JOHANNESBURG (miningweekly.com) – Allowing South African companies to migrate to global stock exchanges has impacted negatively on South Africa’s own exchange, African National Congress (ANC) secretary-general Gwede Mantashe contends.
In a guest column in the latest edition of Mining Weekly, Mantashe also criticises what he describes as “the emerging trend” of the separation of South African assets from the global assets that they have capitalised.
He expresses high regard for companies that show national pride in their countries of domicile and laments the loss to Britain of an iconic South African-reared giant like Anglo American.
His explanation is that, at the moment of South Africa’s attainment of freedom, neo-liberalism was at the pinnacle of being the world’s most dominant ideology and resulted in South African companies being permitted to establish primary listings on foreign exchanges.
“The one-size-fits-all mindset, driven through the structural adjustment programmes, was forcefully imposed on small and developing economies like South Africa, with disastrous consequences,” Mantashe writes, adding that it was during this period of transition when South African companies were allowed to migrate with relative ease to the London Stock Exchange and to a lesser extent the New York Stock Exchange.
“The question that confronts us is whether the South African economy has benefited optimally from this move. We contend that it impacted negatively on our stock exchange,” Mantashe writes.
He goes on to condemn as “suspicious and disingenuous” what he describes as the current “emerging trend” of South African companies using South African capital to grow assets outside of the country, and then, once their foreign holdings have matured, to ring-fence the South African assets out of their portfolios.
“This needs a discussion by the nation,” says Mantashe.
The ANC secretary-general wrote the Mining Weekly article in response to our request that he elaborate on his comment – made during a Xolani Gwala-hosted national radio debate on SAfm’s AMLive – that Anglo American had “stolen our money” in listing in London and becoming “a British company”.
At the heart of the radio debate was the decision of Anglo American Platinum to retrench 14 000 workers, which is the headline issue of Mantashe’s article, in which he recalls that Anglo American Corporation was formed in South Africa in 1917, with the initial capital of 50% contributed by Sir Ernest Oppenheimer and his family, and the remaining 50% contributed by two American companies, JP Morgan and Company and Newmont Mining Corporation.
The US contribution resulted in the word “American” featuring in the name of the company, which, in the main, derived its fortune from mining South African gold and diamonds, and later diversifying into related sectors like explosives and other manufacture.
“It is, however, not our objective to trace the Anglo American web that covered almost every sector in the 1970s and 1980s but to establish our claim to it as South Africans.
“Our claim is that Anglo American was built in South Africa with South African mineral deposits and South African cheap labour.
“Hence our disbelief when we are told that Anglo American is a foreign investment,” he writes, pointing out that companies are the economy of their country of domicile.
He argues further that it is for this reason that many countries relate to their major companies as part of the family.
He cites the example of Nestle remaining a proud Swiss company even during a period when it was only generating 2% of its revenue from Switzerland.
He uses the proudly Australian BHP as another example, recalling that when South Africa’s Gencor reconstituted itself into the London-listed Billiton, it was forced to move its primary listing to Australia on merging with BHP.
“There are plenty of examples to this effect, but we intend showing our appreciation of the national pride some countries have about their companies and the companies about their countries.
“The global financial crisis reinforced this argument when governments in developed economies were prepared to bail out what they saw as the family silverware, in their national private companies,” Mantashe adds.