Path to prosperity: Ramaphosa, please give up on land grab push - Biznews

23 October 2018 - If any belief is to survive that his ascent to the head of government really means a turnaround, it will need to communicate a very audible message that South Africa is a safe, stable and profitable destination for investors and entrepreneurs.

Terence Corrigan

This week’s investment summit represents a high-water mark of sorts for President Ramaphosa in his first year of office.

If any belief is to survive that his ascent to the head of government really means a turnaround, it will need to communicate a very audible message that South Africa is a safe, stable and profitable destination for investors and entrepreneurs. It will have to do so convincingly for this event is to deliver something tangible and extraordinary.

Whether this is possible is an open question.

President Cyril Ramaphosa.
No doubt, investors with an interest in South Africa – local and foreign – find President Ramaphosa an improvement on his predecessor. He has acknowledged at least some of the pathologies that have infected the economic environment, such as the rot in the country’s state owned enterprises. These are assets he could deploy.

On the other hand, President Ramaphosa has presided over – and actively encouraged – the drive to institute a programme of Expropriation without Compensation (EWC), ostensibly to accelerate land reform. Severe misgivings have been expressed about this by business people, as even government representatives have conceded.

With this in mind, it is notable that Minister for Economic Development Ebrahim Patel told a media briefing last week that the summit would need to address this question. ‘The president will no doubt want to deal with this matter next week to share with investors our storyline and our timeframes, what we expect will be the processes that will happen here. We are a democracy, Parliament is seized on the matter,’ he said.

Mr Patel added that the conference would need to provide ‘a more coherent narrative about where we want the economy to go, where the opportunities are and how we’re going to increase the rate of growth’.

In other words, policy certainty.

Concern about policy certainty has been a major problem for years. Any businessperson seeking opportunities will find it burdensome to navigate a constantly changing environment, and will tend towards suspicion of the intentions of a government whose choices contribute to such a state of affairs.

South Africa’s ruling party encompasses a wide, perhaps ultimately incompatible, range of ideological positions. Governance has been afflicted by frequent changes in ministers and senior civil servants. And there has long been a passion for legislating rather than for the pedestrian business of governing. All of these have worked against policy certainty, and have cost the country opportunities.

That said, it is possible to attribute too much to policy uncertainty. What needs to be faced forthrightly is that it is not only a lack of policy certainty – a lack of a coherent narrative, as Patel put it – that is chasing investment away. It is the expectation of counterproductive policy. Understanding the details of such a policy choice, or being informed that the government is committed to embarking on it offers no comfort to investors. It signals that the risks outweigh any foreseeable reward.

It is difficult to imagine a policy choice with quite the potential dissuasive impact as one that threatens the very security of investors’ property. It is equally difficult to imagine, within the current trajectory of developments, what message he could communicate that would provide certainty and allay investors’ concerns.

Thus far, despite loose, non-binding assurances that the process will not disrupt the economy, there is little indication as to what it will do. Conflicting messages suggest, variously, that it will target abandoned and unused properties, or that it will be directed at productive assets. A leaked list of properties targeted for expropriation – which we at the Institute of Race Relations (IRR) have good reason to believe is genuine – contains a number of working properties. The minister of rural development and land reform has spoken of the government’s intentions in terms evocative of a decapitation strike on an enemy: properties have been identified for seizure, but this will happen so as to deny their owners time to prepare a challenge.

For some time, government might have been able to claim with some credibility that various options were on the table and would be explored in the spirit of democratic deliberation, not least the momentous issue of amending the Bill of Rights. However, when President Ramaphosa announced on late night television on 31 July that his party would be driving an amendment anyway – despite the consultation process not having been completed – grave questions arose about the good faith within which this has been undertaken. (It also appears that a substantial majority of those who made submissions to the process were in fact opposed to amending the constitution.)

As we at the IRR have argued, all of this has created a perilous situation in which just enough certainty of a destructive policy outcome seems to have been communicated, yet not enough to permit any sort of planning to mitigate it.

The logical choice would be to use the Summit as an opportunity to pull back from this path; to announce the constitution will be left intact (not a difficult choice, since even partisans of EWC argue that the constitution would allow EWC under certain circumstances), and to spell out some binding limiting principles. Meanwhile, a pledge to address the identified deficiencies in the land reform programme – deficiencies identified by such studies as that of the High Level Panel under former president Kgalema Motlanthe – would signal a seriousness to tackle the problems in this area as they exist, and not as may be politically or ideologically comfortable to believe they exist.

Taking this path might not be universally popular – not least with some within the president’s own party – but it would signal that South Africa is indeed gearing up for growth and development. This might help to make President Ramaphosa’s ‘New Dawn’ the centrepiece of his legacy.

Terence Corrigan is a project manager at the Institute of Race Relations. To join the Institute of Race Relations send an SMS to 32823 (SMSes cost R1, Ts and Cs apply).