South Africa's equity market would collapse if the country pursued nationalisation as a policy given the significant weight mining stocks have on the JSE, Roger Baxter, chief economist at the South African Chamber of Mines, suggested on Thursday.
Baxter was addressing the SA Chamber of Commerce and Industry's nationalisation discussions.
Nationalisation debates are being lead by the African National Congress Youth League and its leader Julius Malema. The business community strongly against the adoption of the policy.
“We as a society need to be aware of the risks. Even with the current debate, the opportunity cost to South Africa is huge,” Baxter said.
Other consequences of nationalisation would include a collapse of credit ratings, in turn reducing SA's ability to borrow in international markets, Baxter cautioned.
Baxter said SA needed to focus on the “right debate” about redistribution and unemployment.
“We need to focus on the right medicine. Nationalisation is not the answer,” Baxter said.
Addressing SA's micro economic constraints such as infrastructure and skills would ensure that the country's growth potential rose closer to five percent from the current three percent level.
“Let's make it easier to register a business in South Africa. Let's create an environment where business can really thrive,” Baxter said. - I-Net Bridge