A few days after electing businessman Cyril Ramaphosa to position of ANC deputy president, South Africa’s ruling party is now poised to execute new taxes on mining companies, it has emerged.
Enoch Godongwana, the head of ANC’s economic policy-making unit, speaking at the end of the ANC elective conference in Mangaung on Thursday, said this move was aimed at distributing South Africa’s mineral wealth to the poor.
This could plug the gap between South Africa’s rich and the poor which continues to grow, with the rich getting richer and the poor getting poorer.
“The state must capture an equitable share of mineral resources through the tax system and deploy them toward long-term growth and economic transformation,” Godongwana said on Thursday at the end of a party conference.
Investors have been closely following the conference for signs that the ruling party may take a populist approach in the wake of recent violence in the mining sector.
In August, police shot and killed 34 miners at a platinum mine northwest of Johannesburg, sparking labor unrest at mines across the country as well as manufacturers and transport companies.
The ANC has led South Africa since the end of white minority rule in 1994 and holds a commanding majority in parliament, meaning that its policies inform much of the legislation governing Africa’s biggest economy.
Godongwana wouldn’t provide any details on the size of a new mining tax or what minerals it might cover.
At the same time, the party skirted investors’ biggest fears—that the ANC would try to nationalize mines owned by private companies. Top officials ruled out such a move.
Malusi Gigaba, a member of the ANC policy making unit and South Africa’s minister of public enterprises, said there shouldn’t be any expectation that the ANC would move to start deciding where and what to nationalize.
The pronouncements came at the close of a conference the ANC holds every five years to set policy and elect its leaders.
Any policies, including new mine taxes, would still need to find their way into legislation and win approval from parliament, where the ANC faces resistance from several smaller opposition parties.
Analysts believe the threat of new taxes could prevent investment from foreign firms. South Africa’s foreign direct investment has been lagging behind those of countries like Nigeria and Angola.