our lifetime and beyond. Instead of placing the primary emphasis on agrarian and mineral resource reform, we should be turning our attention to ensuring that there is equitable ownership in the industries that will emerge and grow over the next half a decade, not the ones that will decline. Bill Gates suggests that these are Renewable Energy, IT and healthcare innovation. The jury is still out on exactly how the South African economy should diversify but that is the point, us young people should be contributing to that debate before we contribute to the other. If we spend our time trying to flog a dead mineral horse, we could miss out on the real economic gems of the future.

We must shift the debate over economic freedom away from its obsession with mining and land. This is because even though those industries may be important in our lifetime, in the generations to come their importance will dwindle significantly. For long-term economic freedom, we need to add a layer of analysis which seeks to ascertain what the key emerging industries in South Africa will be and how the people can gain meaningful access to them.