EWC on the horizon - Politicsweb

With its adoption by the National Council of Provinces (NCOP), the Expropriation Bill has passed one of its final legal hurdles before becoming law.

Marius Roodt 
With its adoption by the National Council of Provinces (NCOP), the Expropriation Bill has passed one of its final legal hurdles before becoming law.

Since the Bill was adopted by the NCOP with various changes − some of which make the legislation slightly more palatable –it must now return to the National Assembly for endorsement before being sent to the President to be signed into law.

Should the Bill pass, it will continue to be challenged. A number of groups are already consulting their legal experts. Among them is the Institute of Race Relations (IRR), which has fought for the property rights of all South Africans since its founding in 1929.

The Bill, as it stands, still has serious problems. And if a governing coalition of parties which have little concern for the property rights of South Africans should come to power, the legislation will provide these elements with extensive powers to expropriate both land and other property for nil or inadequate compensation.

Some will argue that it is unlikely that the government would expropriate your house in the suburbs. This may be true, but in its present form the legislation would allow the government to do so on flimsy pretexts. And, although this is an outcome that is perhaps too ghastly to contemplate, a coalition made up of the ANC, EFF, and MK could well decide to interpret the provisions of the Expropriation Bill generously to ride roughshod over everyone’s property rights.

Moreover, it must be remembered that, even if no suburban house is at risk of being exposed to expropriation, a regime in which the state has wide powers to expropriate with no or little compensation will have severe knock-on effects for the economy. It could also undermine the use of property as collateral for loans, and unleash a banking crisis.

In countries where oppressive governments have destroyed property rights there has been a sharp and permanent drop in per capita incomes. For example, per capita income in Zimbabwe was $1 680 in 2000 (in constant 2015 US dollars), just before the country’s “land reform” seizures started in earnest. By 2008, per capita income had halved, falling to just over $820. It has recovered somewhat but in 2022 Zimbabweans were still, on average, 20% poorer than they had been in 2000.

It was a similar tale in Venezuela, a country which parties like the ANC and EFF see as an ideological lodestar. Here, incomes also collapsed − but there is no data available that is less than a decade old; the country simply stopped reporting any reliable economic statistics. Nevertheless, following large-scale seizures of private property hyperinflation became the norm, with millions of Venezuelans falling into poverty. By some estimates, the proportion of Venezuelans living in poverty is as high as 90%.

There is little reason to believe that, should property rights in South Africa be weakened to the same degree as they have been in Zimbabwe and Venezuela, the economic outcomes would be any different.

But is this a real threat? Our critics will dismiss this as scaremongering, but it’s a mistake to assume that all governments have everyone’s best interests at heart at all times. At the end of the day, if the new Expropriation Bill becomes law, the nightmare that unfolded in other countries could also happen here.

As noted earlier, the Bill as amended by the NCOP has a few elements to commend it. For example, in the earlier draft, a sufficient option for serving a notice of expropriation on an owner was to send it by registered post. Anyone familiar with the South African postal system knows that sending a message through the South African Post Office is about as effective as using smoke signals or telepathy. However, the NCOP has now amended the text to say that serving such notice must include electronic delivery by email too.

People will argued that expropriation is a common tool that governments across the world use for the “common good” (if such a concept truly exists). This is true – but in most countries the property owner is compensated and the state is not predatory or rapacious, which elements of the South African government arguably are.

The Bill sets out several circumstances that qualify for nil compensation. For example, land could be expropriated without compensation where the owner’s “main purpose” is not to develop or use the land but rather to benefit from an increase in its market value.

Land could also be expropriated for nil compensation where an owner has “abandoned” it by “failing to exercise control over it, despite being reasonably capable of doing so”. This could mean that someone who is the victim of a land invasion – and has hesitated in bringing costly eviction proceedings aimed at regaining control of it – could see their land expropriated with nil compensation.

One of the most concerning parts of the Bill − which the IRR has sounded the alarm about in the past – is that the list of circumstances in which nil compensation can be paid is an open one. According to the Bill, the instances in which nil compensation may be paid “include but are not limited to…” the ones it expressly lists. Hundreds of cash-strapped and often parasitic state entities could take advantage of this to pay nil compensation in many other circumstances too.

Many other aspects of the Bill are no less troubling. Overall, this draft legislation is simply not fit for purpose – and, in the hands of bad actors, such as the EFF, MK, and certain elements in the ANC, it could lead to large-scale seizures of property, with terrifying consequences for the economy.

For all these reasons, the IRR will be writing to President Ramaphosa to petition him not to sign the Bill into law once the parliamentary process is completed. We will also be considering court action.

Once again, we will build a lobby against EWC – doing just this five years ago helped block moves to introduce EWC through an amendment to the Constitution.

Letting this Bill pass will drive a knife into the heart of the quest to increase growth and build a prosperous South Africa.

Marius Roodt is a writer and senior researcher at the Institute of Race Relations