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In the lead-up to the launch of its manifesto, the ANC tried to deny responsibility for SA’s dire fiscal condition. But it can’t deny any more that the coffers are bare, and it knows it.

The document, which reiterates the party’s failed economic policies over the past 30 years, reveals the strategy that will fund the party’s version of a developmental state should it secure victory in the national and provincial elections on May 29.

The ANC’s strategy attempts to leverage the SA Reserve Bank to its advantage by liquidating the Gold & Foreign Exchange Contingency Reserve Account (GFECRA) of R150b, in the first instance as a fiscal stopgap. This was announced in the 2024 national budget. Further raids are sure to follow until the reserves are depleted. The fallout from this desperate measure will be catastrophic in the long term and will worsen the cost-of-living crisis.

In recognising that this is a Band-Aid solution, insufficient to facilitate sustained economic growth and labour market participation, the party has also set its sights on pension funds as another source of revenue. Specifically, the ANC aims to “engage and direct financial institutions to invest a portion of their assets in industrialisation, infrastructure development, and the economy at large through prescribed assets”.

The party misleadingly labels this as an “expansionary fiscal policy” when in reality it constitutes a direct seizure of SA citizens’ assets by redirecting private savings into government-prescribed channels without consent or proven efficacy.

This policy position is chillingly reminiscent of the apartheid government’s attempts to fund its failing regime. Under apartheid, pension funds were forced to invest heavily — up to 77% — in government and parastatal bonds, propping up the collapsing system in the face of international sanctions and increasingly limited access to global capital markets. In this way, private savings were used to fund National Party directives. The ANC is following the same road.

Why does the ANC seek to echo the mistakes of a morally reprehensible dispensation? Why does it seek to actively undermine the hard-won freedoms of South Africans and sacrifice our country’s democratic achievements on the altar of its flawed governance?

From this emerges the alarming conclusion that the use of what was previously an oppressive tool used to sustain oppressive racial segregation and state control can be justified so long as it is wielded to support the ANC’s own ruinous policies.

When the ANC assumed power in 1994 it replaced the apartheid-era investment laws with regulation 28 of the Pension Funds Act. Pension funds today enjoy flexibility to invest their members’ money in a variety of alternatives to the members’ benefit.

Now the ANC wants funds to invest to the ANC’s benefit at the expense of members. Any change to regulation 28 to facilitate an ANC raid on hard-working South Africans’ pension savings must be resisted.

This also raises the pressing question of how the ANC wants money raided from pension funds to be used, and who will oversee this patronage. The governing party wants this money to be redirected into dysfunctional state-owned enterprises (SOEs), which are marred by political appointments and patronage.

There are hundreds of state-owned companies that show little or no prospect of revival despite hundreds of billions of rand already wasted in bailouts. If successful, this scheme will facilitate continued plundering of public assets and severely affect pension fund returns, to the detriment of all pension members, who are already battling a government that does not care.

Like expropriation without compensation, until this policy objective is done away with to the extent that it is a non-issue, every pension fund member has reason to be alarmed. Mandating asset allocation disrupts capital markets by diverting investments from their most efficient uses, which are determined through rigorous risk and return analyses, not by the demands of politicians seeking re-election. Mandating investment in specific government securities undermines property rights.

Compelling investment in government debt, prescribed assets amplify risk in the financial system by concentrating exposure and engendering systemic vulnerabilities. Heightened concentration escalates the risks associated with fiscal mismanagement and economic downturns, which affect institutional health. It also closely ties the financial sector’s stability to government solvency. Consequently, any decline in the government’s fiscal health directly imperils the broader economy, especially those institutions that are, by mandate, exposed to substantial government debt.

The imposition of prescribed assets also erodes trust in both the financial system and the government. It signals potential desperation and a lack of confidence in the government’s ability to attract voluntary investments, which undermines perceived stability and attractiveness of the domestic market.

By reviving prescribed assets, the ANC inadvertently casts a light on its own insecurities. This policy direction, more than anything, underscores the tacit admission that the party increasingly doubts its capacity to create a conducive environment for investment and economic prosperity. It reflects a deeper, systemic concern that, despite years of governance, the party finds itself compelled to consider measures that circumvent the natural market dynamic and investor choice.

The appropriate course of action for the government to address our underperforming economy would be to facilitate a more flexible and responsive environment. Regrettably, the governing party continues to position itself in the wrong place.

To achieve lasting prosperity, SA needs comprehensive economic reforms that capitalise on the extensive resources and expertise of the private sector. The starting point is the elimination of government-imposed obstacles to growth. An effective government is not one that seeks to control every economic lever but rather one that focuses on the successful delivery of essential services such as education, health care, infrastructure, defence, law enforcement and a social security net.

It is only then that we can create an economy that is both dynamic and responsive, driven by market forces and individual agency.

• George is DA shadow finance minister.

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