The persistent call from the African National Congress Youth League (ANCYL) for nationalisation of South Africa’s banks and mines threatens economic growth and employment, economists and industry players have warned.

Standard Bank of South Africa CEO Sim Tshabalala said in an opinion piece published in financial daily Business Day on Thursday that the league’s campaign for nationalisation was billed to cause a “great deal of unnecessary damage” to South Africa’s growth and job creation prospects.

“If the nationalisation debate grinds on for many more months, there will be fewer new businesses, fewer new jobs, more poverty and less development for decades to come,” he commented.

This, in a country, saddled with an unemployment rate of 25% and 65% of its population living on less than R550 a month.

The ANCYL, under the leadership of Julius Malema, wants the government to take over mines and banks, and has also called for the expropriation of land without compensation.

Business Unity South Africa also said that it was inconsistent to try and implement South Africa’s New Growth Path, which aims to create five-million new jobs, while the nationalisation debate continues to create uncertainty. It added that the debate was not conducive to the promotion of investor confidence.

Tshabalala pointed out that South Africa was in “ferocious competition” with dozens of other developing countries for capital. “While South Africa has been drifting down the international competitiveness rankings, many of our competitor nations are becoming very attractive to investors, thanks to their fast growth and their clear, consistent and socially sensitive market-orientated economic policies.”

Efficient Group chief economist Dawie Roodt also said this week that the nationalisation calls were not doing South Africa’s economy any favours.

He predicted that South Africa’s shrinking mining sector would contribute less than 5% to its gross domestic product growth within the next two to three years, this from a 10% contribution in 1995.

Roodt pointed out that this meant that South Africa was once again failing to align its economy to the strong post-crisis commodity boom and was instead witnessing a further shrinking of the sector, which was being undermined further by the nationalisation rhetoric.

Looking at the banking sector, Tshabalala pointed out that in almost all cases, banks that were nationalised in Africa were in deep trouble within a decade, and bankrupt within 20 years.

“Those countries that have avoided experiments with wholesale bank nationalisation, notably Botswana, Kenya, Mauritius and South Africa, are also those with the most advanced financial systems and the most developed economies on the continent. This is not a coincidence,” he said.

Speaking in Toronto this week, ANC deputy secretary-general Thandi Modise said that the calls by the ANCYL for nationalisation amounted to “young men flexing their muscles” and was not government or ANC policy.

The ANC commissioned an independent study to look at South Africa’s mining sector, as well as four other countries where nationalisation had been implemented. The study will be completed in time for the party's National Executive Committee to consider the results and make a recommendation on nationalisation at the ANC’s policy conference in 2012. Two researchers are currently working on the study.