South Africa has so many amazing mineral natural resources as well a profitable well-developed mining sector. The nationalisation of the mining sector is an argumentative topic in our country at the moment. It has been argued that income from the mining sector will advance several social and economic project which include resource redistribution, transformation and job creation.
The case for or against Nationalisation:
Nationalisation is the process of taking on an industry or assets into government ownership by a national government/state resulting into public majority ownership.(www.dictionary.com) Repeated experience has shown that nationalised companies and industries consistently under perform their sector counterparts in terms of productivity profitability and services quality.
Private companies are accountable to their shareholders who are able either to disinvest in the companies and industries consistently under perform their private sector counterparts in terms of productivity, profitability and service quality. (www.thebudgetspeechcompetition.co.za) The state and effectively taxpayers, maintains permanently majority ownership of a company and which losses are incurred. The state finance department often intervenes in these situations as a result there, it exists as an incentive to maximise efficiency, productivity and profitability within the private sector. Nationalised enterprises face little risk of becoming insolvent and therefore incentives for efficiency and profitability are often lax or non-existent.
ARGUMENTS AGAINST NATIONALISATION
Several political groupings have instigated support for the idea of nationalisating the South African Mining Sector. Of these, the ruling party’s youth league (ANCYL) is the most prominent. In order to understand the nature of the nationalisation debate that’s been going on recently by the ANCYL , it is necessary to study their nationalisation proposal. The...