Who owns a country’s resources is not as important as how their proceeds are accounted for, the World Bank said on Wednesday.

“The big lesson of the Nineties is that ownership is less important than accountability,” Marcelo Giugale, the World Bank’s director of poverty reduction and economic management in Africa, told media in Johannesburg.

“In private ownership, accountability is left to the market which is very good at holding you accountable.”

If a company was not run well, shareholders held management accountable, and if a business did not price correctly, its competitors would take care of it, he said.

This worked very well and efficiently, Giugale said.

Regulatory bodies

State ownership was held accountable by regulation enforced by a regulatory body.

“You need institutions strong enough to hold public owners accountable,” Giugale said.

In addition, some countries included civil society in the monitoring and evaluation of public companies.

When it comes to nationalising a country’s resources, “no one system is better than the other”.

“What you need to be sure of is that at the end of day the company, public or private, is held accountable,” he said.

A country’s ability to turn its natural wealth into human wealth depended on the quality of public expenditures, not on ownership.

Long-term, sustainable jobs

“The reason is that you may extract as much rent as you want but if money then gets wasted, it won’t generate any jobs.”

It was important that the state used its resources to create long-term sustainable jobs, he said.

“Exploitation of natural wealth is much more than ownership of stuff in the ground … you have to look at the whole chain of events … to the creation of productive workers, or achieving of developmental outcomes.”

Chile did this well, he said, as ownership of the “stuff in the ground” was clearly defined, and the funds it provided to the government were budgeted for and spent in a very transparent, highly monitored manner.

No clear answers

Sandeep Mahajan, the World Bank’s lead economist for South Africa, added it was not the bank’s role to tell South Africa whether it should nationalise industries.

“What should be done with the natural resources of a country are very difficult questions for society … we don’t have clear answers on ownership, only on accountability principles.”

The discussion comes amid a national debate about nationalising the country’s mines and banks, sparked by ANC Youth League president Julius Malema.

Last month, he repeated calls for South Africa’s wealth to be transferred to the people through the nationalisation of banks and mines and the acceleration of land redistribution.

Business has since come out in opposition, while the ruling ANC said the government’s policy on nationalisation had not changed.

Spokesperson Jackson Mthembu said pronouncements by the league on matters such as nationalisation and land redistribution formed part of continuing discussions within the ANC. — Sapa