A GLANCE at countries that have undergone nationalisation around the world suggest that there could be better ways of managing the mining sector.

Contrary to simplistic conceptions, the issue is more nuanced than the reductionist notion of "nationalisation or privatisation".

History is replete with examples of unexpected twists in policy. This was the case in Iran in the early 1950s when populist sentiments were whipped up against the dominance of foreign interests in the hydrocarbon sector, leading to the nationalisation of Anglo-Iranian's concession.

Resources nationalism, expressed as a protest against foreign dominance in Iran's oil sector, was initially championed by a coterie of nationalistic politicians who saw an opportunity to strengthen their hand in national politics.

With the rising tide of populist support, their cause gained greater weight and respectability, thus enabling them to enforce nationalisation; no longer just wanting a share in profits, as was initially the case.

Indeed, the 1950s up to the 1980s could be described as the reign of resource nationalism, particularly in many socialist-oriented countries across the world.

The dawn of the 1990s marked a fundamental departure from nationalisation to privatisation in much of the developing world, with more than 8000 privatisations between 1990 and 2003, raising about $410billion (about R2,8trillion).

Yet recent times have seen a number of countries in parts of Latin America as well as in Russia embark on nationalisation.

Since early 2008, in the wake of the global financial crisis, Venezuela has nationalised hundreds of firms, spanning agricultural farms, steel, fertiliser production, oil, cement, and even retail.

The 2009 round of nationalisation that was announced by President Hugo Chavez was mainly a response to a potential macro-economic crisis as state-owned enterprises faced mounting debt.

This was ostensibly to shore up spending on socio-economic projects.

In reality, it was a ploy to boost his political legitimacy when his popularity among voters had been seriously dented. Western companies such as BP, Exxon Mobil, Conono, Phillips, Cargill and Cemex were on the receiving end.

Much of Chavez's political legitimacy comes not from prudent macro-economic management or market-friendly policies, but from the supporters who derive benefits from his social welfare largesse.

Pitting the working class and poor against the middle classes was a winning political card until recently when his popularity began to weaken with the deterioration of the domestic economic situation.

In other words, populist nationalism was the soul that sustained the life of his political rule.

In 2008, Russia passed a law declaring 42 economic sectors as "strategic", thus rendering them inaccessible to foreigners.

Furthermore, foreign investors are limited to 10percent of equity in any Russian company that controls a field containing more than 70million tons of oil, 50billion cubic metres of gas and 500000 tons of copper.

Closer to home, in the southern African region, two countries have recently announced policies that rattled the foreign investor community.

In Zimbabwe, the ruling coalition government has approved an indigenisation law that requires foreign companies to cede 51 percentage of equity to locally based companies, with the state selecting the actual partner.

The targets are "strategic" resources such as gold, platinum and chrome.

It is a development that has also been seized upon by the ANC Youth League, which described it as "a very brave, militant, but correct method of transferring wealth from the minority to the majority".

Similar practices were implemented post-independence in Zaire (now the Democratic Republic of the Congo) and Zambia where foreign investments in mining were nationalised, and the proceeds were used mainly to service the patronage machine of ruling oligarchy.

Not only were these countries marked by weak institutions, they also had no managerial capacity in place to run the acquired entities effectively.

What, then, are the factors that drive countries into nationalisation? While the reasons are varied, the followed seem common:

• Rising nationalistic sentiments and distrust of multinationals by ruling elites.

This often is a reflection of unhealthy relations between government and business broadly, and a perception that business is not playing its part in the national effort towards development.

• Weakening macro-economic environment characterised by dwindling tax revenues, a factor that undermines the legitimacy of ruling parties.

Even in environments where macro-economic fundamentals are in place, as is the case in South Africa, growing anxieties about joblessness and poverty undermines the popular standing of government. In such circumstances, nationalisation can be seen as a quick fix.

• The need to manage the development of a sector seen as "strategic" towards generating outcomes that are closely linked to government's economic policy programmes such as beneficiation, diversification and job creation.
• Intentions to open new avenues for enlarging the pie of patronage by ruling parties in order to be able to buy political allies. Joint ventures with favoured groups or rewarding political clients with managerial positions become a means of dispensing patronage.

From the cases considered, the weight of evidence suggests that nationalisation does not deliver manna from heaven; it does not lift whole masses of poor citizens, like a whirlwind, from poverty.

Prospects for a successful nationalisation policy are made all the more complicated by the reality of deep inter-linkages between the national and global economy.

South Africa is one of the top mining countries under the glare of international investors.

While it would be wrong to suggest that there is no space at all for creativity, caution would still be advised.

• Qobo is a senior fellow at the centre for politics and research. This is an edited extract from his book The Role of the African State in Mining. The book will be launched next week