EWC back on track - Rational Standard

8 July 2020 - In the midst of the worst economic crisis since the 1930s, South Africa’s ruling party is determined to continue pushing ahead with a policy trajectory that helped bring the crisis about.

Terence Corrigan

With little fanfare, Parliament voted last week to reconvene its ad hoc committee dealing with the amendment to Section 25 of the constitution. With the mandate of the pre-existing committee having lapsed in May, this decision has to all intents and purposes formally set expropriation without compensation (EWC) back in motion.

We should be under no illusions as to what this means. In the midst of the worst economic crisis since the 1930s, South Africa’s ruling party is determined to continue pushing ahead with a policy trajectory that helped bring the crisis about.

South Africa is not facing the current malaise off a clean slate. What the country is experiencing now has been a decade, and probably more, in the making.

The reasons for this are multi-sided, but prominent among them is a confusing policy environment. Within the ruling African National Congress (ANC) and the government it heads, there exists a hostility to business and to successful market economics that all too often overwhelms the reluctant recognition of its importance. As Ann Bernstein put it nearly 20 years ago, ‘market friendly messages are frequently cancelled out by anti-market approaches and sentiments’.

South Africa took a significant hit from the global financial crisis, but in contrast to some of its developing-world peers, was never able to get back onto a high-growth path (nor, increasingly, even a middling one). Indeed, the crisis coincided not only with the ascendancy of President Jacob Zuma – and the venality and toxicity that his administration is held to have embodied – but with a marked emboldening of those ‘anti-market sentiments’.

Questions of the security of property have been central to this. The Institute of Race Relations has tracked close to three dozen attempts by the ANC and the government to encroach on private property rights and to expand the latitude and power of the state.

These included such measures at the Expropriation Bills of 2008, 2013 and 2015 and the Green Paper on Land Reform in 2011, the provisions of which foreshadowed sweeping state intervention and control of landholding, and many of which formed the basis for subsequent legislative proposals. The Restitution of Land Rights Amendment Act of 2014 was intended to prompt a flood of new claims (though without committing the resources to make this possible). In the same year, the Property Valuation Act established the office of the Valuer-General, a state institution to determine property values.

And recent regulations in terms of the Property Valuation Act granted the state substantial discounts in expropriating for land reform purposes. Valuer-General Pelekelo Mwiya said that through the formula prescribed in the regulations ‘one could get to zero compensation’.

This was not confined to land and agriculture. For years, the country endured a ‘debate’ driven by the ANC Youth League (many of whose leadership went on to form the Economic Freedom Fighters) about the nationalisation of mines. Bilateral investment treaties with major investors were cancelled.

The move to amend Section 25 fits squarely with this framework. Since the African National Congress explicitly committed itself to a policy of expropriation without compensation at its 2017 conference at Nasrec, this policy agenda has become – if anything – more direct and explicit. Indeed, while many hoped that the incoming administration of President Cyril Ramaphosa would be sympathetic to business, it is difficult to think of any other issue in which he and his administration have invested so much political capital.

The assault on Section 25 began within weeks of President Ramaphosa’s assumption of the presidency.  It is no trivial matter, as this will alter the relationship between the citizen and the state in matters of property. At a minimum, it will remove some of the recourse to constitutional protections South Africans currently enjoy.

Taking into account the ANC’s position immediately prior to the lockdown, the amendment is likely to be far more intrusive, handing decisions around compensation to the executive rather than the courts.

Meanwhile, new legislation on expropriation is coming. The existing draft defines expropriation as the state taking ownership, not merely depriving people of their assets. This would allow for a wide range of confiscations, with no right to compensation.

It is revealing that the official line has been that EWC will take place within the constitution  and the law – both of which are to be changed.

The IRR has long argued that the goal of this process is not only to establish damaging new powers in the hands of the state, but to facilitate a mass custodial taking of land, along the lines of water and mineral rights (as was in fact mooted in the Preservation and Development of Agricultural Land Framework Bill of 2015).

As Section 25 once again comes under the knife, none of this should be forgotten. The past has demonstrated just how damaging bad policy and ideological fixations have been for South Africa. The renewed drive for EWC will repeat and compound this experience. South Africa cannot afford this.

 Terence Corrigan is a project manager at the Institute of Race Relations. Readers are invited to join the IRR by sending an SMS to 32823 (SMSes cost R1, Ts and Cs apply).