Inequality poses "grave threat" to South Africa: Zuma

JOHANNESBURG Fri Jun 29, 2012 2:39pm EDT

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JOHANNESBURG (Reuters) - South Africa's ruling ANC will push for greater state involvement in mining and land ownership to address inequalities inherited from apartheid that pose a "grave threat" to Africa's biggest economy, President Jacob Zuma said on Friday.

Speaking at the end of a week-long African National Congress (ANC) policy meeting, Zuma said the capitalists who became rich under white-minority rule still held a disproportionate sway over the economy 18 years after its demise.

"If we continue in this way, our gains of democracy will be put at risk because those who feel the pain will say 'Enough is enough,'" Zuma said.

Mining firms in the world's largest platinum provider had to do more to create jobs and alleviate the poverty that is fuelling almost daily unrest in sprawling black townships, posing long-term risks to South Africa's stability, he added.

However, in his hour-long address, Zuma made no mention of nationalization as a solution to the sector's social short-comings, suggesting a blanket state takeover of the mines - the economic backbone of the state - has been shelved.

Instead, the ANC, which has enjoyed solid parliamentary majorities since taking power in 1994, is looking at windfall taxes on mining companies to fund redistributive social spending.

"The state should also capture an equitable share of mineral resource rents and deploy them in the long-term interest of economic growth, development and transformation," Zuma said.

He also said Nelson Mandela's former liberation movement, which turned 100 this year, wanted to bolster the power of a recently created state mining firm, although - as with much of the speech - he offered few details.

In addition, Zuma, who faces re-election as ANC leader in December, called for an end to a "willing buyer-willing seller" land reform program that has been criticized as too slow and too costly in turning over white-owned farmland to blacks.

State-owned companies would also play a key role in driving economic growth as part of a "mixed economy" model borrowed from the likes of China, he added.

At the start of his speech, Zuma highlighted research pointing to the failures of a decade of black economic empowerment that has left blacks owning less than 7 percent of the Johannesburg stock exchange.

According to Statistics South Africa, 29 percent of blacks are unemployed compared with 5.9 percent of whites, while IHS Global Insight, an economic consultancy, estimates that whites have an average income nearly seven times that of blacks.

Even though the conference was officially about policies, many have read it as a proxy for a leadership battle bubbling away beneath the surface ahead of an ANC "elective conference" at the end of the year.

Zuma is firm favorite to win re-election to the helm of the ANC, making him almost certain to capture a second five-year term as president in national elections due in 2014.

(Additional reporting by Peroshni Govender; Writing by Ed Cropley; editing by Ron Askew)

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