Expropriation without compensation: about so much more than land - Voices360

By Terence Corrigan 

Expropriation without compensation is a measure designed to expedite and rejuvenate South Africa’s faltering land reform programme. An empowered state will ensure that the lagging business of rural land transformation is pushed forward with determination. For good or ill, the countryside will never be the same again.

So goes the narrative around the controversial policy stance adopted by the ANC’s 54th elective conference last month. For supporters and detractors alike, it is a policy aimed at South Africa’s farmland and its farming economy, something which most of the country will watch – with anticipation or trepidation – from afar.

This assumption reflects a widespread misconception around what such a policy would likely involve, and how it would play out, should it be enacted. While few specifics have been provided as to how this would be achieved, it has been made clear that it would be done through a constitutional amendment.

Section 25 of the constitution – the so-called ‘property clause’ – deals with rights to property, of which land ownership is but one expression. Section 25 acknowledges that redistributive measures will feature strongly in state policy and allows for this (it encourages it) for both a ‘public purpose’ and ‘in the public interest’. The public interest refers to broadly agreed policy goals, including land reform and providing access to the country’s natural resources – but it is certainly not limited to this. In addressing expropriation, Section 25 states unambiguously that expropriation in the public interest may be carried out in respect of property other than land. It balances this by prohibiting the arbitrary seizure of property, and by entitling those whose property is expropriated to compensation.

Amending the constitution to allow for expropriation without compensation might be achieved by removing the constitutional requirement that expropriation is to be ‘subject to compensation’ (Section 25(2)(b)), as well as the subsequent considerations detailing the factors to be taken into account when determining what compensation is payable. With the constitutional requirement for compensation abolished (and the possibility of a constitutional challenge removed or vastly diminished), enabling legislation for expropriation without compensation could be enacted.

Once actual acts of compensation-free expropriation have been undertaken – probably targeting landholdings – pressure would likely build very rapidly from interest groups to apply this model to other sectors of the economy. This might take the form of expropriation of shares in companies to satisfy empowerment goals, or in the interests of national security. It is not inconceivable that culturally significant artworks or artefacts in private ownership might also be targeted.   

This proposal is consonant with the direction that government policy has been taking. Over the past decade in particular, government has sought on several occasions to expand its powers to intrude onto the property rights of individuals and businesses alike. These were not limited to land. Indeed, government policy in general has been chasing a larger and more assertive role for the state in pushing its transformation agenda – in fields ranging from intellectual property to mining.

The Private Security Industry Regulation Amendment Bill is a good example. Not concerned with land at all, it proposed extending to the minister of police the power to expropriate foreign-owned security firms, and limit acquisitions by foreigners of domestic security firms to 49% or less. This has been justified on the grounds of safeguarding the country’s sovereignty.

Perhaps most important to realise is that the abridgement of private property rights does not necessarily imply the redistribution of property between South African citizens. Rather, it seems to seek transfers from South Africa’s property owners to the state. This is clearly evident in current land redistribution policy, which emphasises tenancy rather than title for its beneficiaries. This would raise the question of how efficiently, transparently and honestly the state would be able to manage a growing portfolio of property holdings that would be the outcome of a strategy of expropriation.

The opportunities for corruption and ‘capture’ are real and extensive – and have been recognised in government’s own analyses.

It is also important to note that property rights are not a preoccupation of the more affluent. True enough, they may have a lot to lose – but often also the power and influence to cut backroom deals to protect themselves. There has been much bitter experience worldwide of poorer people being deprived of the small-scale property they own for the putative benefit of ‘society’, or at the behest of those with powerful patrons. With little voice, and meagre resources, the protection of a robust system of property rights can be of inestimable value to such people.

Whatever its intentions, the logical impact of this proposal would be deeply damaging and would be felt far beyond the agricultural sector. It would degrade the entire system of property protection in South Africa. Ultimately, the price to be paid for dispensing with compensation may be very dear indeed.

*Terence Corrigan is a Policy Fellow at the Institute of Race Relations, a liberal think tank that promotes economic and political freedom.

Read the article on Voice 360 here.