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Don’t ignore full scope of govt expropriation plans – Nedbank CEO

FIN 24
Mar 15, 2018 06:01
Carin Smith

Cape Town – It is important to emphasise the fact that what Parliament announced was a process to investigate land expropriation without compensation in a way that does not impact food security or the economy, Nedbank Group CEO Mike Brown told Fin24 on Tuesday.

This statement is, therefore, open to a broad interpretation which creates uncertainty, said Brown.

Fin24 reported earlier that banks could potentially be hard-hit if land is expropriated without compensation.

“Most articles I have read only focus on the piece about land expropriation without compensation – ignoring the fact that Parliament said this was the start of a process [of consultation] and that it must be done without impacting the economy and food security.”

He said Nedbank Group is confident that this consultation process will result in the appropriate level of engagement amongst all interested parties to ensure the outcome is one that does not impact food security or the economy and is in the best long-term interests of all South Africans.

“Nedbank will be an active participant of that process and the other [banks] too I am sure. Clearly wholesale land expropriation in a way that does not impact the economy or food security is not possible,” said Brown, “and the President has reiterated this by saying this is not, in his words, smash and grab”.

“We fully support this process as the current land issues in SA are unsustainable in their own right, but it will require our people to have cool heads and think deeply about the long-term impacts on our country and all her people rather than be focussed on emotional rhetoric.”

Cautious optimism

The big challenges ahead for SA include the land debate, but with the right leadership and cooperation between business, labour, civil society and government it can be addressed, in Brown’s view.

Nedbank Group is cautiously optimistic about the current South African environment, Brown said.

He said 2017 can be described as an environment of almost unprecedented uncertainty in SA. For instance, the changes of ministers of finance; the ratings downgrades; Gupta leaks revelations on state capture; ANC leadership struggles and corporate issues like the Steinhoff accounting irregularities saga.

“Clearly 2018 has seen the dawn of an environment with more confidence about the ability of our country to arrest the decline and improve the strength of our institutions. There is a lot more confidence about the willingness and ability of our leaders to fix institutions, deal with fiscal deficits and to deal with the big challenges in the economy thereby enabling higher levels of growth and job creation,” said Brown.

He emphasised, however, that the challenges faced by the country have themselves not gone away – for instance regarding state-owned enterprises (SOEs).

“It was a great first step to establish a credible board and chair at Eskom, but Eskom needs a fundamental review of its business model, its gearing and its cost base,” said Brown.

“All those are complicated to do. So, having the right board is important, but it is just a first step. In the context of SA, Eskom is too big to fail with it being the monopoly generator and distributor.”