Implications of Ramaphosa's announcement on land dire - News24

2 August 2018 - Nothing has injected greater concern and insecurity into business' views on South Africa than the prospect of assets being subject to confiscation. It places jobs and social mobility further from the country's reach.


Terence Corrigan

If there was any doubt about the seriousness of the drive by the African National Congress (ANC) and the government it leads to introduce a policy of expropriation without compensation, Tuesday's late-night announcement by President Cyril Ramaphosa should have put that to rest. 

Referring to the (as yet unfinished) public hearings on whether or not to amend Section 25 of the Constitution, the president announced that the ANC would spearhead a parliamentary process to "finalise a proposed amendment to the Constitution that outlines more clearly the conditions under which expropriation of land without compensation can be effected". 

This is despite – again in his own words – that "there is also a growing body of opinion, by a number of South Africans, that the Constitution as it stands does not impede expropriation of land without compensation". 

So, taking the president at his word, a provision in the Bill of Rights is to be tampered with in order to address an issue that does not really exist.

The true significance of what transpired is best understood in relation to other concerns expressed in the announcement. Not surprisingly, these relate to the state of the economy, and to its capacity to absorb the millions locked out of opportunities. 

"Our economy is facing serious challenges," the president correctly said. "The recently released figures on unemployment are worrying."

This puts it mildly. With an unemployment rate in excess of 27% – or 37% by the "expanded" definition – this is not just a socio-economic crisis, it is in a very real sense a betrayal of the promise of freedom. 

Thus, the ANC will require the state to embark on a stimulus programme to push growth and job creation: "It will be based on existing budgetary resources and the pursuit of new investments while remaining committed to fiscal prudence."     

The disconnect here is jarring. 

Expropriation without compensation is a disincentive to investment, whether to businesspeople domestically or abroad. That the ANC has signalled clearly its intention to use it, and to remove (to some extent) the constitutional protections afforded against it, will only damage South Africa's prospects of attracting it. This is not, as some might put it, to "threaten" the government, but merely to point out the inevitable and entirely predictable consequences of its policy choices.

Nothing has injected greater concern and insecurity into business' views on South Africa than the prospect of assets being subject to confiscation. It places jobs and social mobility further from the country's reach. One of President Ramaphosa's investment envoys, Trevor Manuel – finance minister under presidents Mandela, Mbeki and Motlanthe – recently pointed out that expropriation without compensation was not being received favourably abroad. 

"Communicating this, I think, is a bigger challenge than what we thought," he said.

Communicating the posture that President Ramaphosa outlined will prove an even bigger challenge – although it is worth noting that communication is not the problem. The substance of the prospective policy is. 

Expropriation without compensation does nothing to address the real problems besetting land reform. It does nothing to give land reform priority in policy making and budgets, defective project design, administrative incapacity and inadequate post-settlement support. Quite the contrary – by undermining South Africa's attractiveness for investment, it places the resources that could underwrite a successful land reform process further beyond reach. 

Moreover, expropriation without compensation thrusts ideological and political distractions into the debate. These draw attention away from finding durable solutions, and (whether intentionally or not) encourage polarisation.  

(It remains to be seen whether the country will be able to find the funds and skills for the seed, equipment, finance and extension services that the president said would be rolled out "before the first rains". Or, for that matter, where in our stressed fiscus the funding for a stimulus package is to be found.)

And it should not be forgotten that what President Ramaphosa has announced will in all likelihood not be limited to land. It is difficult to see how an amendment to Section 25 of the Constitution would not carry with it severe implications for property of all types. Having embarked on a programme to take land without compensation, pressure would probably build to do so in other spheres of the economy. 

Taken together, the implications of the president's announcement are dire. They point to stagnation at best and catastrophe at worst. This is a road that those in power are choosing to take. It need not be taken – indeed, when the consequences are clear, it beggars belief that anyone would want to. 

*Terence Corrigan is a project manager at the Institute of Race Relations (IRR), a think tank that promotes political and economic freedom. If you agree with what you have just read then click here or SMS your name to 32823.