Expropriation Bill threatens all of us and the economy - Dispatch

John Endres

On 11 January, the Amathole District Municipality in the Eastern Cape sent a letter to its 1 670 employees notifying them that they would not be receiving their salaries for four months.

So cash-strapped was the municipality that it had been relying on bank overdrafts for the preceding two years to pay staff, according to the report, “‘Cash-strapped’ Amathole municipality won’t be able to pay workers’ salaries for four months”, on The Citizen’s online platform.

Although the story made headlines, it is not out of the ordinary. According to another Citizen report last month, 24 of the 39 municipalities in the Eastern Cape “are standing on the edge of a fiscal cliff”.

It is a picture of financial mismanagement and crisis repeated in towns across the country.

Not a single municipality in the Free State or the North West achieved a clean audit in 2020, and, according to a Mail & Guardian report last July, the auditor general found over R32-billion of irregular expenditure in the nation’s municipalities.

Yet a draft law currently before Parliament, the Expropriation Bill, would, if passed, allow the Amathole District Municipality – as well as any other municipality – to expropriate property without compensation and without a court order.

Commentators have assured South Africans that the considerable power conferred upon state organs by enabling them to expropriate private property would be deployed sparingly and responsibly. But considering the parlous state of the municipalities’ finances, this claim deserves to be treated with scepticism, not least because the new law tilts the scales heavily in the state’s favour.

A municipality wishing to expropriate a piece of land, for example, must begin by investigating the property and negotiating for its purchase with the owner.

If no agreement is reached, the municipality may issue a notice of its intention to expropriate. In this document, it must invite the owner to make representations on the proposed expropriation and the compensation to be paid. The municipality is obliged to consider any representations received, but it need not respond to them or give reasons for rejecting them.

Once it has taken these simple preliminary steps, the municipality may issue a notice of expropriation. Under this notice, both ownership and the right to possess the property will automatically pass to it on the dates set out in the notice – without any court involvement at all. The date for the transfer of ownership could be a mere week after the service of the notice, and the right to possess the property could pass to the municipality within another week.

An owner with sufficiently deep pockets may apply directly to the courts to challenge the validity of the expropriation and the amount of compensation offered. However, most people will lack the necessary resources to mount legal challenges – especially after losing ownership and possession of their homes.

These are among the reasons why the Institute of Race Relations (IRR) argues that the Expropriation Bill in its current form offers enormous potential for abuse. It represents a grave risk to South Africa’s economy and citizens, and must be opposed.

This is thrust of the special report – Issue Alert: Expropriation Bill, One week left to ‘kill the bill – published this week by the IRR.

Author of the report, IRR head of policy research Dr Anthea Jeffery, warns that, far from addressing “the injustices of the past and (restoring) land rights” – as Deputy President David Mabuza claimed when the draft legislation was gazetted last October – the real import of the Bill is that “(all) asset classes are vulnerable, and so too are all South Africans”.

She writes: “The Bill has enormous ramifications for the 1 million white and 8.7 million black South Africans who own houses, the thousands of black South Africans who have bought more than 6 million hectares of urban and rural land since 1991, and the roughly 17 million people with informal rights to plots held in customary tenure. It also threatens companies, both large and small, with the loss of shares, business premises, mining rights, and other property.”

While South Africans “have been encouraged to believe that the Bill deals only with land, and primarily with ‘white’ farming land”, the Bill describes the “property” subject to its provisions as “not limited to land”.

In the light of this, it is sobering – as Jeffery notes – that, under the Bill, law-abiding owners of homes and other property will have fewer rights than criminals illegally using a warehouse they own to store heroin and other drugs. The warehouse can be seized by the state only after its use for criminal purposes has been proved and a court order for its confiscation obtained.

But a municipality can expropriate a home by following the simple steps set out in the Bill – and without having to prove to a court that the expropriation is in the public interest or that the compensation is just and equitable.

This would allow any expropriating authority “to resort to ‘self-help’ when it embarks on an expropriation”, Jeffery writes.

The public has until 10 February to comment on this draft legislation, and we urge people to register their objections and help protect their interests by endorsing the IRR’s submission at https://irr.org.za/campaigns/kill-the-bill-stop-ewc.

John Endres is Chief of Staff at the IRR, a liberal think tank that promotes political and economic freedom.