It’s been an eventful week on the Expropriation without Compensation front.
A new iteration of the amendment to Section 25 of the Constitution found its way onto the agenda, only to be abandoned. Today the ad hoc committee working on the amendment is hoping (that is, those in favour of doing so are hoping) to adopt a bill to present to Parliament.
As we near the 10 September deadline for the ad hoc committee to complete its work, it’s a good time to take stock of where we are, and more importantly, where we are headed.
An overall concern is that the changes being proposed exceed the mandate of the committee. This was to recommend an amendment to Section 25 ‘to make explicit that which is implicit in the Constitution, with regards to Expropriation of Land without Compensation, as a legitimate option for Land Reform.’
Questions of altering the dates for lodging restitution claims (which has now been dropped) and introducing state custodianship (which remains) are separate issues and have no business being included in this process.
Substantively, the amendment carries out the mandate in that it specifies that land may be expropriated at nil compensation. However, it goes somewhat beyond this in specifying that in addition to the land ‘any improvements thereon’ might likewise be taken.
Custodianship
But most contentiously is the idea of custodianship. The ANC has been vague on what custodianship will mean, although on the evidence of past legislation – such as water and mineral rights – we at the IRR have been clear that it will ultimately mean the extinguishing of private property rights in land. Minister of Justice and Correctional Services Ronald Lamola recently said that this would amount to nationalisation, which is out of line with what South Africa’s people desire. This is broadly what we have been saying.
The proposed amendment specifies that ‘certain’ land will be held in state custodianship. Perhaps sensitive to investor sentiment (and indeed, to the views of South Africa’s people), the ANC has tried to downplay the significance of this. The now aborted changes would have qualified custodianship as ‘a transitional measure’ pending final redistribution.
But if this is the case, it’s puzzling why a provision on custodianship should be included in the Constitution at all. This may be to mollify the EFF and win its support for the Bill, although the latter party has made it clear that it seeks unambiguous custodianship of all land for all time.
Transitional measure
Note, however, that what constitutes a transitional measure is open to question. Current redistribution policy is that land is acquired by the state and held by it. Beneficiaries may only lease it, with an option to purchase being available for those producing on a substantial scale. In the original policy document, this would only be possible after having occupied the land for 50 years – it has been reported that the timeframe has now been revised significantly, although this seems to have been done very quietly…
Time for the ANC to leave behind expropriation without compensation - South Africa
Until policy actually reflects a preference for ownership, it would be wise to consider custodianship a possible endpoint of land policy. The transition period might be set so as to make state holding a reality for decades.
Land could, for instance, be held until beneficiaries have demonstrated a capacity to produce to the satisfaction of their bureaucratic overseers – an open-ended period effectively. Or custodianship might be a transition phase pending transfer to the state. If the last option seems alarmist, remember that considerable support has been expressed from within the ANC for the state to assume custodianship over all land, something which is not dissimilar ideologically from ownership. Having taken tracts for land reform purposes, a future administration might simply reassign them to the state after the transition period has lapsed.
This has real-world consequences. It aggravates the problem that even the government acknowledges: policy uncertainty. Or rather, certainty that the government intends expanding its latitude for action, but not what it intends to do with this. Not enough certainty, in other words, to make any plans.
Very little compromises a country’s competitiveness and investment attractiveness like a threat to property rights. A few months ago, former president Mbeki, for example, made some thoughtful and cogent comments about the danger of EWC – as it relates to ‘improvements’ – as ‘a very serious disincentive to investment which our country cannot afford’.
Similarly, Busi Mavuso, CEO of Business Leadership South Africa, has expressed concerns about the Expropriation Bill (admittedly, a separate process from the constitutional amendment, although one related to it). ‘This means everything is up for grabs,’ she writes, ‘from moveable and financial assets to intellectual property.’
They are both quite correct.
Nowhere near
The National Development Plan sought sustained growth of some 5.4% per annum as a requirement for addressing poverty and unemployment. We’ve come nowhere near this – even before the Covid-19 pandemic. Indeed, Leila Fourie, CEO of the JSE, has commented that she was concerned about disinvestment from South Africa, particularly the outflow of foreign capital. To this one might add that many South African entrepreneurs and investors are reluctant to sink money into the economy. So investment lags, dissuaded not only by harsh global conditions, but by choices that South Africa’s leaders have made. And if South Africa continues down its current path, it’s highly unlikely that the coming years will be any different.
So where does this take us? The EWC drive – in its multiple forms of tinkering with the Constitution, taking property at ‘nil’ compensation, or the comprehensive seizure of land under a ‘custodial’ regime – did more than point to a perilous and damaging outcome. It also contributed to the great malaise of uncertainty that even the government admits is chewing away at South Africa’s developmental prospects.
Where something as profoundly important as an amendment to the Bill of Rights seems dictated by political expediency and where doing so opens up opportunities for the most destructive ideological experimentation, South Africa’s future remains in grave danger.
