Redistribution of state assets key to national prosperity - CNBC Africa

Redistribution of state assets key to national prosperity

Southern Africa

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Passing money from one hand to the other. PHOTO: Getty Images

“There’s a weird notion in South Africa that if the government owns things, people own things. For example, in the promotion of the ANC’s election manifesto, the president said that many farms had been transferred to black people. That’s not right: black people did not get the farms, the government took the farms and the black people are tenants on the farms,” Free Market Foundation executive director Leon Louw told CNBC Africa.

“The Freedom Charter talks about freedom of ownership by the people as a whole and as Mandela and all the founding fathers explained in great length is ownership by the people is different from ownership by the government.”

In a recent article entitled, “For real prosperity in South Africa, let the youth own the state’s assets,” Adrian Saville, CIO of Canon Asset Management, explained the importance of the country’s youth owning state property.

“The proposition is relatively straightforward: the first is that South Africa has a trapped youth who are poverty trapped, and the poverty trap has two elements to it. The one is a yawning education deficit, and the other is an associated financial deficit,” said Saville.

“Even if people are able to close out the education deficit by getting access to effective sound education and skill, how do they then build enterprise? How do they build business? Ultimately, the only creator of jobs is companies. It’s not government.”

Saville added that he aims to table a proposal that indicates a means of not only incentivising individuals, but also making sure that those who are able to take up the incentive are financially empowered.


“It’s not a handout, it’s not redistribution in a conventional sense. It is an empowering and truly enabling proposal. That’s the essence of it,” Saville explained.

“There’s lots of examples of this from of practice in the past, which include the reallocation of land rights, where people who have worked land are now given a single title deed.”

According to Louw, South Africa’s government currently sits on trillions of rand worth of assets that had been inherited from the apartheid government, and encouraged redistribution of these assets instead of their remaining in the hands of the state.

“It should be redistributing that wealth to the people as a whole. I’m one of the people who says just get the assets out of the hand of the state. If you just transfer the wealth to the people as a whole in their own name, this will empower the youth. It will be a huge boost to the economy. Where it’s been done, it has brought immense prosperity,” said Louw.