JOHANNESBURG—A top official at South Africa's central bank added his voice to a growing chorus against nationalizing mines and banks, warning that while he didn't think the government would go through with it, the debate could signal a move toward a more hands-on economic approach.
This wouldn't be good news for the economy, said Rashad Cassim, one of eight members of the central bank's monetary policy committee.
"If we had a track record of a highly efficient government with great checks and balances, with the ability to distribute effectively and with minimal corruption, then actually no one would react to the government taking over mines," said Mr. Cassim, the central bank's head of research. "But we don't have that."
A push for South Africa to nationalize its mines and banks, led by Julius Malema, the influential youth leader of the ruling African National Congress, has topped headlines in recent months. The Youth League wants the government to take 60% of private mining assets without compensation to distribute wealth and create jobs.
The ANC hasn't endorsed nationalization as official policy, and so far, President Jacob Zuma and Finance Minister Pravin Gordhan have remained quiet on the issue. Only two government ministers have spoken out against it, including Susan Shabangu, the country's mining minister. On Monday, South Africa's public enterprise minister, Malusi Gigaba, called the debate "reckless" and said it is hurting investment sentiment and the country's reputation.
The Reserve Bank's position against nationalization isn't surprising, given that nationalization proponents would want the bank to lose its shareholders and become strictly a state institution, said Neren Rau, chief executive of the South African Chamber of Commerce.
"It is obviously coming from the point of view of defending its current model, which is highly regarded in terms of international standards," Mr. Rau said. "Nevertheless, I do believe the Reserve Bank reasons its argument strongly."
Mr. Cassim said he doesn't expect a major shift in the ruling party's economic policy, but at worst, he's concerned the government is heading toward increased state monitoring and regulations.
Even with talk of nationalization and increasingly hostile political rhetoric in Africa's largest economy, money keeps flowing into the South African market. The rand, with attractive yields, remains up 5% to the dollar compared with the same time last year.
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